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Vol. 27, No. 08                                                                                                                                                                                                 June 22, 2007                                                                              

                                                                                                                                                                                                 Pension fund administrators
                                                                                                                                                                                                 get clear direction on appeal
                                                                                                                                                                                                  By John Jaffey                                                                    Canadian Doughnut Company
                                                                                                                                                                                                  Toronto                                                                           Limited’s establishment of a
                                                                                                                                                                                                     In a landmark pension law                                                      defined benefit pension plan in
                                                                                                                                                                                                  decision, the Ontario Court of                                                    1954. (The company later became
                                                                                                                                                                                                  Appeal outlined when it is accept-                                                DCA Canada Inc., then Kerry
                                                                                                                                                                                                  able for plan expenses to be paid                                                 (Canada) Inc., now the appellant.)
                                                                                                                                                                                                  from pension funds, when an                                                          Ronald Walker of Fasken Mar-
                                                                                                                                                                                                  employer may use surplus assets                                                   tineau Dumoulin LLP was lead
                                                                                                                                                                                                  to pay current service costs and                                                  counsel for Kerry. He told The
                                                                                                                                                                                                  when the costs of a tribunal                                                      Lawyers Weekly, “We’re delighted
                                                                                                                                                                                                  hearing may be paid from the                                                      that the Court of Appeal has seen
                                                                                                                                                                                                  fund.                                                                             fit to provide some clarity and
                                                                                                                                                                                                     Augmenting “the much needed                                                    guidance both with respect to the
                                                                                                                                                                                                  guidance in this new and emerging                                                 amendments to plans to deal with
                                                                                                                                                                                                  area of law” provided by the                                                      expenses, and with respect to the
                                                                                                                                                                                                  Supreme Court of Canada over the                                                  use of surplus in plans where there
                                                                                                                                                                                                  last decade, Justice Eileen Gillese                                               is both a defined benefit and
                                                                                                                                                                                                  overruled a decision by the Divi-                                                 defined contribution part of the
                                                                                                                                                                                                  sional Court and restored rulings                                                 plan.
                                         Alan Gold; Photo by Paul Lawrence                                                                                                                        by Ontario’s Financial Services
                                                                                                                                                                                                  Tribunal in a case dealing with the                                                                                     see PENSION p. 7

Charter does not apply to foreign seizures
By Cristin Schmitz                       Louis LeBel, Marie Deschamps,                    for future cases to flesh out,” Gold
                                                                                                                                                                                                  Medical teams no more likely
    A deeply divided Supreme
                                         Morris Fish and Louise Charron
                                         adopted a very restrictive view of
                                                                                          observed. If the court is saying that
                                                                                          the only relevant issue around the
                                                                                                                                                                                                  to get sued, researchers report
Court has ruled that the Charter         the Charter’s application to the                 application of the Charter abroad
does not apply to foreign searches       conduct of Canadian officials                    is the effect of the impugned con-                                                                     By donalee Moulton                                                                    They recognize that collabora-
and seizures by Canadian police,         overseas, while the minority com-                duct on trial fairness, “then if there                                                                 Halifax                                                                            tive arrangements are often used in
although tainted evidence may be         plained that their colleagues were               is no trial, all the Charter remedies                                                                     The common belief among                                                         patient care and that a team
excluded from trials here if it is       effectively overruling Cook which                are no longer available,” he                                                                           health-care professionals that those                                               approach is desirable. Courts have
obtained abroad in violation of the      left the door open to extraterrito-              pointed out.                                                                                           who work in groups are more                                                        always assessed liability against
Charter’s fair trial and funda-          rial application of the Charter.                     This would pose problems for                                                                       likely to get sued has been                                                        individuals, even in cases
mental justice standards.                    Reasoned the majority, “as the               those seeking Charter remedies                                                                         debunked by new research from                                                      involving health professionals
    Counsel say R. v. Hape, a 9-0        supreme law of Canada the                        outside a criminal trial, the                                                                          The Conference Board of Canada.                                                    working as a team. Therefore, it is
decision June 7, raises as many          Charter is subject to the same                   minority also noted. For example,                                                                      The board found that although                                                      likely that they will continue to
questions as it answers about when       jurisdictional limits as the                     human rights activists in Canada                                                                       legal liability is widely perceived                                                assess the standard of care
and how the Charter applies to           country’s other laws or rules.                   are suing the federal government                                                                       to be a barrier to delivering health                                               expected of a health professional,
Canadian officials operating in          Simply put, Canadian law, whether                to extend Charter protections to                                                                       services in collaborative teams, the                                               given their qualifications and
foreign jurisdictions, a vexed issue     statutory or constitutional, cannot              suspected insurgents detained by                                                                       perception is not grounded in                                                      experience, on an individual basis.
at least since the court splintered in   be enforced in another state’s terri-            Canadian Forces operating in                                                                           reality.                                                                              “Health professionals are
R. v. Cook, [1998] 2 S.C.R. 597.         tory without the other state’s con-              Afghanistan.                                                                                              “Although there are liability
    Although the Supreme Court           sent. Since extraterritorial enforce-                But Justice LeBel reasoned that                                                                    concerns, they are not significant                                                                                        see HEALTH p. 6
agreed unanimously in Hape to            ment [of Canadian law] is not                    “the power to invade the private                                                                       enough to deter collaboration,”
reject the s. 24(2) Charter bid of       possible, and enforcement is nec-                sphere of persons and property,                                                                        Gabriela Prada, one of the study’s                                                                       CONTENTS p. 2
an Ontario man accused of money          essary for the Charter to apply,                 and seize personal items and infor-                                                                    authors and a principal research
laundering who sought to exclude         extraterritorial application of the              mation is paradigmatic of state                                                                        associate with The Conference
from evidence documents seized           Charter is impossible.”                          sovereignty. These actions can be                                                                      Board, told The Lawyers Weekly.
by the RCMP in a raid on his busi-           Counsel for Hape, Alan Gold of               authorized only by the territorial                                                                        The study, “Liability Risks in
                                                                                                                                                                                                                                                                                                                                                      FOCUS ON LABOUR AND EMPLOYMENT

                                                                                                                                                                                                                                                                                                                                                                                                              FOCUS ON CORPORATE COMMERCIAL

ness in the Turks and Caicos             Toronto, said the majority’s judg-               state. From a theoretical stand-                                                                       Interdisciplinary Care: Thinking
                                                                                                                                                                                                                                                                                                                                                                                                                                              PUBLICATIONS MAIL AGREEMENT NO. 40065517

Islands, the judges split 5-4-1 on       ment and discussion of interna-                  point the Charter cannot be                                                                            Outside the Box”, found that
why they were rejecting his              tional law goes “far beyond” the                 applied, because its application                                                                       Canadian courts seem to have kept
                                                                                                                                                                                                                                                                                                          FOCUS ON FAMILY LAW

appeal.                                  submissions of the parties to the                would necessarily entail an exer-                                                                      pace with the times. “The courts in
                                                                                                                                                                                                                                                                                                                                                                                       COMING JULY 13, 2007
                                                                                                                                                                                                                                                                                                                                COMING JULY 6, 2007
                                                                                                                                                                                                                                                                                      COMING NEXT ISSUE

    In the majority, Chief Justice       case. “This very lengthy discus-                                                                                                                        Canada are reasonable,” said
Beverley McLachlin and Justices          sion will clearly provide material                                        see SEIZURE p. 3                                                              Prada.

                                                                                      NICE BACKYARD.
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THE LAWYERS WEEKLY June 22, 2007                                                                                                                                                                              7

No provisions relevant to expense payments                                                                                                                          Gillese pointed out that the tri-
                                                                                                                                                                    bunal unanimously declined to
                                                                                                                                                                    make any order as to costs.
             PENSION                   were required to participate in the        She then noted that the tribunal                                                     The Divisional Court had
      –continued from p. 1–            defined contribution component.         had relied on clauses in both the                                                    ordered costs against Kerry not
                                           When the amendments were            trust agreement and the plan docu-                                                   only at the Divisional Court but
   “There was a great deal of con-     introduced, the Committee asked         ments that authorized money to be                                                    also retroactively with respect to
fusion for plan administrators         the superintendent of Financial         paid for the exclusive benefit of                                                    the second tribunal hearing.
given the Divisional Court deci-       Services to investigate alleged         the employees. Furthermore,                                                             Justice Gillese restored the “no
sion. The Court of Appeal decision     irregularities in the administration    expert evidence at the hearing                                                       costs” award at the tribunal level.
has clearly provided guidance to       of the plan, including the payment      equated “exclusive benefit of Plan                                                   She held that it was a proper exer-
plan administrators and the profes-    of plan expenses from the Fund          members” with “routine expenses                                                      cise of the tribunal’s discretion to
sions dealing with pension plans.      and the employer’s contribution         essential to the continued opera-                                                    decide on costs and that there was
Throughout, our client has been        holidays.                               tion of the Plan.” Following a thor-                                                 nothing in that decision that war-
trying to administer the plan in           After investigating, the Super-     ough analysis of the legal obliga-               Ronald Walker                       ranted interference by the Divi-
good faith and feels vindicated by     intendent required Kerry (the                                                                                                sional Court. “When the Divi-
the decision.”                         employer) to reimburse the Fund                                                                                              sional Court makes a costs award
   Walker’s co-counsel was Chris-      for expenses not incurred for the                                                                                            in respect of a tribunal hearing,”
tine Tabbert, also of Fasken Mar-      exclusive benefit of plan members                                                                                            she wrote, “it is standing in the
tineau.                                dating back to 1985. However, the                “The company has the right to use the                                       shoes of the tribunal. Accordingly,
   The company’s original pension      Superintendent did not order                    actuarial surplus to fund its contributions                                  the Divisional Court is obliged to
plan text specified that funding for   Kerry to pay into the Fund the                         while the Plan is ongoing.”                                           consider and apply the rules gov-
the pension was through company        amount represented by its contri-                                                                                            erning costs under which the tri-
and employee contributions to a        bution holidays.                                                                                                             bunal operates.”
pension fund (the “Fund”) consti-          Kerry sought a hearing before                                                                                               Justices John Laskin and Paul
tuted as a trust. A simple trust       the tribunal with respect to plan       tion for payment of plan expense,      the plan is ongoing. It is signifi-           Rouleau agreed.
agreement was entered into at that     expenses. The Committee sought a        she concluded that the tribunal’s      cant to note that Schmidt estab-                 Ari Kaplan and Clio Godke-
time, and subsequent trust agree-      hearing with respect to the contri-     decision was reasonable and ought      lishes that right even where, as              witsch of Koskie Minsky LLP
ments were signed from time to         bution holidays.                        to be restored.                        here, the trust agreement provides            acted for the plan members.
time beginning in 1958.                    Kerry was successful on both           As to contribution holidays,        that the fund is to be used exclu-            Kaplan told The Lawyers Weekly
   There are about 80 members of       matters at the tribunal hearings.       Justice Gillese noted there was no     sively for the benefit of plan mem-           his clients are reviewing the deci-
the plan. The respondents are          (The tribunal did, however, order       prohibition against them in the        bers.”                                        sion and considering their options.
former employees and members of        Kerry to repay $5,455 spent to          original plan and trust documents.        Further, she held that cross-sub-          They have until the beginning of
the Retirement Committee (the          obtain advice about the addition of     She relied on Schmidt v. Air Prod-     sidization is not prohibited by the           September to decide whether to
Committee), which administers          the defined contribution option,        ucts of Canada Ltd., [1994] 2          trust agreement. “What is prohib-             seek leave to appeal.
the plan.                              but ruled that all other plan           S.C.R. 611 as authority for the        ited,” she wrote, “is the use of the
   The Fund has been in a surplus      expenses were incurred for the          principle “that the company has        Fund for other than the exclusive             Reasons: Nolan v. Ontario (Superinten-
position for many years, and plan      “primary benefit” of the plan ben-      the right to use the actuarial sur-    benefit of fund beneficiaries.”               dent of Financial Services), [2007] O.J.
members have always received           eficiaries.)                            plus to fund its contributions while      Finally, regarding costs, Justice          No. 2176.
their full pension benefits.               The Committee appealed suc-
   Amendments to the original          cessfully to the Divisional Court,
plan text in 1975, 1987 and 2000       which not only overturned the tri-
purported, among other things, to      bunal’s decisions, but ordered
give the employer the power to pay     Kerry to pay the Committee’s costs
plan expenses from the Fund.           of the appeals and of the second
   From the inception of the plan      tribunal hearing.
to the end of 1984, the employer           This time it was Kerry’s turn to
paid all plan expenses. Beginning      appeal. As well, the Committee
in 1985, however, it paid third-       cross-appealed to the Ontario
party plan expenses (such as actu-     Court of Appeal on the issues of
arial, investment management and       whether Kerry must remit contri-
audit services) from the Fund.         butions in respect of the defined                      Don’t miss The Canadian Bar Association’s Canadian Legal
Between 1985 and 2002, some            benefit component of the plan and                      Conference and Expo 2007 in Calgary from August 12 to 14.
$850,000 of these expenses were        whether the tribunal has the power                     Everybody will be there. *
paid from the Fund.                    to order costs payable from a pen-
   Also beginning in 1985, the         sion fund.
employer took contribution holi-           On the issue of plan expenses,
days in respect of its funding         Justice Gillese (who is widely pub-                                                                                                            Elie Wiesel
obligations. By 2001, the amount       lished in the field of trusts and
totalled $1.5 million.                 pensions, and who is a former
   In 2000, the plan text was          chair of the Pension Commission
amended to introduce a defined         of Ontario (1994-96), the Finan-
contribution component. Existing       cial Services Commission of                                                                                                                       Preston
plan members were given the            Ontario (1998-99) and the Finan-                                                                                                                 Manning

option of remaining in the defined     cial Services Tribunal of Ontario)
benefit component of the plan or       noted there are no provisions in the
converting to the defined contribu-    Pension Benefits Act relevant to the
tion component. New employees          payment of expenses.
                                                                                                                                                                                        The Hon.

Yippie became a stockbroker
                                       especially if it meant giving up the
      –continued from p. 5–            pleasures of the flesh.                                                                                                                        Jann Arden

national Party (Yippies) and a            Jeffrey Miller is a writer, trans-
defendant in the Chicago Seven         lator, and lawyer. His latest books                                               *Perhaps we should qualify the word “everybody.” It isn’t intended to presuppose
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show trial, for becoming a stock-      are the courtroom crime comedies,                                                   professional who appreciates a chance to connect with his or her peers while
broker. But I wasn’t surprised         Murder at Osgoode Hall, Murder’s                                                    listening to outstanding presenters, learning about new trends in Canadian and
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when he did that. He was always        Out of Tune, and (to be published                                                   of Canada’s new West will be excited enough to sign up today. Visit
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plated being “stuck in the sixties,”   Web:

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