The court dismissed an appeal overturning a decision of the Financial Services Tribunal which had held that section 70(6) of the Ontario Pension Benefits Act, R.S.O. 1990, c. P.8, does not require a distribution of the actuarial surplus when there is a partial wind-up of an Ontario defined benefit pension plan

28. September 2004 0

Administrative law – Decisions of administrative tribunals – Financial Services Commission – Pension plans – winding-up – surplus – Judicial review – Compliance with legislation – Standard of review – Correctness – Statutory interpretation – Legislation

Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] S.C.J. No. 51, Supreme Court of Canada, July 29, 2004, McLachlin C.J. and Iacobucci, Major, Bastarache, Binnie, Deschamps and Fish JJ.

Monsanto had a pension plan for its employees. A re-organization occurred which involved a staff reduction and a plant closure, with 146 members of the pension plan receiving notice that their employment would be terminated. Monsanto reported to the Superintendent that there would be a partial wind-up of the plan. At that time, there was an actuarial surplus of some $19,100,000, representing the amount by which the estimated asset value exceeded the estimated liabilities. The pro rata share of the surplus related to the part of the plan being wound up was approximately $3,100,000. The Superintendent refused to approve Monsanto’s report because, among other things, it failed to provide for the distribution of the surplus on partial wind-up, in accordance with section 70(6) of the Act. A majority of the Financial Services Tribunal disagreed with the Superintendent and ordered her to approve the report.

The court evaluated the four factors comprising the pragmatic and functional approach which is required to decide the appropriate level of deference that a court should grant in reviewing the decision of the Tribunal. First, the absence of a privative clause, while not determinative, suggested that the legislature intended less deference to be afforded the Tribunal on judicial review. Second, the nature of the problem was a pure question of law related to statutory interpretation. Such legal questions will attract a more searching standard of review as being clearly within the expertise of the judiciary, unless the legal question is “at the core” of the Tribunal’s expertise. Third, with respect to the relative expertise of the Tribunal, there is little to indicate that the legislature intended to create a body with particular expertise over the statutory interpretation of the Act. This suggested a lower amount of deference on judicial review. Fourth, considering the purposes of the legislation and the provision, the Tribunal assumed a different role and function in relation to the statutory purpose of the particular provision at issue. The determination of the meaning of section 70(6) was not polycentric in nature, and the legislature did not grant the Tribunal broad discretionary powers nor a range of policy-laden remedial choices that involved the balancing of multiple sets of interests of competing constituencies. The issues raised in section 70(6) are legal in nature, rather than economic, broad, specialized, technical or scientific in such a way as to substantially deviate from the normal role of the courts. This also indicated less deference on judicial review. The court adopted a standard of review of correctness, as there were no persuasive grounds for the court to grant the Tribunal any deference on the pure question of law.

Turning to the statutory interpretation, the court concluded that section 70(6) of the Act required the distribution of actuarial surplus related to the part of the pension plan being wound-up on the effective date of the partial wind-up. The Financial Services Tribunal was found to have incorrectly interpreted the provision at first instance.

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