File No. 33968
SUPREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO)
BETWEEN:
PROFESSIONAL INSTITUTE OF THE PUBLIC SERVICE OF CANADA, CANADIAN MERCHANT SERVICE GUILD, FEDERAL GOVERNMENT DOCKYARD TRADES AND LABOUR COUNCIL (EAST), INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, FEDERAL GOVERNMENT DOCKYARD CHARGEHANDS ASSOCIATION, RESEARCH COUNCIL EMPLOYEES’ ASSOCIATION, ASSOCIATION OF PUBLIC SERVICE FINANCIAL ADMINISTRATORS, PROFESSIONAL ASSOCIATION OF FOREIGN SERVICE OFFICERS, FEDERAL GOVERNMENT DOCKYARD TRADES AND LABOUR COUNCIL (WEST), THE CANADIAN ASSOCIATION OF PROFESSIONAL RADIO OPERATORS, CANADIAN AIR TRAFFIC CONTROL ASSOCIATION, CANADIAN MILITARY COLLEGES FACULTY ASSOCIATION, and FEDERAL SUPERANNUATES NATIONAL ASSOCIATION
APPELLANTS (Appellants)
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ATTORNEY GENERAL FOR CANADA
RESPONDENT (Respondent)
(Style of cause – as well as Counsel and Agents’ Names and Addresses – continue inside cover page)
APPELLANTS’ FACTUM
Supreme Factum 2005 Limoges Street Tel.: (613) 737-0834 Longueuil, Québec J4G 1C4 Fax: (450) 442-2040 www.supremefactum.ca [email protected] S-3484-11
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AND BETWEEN:
PUBLIC SERVICE ALLIANCE OF CANADA
APPELLANT (Appellant)
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ATTORNEY GENERAL FOR CANADA
RESPONDENT (Respondent)
AND BETWEEN:
THE ARMED FORCES PENSIONERS’/ANNUITANTS’ ASSOCIATION OF CANADA, L’ASSOCIATION DES MEMBRES DE LA POLICE MONTÉE DU QUÉBEC, THE BRITISH COLUMBIA MOUNTED POLICE PROFESSIONAL ASSOCIATION, THE MOUNTED POLICE ASSOCIATION OF ONTARIO, AND THE CANADIAN ASSOCIATION OF PROFESSIONAL EMPLOYEES
APPELLANTS (Appellants)
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ATTORNEY GENERAL FOR CANADA
RESPONDENT (Respondent)
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Paul J.J. Cavalluzzo Andrew Raven Hugh O’Reilly Raven, Cameron, Ballantyne & Amanda Darrach Yazbeck LLP Cavalluzzo Hayes Shilton McIntyre 1600 – 220 Laurier Ave. West & Cornish LLP Ottawa, Ontario 300 – 474 Bathurst Street K1P 5Z9 Toronto, Ontario M5T 2S6
Tel. (416) 964-1115 Tel. (613) 567-2901 Fax (416) 964-5895 Fax (613) 567-2921 [email protected] [email protected] [email protected] [email protected]
Counsel for the Appellants Agent for the Appellants Professional Institute of the Public Professional Institute of the Service of Canada, et al. Public Service of Canada, et al.
Andrew J. Raven James G. Cameron Andrew S. Astritis Raven, Cameron, Ballantyne & Yazbeck LLP 1600 – 220 Laurier Ave. West Ottawa, Ontario K1P 5Z9
Tel. (613) 567-2901 Fax (613) 567-2921 [email protected] [email protected] [email protected]
Counsel for the Appellants Public Service Alliance of Canada and The Armed Forces Pensioners’/ Annuitants’ Association of Canada, et al.
Dale Yurka Christopher M. Rupar Christine Mohr Attorney General of Canada Attorney General of Canada Bank of Canada Building 3400 – 130 King St. W. East Tower, Room 1212 Exchange Tower, Box 36 234 Wellington Street Toronto, Ontario M5X 1K6 Ottawa, Ontario K1A 0H8
Tel. (416) 954-8110 Tel. (613) 941-2351 Fax (416) 973-5004 Fax (613) 954-1920 [email protected] [email protected] [email protected]
Counsel for the Respondent Agent for the Respondent
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TABLE OF CONTENTS
APPELLANTS’ FACTUM Page
PART I – OVERVIEW AND CONCISE STATEMENT OF FACTS ...... 1
A. Overview ...... 1
B. Concise statement of facts ...... 4
Pension plans for federal public service employees ...... 4
Government accounting ...... 6
Assurances that pension contributions would be used for pension purposes ...... 7
Monitoring the Superannuation Accounts ...... 9
The surplus in the Superannuation Accounts and its amortization ...... 10
Bill C-78 ...... 12
The appellants’ action and the trial judge’s decision ...... 14
The Ontario Court of Appeal’s decision ...... 15
PART II – STATEMENT OF QUESTIONS IN ISSUE ...... 16
PART III – STATEMENT OF ARGUMENT ...... 17
A. Standard of review ...... 17
B. The Courts below erred in determining that there were no assets in the accounts ...... 17
The PSSA and the Public Pensions Reporting Act expressly state that the Superannuation Accounts hold assets ...... 18 - ii -
TABLE OF CONTENTS
APPELLANTS’ FACTUM Page
The historical record supports the conclusion that the accounts held assets ...... 20
The expert evidence at trial confirms the existence of assets ...... 23
The Court of Appeal’s conclusion is contradicted by this Court’s decision in Ermineskin ...... 27
The conclusion that there were no assets in the accounts is based on a misunderstanding of how the accounts function ...... 29
C. The Government owes plan members a fiduciary duty ...... 31
The Government, as plan administrator, acts in a recognized fiduciary role ...... 32
The test for a fiduciary relationship ...... 34
A fiduciary obligation is established in the present case ...... 35
i. Undertaking to Act in the plan members’ interests ...... 35
ii. Defined class of vulnerable persons ...... 37
iii. A substantial interest affected by the fiduciary’s exercise of discretion ...... 38
The amortization and removal of the surplus violated the Government’s fiduciary and statutory obligations ...... 42
A constructive trust is an appropriate remedy for breach of fiduciary duties ...... 43
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TABLE OF CONTENTS
APPELLANTS’ FACTUM Page
D. The Court of Appeal erred in concluding that the Government was not unjustly enriched ...... 44
(i) Use of the surplus funds enriched the Government ...... 45
(ii) The plan members were deprived ...... 47
(iii) There was no juristic reason for the enrichment ...... 47
There is no basis to rebut the prima facie case of unjust enrichment ...... 48
The proper remedy for the enrichment is a constructive trust ...... 50
E. C-78 did not extinguish the plan members’ interest in the surplus ...... 52
The presumption against expropriation without compensation ...... 52
C-78 does not disclose an intention to expropriate without compensation ...... 53
The legislative debates confirm there was no intent to expropriate without compensation ...... 55
Conclusion ...... 58
PART IV – SUBMISSIONS AS TO COSTS ...... 59
PART V – ORDER SOUGHT ...... 60
PART VI – ALPHABETICAL TABLE OF AUTHORITIES ...... 61
PART VII – STATUTES, REGULATIONS, RULES Already reproduced in the Appellants’ Book of Authorities - 1 -
Appellants’ Factum Overview and Concise Statement of Facts
APPELLANTS’ FACTUM
PART I – OVERVIEW AND CONCISE STATEMENT OF FACTS
A. OVERVIEW
1. The present appeals involve the amortization and removal by the Government of Canada of over $28 billion from the Federal Public Service Superannuation Account, the Canadian Armed Forces Superannuation Account, and the Royal Canadian Mounted Police Superannuation Accounts (“Accounts” or “Superannuation Accounts”). The amounts taken by the Government include mandatory contributions made by both itself and its employees (“Plan Members”) for the purpose of providing pensions pursuant to the Public Service Superannuation Act (“PSSA”) and other related legislation.1 These amounts were used by the Government to pay down its debt.
2. The Superannuation Accounts are specified purpose accounts held within the Consolidated Revenue Fund (“CRF”). In the early 1990s they began to develop actuarial surpluses, which grew to over $30 billion by the end of the decade. Uncontradicted expert evidence at trial established that between 36.9 and 42.2 percent of the surplus in the Public Service Superannuation Plan was attributable to Plan Member contributions and the interest thereon. The Government, however, asserted ownership over the entire surplus by amortizing it over the expected average remaining service lives of its employees. This action, which reduced the Government’s annual budgetary
1 The relevant statutes are the Public Service Superannuation Act, R.S., 1985, c. P-36 (Appellants’ Book of Authorities, hereafter AA, Vol. 1, Tab 12), as amended [“PSSA”]; the Canadian Forces Superannuation Act, R.S., 1985, c. C-17 (AA, Vol. 1, Tab 3), as amended; and the Royal Canadian Mounted Police Superannuation Act, R.S., 1985, c. R-11 (AA, Vol. 1, Tab 13), as amended, collectively referred to as the “Superannuation Acts”. The relevant pension plans are the Public Service Superannuation Plan, the RCMP Superannuation Plan and the Canadian Forces Superannuation Plan (the “Plans”). While differences exist between the Plans, the provisions relevant to the present appeal are largely identical. As such, references below will be limited to the Public Service Superannuation Plan and the Public Service Superannuation Account, although differences will be identified where necessary. - 2 -
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expenditures, effectively granted the Government an unauthorized contribution holiday while Plan Members continued to make full contributions to the Plans.
3. In 1999, Parliament enacted the Public Sector Pension Investment Board Act (“C-78”), which created new pension funds to deal with benefits earned subsequent to April 1, 2000. C-78 granted the Minister of Finance discretion to debit certain “amounts” from the Accounts, while requiring that amounts be debited in other circumstances. The Government relied on C-78 to remove over $28 billion that it had already amortized by 2004. Following the amortization and removal of the pension surplus, and the subsequent developments of deficits in the new pension funds, the Government imposed significant increases on the contributions Plan Members are required to make, some by as much as 60%.
4. It is a fundamental principle in a parliamentary democracy that Government can only act within its legislative and constitutional authority. Nothing in the Superannuation Acts or any other statute authorized the Government to use the funds in the Accounts for a purpose other than the provision of pension benefits. As a result, the Government acted beyond its legal authority when it used the surplus in the Accounts for purposes other than for which it was collected.
5. The Appellants commenced an action claiming that the Government’s taking of the pension surplus violated Plan Members’ equitable interest in the surplus, which had not been extinguished by C-78. The action and the subsequent appeal were dismissed, although the Court of Appeal overturned a number of the trial judge’s findings.
6. In particular, the Court of Appeal held that the Government did not owe a fiduciary duty to Plan Members as there were no assets in the Accounts to give rise to such a duty. In the Court of Appeal’s view, the Accounts were merely “legislated ledgers” to track the Government’s pension obligation and that pension contributions, by virtue of their deposit into the CRF, became public funds available for any Government use. The Court of Appeal further found that, despite the apparent detriment to Plan Members, the Government had not been unjustly enriched, as its actions were to the - 3 -
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benefit of all taxpayers. Finally, the Court held that C-78 extinguished any equitable interest Plan Members may have had in the surplus.
7. The Appellants seek to overturn the Court of Appeal’s judgment on the following grounds. First, the Appellants maintain that the Plans were funded and that the Superannuation Accounts held assets. The contrary conclusion conflicts with the language of the PSSA, which expressly states that the Accounts hold assets, as well as the numerous statements by the Government, both inside and outside Parliament. The Court of Appeal’s conclusion also conflicts with the uncontradicted expert evidence at trial, which confirmed that the Accounts represent real assets put aside by Plan Members and the Government for the provision of pension benefits, as well as this Court’s reasons in Ermineskin. The Government chose to call no evidence to support its newly adopted position that the Plans were unfunded and the Accounts held no assets.
8. Second, the Government owed Plan Members a fiduciary duty. The Court of Appeal properly rejected the trial judge’s claim that the PSSA constituted a “complete code”, but instead held that, as there were no assets in the Accounts, there was no property to which a fiduciary duty could apply. Although the Court of Appeal acknowledged the vulnerability of Plan Members, given that the Plans are not subject to regulatory oversight and that the Plans cannot be the subject of collective bargaining, it erroneously concluded that imposing a fiduciary duty would place the Government in a conflict with its obligations to the broader public, ignoring the private nature of the relationship between Plan Members and the Government in the present case. In this context, it was reasonable for Plan Members to rely on the numerous Government statements indicating that their contributions were secure.
9. The taking of the surplus also unjustly enriched the Government. While the Court of Appeal rightly found that Plan Members likely suffered a detriment on account of the increased pension contributions they were required to make after the year 2000, it erred in concluding that the Government did not benefit from the taking of the surplus on the basis that this benefit was shared by all Canadian taxpayers. As such, an unlegislated public benefit was taken at the expense of private rights owed to Plan Members. Plan - 4 -
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Members are, thus, entitled to rely on a constructive trust remedy to have their contributions returned to the pension plan.
10. Finally, C-78 did not extinguish Plan Members’ interest in the surplus. Nothing in C-78 explicitly calls for the taking of the Plan Members’ interest in the surplus without compensation. In fact, Parliament authorized the removal of the surplus on the express understanding, expressed in the debates, that the surplus already belonged to the Government of Canada. In these circumstances, it cannot be said that Parliament evidenced an unambiguous intent to extinguish the Plan Members’ interest in the surplus, such that the presumption against expropriation would be rebutted.
11. The Appellants seek an Order overturning the Court of Appeal’s judgment and returning to the Superannuation Accounts the amounts representing the Plan Members’ interest in the surplus, to be administered in a manner consistent with the Government’s equitable obligations.
B. CONCISE STATEMENT OF FACTS
Pension Plans for Federal Public Service Employees
12. The Plans are contributory, defined benefit pension plans established by statute. Unlike other federally regulated pension plans, these Plans are not subject to any regulatory oversight or protection and their terms and conditions cannot be collectively bargained.
Decision of the Ontario Court of Appeal (“OCA Reasons”) dated October 8, 2010, paras. 10, 13, 14, 15, 18 (Appellants’ Record, hereafter AR, Vol. 1, pp. 122-123; PSSA, S.C. 1952-53, c. 47, proclaimed in force Jan. 1, 1954 (“PSSA 1954”) (AR, Vol. 7, p. 51); Agreed Statement of Facts, paras. 24-37 (AR, Vol. 4, pp. 129-131)
13. Employees are required by statute to contribute a percentage of their salary from each pay cheque to their pension. Prior to March 31, 2000, the employer was also - 5 -
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required by statute to make four types of contributions to the Plans: 1) matching contributions equal to employee contributions; 2) actuarial liability credits to deal with any deficits in the Accounts; 3) past service contributions, where Plan Members elected to buy-back pensionable service; and 4) interest contributions on the balance in the Accounts.2 Contributions were also made by other Public Service Corporations into the Accounts.
PSSA, supra, ss. 5(1), 44 (AR, Vol. 7, pp. 54-117); OCA Reasons at para. 18 (AR, Vol. 1, p. 123); Agreed Statement of Facts, paras. 49-82 (AR, Vol. 4, pp. 134-144); Trial Judge at para. 3 (AR, Vol. 1, pp. 10-11); E/D S. Hamilton, (AR, Vol. 3, pp. 151, 155-156, l. 4-14, 8-21)
14. The Government of Canada is constitutionally required to maintain all its funds in the CRF. The Superannuation Accounts were established by legislation as “Special Accounts” within the CRF to include “all monies received or so payable” for the public service pension plans and an amount representing interest on those amounts. Prior to March 31, 2000, the PSSA specifically required all contributions and interest in relation to the Plans to be “paid into”, or “credited to”, the Superannuation Accounts. Pension benefits were to be “paid out of” the Superannuation Accounts. Prior to this litigation, the Government had consistently taken the position that the Plans were funded and that the Accounts contained assets.
The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, s. 102 (AA, Vol. 1, Tab 4); An Act to amend the Civil Service Superannuation Act, 1944-45, c. 34, s. 6 (AA, Vol. 1, Tab 1); PSSA 1954, s. 4(1), 6-7, 23(2), 28(3), 31, 32(1), 33- 34 (AR, Vol. 7, pp. 53, 57-60, 76, 81, 86-87); PSSA, supra, s. 5(1), 6-8, 37(2), 40(1), 43, 44(1), 45-46 (AR, Vol. 7, pp. 54, 57-62,113, 115-118)
2 Pursuant to Regulations enacted in 1969, these contributions were made as if the money in the Accounts had been invested quarterly in 20 year Government of Canada bonds, held to maturity and reinvested every 20 years. - 6 -
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Government Accounting
15. The Government’s financial situation is reported in the Public Accounts. The two principal statements in the Public Accounts are the Statement of Financial Position, which sets out the assets and liabilities of the Government (“Statement of Assets and Liabilities”), and the Statement of Operations and Accumulated Deficit, which sets out the Government’s revenues and expenditures (“Statement of Revenues and Expenses”). The Financial Administration Act requires the Public Accounts to be tabled annually before the House of Commons.
Financial Administration Act, R.S. 1985, c.F-11, s. 64 (“FAA”) (AA, Vol. 1, Tab 6); OCA Reasons, para. 20 (AR, Vol. 1, p. 124); (AR, Vol. 8, pp. 122-123); Evidence of S. Milne (AR, Vol. 4, pp. 12-15, l. 7-10); Report on the Accounting Treatment of the Superannuation Accounts in the Public Accounts of Canada, Scott Milne, June 2005, (“Milne Report”) (AR, Vol. 11, pp. 15-16, 44); see for example the 1992 Public Accounts (AR, Vol. 9, pp. 14- 15)
16. The transactions and balances of the Superannuation Accounts are reported annually in the Public Accounts. Annual contributions made to the Superannuation Accounts by the Government are shown as a Government expense in the Statement of Revenues and Expenses in the year they are made. Employee contributions are deposited in the CRF and shown as credits to the Superannuation Accounts, but are not Government revenues. Interest is credited to the Superannuation Accounts on these amounts and shown as an annual Government expense in the Statement of Revenues and Expenses. The balance in the Superannuation Accounts appears as an ongoing liability of the Government in the Statement of Assets and Liabilities, as it reflects amounts that were credited to the Superannuation Accounts in previous years to pay for future benefits, but remain available for use by Government. The difference between the assets in the Superannuation Accounts and the liability of the Plans to pay benefits constitutes the actuarial surplus or deficit. - 7 -
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Testimony of S. Milne (AR, Vol. 4, pp. 40-46, l. 28-17); Compendium of documents for S. Milne’s Testimony, (AR, Vol. 11, p. 127); Milne Report, (AR, Vol. 11, pp. 25-27)
17. In 1981, the Government identified the Superannuation Accounts as Specified Purpose Accounts. The Specified Purpose Accounts within the CRF are either budgetary or non-budgetary. Budgetary accounts report the revenues and expenses of Government that are similar to departmental activities funded on a “pay-as-you-go” basis, such as the Employment Insurance program. Amounts held in such funds are accounted for as Government assets and any benefits paid from these funds are reported as an annual expense. In contrast, non-budgetary accounts, such as trust accounts and the Superannuation Accounts, represent the Government’s outstanding financial obligations for funds it holds to the benefit of others. As such, pension benefits paid out of the Accounts are non-budgetary expenditures, as they are paid from previous Plan Member and Government contributions that were put aside and reported as budgetary expenditures. The only exception to this rule involves the payment of indexing benefits for years in which budgetary contributions for such benefits were not made; in these circumstances, the indexing portion of the benefit appears as a budgetary expense at the time of payment.
(AR, Vol. 9, p. 103); Milne Report (AR, Vol. 11, pp. 19-24,72); Evidence of S. Milne (AR, Vol. 4, pp. 26-29, 32-34, 38-39 l. 7-14, 24-30, 12-24); Confédération des Syndicats Nationaux v. Canada (Attorney General), [2008] S.C.J. No. 69 at para. 74 (“CSN v. Canada”) (AA, Vol. 2, Tab 29); Agreed Statement of Facts (AR, Vol. 4, pp. 140-141)
Assurances that Pension Contributions would be used for Pension Purposes
18. Plan members were repeatedly given assurances that their contributions would only be used for pension purposes. For instance:
a. In 1981 the Government identified the Superannuation Accounts as Specified Purpose Accounts. The 1982-1983 Public Accounts explained - 8 -
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that such non-budgetary accounts represented the “recorded value of the financial obligations of the Government of Canada in its role as administrator of certain public monies received or collected for a specified purpose”. These monies could be “used only for the purposes for which they were received or collected”.
b. In 1989 the Comptroller-General of Canada, the “Senior Government Accountant”, sent a Circular to all Government Financial Officers explaining that the ownership of these non-budgetary accounts “remains with the participants in the plan or program, at least for the portion they personally contributed and any interest applicable thereon”.
c. The 1991 Federal Budget stated that these funds were held in “trust” for employees, a point reiterated in the 1991 Auditor General’s Report to the House of Commons and previously set out in a 1970 paper by the Personnel Policy Branch at Treasury Board.
d. In 1995 Treasury Board issued a new Policy on Specified Purpose Accounts, noting the need to ensure that any “fiduciary duties and responsibilities are fully and adequately discharged”. The Policy further stated that, unlike budgetary accounts, non-budgetary accounts, such as the Superannuation Accounts, are “principally, money that belongs to and is to be repaid to (or used for the benefit of) identifiable outside organizations and individuals”.
Public Accounts, 1982-1983 (AR, Vol. 9, p. 103); Comptroller General, 1989 Circular (AR, Vol. 4, p. 178); 1991 Budget (AR, Vol. 4, p. 170); Report of the Auditor General, 1991 (AR, Vol. 4, p. 230); (AR, Vol. 5, p. 5); 1995 Treasury Board Policy (AR, Vol. 4, pp. 202-203, 214); Milne Report, June 2005 (AR, Vol. 11, pp. 19-25); Your Superannuation Plan (AR, Vol. 5, pp. 82-84); Evidence of S. Milne (AR, Vol. 4, pp. 19-25, 38-39, l. 22-29, 12-25)
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Monitoring the Superannuation Accounts
19. The PSSA required the Minister of Finance to regularly table before Parliament an actuarial report estimating the extent to which the “assets” in the Superannuation Accounts were sufficient to meet the estimated costs of the pension benefits owed. Actuarial liability credits of approximately $6 billion were contributed by Government between 1964-65 and 1982-83. Expert testimony at trial, however, explained that these deficits were entirely predictable given shortfalls in statutory contribution rates that led to inadequate employer contributions during this period, a point initially raised by the Chief Actuary in his 1977 report, the first year salary increases were taken into account.
PSSA, supra, s. 45 (AR, Vol. 7, p. 117); Evidence of J. Christie (AR, Vol. 3, pp. 46-49, 54-55, 58-60, 62-63, l. 2-10, 9-32, 1-31, 11-31, 5-32); Report on the Effects of Bills C-71 and C-78 on the PSSA, CFSA and RCMPSA, John Christie, July 15, 2005 (“Christie Report”) (AR, Vol. 9, pp. 200-207, 210); (AR, Vol. 7, pp. 1, 15)
20. The Government also dealt with possible deficit situations by instituting benefit cut backs and imposing wage freezes on public service employees. One program, which capped indexing benefits in 1983 and 1984, resulted in a permanent reduction of 6.9% from the promised pension benefit, a cumulative loss for Plan Members of as much as $3.4 billion. Accordingly, Plan Members also bore a portion of the risk for actuarial deficits.
Evidence of J. Christie (AR, Vol. 3, pp. 5-7, l. 1-4; (AR, Vol. 11, p. 1); Christie Report (AR, Vol. 9, pp. 218-219); Reply Report on the Effects of Bills C-71 and C-78 on the PSSA, CFSA and RCMPSA, John Christie, July 25, 2006 (“Christie Reply Report”) (AR, Vol. 10, pp. 121-122, Vol. 7, p. 15); (AR, Vol. 6, pp. 113-114)
21. An attribution analysis giving the employer the full benefit of all its contributions to the Superannuation Accounts, including all actuarial liability credits, results in between - 10 -
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36.9 and 42.2%3 of the surplus in the Public Service Account being attributable to employee contributions and the interest thereon. Don Lee, who provided the only expert evidence on this issue at trial, endorsed the 42.2% figure.
OCA Reasons, para. 28 (AR, Vol. 1, p. 126); Attribution of Surplus to Employees and Pensioners, Contributors to the Public Service Superannuation Account: Report on Amount and Shares of Surplus, Don Lee, PhD, June 2005 (“Lee Report”) (AR, Vol. 11, p. 167); Evidence of D. Lee, Transcript (AR, Vol. 4, pp. 94, 97-100, l. 1-10, 3-30)
The Surplus in the Superannuation Accounts and its Amortization
22. As a result of a combination of factors including low inflation rates, high interest rates, Government-imposed restraints on salaries, unilateral decisions to cap indexing benefits in the 1980s, and changing assumptions in calculating the actuarial liability of the Plans, an actuarial surplus emerged in the Superannuation Accounts in the early 1990s. The surplus in the three Accounts had reached $30.9 billion by March 1999.
OCA Reasons, paras. 23-24 (AR, Vol. 1, p. 125); Decision of the Ontario Superior Court (“Trial Judgment”) dated November 20, 2007 (AR, Vol. 1, p. 37 at paras. 91-92); Public Service Pension Reform (AR, Vol. 6, p. 84); (AR, Vol. 5, p. 98); E/D S. Hamilton (AR, Vol. 3, pp. 154-155, l. 11-5); Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] S.C.J. No. 51, para. 38 (AA, Vol. 5, Tab 55); see also Expenditure Restraint Act, Part 10 of the Budget Implementation Act, 2009, S.C. 2009 c.2, s.16 (AA, Vol. 1, Tab 5, p. 25)
3 31.4-32.1% for the RCMP Account, 22.5-25.6% for the Canadian Forces Account: Attribution of Surplus to Employees and Pensioners, Contributors to the Royal Canadian Mounted Police Superannuation Account: Report on Amount and Shares of Surplus, Don Lee, PhD, June 2005 (AR. Vol. 12, p. 23) and Attribution of Surplus to Employees and Pensioners, Contributors to the Canadian Forces Superannuation Account: Report on Amount and Shares of Surplus, Don Lee, PhD, June 2005 (AR, Vol. 12, p. 90); Evidence of D. Lee, Transcript (AR, Vol. 4, p. 99, 101.1-101.3, l. 4-32, 1-30, 2-32) - 11 -
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23. In the absence of statutory authority to remove the surplus, the Government began, in the 1990-91 fiscal year, to make use of the surplus by amortizing it over the expected average remaining service lives of the plan members. Although the amortization of these amounts did not affect the recorded balance of the Superannuation Accounts, it rendered the surplus funds unusable to provide any other service or benefit for Plan Members. This effectively provided the Government with an unauthorized contribution holiday, as its statutorily required contributions to the Superannuation Accounts were offset by reductions in its annual expenditures. Plan Members continued to make their regular contributions during this period.
OCA Reasons, paras. 25-26 (AR, Vol. 1, p. 126); Trial Judgment, paras. 94- 97 (AR, Vol. 1, pp. 38-40); Evidence of S. Milne (AR, Vol. 4, pp. 68-74); E/D S. Hamilton (AR, Vol. 3, pp. 155, 168-174, p.191, l. 1-23); (AR, Vol. 6, pp. 20, 35, 72)
24. Having begun to use the surplus in this manner, the Department of Finance rejected a number of reform proposals by the Pension Advisory Committee, a union- management body established pursuant to the PSSA. Such proposals, including a recommendation to invest existing funds in the Accounts externally, would have prevented the Government from continuing to use the surplus to reduce its annual budget deficit and required it to return funds it had already amortized. Instead, Finance proposed that existing funds remain in the Accounts, while future contributions would be placed in a separate fund for market investment. In contrast, Crown corporations that established separate pension funds during this period received a transfer of funds from the Accounts that included a portion of the surplus, to be used for pension purposes.
PSSA 1954, supra, s. 29 (AR, Vol. 7, p. 82); (AR, Vol. 6, pp. 24-26); Evidence of J. Christie (AR, Vol. 3, pp. 77-78, 82-83, 88-93, 97, l. 8-24, 14-27, 12-26, 16- 31); Christie Report (AR, Vol. 10, pp. 26-49); E/D S. Hamilton (AR, Vol. 3, pp. 164-169, 172-173, l. 5-24)
25. During the 1990s, the Government amortized a total of $18.6 billion, with further amounts being amortized after the year 2000. To keep track of the amounts it had - 12 -
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amortized, the Government established a separate account sometimes entitled the Estimation of Pension Adjustments, which was not established by statute. The amortized amount was “booked” into the fiscal framework and applied to effectively reduce the annual pension cost of the Government as disclosed in the Statement of Revenues and Expenses, thus reducing the Government’s overall budget deficit. The amount disclosed in the liabilities section of the Statement of Assets and Liabilities for the Superannuation Accounts was likewise reduced by the amortized amount.
OCA Reasons, paras. 25-26 (AR, Vol. 1, p. 126); Judgment (AR, Vol. 1, pp. 38-40, paras. 94-97); E/D S. Hamilton (AR, Vol. 3, pp. 152, 168, 172-173, l. 8-31, 1-18, 1-32; Evidence of S. Milne (AR, Vol. 4, pp. 68-74, l. 5-32)
26. Senior Treasury Board representatives repeatedly wrote to the Ministry of Finance stating that it was improper to amortize these amounts before a determination was made as to whether employees had an interest in the surplus. Finance agreed to end this practice, although Treasury Board later learned that it had ignored this commitment. The Auditor General’s 1996 Report also raised concerns over this practice, noting it was unclear whether the Government was entitled to the entire surplus.
(AR, Vol. 6, pp. 35-36, 48, 61, 72, 74, 133); E/D. S. Hamilton (AR, Vol. 3, pp. 173-177, 180-186, 191, l. 2-12, 10-8, 10-20)
Bill C-78
27. Bill C-78, which came into force on April 1, 2000, established the Public Service Pension Fund (the “Pension Fund”) to receive all employee and employer contributions as of that date. Instead of being held in the Superannuation Accounts, amounts deposited in the Pension Fund were invested externally in the market. Under C-78, the employer was no longer required to make matching contributions, instead making contributions based on actuarial liability. All benefits for pensionable service prior to April 1, 2000 continued to be paid out of the Superannuation Accounts, although funds could move between the Accounts and an investment fund established for the period prior to April 2000. - 13 -
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OCA Reasons, paras. 30-36 (AR, Vol. 1, pp. 127-129); Public Sector Pension Investment Board Act, S.C., 1999, c. 34, ss. 4, 55(4), 93, 95, 96 (“C-78”) (AA, Vol. 1, Tab 10, pp. 57, 76); (AR, Vol. 7, p. 94); PSSA, supra, ss. 43(3), 44.1 (AA, Vol. 1, Tab 12, pp. 98-99)
28. C-78 also provided for the withdrawal of certain amounts from the Superannuation Accounts. It gave the Minister discretion to debit from the Accounts “amounts” in the surplus that were not estimated to be required to fulfill future pension obligations at the end of a 15 year period, while requiring the removal of any amount over 110% of what was projected to be required to meet pension obligations at the end of this period. The Government relied on C-78 to remove over $28 billion from the Superannuation Accounts between 2000 and 2004, with further amounts being removed afterwards. Due to the previous amortization of these funds, however, this removal had no effect on the Public Accounts. The Government of the day justified the removal of these amounts on the basis that the funds already belonged to it.
Judgment (AR, Vol. 1, pp. 41-44, paras. 100-103); C-78, supra, s. 95(3) (AA, Vol. 1, Tab, 10, p. 76); Evidence of S. Milne (AR, Vol. 4, pp. 78-81, l. 22-10); Milne Report (AR, Vol. 11, p. 36); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1140 (Hon. Marcel Massé) (AA, Vol. 7, Tab 81, p. 221); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1655, 1700 (Hon. John Bryden) (AA, Vol. 7, Tab 81, p. 268-269); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1635 (Hon. Carolyn Parish) (AA, Vol. 7, Tab 81, p. 265)
29. C-78 further provided that, after January 1, 2004, employee contribution rates would no longer be set by legislation but would be set at the discretion of the Treasury Board, subject to certain restrictions. Employees faced a legislated increase to contribution rates of 15-33% between 2000 and 2003. Treasury Board imposed further increases, between 38-60%, for 2005-2013. Mr. Christie, an actuary who testified as an expert on behalf of the Appellants, stated that announced increases in benefits were “very small” in comparison. - 14 -
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OCA Reasons, para. 33 (AR, Vol. 1, p. 128); C-78, supra, s. 55(4) (AA, Vol. 1, Tab 10); Evidence of J. Christie (AR, Vol. 3, pp. 130-138); (AR, Vol. 11, pp. 4, 6, 8); Christie Report (AR, Vol. 9, pp. 136-147, Vol. 10, pp. 79-82)
30. Mr. Christie also noted that the new Funds were in a combined deficit of $672 million by March 31, 2004. He testified that it was highly unusual and contrary to normal funding practice for an employer to be removing surplus from the plans while the funds that are responsible for paying future benefits are in a deficit, all the while imposing substantial contribution increases on employees. This opinion was not challenged or contradicted.
Christie Report (AR, Vol. 9, pp. 138, 142-147); Evidence of J. Christie (AR, Vol. 3, pp. 109, 127-130, 137); (AR, Vol. 11, p. 3); Evidence of S. Milne (AR, Vol. 4, pp. 84-85, l. 4-28); Milne Report (AR, Vol. 11, p. 54)
The Appellants’ Action and the Trial Judge’s Decision
31. The Appellants commenced an action for the return of the surplus to the Accounts, arguing that the Government had breached its trust and fiduciary duties by amortizing and removing the surplus. The Appellants further maintained that C-78 did not extinguish Plan Members’ interest in the surplus as it did not evidence an unambiguous intent to expropriate without compensation. This was confirmed by the Parliamentary Debates in which the Responsible Minister and other Members of Parliament who supported the bill categorically maintained that the Government already owned the entire surplus and thus there was no need to legislate.
OCA Reasons (AR, Vol. 1, p. 129, paras. 37-39)
32. The trial judge dismissed the Plan Members’ action. First, the trial judge found that there were no assets in the Accounts, stating that the Accounts were merely “legislated ledgers” to track the Government’s pension obligations. Second, the trial judge concluded that the PSSA established a “complete code”, such that the Government’s only obligation was to fulfill the requirements of the Act. Third, the trial judge rejected the argument that Plan Members had an interest in the surplus that was - 15 -
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protected by a fiduciary duty, ruling that the Government had no discretion with respect to the contributions and was bound by its public law duties. Finally, the trial judge ruled that, even if Plan Members had an interest in the surplus, C-78 extinguished it.
Trial Judgment (AR, Vol. 1, pp. 61-62, 68-72, 78-91, 93-97, paras. 157-159, 177-189, 204-206, 209-239, 242, 249-262); OCA Reasons (AR, Vol. 1, pp. 130- 131, paras. 42-45)
The Ontario Court of Appeal’s Decision
33. The Ontario Court of Appeal dismissed the appeal, although it overturned the trial judge on several key points. The Court of Appeal agreed with the trial judge that there were no assets in the Accounts, dismissing the repeated use of the term “assets” in the legislation and stating that the “sloppy use of language that cannot change […] reality”. The Court of Appeal, however, rejected the trial judge’s conclusion that the PSSA established a “complete code”, noting that it did not deal with the pension surplus, the very matter at issue in the present case. The Court also rejected the basis for the trial judge’s conclusion that the Government was not subject to a fiduciary duty to Plan Members, which rested on the Respondent’s claim that it had no discretion in its treatment of the surplus. Instead, the Court of Appeal relied primarily on its previous conclusion that there were no assets in the Accounts, and thus no property with respect to which a fiduciary duty could arise.
OCA Reasons (AR, Vol. 1, pp. 132, 139-140, 143-146, paras. 47, 49, 71-75, 84- 92)
34. The Court of Appeal also refused to impose a constructive trust on the basis of unjust enrichment. The Court of Appeal found that, while the Government’s actions appeared to be to the detriment of Plan Members, the Government had not been enriched by its amortization of the surplus, given that “whatever benefit there was to such actions enured to all Canadian taxpayers”. Finally, the Court found that Parliament intended to expropriate the Plan Members’ interest in the surplus when it debited from the Accounts the amounts the Government had previously amortized.
OCA Reasons (AR, Vol. 1, pp. 149-152, paras. 106-107, 109-112) - 16 -
Appellants’ Factum Statement of Questions in Issue
PART II – STATEMENT OF QUESTIONS IN ISSUE
35. The Appellants raise the following issues before this Court:
a. What is the appropriate standard of review?
b. Did the Courts below err in concluding that there were no assets in the Superannuation Accounts?
c. Did the Courts below err in concluding that the Plan Members’ interest in the Superannuation Accounts was not protected by a fiduciary duty?
d. Did the Courts below err in concluding that the Plan Members’ interest in the Superannuation Accounts was not protected by a constructive trust?
e. Did the Courts below err in concluding that C-78 extinguished the Plan Members’ interest in the surplus?
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PART III – STATEMENT OF ARGUMENT
A. Standard of Review
36. The standard of review on questions of law is correctness. An appellate court is thus free to replace the opinion of the trial judge with its own. A trial judge’s findings of fact are reviewable if the judge made a "palpable and overriding error". In the present case, questions involving the interpretation of the PSSA and C-78, including the determination as to whether the PSSA establishes that the Accounts held assets, whether the Government owes a fiduciary duty that was subsequently breached, whether the Government was unjustly enriched, and whether C-78 extinguishes any interest held by Plan Members in the surplus, are questions of law to be reviewed on a standard of correctness.
Housen v. Nikolaisen, [2002] 2 S.C.R. 235 at paras. 8 and 10 (AA, Vol. 4, Tab 49)
B. The Courts Below Erred in Determining that there were no Assets in the Accounts
37. The Court of Appeal’s conclusion that the Government did not owe Plan Members a fiduciary duty rests heavily on its finding that there were no assets in the Superannuation Accounts, which it concluded were merely “legislated ledgers”. Like the trial judge, the Court of Appeal believed that the purpose of the Accounts was simply to track the contributions to the Plans and provide an estimate of the Government’s liability to provide the benefits promised by the Plans. As such, there was no borrowing from the Superannuation Accounts.
OCA Reasons at paras. 50, 57 (AR, Vol. 1, pp. 132-133, 135); Trial Judgment (AR, Vol. 1, pp. 83-85, paras. 221-225)
38. The Court of Appeal’s conclusion, however, directly conflicts with the clear language of the Superannuation Acts, the information presented to Parliament, to - 18 -
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employees, and to various Government departments, and the uncontradicted expert evidence at trial, which explained in detail how the Accounts function. Simply put, Plan Members and the Government made real contributions to the Accounts in each year; because these amounts were not invested externally, however, and thus remained available for the Government’s use, the balance in the Superannuation Accounts, including any unamortized surplus, appeared as a Government liability in the Public Accounts. Accordingly, the assets in the Accounts were a receivable from the Government of Canada.
39. This conclusion comports with this Court’s recent decision in Ermineskin, which detailed the “forced borrowing” that took place as the Government made use of funds held in the CRF on behalf of two First Nations bands. Ermineskin demonstrates that the Court of Appeal was wrong to conclude that the use of the term “assets” in various statutory provisions was merely the “sloppy use of language”. Moreover, Ermineskin renders untenable the Court of Appeal’s explanation that all funds deposited into the CRF lose their distinct character and become public money available for any public purpose.
Ermineskin Indian Band and Nation v. Canada, [2009] S.C.J. No. 9 at paras. 61, 127-128 (“Ermineskin”) (AA, Vol. 2, Tab 33); OCA Reasons (AR, Vol. 1, p. 132, para. 49)
The PSSA and the Public Pensions Reporting Act Expressly State that the Superannuation Accounts Hold Assets
40. The PSSA, both before and after C-78, expressly states that the Superannuation Accounts hold assets and operate as funded accounts. The PSSA makes repeated reference to “amounts” being “paid into” and “paid out” of the Accounts. Likewise, the PSSA 1954 required the Minister to lay before Parliament an actuarial report “containing an estimate of the extent to which the assets of the said Account are sufficient to meet the cost of benefits payable under the Act”. Similar language is found in the Public - 19 -
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Pension Reporting Act (“PPRA”), which requires the Minister to cause a “certification of assets” in the Accounts. [all emphasis added]
PSSA 1954, supra s. 4(1), 6-7, 23(2), 32(1), 31, 28(3), 34, 33 (AR, Vol. 7, pp. 53, 57-60, 76, 81, 86-87); PSSA, supra, s. 5(1), 7-8, 37(2), 44(1), 43, 40(1), 46, 45 (AA, Vol. 1, Tab 12, pp. 83 and ff.); Public Pensions Reporting Act, R.S.C. 1985, c. 13 (2nd Suppl.) (AR, Vol. 8, p. 189, ss. 8-9)
41. C-78 did not alter the above framework. The PSSA continued to employ the same language noted above, although now with reference to both the Accounts and the newly established Pension Funds. In fact, C-78 amended the PSSA to make explicit reference to the PPRA, such that section 45 of the PSSA now requires “an assets report on the state of the Superannuation Account” and the new Pension Funds be tabled in Parliament. It is significant that Parliament has continued to use the term “assets” in its numerous amendments to the legislation, which is broadly defined as property, an item that is owned, or “entries on a balance sheet showing the items of property owned”.
PSSA, supra, s. 5(1), 43, 44(14), 44.2(3), 45, 46 (AA, Vol. 1, Tab 12, pp. 83 and ff.); Black’s Law Dictionary, 8th ed., s.v. “assets” (AA, Vol. 7, Tab 73); Concise Oxford English Dictionary, 11th ed., s.v. “assets” (AA, Vol. 7, Tab 74)
42. The Court of Appeal, however, rejected this explicit legislative language, stating: “it is clear that the Superannuation Accounts do not hold assets and the sloppy use of language cannot change that reality”. With respect, the Court of Appeal’s conclusion constitutes a remarkable departure from the well-established presumption that legislation is accurate and well-drafted. It is only in limited circumstances – such as where the words employed by Parliament are meaningless, contradictory, incoherent, or lead to a result that could not have been intended – that these presumptions are rebutted and the Courts have jurisdiction to “correct mistakes” in legislative drafting.
Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 5th ed. (Markham: Lexis Nexis, 2008) (“Sullivan”) at 172-175, 205-207 (AA, Vol. 7, Tab 78); OCA Reasons (AR, Vol. 1, p. 132, para. 49) - 20 -
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43. None of these conclusions are defensible in the present case. As set out below, Parliament’s use of the term “assets” fits coherently with the way private pension funds are structured, the interpretation historically given to these provisions within Government, the expert evidence in this case, and the expectation one would have of public accounts for monies held to the benefit of others. Indeed, far from suggesting that the use of the term “assets” in the PSSA led to an incoherent or meaningless result, the Court of Appeal acknowledged that its interpretation of the legislation is “counterintuitive”, failing to identify any principles of statutory interpretation that support its conclusion.
OCA Reasons (AR, Vol. 1, p. 133, para. 51)
44. The broader legislative context supports the interpretation that the Accounts held assets. For instance, the establishment of the new Pension Funds in C-78 reveals that Parliament considered the Accounts to hold assets that could be removed from the Accounts. C-78 also permits the costs of administering the Act in respect of pre-April 2000 service to be “paid out of the Superannuation Account” and allows for funds to be transferred between the Accounts and Superannuation Fund established to allow investment of funds in respect of this period. The same is true of the transfer of assets that took place between the Accounts and the new pension plans established for entities such as Local Airport Authorities, NAV Canada and Canada Post, each of which received past contributions, including a portion of the surplus, when they established separate pension plans. This structure, and C-78’s removal of the surplus from the Accounts, would be impossible if the Accounts held no assets.
(AR, Vol. 8, p. 215); Evidence of J. Christie (AR, Vol. 3, pp. 77-98, 101-107); Christie Report (AR, Vol. 10, pp. 26-49; PSSA, supra, ss. 43(3), 44.1 (AA, Vol. 1, Tab 12, pp. 98, 101)
The Historical Record Supports the Conclusion that the Accounts Held Assets
45. The Court of Appeal concluded that, despite clear statutory language on this point, the evidence on the record demonstrates that the Accounts did not hold assets. This assessment of the nature of the Accounts, however, was not historically shared by - 21 -
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either the Government or other entities involved in reviewing this process. To the contrary, the record points to a clear and consistent understanding within Parliament and Government that the Accounts held assets. This evidence can be relied on to form the legal context in which the Plans are interpreted.
Schmidt v. Air Products Canada Ltd., [1994] 2 S.C.R. 611 (“Schmidt”) at para. 133 (AA, Vol. 6, Tab 66)
46. First, the conclusion that the Accounts held assets is consistent with the information tabled before Parliament. For instance:
a. In 1976, the Government tabled a document titled “Basic Facts About Pensions in the Public Service of Canada”. It stated that the basic pensions provided under the PSSA are financed on a “fully funded basis … in accordance with the same actuarial principles as those which generally apply to private sector pension plans.”
b. In the 1991 Federal Budget, the Government expressly acknowledged that the Superannuation Accounts were “trust” accounts maintained by the Government for its employees. This point was reiterated in the 1991 Auditor General’s Report to Parliament.
c. On February 24, 1992, the President of the Treasury Board introduced Bill C-55, which merged each Superannuation Account with its respective Supplementary Retirement Benefits Account. These Supplementary Accounts had been established in 1970 to provide for the indexing of benefits, but had not been fully funded. In Parliament, the President of Treasury Board expressed the purpose and effect of such a change as follows:
The bill also proposed that all plans should henceforth be operated on a fully funded basis … thus consolidating the assets and the obligations in respect of each group. This would clarify the financial situation of the programs and make sure they operate on a basis that is consistent with private sector standards. The full funding of all benefits would also help to reassure employees and pensioners about the security of their benefits. [Emphasis added]
d. Asset Reports for each of the Superannuation Accounts were prepared by the Comptroller General and tabled in Parliament, as - 22 -
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required by the PPRA. In every case, the Asset Report certified the “assets” of the plan as the amount in the Account.
e. Annual Reports were also tabled in Parliament by the President of the Treasury Board, as required by statute. In the Report on the public service plan for the year-end March 31, 2004, the Auditor General certified that the financial statements fairly disclosed “the net assets available for benefits”. The financial statements report that the “net assets available for benefits” include the amount of the Public Service Superannuation Account. The Balance in the Account is reported as an asset of the plan.
(AR, Vol. 5, pp. 10-11); see also Evidence of J. Christie (AR, Vol. 3, pp. 23- 25, l. 26-4); (AR, Vol. 4, p. 170); see also (AR, Vol. 4, pp. 233, 240); House of Commons Debates (Hansard), February 24, 1992, p. 7486 (AA, Vol. 7, Tab 80); see also Evidence of J. Christie (AR, Vol. 3, pp. 21-22, 24-28, l. 1-32, 2-6); (AR, Vol. 7, pp. 22-29); see Evidence of J. Christie (AR, Vol. 3, pp. 68- 70, l. 8-27); (AR, Vol. 10, pp. 194-195)
47. Second, the conclusion that the Accounts held assets also fits with Government statements that have consistently advised employees and other government departments that the Accounts are financed on a fully-funded basis. For instance:
a. Upon joining the public service, all employees are provided with a booklet entitled “Your Superannuation Plan”, which claims to provide a “factual, concise, explanation of the major terms of the Public Service Superannuation Act.” This booklet states that the basic pensions are financed on a fully-funded basis;
b. A 1965 paper entitled “Management of the Public Service Superannuation Account” distributed by the Office of the Comptroller General to all departments and agencies stated that “[t]he Superannuation Account is operated on principles of funding generally accepted for employee-employer pension plans”;
c. In a January 1970 paper released in connection with the introduction of the indexing provisions of the PPSA, Treasury Board described the Account as a fund “maintained by the federal government and its employees to meet the cost of pensions”. The paper stipulated that “[t]he balance in the Superannuation Account at any point in time represents the assets of the plan at that time just as surely as the portfolio held by a trusteed pension fund is a measure of the assets of that fund”; - 23 -
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d. In 1989 the Comptroller-General of Canada, the “Senior Government Accountant”, sent a Circular to all Government Financial Officers explaining that the ownership of these non- budgetary accounts “remains with the participants in the plan or program, at least for the portion they personally contributed and any interest applicable thereon”; and
e. In 1995 Treasury Board issued a new Policy on Specified Purpose Accounts, noting the need to ensure that any “fiduciary duties and responsibilities are fully and adequately discharged”. The Policy further stated that, unlike budgetary accounts, non-budgetary accounts, such as the Superannuation Accounts, are “principally, money that belongs to and is to be repaid to (or used for the benefit of) identifiable outside organizations and individuals”.
(AR, Vol. 5, pp. 37, 82-84); (AR, Vol. 4, p. 250); (AR, Vol. 5, p. 5); Comptroller General, 1989 Circular (AR, Vol. 4, p. 178); 1995 Treasury Board Policy (AR, Vol. 4, pp. 202-203, 214); Milne Report, June 2005 (AR, Vol. 11, pp. 19-25); Your Superannuation Plan (AR, Vol. 5, pp. 82-84); Evidence of S. Milne (AR, Vol. 4, pp. 19-25, 38-39, l. 22-29, 12-25)
48. Third, the trial judge was also provided with numerous examples of internal Government documents, including communications at the highest levels of Government, that consistently treated the Accounts as funded accounts with assets. Indeed, it was only in response to this litigation that the Government first took the position that the Accounts did not contain assets.
(AR, Vol. 5, p. 104); (AR, Vol. 6, pp. 1, 37, 66, 77); (AR, Vol. 6, pp. 115, 119- 124); (AR, Vol. 6, pp. 166, 174); E/D S. Hamilton (AR, Vol. 3, pp. 158-160, l. 2- 32)
The Expert Evidence at Trial Confirms the Existence of Assets
49. The two experts who testified at trial regarding the funding of the pension plans and the accounting treatment of the Superannuation Accounts also confirmed that the plans were funded and held assets. This evidence was not contradicted by other expert - 24 -
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evidence at trial, given the Respondent’s decision not to call any expert witness to challenge it.
Evidence of J. Christie (AR, Vol. 3. p. 13, l.13-17); Evidence of S. Milne (AR, Vol. 4, p. 66, l. 4-21)
50. John Christie, an actuary with significant pension experience, testified that the Accounts represent real resources that were set aside for pension purposes. He explained that employees gave up real income in order to make their pension contributions. Were employees not required to make these contributions, they would have had 7.5% more in each pay period with which to purchase goods or invest. Moreover, the employer contribution and interest credits to the Accounts were included in the employer’s budgetary expenses in each year and represent real resources that were set aside for pension purposes.
Evidence of J. Christie (AR, Vol. 3, pp. 2-3, 7, 36, l. 2-32, 11-32); Christie Reply Report (AR, Vol. 10, p. 96); see also E/D S. Hamilton E/D (AR, Vol. 3, pp. 151, 155-156, l. 10-15, 8-17, l. 1-21)
51. Mr. Christie further explained that the federal pension plans function like private sector defined benefit plans. While the Accounts do not hold Canada Bonds that could be sold on the market, the amounts in the Accounts are treated as if they were invested in Canada Bonds and the net effect on the Public Accounts would have been the same had the Government formally issued a bond. The assets in the Accounts are therefore as secure as Canada Bonds; they are promises to pay to the Accounts the amounts recorded therein.
Evidence of J. Christie (AR, Vol. 3, pp. 13, 16-20, 28-36, l. 13-16, 10-8, 2-6, 10-32); Christie Reply Report (AR, Vol. 10, p. 93); see also E/D Hamilton (AR, Vol. 3, pp. 150-151, l. 7-8)
52. Mr. Christie also testified that, since at least the mid-1950s, the actuarial reports have consistently disclosed an actuarial balance sheet comparing the assets and - 25 -
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liabilities of the pension plans. The difference between the assets and liabilities was disclosed as either a deficit or a surplus. As with the assets report, this would be unnecessary if the only purpose of the actuarial liabilities had been to track the accrued liability.
Evidence of J. Christie (AR, Vol. 3, pp. 39-41, 68, l. 3-32); Christie Reply Report (AR, Vol. 10, p. 99)
53. Scott Milne is a chartered accountant and former Principal with the Office of the Auditor General of Canada. From 1987 to 1993, he personally supervised the audit of the Superannuation Accounts within the Public Accounts of Canada. He testified that “[t]he pension accounts are real. They are specified purpose accounts that have been created under the authority of the Financial Administration Act. They are funded with real assets, being receivables from the Government, and have real surpluses.”
Evidence of S. Milne (AR, Vol. 4, pp. 2-9, l. 17-3); Evidence of S. Milne (AR, Vol. 4, p. 66, l. 4-21)
54. Mr. Milne further explained that the Government has a single bank account, the CRF. None of the specified purpose accounts have a “separate pot of money”, whether the account is a Superannuation Account or a trust account. Rather, the Government borrows the net amount of employee and employer contributions, plus interest, minus the benefit payments. The result is that the Government records a liability to the Superannuation Accounts, as it does for other non-budgetary accounts.
Evidence of S. Milne (AR, Vol. 4, pp. 46-54, l. 20-10); Milne Report, June 2005 (AR, Vol. 11, pp. 16-17, 23-24); Compendium of Documents for S. Milne’s Testimony (AR, Vol. 11, p. 147); (AR, Vol. 4, p. 231); See also Ermineskin, supra, at paras. 61, 127-128 (AA, Vol. 2, Tab 33)
55. Mr. Milne further stated that the federal pension plans were consistently accounted for in the Public Accounts on the basis that they were funded. Unlike budgetary accounts, such as the EI Account, the Superannuation Accounts are not - 26 -
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consolidated with the Government operations; as such, contributions and payments involving Plan Members are not treated as part of the Government’s revenues and expenditures. The Accounts disclose employee contributions, employer contributions, interest earned and the balance at the end of fiscal year. It is for this reason that the pension plans were described as being funded by the Government, the Auditor General and many other outside sources.
Evidence of S. Milne (AR, Vol. 4, pp. 46-54, 57-66, l. 20-10, 2-21); Milne Reply Report (AR, Vol. 11, pp. 120-123); CSN v. Canada, supra, at para. 74 (AA, Vol. 2, Tab 29)
56. The Courts below failed to provide a reasonable basis for rejecting this evidence. For instance, the Courts state that there is no evidence that the Government borrowed the amounts in the Accounts or that it owed a debt to the Accounts. This conclusion, however, is directly contradicted by the Public Accounts, which identified the value in the Superannuation Accounts, including unamortized portions of the surplus, as a liability of the Government of Canada. Moreover, during examinations for discovery, Sharon Hamilton, representative for the Government, acknowledged that the funds in the Accounts are effectively borrowed, stating that the Government has “given the Accounts an IOU”. The Courts’ analysis to the contrary leads to the unreasonable conclusion that the Plans are funded on a ‘pay-as-you-go’ basis, a proposition for which there is no support.
OCA Reasons (AR, Vol. 1, p. 135, paras. 57-58); E/D S. Hamilton (AR, Vol. 3, p. 151); see also (AR, Vol. 4, p. 230)
57. Likewise, the Courts below misread key elements of the experts’ testimony. The trial judge notes that the experts accepted that the Government had met its statutory obligations to make contributions to the Accounts, while disregarding the experts’ explanation that the only way this could have taken place without money actually being transferred into the Accounts was through the borrowing process described above. Simply put: if the Government did not borrow the amounts in the Superannuation - 27 -
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Accounts, the only conclusion available is that it violated the PSSA by failing to contribute to the Accounts in the first place. This cannot be the case.
OCA Reasons (AR, Vol. 1, p. 135, paras. 57-58); Trial Judgment (AR, Vol. 1, pp. 71, 89, at paras. 184, 238); Evidence of J. Christie (AR, Vol. 3, pp. 21-22, 24-34, 142, 146-147, l. 1-30, 18-32, 1-32, 2-20); Christie Reply Report (AR, Vol. 10, p. 93)
The Court of Appeal’s Conclusion is Contradicted by this Court’s Decision in Ermineskin
58. In attempting to reconcile its conclusion that there were no assets in the Accounts with the fact that real contributions had been made by both employees and employers, the Court of Appeal stated that “[o]nce monies become part of the CRF, they are public monies to be used by the Government for public purposes”. This Court’s recent decision in Ermineskin renders this position impossible to sustain.
OCA Reasons (AR, Vol. 1, pp. 133, 135-137, paras. 53, 59-63); Ermineskin, supra, paras. 2, 11, 21, 60-61, 92-94, 126-128 (AA, Vol. 2, Tab 33); Ermineskin Band and Nation v. Canada, [2006] F.C.J. No. 1961 (C.A.) at paras. 67-68, 119-120 (AA, Vol. 2, Tab 34); Ermineskin Band and Nation v. Canada, [2005] F.C.J. No. 1992 (F.C.) at paras. 234, 237, 247, 259-267 (AA, Vol. 3, Tab 35)
59. First, Ermineskin states that funds held in the CRF on behalf of a particular group are borrowed by the Government while on deposit in the CRF, but remain distinct property to be administered on behalf of that group. Ermineskin involved a claim by two First Nations bands that the Government had breached its fiduciary duties by failing to properly invest funds held in the CRF on their behalf. This Court ruled that, in the circumstances of that case, the Government had satisfied its fiduciary duty by paying interest for the funds it held on behalf of the bands. The Court explained that “[t]he Crown is borrowing the band’s money held in the CRF”, noting that this “forced - 28 -
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borrowing” was a necessary outcome of the legislative framework that required these funds to be deposited and maintained in the CRF.
Ermineskin, supra, at paras. 126-128 (AA, Vol. 2, Tab 33)
60. Second, relying on subsection 21(1) of the FAA, this Court in Ermineskin ruled that funds held as “public money” for a specified purpose pursuant to section 2 of the FAA can only be paid out of the CRF for the purposes provided for in the applicable statute. The Court explained: “Parliament could not have intended that the Crown retain a residual power to pay out band moneys from the CRF without consent of the bands for purposes not referred to in the Indian Act”. The same must be true in the present case, where Parliament established a mandatory contribution scheme for the employer and only authorized the payment of funds out of the Superannuation Accounts for the provision of benefits. The Court of Appeal’s ruling to the contrary undermines the integrity of all funds contributed to the Government for a specified purpose, whether trust or otherwise.
Ermineskin, supra, at paras. 121-122 (AA, Vol. 2, Tab 33); Financial Administration Act, s. 2, 21(1) (AA, Vol. 1, Tab 6)
61. The Court of Appeal sought to distinguish Ermineskin on the basis that the Government in that instance had a fiduciary duty to the First Nations bands. With respect, this position rests on circular logic, given that the Court of Appeal’s conclusion that there was no fiduciary relationship in the present case is based primarily on its finding that there were no assets in the Accounts. In any event, funds paid into the CRF for a specified purpose are all subject to the same treatment under the FAA, regardless of whether they were received pursuant to an Act, trust, treaty or contract. The Ontario Court of Appeal’s ruling in Authorson confirms that funds held in a specified purpose account within the CRF can be the subject of a fiduciary duty.
OCA Reasons (AR, Vol. 1, pp. 133, 135-137, 144, paras. 53, 59-63, 87); FAA, s. 2, 21(1) (AA, Vol. 1, Tab 6); Authorson v. Canada, [2002] O.J. No. 962 (Ont. C.A.) at paras. 71-76 (AA, Vol. 1, Tab 19) - 29 -
Appellants’ Factum Statement of Argument
The Conclusion that there were no Assets in the Accounts is based on a Misunderstanding of how the Accounts Function
62. The conclusion of the Courts below on this issue is based on a fundamental misunderstanding of how the Accounts function and the various liabilities involved in the present case. Contrary to the Court of Appeal’s assertion, the Accounts do not represent an “estimate of the Government’s liability to provide the benefits promised by the Plans”. Rather, as the Act requires, and the Public Accounts clearly demonstrate, the Accounts represent the value of past contributions by employees and employers, plus interest, minus benefits paid out. This balance, which includes “budgetary” contributions made by the Government in previous years, is identified as a liability of the Government in the Public Accounts. It is for this reason that payments made from the Superannuation Accounts are treated as non-budgetary expenditures.
OCA Reasons (AR, Vol. 1, pp. 124, 132, paras. 21, 50); Trial Judgment (AR, Vol. 1, p. 80, at para. 210); Christie Evidence (AR, Vol. 3, pp. 34, 142-143, l. 20-32, 12-17); Milne Evidence (AR, Vol. 4, pp. 39-49, l. 3-32); Public Accounts, 1996-1997 (AR, Vol. 11, p. 142)
63. The Government’s liability to the Accounts for their balance must thus be distinguished from the liability of the Plans themselves for future benefits payable to Plan Members, which is estimated by actuarial report every three years. Indeed, it is the difference between these two amounts that constitutes the actuarial surplus or deficit in the Accounts. Given that the actuarial reports estimate the liability of the Plans, the Superannuation Accounts would serve no purpose if they did not hold assets available to pay for future benefits.
Evidence of J. Christie (AR, Vol. 3, pp. 39-41, l. 3-32); Evidence of S. Milne (AR, Vol. 3, pp. 177-178, Vol. 4, pp. 47-48, 65-74, l. 2-32, 30-32)
64. The evidentiary record demonstrates that contributions to the Accounts were real. Whereas pension benefits to Plan Members are generally treated as non-budgetary expenditures, indexing benefits paid with respect to periods in which indexing - 30 -
Appellants’ Factum Statement of Argument
contributions were not made are recorded as budgetary expenditures, given that no money had previously been set aside for this purpose. Similarly, it is noteworthy that Public Service Corporations also made annual contributions to the Accounts, something which would not have been necessary if the Accounts held no assets and they were merely intended to track Government liability. The tangible nature of these contributions was confirmed by the fact that entities such as Local Airport Authorities, Canada Post and NAV Canada each received the value of their past contributions, including a portion of the surplus, when they established their own separate pension plans.
(AR, Vol. 8, p. 215); Evidence of J. Christie (AR, Vol. 3, pp. 77-98, 101-107); Christie Report (AR, Vol. 10, pp. 26-49)
65. To this end, the fact that “there was no separate pool of assets” that could be “liquidated” to pay for pensions is irrelevant. As the expert evidence outlined, this situation is analogous to accounts within a chartered bank, which hold receivables to the credit of each customer. Moreover, the debates surrounding the removal of the surplus by C-78 make clear that the Accounts held “money” and were not merely ledger items. In any event, regardless of how the Government held the property surrendered by Plan Members, the contributions remained under its control and available for its use. While a separate pool of funds may be necessary to establish certainty of subject matter for the purpose of a trust, this is not so for other equitable obligations. As this Court has emphasized, “equity looks to substance rather than form”.
Milne Reply Report (AR, Vol. 11, pp. 124-125); Christie Reply Report (AR, Vol. 10, pp. 92-93); Evidence of J. Christie (AR, Vol. 3, pp. 34-35); Pacific National Investments v. Victoria (City), [2004] 3 S.C.R. 575 (“Pacific National”) at paras. 13, 14 (AA, Vol. 5, Tab 59); Garland v. Consumers’ Gas Company, [2004] 1 S.C.R. 629 (“Garland”) at paras. 31-32 (AA, Vol. 3, Tab 39); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1140 (Hon. Marcel Massé) (AA, Vol. 7, Tab 81, p. 221); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1655, 1700 (Hon. John Bryden) (AA, Vol. 7, Tab 81, pp. 268-269); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1635 (Hon. Carolyn Parish) (AA, Vol. 7, - 31 -
Appellants’ Factum Statement of Argument
Tab 81, p. 265); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1200, 1235, 1255, 1340, 1640 (various opposition Members of Parliament) (AA, Vol. 7, Tab 81, pp. 223, 228, 231, 238, 265)
66. Finally, the Court of Appeal’s conclusion is puzzling in light of its other findings. The Court acknowledged the “discretion that the Government exercised in managing the credited amounts in the Superannuation Accounts”, concluding that “the Government made the decision to deal with the actuarial surplus by amortizing it”. The Court also agreed that the amortization of the surplus appeared to have a detrimental impact on Plan Members, given the subsequent increases in pension contributions. Having made these findings, it is illogical to suggest that there was no property with respect to which a fiduciary obligation could arise.
OCA Reasons (AR, Vol. 1, pp. 144, 149, at paras. 85, 107)
C. The Government Owes Plan Members a Fiduciary Duty
67. The Government owes Plan Members a fiduciary duty on the basis of its role as a pension plan administrator, which has been recognized at common law as imposing these obligations. The present case also satisfies the established factors for imposing an ad hoc fiduciary obligation: the Government had undertaken to act in the Plan Members’ best interests with respect to their pension contributions; the Plan Members were in a vulnerable relationship in which the Government had significant discretion; and the Government could exercise this discretion to affect the Plan Members’ interests. Importantly, the Plan Members’ interests were not limited to their receipt of pension benefits, but extended to ensuring that their contributions were maintained to be used for pension purposes. As such, the Government violated its fiduciary duty by amortizing and later removing the surplus from the Accounts.
68. In this context, the Government is acting as employer and as pension plan administrator, both roles involving the performance of private law functions. This is not a situation where the Government is called upon to balance competing interests of - 32 -
Appellants’ Factum Statement of Argument
different segments of the public, such that the imposition of a fiduciary relationship would be inappropriate.
The Government, as Plan Administrator, Acts in a Recognized Fiduciary Role
69. With respect, the Court of Appeal erred in failing to find that the Government owed Plan Members a fiduciary duty in its role as plan administrator. The fiduciary position of pension plan administrators has been codified in both provincial and federal pension benefits legislation. Moreover, it has been established that a plan administrator at common law will likewise have a fiduciary duty to beneficiaries. Professor Gillese (now Justice Gillese) has stated:
[T]he hallmarks of a fiduciary relationship are reasonable reliance and vulnerability; an imbalance of power that must not be exploited by the fiduciary for his or her own benefit.
Applying these characteristics to the administrator – Plan Member relationship, it seems clear that, at common law, the registered administrator of a pension plan is in a fiduciary relationship with Plan Members. The administrator has the discretionary power to affect the legal interests of Plan Members through its responsibility for the management of the plan and the fund. The Plan Members reasonably rely on the administrator to protect the value of the fund and the entitlements under the plan. [emphasis added]
Pension Benefits Standards Act, 1985, 1985, c. 32, (2nd supp.) at s. 8(3) (AA, Vol. 1, Tab 8); Pension Benefits Act, R.S.O., 1990 c. P.8 at s. 22(1) (AA, Vol. 1, Tab 7); Eileen Gillese, “The Fiduciary Liability of the Employer as Pension Plan Administrator”, (Paper presented at Canadian Institute Conference, November 18, 1996) (AA, Vol. 7, Tab 76) .
70. Significantly, the Federal Court in Ault v. Canada has already established that a fiduciary duty exists in the context of the PSSA. In doing so, the Federal Court acknowledged the reliance Plan Members properly place in the Government to administer the pension plan in their best interests. Likewise, in another proceeding in Ault where a negligent misrepresentation claim was raised, the Ontario Court of Appeal confirmed that the Government was not only the employer of the employees in question, - 33 -
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but also the administrator of that pension plan. As such, it owed additional duties to the plan members based on the “special relationship” between an administrator of a pension plan and the plan members.
Ault v. Canada, [2003] F.C.J. No. 1461 at para. 35 (AA, Vol. 1, Tab 18, p. 207); Ault v. Canada, 2011 ONCA 147 at para. 36 (AA, Vol. 1, Tab 18, p. 208.2)
71. In the present case, the Court of Appeal erred in dismissing this argument on the basis that the Plans in question were not subject to regulatory oversight. Most modern pension legislation imposes a fiduciary standard of care either explicitly or implicitly. These standards, however, merely codify the common law; they set out the plan administrator’s fiduciary role for greater certainty, but are not the source of that obligation. For instance, a fiduciary duty on plan administrators has been recognized in both Ontario and Saskatchewan, despite the fact that Ontario’s legislation does not expressly impose this duty while Saskatchewan’s does. Requiring a codified standard would allow plan administrators to avoid fiduciary duties based on small differences in statutory language, despite the fact that the underlying relationship is the same.
Ontario Pension Benefits Act, R.S.O. 1990, c.P.8, s. 22(1) (AA, Vol. 1, Tab 7); Burke v. Hudson's Bay Co., [2010] S.C.J. No. 34 at para. 85 (AA, Vol. 1, Tab 24); Re Indalex, [2011] O.J. No. 1621 (C.A.) at para. 129 (AA, Vol. 6, Tab 64); Saskatchewan Pension Benefits Act, 1992, c.P.6, ss. 11(2)(a) (AA, Vol. 1, Tab 14)
72. Moreover, there is no principled distinction between the Government’s duties as administrator in Ault, where it was held to be a fiduciary, and those involved in the present case. In both instances, the duty arises on account of the Government’s role in administering a pension plan in its private capacity as an employer. With respect, it would be illogical to conclude that the same administrator would have a fiduciary duty in one case but not the other.
- 34 -
Appellants’ Factum Statement of Argument
The Test for a Fiduciary Relationship
73. Apart from its established role as pension plan administrator, the Government also satisfies the test for an ad hoc fiduciary. A fiduciary relationship exists where one party has undertaken to act in another party’s best interests and can exercise discretion over a legal or substantial practical interest of the second party. The established categories of relationships that have been characterized as fiduciary in nature are not exhaustive and can be added to when the established test is met.
Alberta v. Elder Advocates of Alberta Society, [2011] S.C.J. No. 24 (“Elder Advocates”) at para. 36 (AA, Vol. 1, Tab 15); Hodgkinson v. Simms, [1994] 3 S.C.R. 377 at paras. 30, 32 (AA, Vol. 4, Tab 48); Lac Minerals Ltd. v. International Corona Ltd., [1989] 2 S.C.R. 574 at 599 (AA, Vol. 5, Tab 52); Frame v. Smith, [1987] 2 S.C.R. 99 at 136, per Wilson J. (AA, Vol. 3, Tab 37)
74. This Court has identified the following factors that must be present to impose a fiduciary relationship: 1) an undertaking by the fiduciary to act in the best interests of the alleged beneficiary; 2) a defined person or class of persons vulnerable to the fiduciary’s control; and 3) a legal or substantial practical interest of the beneficiary that may be adversely affected by that control. These same factors are to be considered to determine whether a government is subject to a fiduciary obligation. Such duties are most likely to be imposed on a government “where the relationship is akin to one where a fiduciary duty has been recognized on private actors”.
Frame v. Smith, supra, at 136 (AA, Vol. 3, Tab 37); Authorson v. Canada, supra, at 68-69, 71, 76 (AA, Vol. 1, Tab 19); Hodgkinson, supra, at paras. 32, 37 (AA, Vol. 4, Tab 48); Elder Advocates, supra, paras. 26, 36, 48 (AA, Vol. 1, Tab 15); Guerin v. Canada, [1984] 2 S.C.R. 335 (AA, Vol. 3, Tab 41); Harris v. Canada, [2001] F.C.J. No. 1876 at para. 178 (AA, Vol. 3, Tab 43)
- 35 -
Appellants’ Factum Statement of Argument
A Fiduciary Obligation is Established in the Present Case
i. Undertaking to Act in the Plan Members’ Interests
75. In Elder Advocates, this Court held that a government may be found to owe a fiduciary duty, and thus to have given an undertaking to act in the Plan Members’ interests, where there is a “strong correspondence” with one of the traditional categories of fiduciary duty. In the present case, as in K.L.B. v. British Columbia, the undertaking to act arises from the relationship between the parties. As discussed above, the strong correspondence is established by the Government’s role as pension plan administrator. This is particularly the case where the statute establishing the Plan requires employer contributions and provides no mechanism for these contributions to be used for any purpose other than the provision of pension benefits.
Elder Advocates, supra, para. 46 – 47 (AA, Vol. 1, Tab 15); K. L. B. v. British Columbia, [2003] 2 S.C.R. 403, para. 41 (AA, Vol. 4, Tab 51); Galambos v. Perez, [2009] 3 S.C.R. 247 at para. 84 (AA, Vol. 3, Tab 38); E/D S. Hamilton (AR, Vol. 3, p. 155, l. 8-17)
76. The Government made repeated representations that the amounts in the Accounts were protected for pension use and that it would act as though the funds were held in trust, with the fiduciary duties and responsibilities fully and adequately discharged. These representations, previously discussed above at paragraphs 18, 46 and 47, evidence an undertaking to protect the Plan Members’ interest in these contributions. This Court’s decision in Schmidt establishes that extraneous documents can form the legal matrix under which a pension plan is governed.
(AR, Vol. 9, p. 103); (AR, Vol. 4, pp. 169-247); 1991 Budget (AR, Vol. 4, p. 170); Report of the Auditor General, 1991 (AR, Vol. 4, p. 230); 1995 Treasury Board Policy (AR, Vol. 4, pp. 202-203); (AR, Vol. 5, p. 5); Evidence of S. Milne (AR, Vol. 4, pp. 19-25, 38-39, l. 12-30, 8-25); Milne Report (AR, Vol. 11, pp. 20-22); House of Commons Debates (Hansard), February 24, - 36 -
Appellants’ Factum Statement of Argument
1992, p. 7486 (AA, Vol. 7, Tab 80); Schmidt, supra, at para. 133 (AA, Vol. 6, Tab 66)
77. Moreover, as discussed above, and as held by this Court in Ermineskin, the FAA requires that monies paid into the Superannuation Accounts may only be paid out for purposes provided for by the PSSA; through the statute, the Government has undertaken that the funds in the Accounts must be used for pension purposes.
Ermineskin, supra, at paras. 121-122 (AA, Vol. 2, Tab 33); Financial Administration Act, s. 2, 21(1) (AA, Vol. 1, Tab 6)
78. The fact that the employer in the present case is the Government does not detract from this conclusion. First, this is not a situation where the Government is asked to mediate between its citizens, or make distinctions between competing groups. Rather, this action was brought by the Government’s employees, who are members of the pension plans the Government administers. Accordingly, this is “in effect a private duty being carried out by the government.”
Elder Advocates, supra, at para. 49 (AA, Vol. 1, Tab 15)
79. Second, this Court has recently confirmed that public service employees are no longer to be seen as “servants of the Crown” but as employees with the same private law rights as other employees. In Wells and Dunsmuir, this Court held that, while the terms of employment of Government employees are dictated by statute, the relationship remains a contract in substance. Therefore the private law of contract will apply “unless specifically superceded by explicit terms in a statute or agreement.” If the contract of employment is silent on a particular issue, the fundamental terms will be supplied by the common law. In the present case, nothing in the PSSA seeks to supercede the Government’s common law obligations, either explicitly or by necessary implication.
Wells v. Newfoundland, [1999] 3 S.C.R. 199 (“Wells”) at paras. 22, 30 (AA, Vol. 7, Tab 72); Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190 (“Dunsmuir”) at paras. 95- 97, 103-104, 111 (AA, Vol. 2, Tab 32); See also: Forest c. Varennes (Ville de), [2008] J.Q. no. 11574 (AA, Vol. 3, Tab 36); Trial Judgment (AR, Vol. 1, p. 96, at para. 258) - 37 -
Appellants’ Factum Statement of Argument
ii. Defined Class of Vulnerable Persons
80. The vulnerability of the Plan Members arises from a number of sources. To start, Plan Members are statutorily required to participate in the pension plans in question and cannot prevent the employer from withholding salary amounts for this purpose. These plans are statutory; there is no plan text or trust instrument. Accordingly, Plan Members rely on the Government to use these contributions for the provision of pension benefits.
81. Further, unlike beneficiaries of all other federally regulated pension plans, these employees lack the protection of statutory regulators overseeing the actions of the plan administrators, including the requirement for regulatory approval before the withdrawal of the surplus. There is also no right in the federal public service to collectively bargain terms and conditions with respect to pension benefits. Accordingly, Plan Members have no recourse with respect to improper conduct by the employer related to the administration of the Plans.
Evidence of J. Christie (AR, Vol. 3, p. 129)
82. Moreover, the foundational terms of Plan Members’ pension benefits are subject to change at any time by Parliament. This provides the Government with an opportunity to alter the terms of the Plans in a manner that is not available to private employers. To this end, Plan Members face significant political risks that the Government may reduce future benefits, as it did during the 1980s. This vulnerability is not hypothetical. Indeed, these risks are heightened given the acknowledged misconceptions and stereotypes that persist regarding the privileged nature of public service employees.
PBSA, supra (AA, Vol. 1, Tab 8); Public Service Labour Relations Act, 2003, c. 22, s. 113 (AA, Vol. 1, Tab 11); Evidence of J. Christie (AR, Vol. 3, pp. 5-7, 11-12, l. 1-4, l. 1-32); (AR, Vol. 7, p. 18); (AR, Vol. 11, p. 1); Christie Report (AR, Vol. 9, pp. 218-219); Christie Reply Report (AR, Vol. 10, pp. 121-122); (AR, Vol. 7, p. 15); (AR, Vol. 6, pp. 113-114); Boudrias Evidence (AR, Vol. 4, pp. 104-118, l. 28-22) - 38 -
Appellants’ Factum Statement of Argument
83. Finally, under C-78, the Government can unilaterally increase the rate of employee contributions, thereby allowing it to off-set any diversion of previous funds away from their intended use. This risk was confirmed when the Government imposed significant increases on the pension contributions Plan Members would be required to make without a corresponding increase in benefits. Accordingly, employees can be left to shoulder the burden of any decisions by Government to use existing contributions or surpluses for matters other than providing pension benefits. This unequal distribution of the burden was foreseen by the Government.
Evidence of J. Christie (AR, Vol. 3, pp. 130-138, l. 1-28); (AR, Vol. 11, pp. 4, 6, 8); Christie Report (AR, Vol. 9, pp. 138-140); E/D S. Hamilton (AR, Vol. 3, pp. 153-154, l. 2-8)
84. As noted above, there is no conflict in this case between the public interest and the imposition of a fiduciary duty. Plan Members do not remit a percentage of their salaries for the good of Canada; they do so to secure their future retirement. Those contributions led directly to between 36.9 and 42.4% of the surplus, which the Government claimed to reduce its deficit. These issues involve the Government acting in a private capacity, which gives rise to a need to address the vulnerable situation Plan Members face.
iii. A Substantial Interest Affected by the Fiduciary’s Exercise of Discretion
85. As the Court of Appeal recognized, the Respondent exercises discretionary control over the Plan Members’ interests. The Appellants maintain that Plan Members have an interest in the entire surplus in the Accounts. Mr. Christie provided expert evidence indicating that the Government had, for decades, followed a “total compensation” approach. Mr. Christie explained that, under this approach, the employer took into account the value of its pension contributions when setting employee salaries, such that employer contributions to the account represented deferred wages that would have otherwise been paid to employees. As such, Plan Members have a proprietary - 39 -
Appellants’ Factum Statement of Argument
interest in both employer and employee contributions to the Accounts. The Courts below did not address this evidence.
Evidence of J. Christie (AR, Vol. 3, pp. 116-125, l. 3-21); (AR, Vol. 5, p. 8); Christie Report (AR, Vol. 9, pp. 161-179)
86. Regardless, it is undeniable that the Government had control over employee contributions deducted from Plan Member pay cheques and paid into the Accounts, which constituted a significant percentage of the surplus. The Government has expressly acknowledged that the ownership of these funds remained with the Plan Members. This can be contrasted with the treatment of employment insurance premiums, which are placed in budgetary (as opposed to non-budgetary) accounts and are part of the Government’s general operating budget.
(AR, Vol. 4, p. 172); (AR, Vol. 4, p. 202); Evidence of S. Milne (AR, Vol. 3, p. 172, Vol. 4, pp. 19-29, 32-35, 38-39, l. 22-14, 24-28, 9-26); Lee Report (AR, Vol. 11, p. 167); Christie Reply Report (AR, Vol. 10, p. 96); E/D S. Hamilton (AR, Vol. 3, pp. 151, 155, l. 10-14, 8-17); CSN v. Canada, supra, para. 74 (AA, Vol. 2, Tab 29).
87. The Government’s ability to unilaterally make use of pension contributions by borrowing the funds required to be “paid into” the Superannuation Accounts exhibits its discretionary control over this property. The Government further demonstrated its power over the contributions through its ability to amortize and book the surplus into the fiscal framework for future years. The amortization was not directed, or even contemplated by statute, but was accomplished solely by virtue of the discretionary power held by the Government.
Ermineskin, supra, at para. 127 (AA, Vol. 2, Tab 33)
88. This discretionary power has been repeatedly exercised in a way that could affect Plan Members’ interests. For instance, the Government’s decision to amortize and book the surplus rendered these funds unavailable for use in providing increased pension - 40 -
Appellants’ Factum Statement of Argument
benefits to Plan Members or for reducing or maintaining Plan Member contribution rates. This resulted in the Government requiring employees to contribute more than was necessary to the Accounts, while it effectively took a contribution holiday during the Surplus Period. Significantly, the deficits that have since surfaced in the pension funds created by C-78 have required significant increases in contribution rates for employees following the year 2000.
(AR, Vol. 6, p. 56); (AR, Vol. 6, p. 61); E/D S. Hamilton (AR, Vol. 3, pp. 168- 169, 172, l. 1-28, 1-32); Evidence of J. Christie (AR, Vol. 3, pp. 109, 127-130, 137); Christie Report (AR, Vol. 9, pp. 138-140)
89. The Government’s ability to use these funds for non-pension purposes could also result in future reductions to the benefits received by Plan Members. As Mr. Christie noted, pension benefits were permanently reduced when indexing benefits were capped in the early 1980s, following earlier periods of actuarial deficits. Pension benefits remain subject to similar changes in the future; the existence of deficits in the Superannuation Accounts or in the Pension Funds established by C-78 increase the likelihood of this taking place.
Evidence of J. Christie (AR, Vol. 3, pp. 58-60, l. 1-5); Christie Report (AR, Vol. 9, pp. 218-219); (AR, Vol. 11, p. 1)
90. Nothing in this Court’s previous jurisprudence limits the Plan Members’ interest in the surplus. Schmidt and Nolan do not stand for the proposition that Plan Members have no interest in an actuarial surplus. In those cases, the employer’s contributions were exclusively based on the actuarial liability of the plan, which allowed the existence of an actuarial surplus to be taken into account in determining employer contribution levels. In contrast, the Government in the present case was required by statute to, at a minimum, match employee contributions. Moreover, unlike the facts in Burke, there is no provision in the present case expressly limiting the rights or interests of Plan Members to the benefits “expressly provided in the Plan”. - 41 -
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Schmidt, supra, at paras. 117-118 (AA, Vol. 6, Tab 66); Nolan v. Ontario (Superintendent of Financial Services), [2007] O.J. No. 2176 (C.A.) (AA, Vol. 5, Tab 57), aff’d [2009] S.C.J. No. 39, at para. 116 (AA, Vol. 5, Tab 57, p. 225); Burke v. Governor and Co. of Adventurers of England Trading into Hudson’s Bay, [2008] O.J. No. 1945 at para. 44 (AA, Vol. 1, Tab 23); See also C.U.P.E.-C.L.C., Local 1000 v Ontario Hydro, (1980) 68 O.R. (2d) 620 (C.A.) (AA, Vol. 2, Tab 30); see also Smith v. Michelin North America (Canada) Inc., [2008] N.S.J. No. 508 (C.A.) at paras. 46, 53 (AA, Vol. 6, Tab 67)
91. Likewise, there is no concern with respect to past actuarial liability credits made by the Government. Expert testimony regarding the attribution of the surplus already accounted for the employer’s past actuarial liability credits, such that the 36-42% identified in the public service Account was exclusively attributable to employee contributions and the interest thereon. In any event, such credits, which have not been required since 1986, are imposed by statute and cannot be used to undercut an equitable obligation.
Lee Report (AR, Vol. 11, p. 167); Agreed Statement of Facts (AR, Vol. 4, p. 142); Evidence of J. Christie (AR, Vol. 3, pp. 73-74, l. 2-5)
92. Finally, it is of no consequence that C-78 expressly stated that the amounts transferred to the Funds must be managed in the best interests of contributors and beneficiaries. This Court has confirmed that subsequent legislative evolution is to be accorded little weight in all but the clearest of cases, given that it sheds no light on the intention of Parliament when it enacted the initial legislation. In the present case, it can equally be argued that the amendments in C-78 simply served to codify the fiduciary duty that previously existed.
United States of America v. Dynar, [1997] 2 S.C.R. 462 at para. 45 (AA, Vol. 7, Tab 71); Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at para. 24 (AA, Vol. 6, Tab 65) - 42 -
Appellants’ Factum Statement of Argument
The Amortization and Removal of the Surplus violated the Government’s Fiduciary and Statutory Obligations
93. The Government thus had a fiduciary obligation to put the Plan Members’ interests with respect to these amounts before its own. A fiduciary obligation can impose trust-like duties, if the situation warrants. Given the legislative and factual context detailed above, the Government had a fiduciary obligation to use the amounts in the Accounts for the purpose for which they were contributed, namely, the provision of pension benefits to Plan Members.
Ermineskin, supra, at paras. 72-73 (AA, Vol. 2, Tab 33)
94. The decision to amortize and remove the surplus breached the Government’s fiduciary obligation. The Courts below disagreed with this conclusion based on his reasoning that the Plan was not “funded” and that there were no assets in the Accounts. For the reasons set out in Section B above, this conclusion cannot be sustained.
95. Moreover, it is clear that the Government chose to amortize the surplus in the 1990s because there were no provisions allowing for the removal of the surplus. The Government’s decision to establish a separate fund for contributions related to the period after C-78 came into force was, likewise, necessitated by the fact that it had already effectively spent a significant portion of the surplus in the Superannuation Accounts, such that it could not transfer the surplus to the new Funds. The Government therefore used accounting mechanisms to affect what the legislation prohibited it from doing.
96. The amortization and removal of the surplus had a significant impact on the interests of employees given that it rendered the surplus unavailable to be used in a manner that would benefit employees, such as benefit increases, contribution decreases, or protection against future contribution increases. It also had a significant impact in reducing the Government’s annual expenditures and overall liabilities. In taking this action, the Government placed its interests above those of the Plan Members, violating its fiduciary obligations. - 43 -
Appellants’ Factum Statement of Argument
A Constructive Trust is an Appropriate Remedy for Breach of Fiduciary Duties
97. The breach of the fiduciary duty in the present case requires the recognition of a constructive trust ordering the Government to return the removed amounts to the Superannuation Accounts. The four elements necessary to award a constructive trust due to a breach of good conscience are met in this case. First, the Government owed Plan Members an equitable obligation to ensure that funds in the Superannuation Accounts were used for pension purposes. Second, the Government would not have been in possession of the funds but for the Plan Members’ required contributions to the Superannuation Accounts.
Soulos v. Korkontzilas, [1997] S.C.J. No. 52 at para. 36 (AA, Vol. 6, Tab 68)
98. Third, there is a legitimate reason that a proprietary remedy is sought. Absent such a remedy, the breach of the fiduciary duty will go unaddressed, condoning what is tantamount to ultra vires taxation. The Government would also be encouraged to assert ownership over similar funds it holds for the benefit of others. Fourth, there are no factors that would render the imposition of a constructive trust unjust. Here, the only potential “third party creditors” are Canadian taxpayers. However, it is established that considerations of the public purse cannot overrule the interests of the Plan Members in a constructive trust. Furthermore, Canadian taxpayers had no interest in the 36-42% of the assets of the Superannuation Account that are attributable to the Plan Members’ contributions.
Soulos, supra, at para. 45 (AA, Vol. 6, Tab 68); Kingstreet Investments Ltd. v. New Brunswick (Finance), [2007] 1 S.C.R. 3 (“Kingstreet”) at para 38 (AA, Vol. 4, Tab 50)
99. The Alberta courts found a constructive trust to lie where an employer claimed the proceeds of demutualization of an insurance policy that had been taken to fund long term disability and life insurance benefits for Plan Members. Even though there was no direct deprivation or unlawful act, the Court held that “a constructive trust may be imposed where good conscience requires it”, with particular attention paid to the - 44 -
Appellants’ Factum Statement of Argument
reasonable expectations of the parties. As earlier outlined, the Plan Members in the present case reasonably anticipated that the funds were held for their benefit, and that the Government would not use those funds for any other purposes.
Northern Alberta Institute of Technology Academic Staff Association v. Northern Alberta Institute of Technology (2002), 217 D.L.R. (4th) 441 (Q.B.) at para. 75 (AA, Vol. 5, Tab 58), aff’d (2004), 235 D.L.R. (4th) 711 (C.A.) (AA, Vol. 5, Tab 58, pp. 280 and ff.)
D. The Court of Appeal erred in Concluding that the Government was not Unjustly Enriched
100. A constructive trust can also be imposed where, as in the present case, there has been an unjust enrichment by one party of another. Prior to C-78, there was nothing within the statute, either explicit or implicit, that authorized the withdrawal of surplus by the Government, although the statute spoke to contribution levels, benefit levels, and the approach to adverse experience. As the Courts below recognized, the statute was simply silent with regard to surplus; in fact, the statute read as a whole leads to the conclusion that the Government was required to use the funds contributed for pension purposes. Importantly, nothing in C-78 sought to apply retroactively to the period prior to its taking effect.
Trial Judgment (AR, Vol. 1, p. 96, at para. 258)
101. In Canada, there are three elements to unjust enrichment: (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment. The Government’s use of the surplus in the Accounts satisfies all three aspects of the test.
Peter v. Beblow, [1993] 1 S.C.R. 980 (“Beblow”) at para. 3 (AA, Vol. 6, Tab 62)
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Appellants’ Factum Statement of Argument
(i) Use of the Surplus Funds Enriched the Government
102. The process of identifying an enrichment to the defendant is governed by a “straightforward economic approach”. An enrichment may be either a benefit, or relief from an obligation that the party may have otherwise been required to fulfill. This Court has held that, where there is a transfer of funds, an enrichment is obvious on the face of the transaction, barring factors unique to the transaction.
Pacific National, supra, para 15 (AA, Vol. 5, Tab 59); Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762 (AA, Vol. 6, Tab 61)
103. In the circumstances at bar, Plan Members surrendered part of their compensation to the Government for the provision of pensions. The Government held the funds and had the use of them, ultimately removing them from the Superannuation Accounts. Unlike the situation in Ermineskin, nothing in the PSSA constrained or directed the exercise of the Government’s discretion, such that it was required to use the pension funds within the CRF in what would otherwise be a breach of a fiduciary duty. Moreover the funds collected pursuant to the PSSA had to be used for pension purposes, as there was no provision to allow the funds to leave the Superannuation Accounts for any other purpose.
Ermineskin, supra, at para. 79 (AA, Vol. 2, Tab 33); E/D S. Hamilton (AR, Vol. 3, p. 155, l. 8-17)
104. The Government was enriched by the availability of the surplus funds in the Superannuation Accounts. By amortizing and removing the liability for the surplus, the Government offset its pension costs as disclosed in the Statement of Revenues and Expenses. The Government then used these funds for purposes unrelated to the provision of pensions to the Plan Members who had sacrificed a significant percentage of their salaries in contributions.
105. Importantly, the PSSA required the Government to make annual mandatory contributions. Like the contribution clauses in Ontario Hydro, Trent University, and - 46 -
Appellants’ Factum Statement of Argument
Hockin, the employer in the present case was required to contribute a set amount each year; in each of these prior cases, contribution holidays were found to be impermissible under the terms of the plan. This is unlike the plan in Schmidt, where the text required only that the contributions be made in accordance with the actuarial requirements of the plan.
Evidence of J. Christie (AR, Vol. 3, pp. 43-44, l. 4-30); Ontario Hydro, supra (AA, Vol. 2, Tab 30); Trent University Faculty Association v. Trent University (1997), 35 O.R. (3d) 375 (C.A.) at p. 9 (Q.L.) (AA, Vol. 7, Tab 70); Hockin v. Bank of British Columbia (1990), 71 D.L.R. (4th) 11 (B.C.C.A.) at 7 (Q.L.) (AA, Vol. 4, Tab 47)
106. Similarly, even in the circumstances where Schmidt permits the taking of contribution holidays in an ongoing pension plan it does so only where the funds are retained within the plan and allowed to be depleted for pension purposes. In contrast, the funds in the present case were taken outside the pension plan and used within the budgetary process for the Government, as a whole, for purposes other than the provision of pensions. Accordingly, the Government ignored its statutory obligation to retain earmarked funds for the pension plan. As such, this case is more akin to Collins, where the funds were removed for use as company capital.
Schmidt, supra, at para. 95 (AA, Vol. 6, Tab 66); Collins et al. v. Pension Commission of Ontario et al. (1986), 56 O.R. (2d) 574 (H.C.J.) (AA, Vol. 2, Tab 28)
107. The Court of Appeal in the present case rejected this conclusion on the basis that “whatever benefit there was to such actions enured to all Canadian taxpayers”. With respect, this reasoning cannot be sustained. The Court of Appeal’s conclusion would effectively insulate the Government from any claim of unjust enrichment. This is inconsistent with this Court’s jurisprudence regarding the Government’s equitable obligations when acting in a private capacity as employer.
OCA Reasons (AR, Vol. 1, p. 149, at para. 106); Dunsmuir, supra, at para. 95-97, 103-104, 111 (AA, Vol. 2, Tab 32); Wells, supra, at para. 22, 30 (AA, Vol. 7, Tab 72); Kingstreet, supra, at para. 34 (AA, Vol. 4, Tab 50) - 47 -
Appellants’ Factum Statement of Argument
(ii) The Plan Members Were Deprived
108. The requirement for a corresponding deprivation is easily satisfied where, as here, the enrichment is monetary in nature. Contributions were given as a percentage of salary that Plan Members would have otherwise received. The contributions reduced the take home amount of the total compensation package; these contributions were to be held available to be used for the benefit of the Plan Members who made them.
109. In these circumstances, the Plan Members were deprived of the use of their contributions as well as those of the employer. As quoted by the trial judge,
... in recent years many sophisticated employers have adopted a compensation approach based on the “total value of labour remuneration, wages and fringes having some interchangeable costs.” Thus, what some may still view as a gratuitous reward for Plan Members remains a powerful long-term human resources management tool as well as an undeniable benefits for aging Plan Members. Plan Members rightly see their pension benefits as part of their overall compensation.
Buschau v. Rogers Communications Inc., [2006] 1 S.C.R. 973 at para. 12 (AA, Vol. 1, Tab 25); Trial Judgment (AR, Vol. 1, pp. 15-17, at para. 22)
110. As noted by the Court of Appeal, this deprivation can be further seen in the significant increase in Plan Member contribution rates. Had the surplus funds been available when the newly established pension funds went into a deficit position, the increase in Plan Members’ contributions would not have been necessary.
Christie Report (AR, Vol 9, pp. 218-219); OCA Decision (AR, Vol. 1, p. 145, at para. 90)
(iii) There was no Juristic Reason for the Enrichment
111. It is not until the third branch of the unjust enrichment inquiry where the Court must decide “whether the enrichment and detriment, morally neutral in themselves, are ’unjust’.” When undertaking the juristic reason inquiry, the following approach is applied: - 48 -
Appellants’ Factum Statement of Argument
First, the plaintiff must show that no juristic reason from an established category exists to deny recovery... The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.
Garland v. Consumers Gas Co., supra, at para. 44 (AA, Vol. 3, Tab 39)
112. In the circumstance at bar, pre C-78, there was no juristic reason for the deprivation. In particular, there was no reference in the PSSA to surplus entitlement, which is the very question before the court. While the statute required Plan Members to contribute to the pension plan, it did not allow the Government to assert ownership over the funds Plan Members had contributed. Moreover, no court order required the Plan Members to give the funds to the Government and the Plan Members certainly had no intent to donate a percentage of their wages to the Government. The amortization of the surplus during the 1990s was, thus, an attempt by the Government to do indirectly what it could not do directly; indeed, the Government showed an awareness of its inability by the passage of C-78, as discussed more fully below.
Manville Canada Inc. v. Montreal Trust Co. of Canada (1993), 17 C.P.C. (3d) 122 (A.B.Q.B.) at p. 3 (QL) (AA, Vol. 5, Tab 54)
113. Post C-78, the Government still lacks a juristic reason for the removal of the surplus funds attributable to the Plan Members’ contributions without compensation. This point is addressed below in Section E.
There is no Basis to Rebut the Prima Facie Case of Unjust Enrichment
114. Accordingly, the Appellants have established a prima facie case that there was no juristic reason for the unjust enrichment. In assessing a defendant’s arguments to rebut the prima facie case, “courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations.”
Garland, supra, paras. 44-46 (AA, Vol. 3, Tab 39) - 49 -
Appellants’ Factum Statement of Argument
115. The Plan Members had a clear and reasonable expectation, as set out in the PSSA, that the funds would be held in the Superannuation Accounts for pension use, not just for the provision of benefits, but for a cushion to protect against adverse experience. Such expectation, set out above at paragraphs 18, 46 and 47, was bolstered by the Government’s explanation that the payment of these contributions into a specified purpose account ensured they would only be used for the purpose of providing pension benefits and that the plans would remain “fully funded”.
(AR, Vol. 5, pp. 37, 82-84)
116. Moreover, the Government has repeatedly stated that the Accounts were akin to trust accounts and would be treated as such. A 1970 Treasury Board paper stated: “[t]here is no difference in principle between the account and a trusteed pension fund set up by private employers”. Likewise, the 1991 Federal Budget expressly stated that these Accounts were trust accounts to be administered in the interests of the Plan Members. At no time prior to C-78 did the Government assert to Plan Members that it was entitled to the surplus, nor did it repudiate its previous statements that the funds were effectively held in trust for the Plan Members. Reasonable employees would thus assume that these funds would be used exclusively to provide pension benefits, and that the Government would act in the Plan Members’ best interests.
(AR, Vol. 5, p. 5); (AR, Vol. 4, p. 169); (AR, Vol. 5, pp. 37, 82-84); Auditor General’s Report (AR, Vol. 10, pp. 194-195)
117. Further, it is unfair to require Plan Members to bear the costs of the Government’s decision to overstep its authority. Plan Members deferred a percentage of their income (earned in the service of Canadians) for a promise that the funds so forgone would be available to them to enforce the pension promise. Plan Members should not be asked to give up these funds simply because the Government has improperly allocated them to other uses on behalf of the Canadian taxpayer; unfortunately, it was not Government’s money to so allocate. The Government may argue, as in cases regarding ultra vires taxation, that since the funds have already been - 50 -
Appellants’ Factum Statement of Argument
allocated and spent, the real victims will be the taxpayers of Canada. However, this Court has recently stated:
…[c]onsiderations related to preserving the public purse do not properly fall within the second branch of the juristic reason analysis, which is more concerned with broad principles of fairness.
Kingstreet, supra, at para. 38 (AA, Vol. 4, Tab 50)
118. Finding that concerns relating to the public purse prevent restitution in these circumstances would be contrary to this Court’s specific finding that the law of unjust enrichment can be applied to public bodies. Moreover, unlike the situation in Kingstreet, which dealt with a claim that taxes charged were unconstitutional, the present claim is founded in a breach of equitable principles, and thus more squarely falls into the traditional realms of unjust enrichment. In any event, the use of the surplus from the Accounts would effectively impose a tax on public servants. This cannot be the case, however, given that it was not directly assessed with the consent of Parliament, as required under s. 53 of the Constitution Act, 1867.
Kingstreet, supra, at 31 and 39 (AA, Vol. 4, Tab 50); The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, s. 53 (AA, Vol. 1, Tab 4)
The Proper Remedy for the Enrichment is a Constructive Trust
119. In these circumstances, the proper remedy for the unjust enrichment is a constructive trust. Plan Members are not seeking to withdraw the surplus, but rather to ensure that the funds are available within the Superannuation Accounts to protect against any adverse economic experience. Accordingly, a monetary award of damages will not suffice. Moreover, appellate court jurisprudence from other jurisdictions has demonstrated that, where there is a reasonable expectation that funds will be used for employee benefits, a constructive trust may be an appropriate remedy.
Beblow, supra, at 997 (AA, Vol. 6, Tab 62); Northern Alberta Institute of Technology Academic Staff Association v. Northern Alberta Institute of Technology, supra, at para. 75 (AA, Vol. 5, Tab 58) - 51 -
Appellants’ Factum Statement of Argument
120. A portion of the property over which the Plan Members claim the constructive trust can be directly traced to contributions made by Plan Members. The funds attributable to the Plan Members’ contributions can be determined pursuant to a formula as described by Don Lee, the expert who testified before the trial judge. This formula concludes that 36-42% of the surplus can be directly traced to Plan Members’ contributions.
Evidence of D. Lee (AR, Vol. 4, p. 94, l. 1-12)
121. Case law regarding the Canada Pension Plan (the “CPP”), wherein the courts have declined to grant a constructive trust over funds held for the CPP, is easily distinguished. First, unlike the CPP, the funds in the Superannuation Accounts have been made available by the Government for other uses. Although the funds were accounted for separately the Government has borrowed against the surplus funds in the Accounts in order to fund other governmental objectives. This was manifestly not the case in the CPP cases, where the constructive trust claim was defeated by the fact that the CPP funds could not, and were not, used for other purposes. Here, the prima facie evidence of enrichment also defeats any potential similarity to the CPP.
Hislop v. Canada (2003), 234 D.L.R. (4th) 465 (O.S.C.J.) at para. 126 (AA, Vol. 4, Tab 44), var’d (2004) 246 D.L.R. (4th) 644, aff’d (2007) (AA, Vol. 4, Tab 45), 1 S.C.R. 249 (AA, Vol. 4, Tab 46)
122. Second, it is not “unjust” in this situation to impose a constructive trust. There is no indication that employee claims to the funds are precluded by the terms of the pre-2000 legislation, and all other communications with Plan Members indicated that, if anything, entitlement to the use of the surplus for pension purposes was implied within the statute. Unlike the situation in Gorecki, where the statute specifically set out and circumscribed the rights of the applicants, the Plan Members claim an interest in the surplus where the Act is silent.
Gorecki v. Canada (Attorney General), [2006] O.J. No. 1130 (C.A.) (“Gorecki”) at paras. 7 and 11 (AA, Vol. 3, Tab 40) - 52 -
Appellants’ Factum Statement of Argument
E. C-78 Did Not Extinguish the Plan Members’ Interest in the Surplus
123. The Courts below ruled that any interest Plan Members may have had in the surplus was extinguished by C-78. In doing so, the Courts failed to properly apply the presumption against expropriation without compensation. In particular, the Appellants maintain that C-78 could not have disclosed an explicit intent to expropriate the Plan Members’ interest in the surplus since Parliament proceeded on the express understanding that the Government already owned the entire surplus. Accordingly, C-78 did not displace the Plan Members’ interest in the funds, which was established pursuant to fiduciary and constructive trust principles.
The Presumption Against Expropriation without Compensation
124. There is a well-established presumption in statutory interpretation that the legislature does not intend to expropriate property interests without compensation. As this Court has noted, “[t]he courts require that the legislature express [itself] extremely clearly where there is an intention to expropriate or confiscate without compensation”. It is also presumed that legislation, whether retroactive or prospective, is not intended to apply in circumstances where its application would impair vested rights. These presumptions are rebutted only where the legislation discloses an explicit intention to expropriate without compensation or interfere with vested interests in clear and unambiguous terms.
Sullivan, supra, at 478-482 (AA, Vol. 7, Tab 78); Authorson v. Canada, [2003] 2 S.C.R. 40 at para. 55 (AA, Vol. 1, Tab 20); Att. Gen. v. de Keyser’s Royal Hotel, [1920] A.C. 508 (AA, Vol. 1, Tab 17); Pacific National, supra, at para. 26 (AA, Vol. 5, Tab 59); British Columbia v. Tener, [1985] 1 S.C.R. 533 at para. 52 (AA, Vol. 1, Tab 22); Manitoba Fisheries Ltd. v. The Queen (1978) 88 D.L.R. (3d) 462 at 473 (AA, Vol. 5, Tab 53); Eric Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough: Carswell, 1992) at 31-38 (AA, Vol. 7, Tab 79) - 53 -
Appellants’ Factum Statement of Argument
125. Expropriation without compensation requires a conscious decision on the part of Parliament. As this Court held in Authorson, “[s]uch expropriations are within the power of legislatures where the intent is clearly and unambiguously stated”. This approach respects Parliamentary supremacy while ensuring that expropriation without compensation does not occur as an unintended consequence of legislation.
Authorson (SCC), supra, at paras. 52, 55 [emphasis added] (AA, Vol. 1, Tab 20); De Keyser’s Royal Hotel, supra (AA, Vol. 1, Tab 17); Pacific National, supra, at para. 26 (AA, Vol. 5, Tab 59)
126. As such, Parliament knows that the courts will presume it does not intend to expropriate property without compensation unless it explicitly states its intention to do so. Courts can thus be confident that Parliament will leave no room for doubt when it intends to deprive subjects of their property interests. Indeed, expropriation without clear expression of intent violates the protections established in the Canadian Bill of Rights.
Sullivan, supra, at 478-482 (AA, Vol. 7, Tab 78); Pierre-André Côté, The Interpretation of Legislation in Canada, 3rd ed. (Scarborough: Carswell, 2000) at 482 (AA, Vol. 7, Tab 75); Morguard Properties Ltd. v. Winnipeg (City), [1983] S.C.J. No. 83 at 10 of 12 (AA, Vol. 5, Tab 56); Pacific National, supra, at paras. 26, 72-74 (AA, Vol. 5, Tab 60); CSN v. Canada, supra, at paras. 87-93 (AA, Vol. 2, Tab 29); Canadian Bill of Rights, S.C. 1960, c. 44, subsection 1(a) (AA, Vol. 1, Tab 2); Byron Hills Resources Ltd. v. Alberta (Sustainable Resource Development), [2009] A.J. No. 719 (QB) at para. 78 (AA, Vol. 2, Tab 26)
C-78 does not Disclose an Intention to Expropriate without Compensation
127. The Courts below erred in concluding that C-78 disclosed a clear and unambiguous intention to expropriate the Plan Members’ interest in the surplus without compensation. Such intention cannot be gleaned from the text of C-78 and is, in fact, repudiated by the broader legislative context, which demonstrates that Parliament proceeded on the assumption that the Government already owned the entire surplus. - 54 -
Appellants’ Factum Statement of Argument
The claim that Parliament sought to expropriate the Plan Members’ interest in the surplus – an interest which the Government to this day maintains has never existed – is simply a post-hoc rationalization that seeks to invest these provisions with a meaning they were never intended to have.
128. Nothing in C-78 purports to extinguish the Plan Members’ interest in the surplus without compensation. At most, these provisions provide for the debit or transfer of an “amount” out of the Superannuation Accounts in certain circumstances. This is insufficient, however, to extinguish the Plan Members’ interest in the surplus, as it fails to expressly set out an intention to deprive the plan members of their interest without compensation. Whereas expropriation without compensation involves both a taking of property and a conscious refusal to compensate, C-78 establishes nothing more than the initial taking.
Public Service Superannuation Act, R.S. 1985 c. P-35 at subsections 44(9), (10), and (13) (AA, Vol. 1, Tab 12); Canadian Forces Superannuation Act, R.S. 1985 c. C-17, subsections 55(9), (10) and (13) (AA, Vol. 1, Tab 3); Royal Canadian Mounted Police Superannuation Act, R.S. 1985 c. R-11, subsections 29(9), (10) and (13) (AA, Vol. 1, Tab 13)
129. The present case can be contrasted with the situation in Authorson, where this Court determined that Parliament had clearly and unambiguously extinguished any claim disabled veterans may have had for interest they owed on their pensions. In that case, Parliament left no doubt as to its intentions, stating that “no claim shall be made after this subsection comes into force for or on account of interest of monies held or administered […] prior to January 1, 1990”. Parliament used this clear language despite the fact that, at the time the legislation was introduced, it remained an open question as to whether the Government owed disabled veterans a fiduciary duty to pay interest on funds it held on their behalf. Nothing in C-78 expressly establishes an intent to extinguish a proprietary right held by Plan Members in this manner. Even if it did, there is nothing in C-78 to indicate that it would apply retroactively to address the improper use of the surplus during the 1990s.
Authorson (SCC), supra, at para. 56 (AA, Vol. 1, Tab 20) - 55 -
Appellants’ Factum Statement of Argument
130. This interpretation of C-78 fits with the broader context of pension legislation, which seeks to ensure the integrity of pension funds and to prevent funds collected for pension purposes from being used for other purposes. Moreover, as noted by Mr. Christie, it is significant that the inclusion of s. 44 (10) and (13) of the PSSA also serve to bring the Plans into compliance with the requirements of the Income Tax Act that apply to all private pension plans, further clouding Parliament’s intent in passing these measures.
Pension Benefits Standards Act, R.S.C. 1985 c. 32 (2nd Supp.), sections 9, 9.1, 9.2 (AA, Vol. 1, Tab 8); Monsanto, supra, at para. 38 (AA, Vol. 5, Tab 55); Christie Report (AR, Vol. 9, pp. 150, 154-155, 189-192); Evidence of J. Christie (AR, Vol. 3, p. 129, l. 10-32)
The Legislative Debates Confirm There Was No Intent to Expropriate Without Compensation
131. The absence of an intent to expropriate the Plan Members’ interest in the surplus without compensation is confirmed by the Parliamentary debates during the passage of C-78.
132. Legislative debates provide an appropriate source for understanding the intent of the legislature and should be considered where they shed light on the meaning of legislation. In applying the modern approach to statutory interpretation, a court must consider this broader context prior to determining whether the language in the statute is clear. This Court has, on a number of occasions, relied on the broader legislative context to interpret statutory provisions in a manner that would appear, at first blush, to be precluded by the ordinary and grammatical meaning of the legislative text.
Sullivan, supra, at 609-615 (AA, Vol. 7, Tab 78); Rizzo & Rizzo Shoes Ltd. (Re), supra, at paras. 31, 35 (AA, Vol. 6, Tab 65); Delisle v. Canada (Deputy Attorney General), [1999] 2 S.C.R. 989 at para. 79 (AA, Vol. 2, Tab 31); R. v. Morgentaler, [1993] 3 S.C.R. 463 at 484 (AA, Vol. 6, Tab 63); Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559 at paras. 29-30 (AA, Vol. 1, - 56 -
Appellants’ Factum Statement of Argument
Tab 21); Canada 3000 Inc., Re; Inter-Canadian (1991) Inc. (Trustee of), [2006] S.C.J. No. 24 at paras. 44-46, 57-61 (AA, Vol. 2, Tab 27); ATCO Gas & Pipeline Ltd. v. Alberta (Energy & Utilities Board), [2006] S.C.J. No. 4 at para. 36, 48 (AA, Vol. 1, Tab 16); Tele-Mobile Co. v. Ontario, [2008] S.C.J. No. 12 at paras. 29-31, 42, 55 (AA, Vol. 7, Tab 69); H.L. v. Canada (Attorney General), [2005] S.C.J. No. 24 at paras. 105-106 (AA, Vol. 3, Tab 42)
133. In the present case, the broader legislative context confirms that Parliament did not intend to extinguish a proprietary interest held by employees in the surplus. An intention to extinguish an interest requires, at the very least, a prior recognition that the interest exists, or may exist. The record of Parliamentary debates, however, demonstrates that C-78 was enacted on the express understanding that the amounts to be debited from the Accounts were already the sole property of the Government.
134. Indeed, Members of Parliament from the Government side of the House of Commons strenuously denied that Plan Members had any interest in the surplus in the Superannuation Accounts. For instance, in introducing C-78 for the Government on second reading, the President of the Treasury Board, the Minister responsible for the pension plans at issue in this case, clearly set out the Government’s position that, “[r]egardless of what employee unions think, this money belongs to Canadian taxpayers”. The record of Parliamentary debates further demonstrates that Members of Parliament who spoke in support of the bill rejected even the possibility that the surplus did not already belong to the Government.
House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1140 (Hon. Marcel Massé) (AA, Vol. 7, Tab 81, p. 221); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1655, 1700 (Hon. John Bryden) (AA, Vol. 7, Tab 81, pp. 268-269); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1635 (Hon. Carolyn Parish) (AA, Vol. 7, Tab 81, p. 265); House of Commons Debates (Hansard), No. 213 (April 22, 1999) at 1200, 1235, 1255, 1340, 1640 (various opposition Members of Parliament) (AA, Vol. 7, Tab 81, pp. 223, 228, 231, 238, 265) - 57 -
Appellants’ Factum Statement of Argument
135. If Members of Parliament supporting the legislation had intended to expropriate the Plan Members’ interest in the surplus without compensation, they would have agreed that they were doing so, or at least allowed for the possibility that this would be a result of the legislation; instead, they stated the opposite. It could not, therefore, have been Parliament’s intent to extinguish the Plan Members’ interest in the surplus without compensation, given that those supporting the legislation refused to acknowledge that such an interest could even exist.
136. The Court of Appeal improperly rejected this conclusion, reasoning that “all members of Parliament were aware of the underlying dispute about the ownership of the surplus”. This conclusion, however, ignores the corporate nature of Parliament and the fact that its intent must be assessed in line with the statements made by those who introduced and supported the legislation. In this regard, this Court has repeatedly cautioned against relying on statements made by individual Parliamentarians that may not reflect the intent of Parliament as a whole.
OCA Reasons (AR, Vol. 1, p. 151, para. 112); Sullivan, supra, at pp. 593-594, 613-615 (AA, Vol. 7, Tab 78)
137. This issue also goes to the core of democratic accountability. As Professor Hogg has explained, Courts defer to constitutional legislation on the understanding that the safeguards against “preposterous” legislation are “political and conventional”. For such safeguards to function, Parliament must be open and transparent with respect to its actions; indeed, this helps explain the presumption against expropriation without compensation where this intent is not stated. The Government’s failure to acknowledge that it was expropriating the plan members’ property without compensation undermines the foundation of this system of accountability.
P. Hogg, Constitutional Law of Canada, 5th ed. (Toronto: Carswell, 2007) at 12.1 (AA, Vol. 7, Tab 77)
138. Finally, it cannot be asserted that the complexity of determining the amount of the surplus belonging to Plan Members demonstrates that Parliament must have intended to expropriate the surplus. The question is not whether Parliament intended the - 58 -
Appellants’ Factum Statement of Argument
consequences that would result from a finding that employees enjoyed an interest in the surplus, given that it assumed not such interest existed. The inquiry is whether Parliament intended to expropriate the Plan Members’ interest without compensation. Absent express evidence that it so intended, the Government was required to conduct itself in accordance with its obligations to Plan Members.
CONCLUSION
139. The assets in the Superannuation Accounts represent the accumulated pension contributions of employees and the employer, and the interest thereon. These contributions were required by statute to be paid into the Accounts and set aside for the purpose of providing pensions for public service employees, RCMP officers and Canadian Forces personnel. Absent clear statutory direction to the contrary, these amounts were only to be used for that purpose, as the Government had repeatedly stated they would be.
140. Despite the absence of any statutory authority to remove the surplus, the Government chose to amortize these amounts, doing indirectly what it could not do directly. This assertion of ownership over the entire surplus deprived the Plan Members of their interest in these amounts, unjustly enriching the Government and breaching its fiduciary obligations. As a result, these funds are no longer available to be used for pension purposes, and active Plan Members have faced significant increases in contribution rates, while remaining under the constant threat of legislative action that could reduce future pension benefits. Constructive trust principles confirm that these amounts should thus be returned to the Accounts to be used for pension purposes.
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Appellants’ Factum Submissions as to Costs
PART IV – SUBMISSIONS AS TO COSTS
141. The Appellants seek their costs in this Court and the Courts below.
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Appellants’ Factum Order Sought
PART V – ORDER SOUGHT
142. The Appellants request the following relief:
a. A declaration that the Plan Members have an equitable interest in the outstanding balance in the Superannuation Accounts at March 31, 2000, which includes the right to have such amount used solely for the purpose of providing pension benefits to Plan Members;
b. Alternatively, a declaration that the equitable interest of Plan Members is the right to have a share of the actuarial surplus in the Superannuation Accounts used for the purpose of providing benefits to Plan Members, the said share being an amount that is pro rata to the allocation of contributions as between employees and employer as of March 31, 2000, which is equal to 42.2 percent of the actuarial surplus on that date;
c. A declaration that subsections 44(9) and 44(10) of C-78 do not authorize the removal from the Superannuation Accounts of any amount in which Plan Members have an equitable interest without compensation;
d. An Order that the Superannuation Accounts be credited with all amounts, in which Plan Members have an equitable interest, that were removed following C-78, together with appropriate interest on those amounts, to be used for pension purposes to the benefit of Plan Members;
e. Their costs before this Court and the Courts below;
f. Such further and other relief as counsel may request and this Honourable Court may permit.
All of which is respectfully submitted this 7th day of September, 2011.
______Paul J.J. Cavalluzzo / Hugh O’Reilly / Andrew Raven / James Cameron / Amanda Darrach Andrew Astritis Cavalluzzo Hayes Shilton McIntyre & Raven, Cameron, Ballantyne & Yazbeck LLP Cornish LLP Counsel for the Appellants Public Service Counsel for the Appellants Professionnal Alliance of Canada and The Armed Forces Institute of the Public Service of Canada Pensioners’/Annuitants’ Association of et al. Canada, et al. - 61 -
Appellants’ Factum Alphabetical Table of Authorities
PART VI – ALPHABETICAL TABLE OF AUTHORITIES
Legislation...... Paragraph(s)
An Act to amend the Civil Service Superannuation Act, 1944-45, c. 34 ...... 14
Canadian Bill of Rights, S.C. 1960, c. 44 ...... 126
Canadian Forces Superannuation Act, R.S.C. 1985 c. C-17 ...... 1,128
The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3 ...... 14,118
Expenditure Restraint Act, Part 10 of the Budget Implementation Act, 2009, S.C. 2009, c.2 ...... 22
Financial Administration Act, R.S. 1985, c. F-11 ...... 15,53,60,61,77
Pension Benefits Act, R.S.O. 1990 c. P.8 ...... 69,71
Pension Benefits Standards Act, 1985, R.S.C. 1985, c. 32, (2nd supp.) ...... 69,82,130
Public Pensions Reporting Act, R.S. 1985, c.13 (2nd Supp.) ...... 40
Public Sector Pension Investment Board Act, S.C. 1999, c. 34 ...... 3,27,29
Public Service Labour Relations Act, S.C. 2003, c. 22 ...... 82
Public Service Superannuation Act, R.S.C. 1985, c. P-36 ...... 1,27,40,41,44,128
Royal Canadian Mounted Police Superannuation Act, R.S. 1985, c. R-11 ...... 1
Saskatchewan Pension Benefits Act, 1992, c. P.6.001 ...... 71
Case Law
Alberta v. Elder Advocates of Alberta Society, [2011] S.C.J. No. 24 ...... 73,74,75,78
ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), [2006] S.C.J. No. 4 ...... 132 - 62 -
Appellants’ Factum Alphabetical Table of Authorities
Case Law (cont’d) Paragraph(s)
Attorney General v. de Keyser’s Royal Hotel, [1920] A.C. 508 ...... 124,125
Ault v. Canada, [2003] F.C.J. No. 1461; Ault v. Canada, 2011 ONCA 147 ...... 70,72
Authorson v. Canada, [2002] O.J. No. 962 (Ont. C.A.) ...... 61,74
Authorson v. Canada, [2003] 2 S.C.R. 40 ...... 124,125,129
Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559 ...... 132
British Columbia v. Tener, [1985] 1 S.C.R. 533 ...... 124
Burke v. Governor and Co. of Adventurers of England Trading into Hudson’s Bay, [2008] O.J. No. 1945 (C.A.) ...... 90
Burke v. Hudson's Bay Co., [2010] S.C.J. No. 34 ...... 71
Buschau v. Rogers Communications Inc., [2006] 1 S.C.R. 973 ...... 109
Byron Hills Resources Ltd. v. Alberta (Sustainable Resource Development), [2009] A.J. No. 719 (QB) ...... 126
Canada 3000 Inc., Re; Inter-Canadian (1991) Inc. (Trustee of), [2006] S.C.J. No. 24 ...... 132
Collins et al. v. Pension Commission of Ontario et al. (1986), 56 O.R. (2d) 274 (H.C.J.) ...... 106
Confédération des Syndicats Nationaux v. Canada (Attorney General), [2008] S.C.J. No. 69 ...... 17,55,86,126
C.U.P.E.-C.L.C., Local 1000 v Ontario Hydro (1980), 68 O.R. (2d) 620 (C.A.) ...... 90
Delisle v. Canada (Deputy Attorney General), [1999] 2 S.C.R. 989 ...... 132
Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190 ...... 79,107
Ermineskin Indian Band and Nation v. Canada, [2009] S.C.J. No. 9 ...... 7,39,54,58,59,60 ...... 77,87,93,103 - 63 -
Appellants’ Factum Alphabetical Table of Authorities
Case Law (cont’d) Paragraph(s)
Ermineskin Indian Band and Nation v. Canada, [2006] F.C.J. No. 1961 (C.A.) ...... 58
Ermineskin Indian Band and Nation v. Canada, [2005] F.C.J. No. 1992 (F.C.) ...... 58
Forest c Varennes (Ville de), [2008] J.Q. no. 11574 ...... 79
Frame v. Smith, [1987] 2 S.C.R. 99 ...... 73,74
Galambos v. Perez, [2009] 3 S.C.R. 247 ...... 75
Garland v. Consumers’ Gas Company, [2004] 1 S.C.R. 629 ...... 65,111,114
Gorecki v. Canada (Attorney General), [2006] O.J. No. 1130 (C.A.) ...... 122
Guerin v. Canada, [1984] 2 S.C.R. 335 ...... 74
H.L. v. Canada (Attorney General), [2005] S.C.J. No. 24 ...... 132
Harris v. Canada, [2001] F.C.J. No. 1876 (T.D.) ...... 74
Hislop v. Canada (2003), 234 D.L.R. (4th) 465 (O.S.C.J.) ...... 121
Hislop v. Canada (2004), 246 D.L.R. (4th) 644 ...... 121
Hislop v. Canada, [2007] 1 S.C.R. 429 ...... 121
Hockin v. Bank of British Columbia (1990), 71 D.L.R. (4th) 11 (B.C.C.A.) (Q.L.) ...... 105
Hodgkinson v. Simms, [1994] 3 S.C.R. 377 ...... 73,74
Housen v. Nikolaisen, [2002] 2 S.C.R. 235 ...... 36
Kingstreet Investments Ltd. v. New Brunswick (Finance), [2007] 1 S.C.R. 3 ...... 98,107,117,118
K. L. B. v. British Columbia, [2003] 2 S.C.R. 403 ...... 75
Lac Minerals Ltd. v. International Corona Ltd., [1989] 2 S.C.R. 574 ...... 73
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Appellants’ Factum Alphabetical Table of Authorities
Case Law (cont’d) Paragraph(s)
Manitoba Fisheries Ltd. v. The Queen (1978), 88 D.L.R. (3d) 462 ...... 124
Manville Canada Inc. v. Montreal Trust Co. of Canada (1993), 17 C.P.C. (3d) 122 (A.B.Q.B.) (QL) ...... 112
Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] S.C.J. No. 51 ...... 22,130
Morguard Properties Ltd. v. Winnipeg (City), [1983] S.C.J. No. 83 ...... 126
Nolan v. Ontario (Superintendent of Financial Services), [2007] O.J. No. 2176; aff’d [2009] S.C.J. No. 39 ...... 90
Northern Alberta Institute of Technology Academic Staff Association v. Northern Alberta Institute of Technology (2002), 217 D.L.R. (4th) 441 (Q.B.); aff’d (2004), 235 D.L.R. (4th) 711 (C.A.) ...... 99,119
Pacific National Investments v. Victoria (City), [2004] 3 S.C.R. 575 ...... 65,102,124,125
Pacific National Investments Ltd. v. Victoria (City), [2000] S.C.J. No. 64 ...... 126
Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762 ...... 102
Peter v. Beblow, [1993] 1 S.C.R. 980 ...... 101
R. v. Morgentaler, [1993] 3 S.C.R. 463 ...... 132
Re Indalex, [2011] O.J. No. 1621 (C.A.) ...... 71
Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 ...... 92,132
Schmidt v. Air Products Canada Ltd., [1994] S.C.J. No. 48 ...... 45,76,90,105,106
Smith v. Michelin North America (Canada) Inc., [2008] N.S.J. No. 508 (C.A.) ...... 90
Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 ...... 97,98
Tele-Mobile Co. v. Ontario, [2008] S.C.J. No. 12 ...... 132 - 65 -
Appellants’ Factum Alphabetical Table of Authorities
Case Law (cont’d) Paragraph(s)
Trent University Faculty Association v. Trent University (1997), 35 O.R. (3d) 375 (C.A.) (Q.L.) ...... 105
United States of America v. Dynar, [1997] 2 S.C.R. 462 ...... 92
Wells v. Newfoundland, [1999] 3 S.C.R. 199 ...... 79,107
Other Texts
Black's Law Dictionary, 8th ed., s.v. "assets" ...... 41
Concise Oxford English Dictionary, 11th ed., s.v. "assets" ...... 42
Pierre-André Côté, The Interpretation of Legislation in Canada, 3rd ed. (Scarborough: Carswell, 2000) ...... 126
Eileen E. Gillese, “The Fiduciary Liability of the Employer as Pension Plan Administrator” (Paper presented at Canadian Institute Conference, November 18, 1996) ...... 69
P. Hogg, Constitutional Law of Canada, 5th ed. (Toronto: Carswell, 2007) ...... 137
Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 5th ed. (Markham: Lexis Nexis, 2008) ...... 42,124,126,132,136
Eric Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough: Carswell, 1992) ...... 124
House of Commons Debates (Hansard), February 24, 1992 ...... 46,76
House of Commons Debates (Hansard), No. 213 (April 22, 1999) ...... 28,65,134