The Quebec Superior Court dismissed, on September 5, 2002, the class action filed by the Provincial Association of Hydro-Québec Pensioners against Hydro-Québec, in its capacity as trustee for the management of the Hydro-Québec Pension Fund. The association was seeking an order that $377.5 million be paid to the retirees as of December 31, 1999, by way of improved retirement benefits. The claim was commenced in 1997, following amendments to the Hydro-Québec Pension Plan that allowed plan administration expenses to be paid from the plan fund and that provided for improved early retirement benefits and partial employer contribution holidays. The plan was again amended in 1999, to provide further improvements to the early retirement benefits and full employer/ employee contribution holidays.
The association claimed that Hydro-Québec had a contractual obligation to obtain the consent of the retirees in respect of such amendments. It also argued that because the amendments had been funded from the plan surplus, Hydro-Québec, in its capacity as trustee for the management of the plan fund, had not complied with its alleged fiduciary obligation to provide the retirees with an equitable share of the surplus and had therefore given undue preference to itself and the active employees in that regard.
The court held that it could not rule on the pensioners’ claim in the absence of all stakeholders, namely the active employees, their unions and Hydro-Québec, as employer. It also ruled that precedents involving terminated pension plans, and more particularly the Quebec Court of Appeal decision in Singer, were of no support to the pensioners’ claim. The court reasoned, on the basis of the Supreme Court of Canada decision in Schmidt v. Air Products Ltd., that the surplus in an ongoing pension plan is artificial and could not serve as the basis for the pensioners’ claim. It concluded that the December 31, 1999 date used to determine both the amount of the claim and the make-up of the plaintiff group was arbitrary.
Michel Benoit and Josée Dumoulin (pensions and employee benefits) and George Hendy (litigation) of Osler, Hoskin & Harcourt LLP, and Nicole Lemieux of Marchand Lemieux in Montreal acted for Hydro-Québec. Marcel Rivest and Guy Désautels of Rivest, Schmidt, Moreau, Désautels & Tardif in Montreal acted for the plaintiff association, who will appeal the decision to the Quebec Court of Appeal.
The association claimed that Hydro-Québec had a contractual obligation to obtain the consent of the retirees in respect of such amendments. It also argued that because the amendments had been funded from the plan surplus, Hydro-Québec, in its capacity as trustee for the management of the plan fund, had not complied with its alleged fiduciary obligation to provide the retirees with an equitable share of the surplus and had therefore given undue preference to itself and the active employees in that regard.
The court held that it could not rule on the pensioners’ claim in the absence of all stakeholders, namely the active employees, their unions and Hydro-Québec, as employer. It also ruled that precedents involving terminated pension plans, and more particularly the Quebec Court of Appeal decision in Singer, were of no support to the pensioners’ claim. The court reasoned, on the basis of the Supreme Court of Canada decision in Schmidt v. Air Products Ltd., that the surplus in an ongoing pension plan is artificial and could not serve as the basis for the pensioners’ claim. It concluded that the December 31, 1999 date used to determine both the amount of the claim and the make-up of the plaintiff group was arbitrary.
Michel Benoit and Josée Dumoulin (pensions and employee benefits) and George Hendy (litigation) of Osler, Hoskin & Harcourt LLP, and Nicole Lemieux of Marchand Lemieux in Montreal acted for Hydro-Québec. Marcel Rivest and Guy Désautels of Rivest, Schmidt, Moreau, Désautels & Tardif in Montreal acted for the plaintiff association, who will appeal the decision to the Quebec Court of Appeal.
Lawyer(s)
Josée Dumoulin
Michel Benoit
Marcel Rivest
Guy Desautels
George R. Hendy
Nicole Lemieux