Class Action Upheld as Preferred Procedure in Pension Plan Dispute Resolution

In the case of Brewers Retail Inc. v. Campbell 2023 ONCA 534, the Ontario Court of Appeal dismissed an appeal from the Financial Services Regulatory Authority of Ontario, concluding that a class action is the preferred procedure for resolving a pension plan dispute.

Background

The applicant and respondent by appeal established a defined benefit pension plan for salaried employees in 1945 and made amendments between 1974 and 1988 to provide adjustments to pensions paid based on the annual consumer price index. In 2010 and 2013, the plaintiff filed amendments to limit the indexing for future retirees, when a group of affected employees formed a committee to dispute the 2013 amendment.

The respondents submitted their arguments to the Financial Services Commission of Ontario (FSCO) regarding the matter. The primary issue at hand was whether the indexing of the pension plan qualified as a “pension benefit” under the Pension Benefits Act (PBA). With FSCO’s support, the parties engaged in negotiations and successfully resolved all indexing- related matters in 2015. This encompassed compensation considerations for potentially hundreds or even thousands of unknown plan members. They also reached an agreement to utilize a class proceeding under the Class Proceedings Act, 1992 (CPA) to implement the settlement. With FSCO’s approval, the parties intended to proceed to court for the approval of the settlement agreement.

While the settlement was initially approved by FSCO, it was later contested by the Financial Services Regulatory Authority of Ontario, which replaced FSCO as the regulatory authority in 2019. The appellant sought to have the matter handled by the Financial Services Tribunal (FST), claiming FST had exclusive jurisdiction.

Ontario Superior Court of Justice

In July 2020, the applicant attempted to address the appellant’s concerns by filing retroactive plan amendments dating back to 1974. On Nov. 24, 2020, the appellant rejected the plan, including amendments from 2013 and 2015. In December 2020, the applicant requested an FST hearing to challenge the rejection and informed the appellant of its intent to proceed with a class action settlement process.

In March 2021, the applicant commenced a class proceeding, seeking certification for court approval. The applicant and respondent requested an adjournment of the FST hearing to allow the certification motion to proceed. The FST granted this adjournment to permit the Ontario Superior Court of Justice to address the issue of jurisdiction. The appellant sought to intervene in the certification motion and moved to stay the class proceeding.

During the certification motion, the applicant and respondent argued that the Ontario Superior Court of Justice and the FST had jurisdiction, but they believed the court should handle all aspects, including plan revisions and addressing unknown members. The appellant opposed the class certification, claimed the FST had sole jurisdiction and requested to stay the class proceeding.

The motion judge certified the action, with a focus on common issues, preferable procedures and additional legal questions. He emphasized the goals of the CPA, which include ensuring access to justice, promoting behaviour modification and facilitating judicial economy. He also noted that a class proceeding is preferable when common issues outweigh individual ones and provide better relief.

Ontario Court of Appeal

On appeal, the appellants raised the following issues:

  1. Did the motion judge make an error in determining that the court has jurisdiction over the application without applying the relevant legal principles or addressing the statutory language?
  2. Did the motion judge make an error in failing to consider the appropriateness of deferring to the FST in a dispute involving intricate pension law and policy issues within the FST’s expertise?
  3. Did the motion judge err in concluding that a class action was a “preferable” approach to a regulatory proceeding, considering that the court lacks jurisdiction to address the core issues raised in the application?

Issues 1 and 2: FST does not have exclusive jurisdiction over the application 

The appellant asserts that the motion judge erred in assuming jurisdiction over matters exclusively within the jurisdiction of the FST, by neglecting to consider s. 8 of the Financial Services Tribunal Act, 2017 (FSTA) which grants the FST exclusive jurisdiction to decide all questions arising in proceedings under the PBA and legal precedents which prohibit the use of civil proceedings to bypass statutory decision-makers’ authority.

In its analysis, the court stated that s. 8 of the FSTA does not contain clear and unequivocal wording that would oust the court’s jurisdiction. It grants the FST exclusive jurisdiction over questions of fact or law that arise in proceedings before it, but it does not explicitly exclude the court’s jurisdiction over all pension disputes or the approval of settlements involving interpretations of the PBA and amendments to pension trusts.

While the FST may have concurrent or overlapping jurisdiction over the common issues, it lacks the power to approve the settlement agreement or modify the pension trust as sought in the class proceeding. Therefore, at most, there may be concurrent jurisdiction over limited matters. Further, allowing the class proceeding to proceed carries no downside, while forcing both parties into an FST hearing against their wishes would risk the negotiated benefits, and they could potentially lose what they had bargained for.

Issue 3: No error in motion judge’s determination that class proceeding is preferable procedure 

Standard of review 

The determination of whether a class proceeding is the preferable procedure under s. 5(1)(d) of the CPA rests on the class action judge’s discretion. As such, appellate deference is typically afforded to this decision, with a reviewing court only intervening if the judge made a palpable and overriding error of fact or principle. Given that the motion judge’s decision encompassed both the assessment of the preferable procedure and the consideration of FSRA’s stay motion to defer jurisdiction to the FST, the court stated that it falls within the realm of broad discretion, and substantial deference should be granted to it.

When dealing with concurrent jurisdiction, the Courts of Justice Act provides the court with the discretion to determine the preferred forum. This discretionary power is relevant when multiple forums, such as the court and the FST, have jurisdiction over the matter, and the court must choose the appropriate venue for the case.

The FSRA argued that the motion judge, assuming he had jurisdiction, failed to consider whether the FST should handle complex pension policy and law questions as a first-instance expert decision- maker. The FSRA asserted that the motion judge did not assess the PBA statutory scheme, the roles of the FSRA and the FST, and whether the issues aligned with their specialized expertise and roles in the broader policy framework.

In its analysis, the court stated that the motion judge did consider whether deferring jurisdiction to the FST was appropriate within his preferable procedure analysis. He understood the regulatory scheme, the roles of the FSRA and the FST and concluded that the class proceeding was more suitable, as it could provide the necessary remedies and process. This decision respected the rights and interests of all parties involved. The appeal was dismissed with costs in the amount of $30,000.

This case highlights the importance of assessing jurisdiction and the appropriateness of various legal avenues in complex matters, and the significance of considering the goals of legislation in making such determination. This case follows the decision of the Ontario Divisional Court in Curtis v. Medcan Health Management Inc. 2022 ONSC 5176, where a class action was also found to be the preferable procedure.

This article was written by Dharshani Arumugam and was originally published in Law 360 Canada on October 4, 2023. Dharshani is licensed by the Law Society of Ontario and is an Employment Lawyer at Monkhouse Law.

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