Ontario Court of Appeal Upholds Partial Wind Up Order

By: Mark T. Firman

On January 11, 2010, the Onta­rio Court of Appeal released its decision in Hydro One Inc. v. Ontario (Financial Services Commission), 2010 ONCA 6 (CanLII). The Court’s decision upheld the decisions of the Divisional Court and the Financial Services Tribunal (the “Tribunal”), which ordered the partial wind up of Hydro One’s pension plan (the “Plan”) based on the termination of 73 non-unionized management members of the Plan (the “Members”). Christopher G. Riggs, Q.C. and Lisa J. Mills argued the case on behalf of Hydro One Inc.

In late 2002, the Members were terminated in connection with the merger of two of Hydro One’s corporate affiliates. The Members represented only 2% of the Plan’s total active membership of about 4,000 but approximately 18% of non-unionized management employees taken as a subset of the total membership.

The Court held that the remedial provisions of the Pension Benefits Act (the “PBA”) should be interpreted liberally and in furtherance of the PBA’s objective of protecting older employees facing workforce reductions. On this basis, the Court upheld the Tribunal’s decision to consider the proportion of Members terminated in relation to the subset of all non-unionized management employees when determining whether a “significant” number of employees had terminated for purposes of ordering a partial wind up.

In December 2009, the Government of Ontario released draft legislation, Bill 236, the Pension Benefits Amendment Act, 2009 (“Bill 236”), which will, if passed in its current form, eliminate all partial wind ups in Ontario with an effective date on or after January 1, 2012. At the same time, Bill 236 proposes to extend the “grow in” rights currently at issue in partial wind up cases to all eligible plan members who involuntarily terminate from their employment, whether as a consequence of a full wind up or otherwise.

For more information, please contact any member of the ­Pension & Benefits Group.