Changing demographics, increasingly vocal retirees, and the prospect of more companies finding themselves in trouble have all combined to create more interest than ever in pension law, a leading practitioner said this morning. “I have often marvelled myself at the interest in pension law,” Andrew Hatnay of Toronto’s Koskie Minsky LLP said at the Canadian Bar Association conference in Halifax.
It’s no surprise, then, that there’s been so much discussion around the Ontario Court of Appeal’s decision in Re: Indalex Ltd., a case Hatnay was involved in and spoke about during a session on disputes over underfunded pension plans. “It’s a great decision,” said Hatnay, who represented employees in a matter that resulted in the company, Indalex Ltd., having to set aside $3.2 million for members of the executive pension plan during Companies’ Creditors Arrangement Act proceedings. “Of course, I’m biased,” he added.
Hatnay noted in Indalex, the appeal court considered the questions of whether the company had breached its fiduciary duty and whether there was a deemed trust in a situation where it had essentially abandoned its pension plan. The issue has been a murky area of law, he said, given that while the Ontario Pension Benefits Act applies a deemed trust to pension plans, the provision has been given ineffective treatment over the years. At the same time, the Supreme Court of Canada has said that provincial deemed trusts don’t apply in a bankruptcy. But in Indalex, the employees argued they do stand during CCAA proceedings.
As Hatnay pointed out, however, there are outstanding leave applications to the SCC related to Indalex. He said he expects a decision on leave issue this fall.
Natalie Bussière of Blake Cassels & Graydon LLP said during the session there needs to be an acknowledgment that there will be benefit cuts when companies go bankrupt. “In order to have pension plans, you need to have employers,” she said, expressing concerns that decisions like Indalex create added risk for employers when dealing with pension plans.
“Where do we strike that balance? Of course, the courts will answer that.”