Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Civil procedure - Costs - Whether the Court of Appeal erred in holding that the bargaining agent for unionized pension plan members does not have the right to obtain payment of costs from a pension trust fund on behalf of its unionized members/plan beneficiaries - Whether the Court of Appeal erred in: i) requiring consent from pension plan beneficiaries and ii) considering the funding status of a pension plan, in both cases as prerequisites to ordering payment of costs from a pension trust fund when the proceeding is non-adversarial between pension plan beneficiaries, has been initiated to enforce the due administration of the trust and is for the benefit of all pension plan beneficiaries.

Indalex Limited, and related companies (collectively “Indalex”) obtained protection under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”). At the time, its two pension plans were underfunded and one was being wound up. The court approved the sale of Indalex’s assets on a going–concern basis and the repayment of a super-priority charge to debtor-in-possession lenders. United Steelworkers (“USW”), as the bargaining agent for 7 of the 169 members of one pension plan, and the representatives of the pension plan for former executives of Indalex (the “Retirees”) challenged the distribution of the sale proceeds. They brought motions for a declaration that there were deemed trusts in favour of pension beneficiaries to the extent of the fund deficiencies and for orders for the release and payment of those amounts. Indalex brought a motion to lift the CCAA stay and assign itself into bankruptcy.

The Ontario Superior Court of Justice dismissed motions by USW, the Retirees and Indalex. The Ontario Court of Appeal allowed the appeal. The Court declared that there was a deemed trust in favour of one pension plan as well as breaches of common law and statutory fiduciary duties which resulted in a constructive trust in favour of the other pension plan. The plans were declared to have priority and the deficiencies were ordered to be paid out of the reserve fund. In a separate Costs Endorsement, the appellate court approved an agreement between the Retirees, Morneau Sobeco Limited Partnership (now Morneau Shepell Ltd.) as plan administrator, and the Ontario Superintendent of Financial Services and ordered, inter alia, that: i) the Retirees’ full indemnity legal fees and disbursements be paid from the pension fund attributable to each of the 14 Retirees’ accrued pension benefits (but not borne by the other three plan members who were not respondents); and i) the costs ordered in favour of the Retirees were to be paid into the fund and allocated among the 14 Retirees in relation to their pension entitlement. The Court of Appeal declined to make a similar order with respect to the costs incurred by USW, finding that the union was in a materially different position. The Court noted that the non-union beneficiaries of that plan had not consented to the arrangement, that USW was not a beneficiary, and that the fund was underfunded. USW applies for leave to appeal that aspect of the Costs Endorsement.