



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Williams 
          v. College Pension Board; Williams v. Bradshaw,







2007 
          BCCA 19



Date: 20070111





Dockets: CA033080 & CA033100

Docket: CA033080

Between:

Anthony Williams, Ashley Dermer, Michael Griffin and 
    Richard Scott

Plaintiffs

(Respondents)

And

College 
    Pension Board of Trustees, John Cook, Dan Bradford,

Paul 
    Martin, Jack Bradshaw, Marilyn Duggan, Andy Jani, Bruce Kennedy,

Tom 
    Kozar, Cliff Neufeld, Valerie Mitchell, Bonnie Pearson,

Roseanne Moran, Dominique Roelants and John Wilson

Defendants

(Appellants)

And

College 
    Institute Educators Association of British Columbia,

Post 
    Secondary Employers Association, and

Her Majesty 
    the Queen in Right of British Columbia

Intervenors

-  and  -

Docket: CA033100

Between:

Anthony Williams, Ashley Dermer, Michael Griffin and 
    Richard Scott

Plaintiffs

(Respondents)





And

College 
    Pension Board of Trustees, John Cook, Dan Bradford,

Paul Martin, 
    Marilyn Duggan, Andy Jani, Bruce Kennedy,

Tom Kozar, 
    Cliff Neufeld, Valerie Mitchell, Bonnie Pearson,

Roseanne Moran, Dominique Roelants and John Wilson

Defendants

(Appellants)

And

Jack Bradshaw

Defendant

(Appellant)

And

College 
    Institute Educators Association of British Columbia,

Post Secondary 
    Employers Association, and

Her Majesty the Queen in 
    Right of British Columbia

Intervenors





Before:


The 
          Honourable Madam Justice Prowse




The 
          Honourable Mr. Justice Donald




The 
          Honourable Mr. Justice Hall








C. 
          Ferris, L. Chamzuk


Counsel for the Appellant Board of Trustees




J. 
          Elwick, G. Pun



D. 
          Klein, M. Zigler




Counsel for the Appellant Bradshaw



Counsel for the Respondents








Place 
          and Date of Hearing:


Vancouver
,
British Columbia




4 December 2006




Place 
          and Date of Judgment:


Vancouver
,
British Columbia




11 January 2007








Written 
          Reasons by
:




The 
          Honourable Mr. Justice Hall




Concurred 
          in by:




The 
          Honourable Madam Justice Prowse

The 
          Honourable Mr. Justice Donald





Reasons for Judgment of the Honourable Mr. Justice Hall:

[1]

The appellants appeal from an order of Mr. Justice Sigurdson certifying 
    the respondents action as a class proceeding.  The reasons for judgment in 
    that decision can be found at 254 D.L.R. (4th) 536, 2005 BCSC 788.

[2]

The certification was ordered pursuant to the
Class Proceedings 
    Act
, R.S.B.C. 1996, c. 50, s. 4 of which provides, in part, as follows:

4
(1)  
    The court must certify a proceeding as a class proceeding on an application 
    under section 2 or 3 if all of the following requirements are met:

(a)  the pleadings disclose a cause of action;

[3]

The appellants submit on this appeal that the respondents have failed 
    to make out a cause of action.  If this submission is accepted, then the respondents 
    would not have satisfied a key requirement of the
Class Proceedings 
    Act
and the certification order should be set aside.

[4]

The respondents maintain that they have a valid cause of action for 
    damages, including punitive damages, against the appellants arising out of 
    an allegation of breach of fiduciary duty.  Specifically, they allege that 
    the appellants administration of a pension plan, under which the respondents 
    are beneficiaries, breached the duty of impartiality and even-handedness of 
    the defendants to administer the fund in the best interests of all Plan members 
    and for the sole benefit of Plan members.

Background and Legislative Provisions

[5]

The respondent plaintiffs are retired members of the College Pension 
    Plan (the Plan), which is constituted under the
Public Sector Pension 
    Plans Act
, S.B.C. 1999, c. 44 (the 
PSPPA
).  The Plan 
    was designed to provide benefits to instructors, librarians and senior administrative 
    staff of colleges designated under the
College and Institute Act
, 
    R.S.B.C. 1996, c. 52.  Covered by the Plan are three categories of beneficiaries: 
    active members, deferred vested members and retired members.

[6]

Schedule A of the
PSPPA
establishes the appellant Board 
    of Trustees (the Board) as being responsible for the administration of the 
    Plan and for the management of the Pension Fund.  The Pension Fund is a trust 
    fund continued under the
PSPPA
to fund the benefits provided 
    for in the Plan.

[7]

In April 2000, the Board promulgated the
College Pension Plan 
    Regulation
, B.C. Reg. 95/2000, which set out rules governing the Plan.  
    Section 13 of Schedule A of the
PSPPA
authorizes the Board to 
    adopt such regulations.

[8]

Section 15 of Schedule A authorizes and, under some circumstances, 
    requires the Board to make amendments to the rules governing the Plan.  The 
    relevant provisions read as follows:

15
(2) The partners may direct the board to amend the pension plan rules 
    and the board must amend the rules if

(a) the partners have first received and considered the advice of 
    the board respecting both the cost and the administrative impact of implementing 
    the proposed amendment, and

(b) the proposed amendment is not inconsistent with subsection (1) 
    or the trustees' fiduciary responsibilities.

[9]

The term partners is defined in s. 1 of Schedule A as the government, 
    the Post Secondary Employers' Association, the College Institute Educators' 
    Association and the British Columbia Government and Service Employees' Union.

[10]

The dispute in this case arises from amendments made pursuant to s. 
    15.  These amendments resulted from a directive dated April 12, 2001 from 
    the partners to the Board to amend the Plan.  This directive is termed the 
    Partners Agreement.

[11]

The rationale behind the Partners Agreement was based on an actuarial 
    valuation of the Plan showing an actuarial surplus of $120,000,000 in the 
    Plan as of August 31, 2000.  The partners wished to allocate the actuarial 
    surplus as follows:

(a)        
    $75,000,000 retained in the Plan to protect all plan members against potential 
    future adverse actuarial experience;

(b)        
    $20,000,000 retained in the Plan and allocated to insulate active contributing 
    members from a contribution increase for five years between January 1, 2002 
    and December 31, 2006;

(c)        
    $20,000,000 retained in the Plan and allocated to insulate the college and 
    institute employers from contribution and rate increases over the same period; 
    and

(d)        
    $5,000,000 to provide enhancements for retired members (about one-half by 
    way of cash payments to retired members and one-half to enhance post-retirement 
    group benefit packages).

[12]

In late 2001, the Board enacted two amending regulations implementing 
    the terms of the Partners Agreement: B.C. Reg. 266/2001 and B.C. Reg. 314/2001.  
    The former authorized the Board to make a one-time lump sum payment to each 
    person who was a retired member of the Plan as of December 31, 2001.  The 
    latter authorized the benefit improvements and contribution reductions set 
    out in the Partners Agreement.

[13]

In the present proceeding, the respondents have alleged that this allocation 
    of the actuarial surplus denied them an allocation of benefits proportionate 
    to benefits granted to active members and employers.  The respondents submitted 
    that in passing the amending Regulations the appellants had breached their 
    fiduciary duties toward the respondents because they had failed to treat all 
    parties in an even-handed fashion.  Damages, both general and punitive, are 
    sought as a remedy for the alleged breach of duty.

[14]

It should be noted that a subsequent actuarial valuation of the Pension 
    Fund, performed as of August 31, 2003, indicated an actuarial deficit, also 
    called an unfunded liability, of $50,000,000.  In response to this situation 
    the Board adopted a later amendment, B.C. Reg. 445/2004, cancelling the temporary 
    contribution rate reduction and holiday and increasing the contribution rates 
    for the Plans active members and employers.  Both the former surplus valuation 
    and the later deficit valuation demonstrate the notional or transitory nature 
    of periodic actuarial valuations and demonstrate that pension plan values 
    can and do fluctuate, sometimes quite dramatically.

The Positions of the Parties

[15]

The appellants argue that the present action cannot succeed because 
    there exists no proper basis for any claim for damages by the respondents.  
    They submit that s. 15(2)(b) of Schedule A sets out as a precondition to the 
    enactment of any amendment that such amendment must be consonant with the 
    Boards fiduciary responsibilities.  If an amendment is adopted in breach 
    of the Boards fiduciary duties, such breach will have the effect of nullifying 
    the amendment, as a requisite precondition for enactment will not have been 
    met.  It is submitted that any such amending regulation would be void for 
    lack of jurisdiction.  That being the case, according to the appellants, the 
    impugned changes to the Plan should be set aside, and matters would revert 
    to the status quo prior to the amendment and the respondents would be unable 
    to advance any successful claim for damages.

[16]

The appellants further submit that the pleadings do not assert sufficient 
    facts to support any claim for punitive damages.  They contend that, in any 
    case, an action in punitive damages cannot stand alone and the punitive damages 
    claim should be struck out.  The appellants submit that if the respondents 
    have any legal remedy available to them, it would be an order declaring the 
    amending regulations invalid, not an award in damages.  The respondents have 
    expressly disclaimed any intention to seek such a remedy.

[17]

The respondents assert that their pleadings disclose actions against 
    the Board in breach of statutory and general fiduciary duties.  They attack 
    not the regulations but, rather, the appellants alleged failure to effect 
    an even-handed distribution of the actuarial surplus.  In other words, the 
    respondents do not wish to undo the effect of the amending regulations or 
    to take away benefits that were granted thereunder; they contend here and 
    contended before Sigurdson J. that the Board breached its fiduciary duties 
    in failing to take proper steps to ensure that retired Plan members received 
    benefits correlative to those received by other Plan participants and seek 
    a remedy in damages.

Analysis

[18]

The respondents submit that it is not plain and obvious that their 
    damages claims cannot succeed.  They submit that when the Board, in allocating 
    the $120,000,000 surplus in the Plan in 2001, only allocated about $5,000,000 
    in immediate cash and other benefits to retirees and utilized $40,000,000 
    to grant contribution holidays and other benefits to the employers and active 
    members, they failed to fulfil their fiduciary responsibility to act in an 
    even-handed fashion.  They submit that damages, both general and punitive, 
    are a fit remedy for this failure of the appellants to provide them with benefits 
    commensurate with benefits provided to the other parties to the Plan.  It 
    was submitted in argument by the respondents that the Board could have awarded 
    additional benefits to the respondents to balance the benefits provided to 
    the employer and active members by the amending Regulations.  This failure, 
    they submit, provides a valid foundation for the present action.

[19]

The appellants take issue with the decision of the Chambers judge finding 
    a validly pleaded cause of action and the order certifying the action under 
    the
Class Proceedings Act
.  I note that the argument advanced 
    in this Court seems to be focussed in a slightly different fashion from the 
    attack mounted by the appellants, aside from Mr. Bradshaw, before the Chambers 
    judge.  Before the Chambers judge it was submitted that the only remedy properly 
    open to the respondents was to attack the Regulations by way of judicial review.

[20]

Sigurdson J.  thus described the argument at para. 53 of his reasons:

The intervenors and defendants say that if judicial review 
    is available to attack the regulation it is the only way, and not merely the 
    preferable, way of proceeding.  Indeed they go one step further.  Not only 
    must the proceeding be brought by judicial review, they submit, but the action 
    has a fatal flaw in that it violates the collateral attack rule.  The action, 
    the defendants say, cannot be brought while the trustees decision is outstanding 
    and has not been quashed because the regulation implementing the Partners 
    Agreement amounts to a binding determination that the amendment was not in 
    breach of fiduciary duty.  The regulation operating as a bar to the attack 
    by the plaintiff, they say, is a species of
res judicata
, and the plaintiffs 
    action for collateral or consequential relief based upon that conduct is a 
    collateral attack and bound to fail.  Thus, there can be no action for compensatory 
    damages because the Board acted lawfully (pursuant to the unattacked regulation).



[21]

The judge answered that submission as follows in his reasons: (paras.57-62)

Does it follow that where there is a breach of a private 
    duty alleged and the underlying conduct may be the subject of judicial review 
    (and there is as well a claim for damages), the challenge must be brought 
    by judicial review?

The question, at this stage, is not what is the preferable 
    procedure, but whether it is plain and obvious that there is no cause of action 
    because there is a decision that must be first set aside before a damage claim 
    can be advanced.  The defendants and intervenors have not provided me with 
    any authority stating that where there is a private law claim for damages 
    that might also be characterized as conduct reviewable by judicial review, 
    that the proceeding must first be brought by way of judicial review.  Although 
    the defendants rely on the decision of
Berscheid v. Ensign
, 
    [1999] B.C.J. No. 1172 (S.C.), that decision merely says that judicial review 
    must be brought by way of petition; it does not decide the point here.

I have concluded that it is not plain and obvious that 
    there is no reasonable cause of action disclosed in the plaintiffs statement 
    of claim.

Accepting that the decision of the trustees implementing 
    the agreement might be characterized as an exercise of a statutory power and 
    that it may be possible to attack the decision under judicial review, I nevertheless 
    do not think that it is plain and obvious that the claim must fail if that 
    regulation is not first successfully attacked.  It is at least arguable that 
    the relevant legislation required only that the arrangement not be in breach 
    of fiduciary duty, and that the adoption of such an agreement does not constitute 
    a binding determination that the arrangement is not in breach of fiduciary 
    duty.

The plaintiffs say that the claim for damages for breach 
    of fiduciary duty may exist even in light of the unchallenged regulation and 
    even if the regulation might be said to amount to an implicit determination 
    that there was no breach of fiduciary duty.  The plaintiffs submission receives 
    some support, if only by analogy, from the decision of the Supreme Court of 
    Canada in
Wells v. Newfoundland
, [1993] 3 S.C.R. 199
.

Although
Wells
may not be directly on point, 
    there are parallels relevant to the issue of whether there is a cause of action 
    disclosed.

[22]

His Lordship observed, I am not persuaded that, even if the conduct 
    complained of is subject to judicial review, it is necessarily incapable of 
    sustaining a claim for breach of fiduciary duty (at para.64).  After considering 
    several other objections to certification advanced before him by the appellants, 
    Sigurdson J. certified the action as a class proceeding.

[23]

In this Court the appellants advance an argument based on statutory 
    construction.  They submit that s.15(2)(b) of Schedule A, properly construed, 
    is a complete answer to the claims of the respondents.  That is so, it is 
    submitted, because a precondition to the enactment of the amending Regulation 
    adopted by the Board in 2001 is that any such amendments must not be inconsistent 
    with the fiduciary responsibilities of the Board.  The argument is that if 
    the amendments amounted to a breach of the fiduciary duty or responsibilities 
    of the Board, then the amendments are and were of no force or effect and any 
    claim of the respondents for damages based on the effect of their passage 
    must fail.

[24]

The appellants submit that the Chambers judge fell into error when 
    he placed any reliance upon the case of
Wells v. Newfoundland
, 
    [1999] 3 S.C.R. 199, 177 D.L.R. (4th) 73.  In that case the plaintiff Wells 
    sued for wrongful dismissal from the Public Utilities Board of the
Province
of Newfoundland.  
    Wells had been employed as a commissioner by the Province under a contractual 
    arrangement.  When the Crown restructured the Board, eliminating the position 
    of Wells, he was found to be entitled to damages for wrongful termination 
    of his contract.  The Supreme Court of Canada held that although the Province 
    possessed the authority to enact legislation denying an individual a remedy 
    for termination of employment, the legislature had not plainly done so in 
    the case of Wells and therefore a suit lay for damages.  The Supreme Court 
    observed at para. 55 of the judgment:

The 
    Crown had a contractual obligation to the respondent, which it breached by 
    eliminating his position.  As his right to seek damages for that breach was 
    not taken from him by legislation, he is entitled to compensation.

[25]

In my opinion,
Wells
is not an authority that supports 
    the arguments of the respondents in the present case.  It seems to me that 
    the Chambers judge fell into error in relying upon that authority which dealt 
    with a wholly different factual circumstance than what is at issue in the 
    case at bar.  Here, the requirement that the Board members must act in accordance 
    with their fiduciary responsibilities to beneficiaries of the Plan is a precondition 
    of the validity of the Regulations complained of by the respondents.  That 
    is a very different issue from the Wells case where what was at issue was 
    whether the legislation eliminating his position plainly took away any claim 
    for damages for breach of contract.

[26]

I am in agreement with the submission of the appellants that if a court 
    were to find that the amending Regulations 266/2001 and 314/2001 were passed 
    in breach of the fiduciary duty of the Board, then such amendments were void 
    from their inception.  The core allegation of the respondents is just that, 
    namely that the Board breached its fiduciary duty to the respondent plaintiffs.  
    Although the respondents have disclaimed any wish to strike down the Regulations 
    in these proceedings, the striking down of the Regulations would be an inescapable 
    corollary of a successful allegation of a breach of fiduciary duty or responsibility 
    by the Board.  They are thus met with the insuperable objection on the part 
    of the appellants that if their allegations should be ultimately successful, 
    no action is maintainable because the foundation for them, the amending Regulations, 
    are swept away.  Because of this impossible conundrum at the heart of the 
    case advanced by the respondents, I consider the Chambers judge ought to have 
    held that there was no valid cause of action pleaded by the respondents and 
    his failure to so find was in error.  In light of the terms of s.15(2)(b), 
    I consider the respondents are not able to advance any successful claim for 
    general damages against the Board  for the reasons set forth above.  Thus 
    their pleading fails to disclose any valid cause of action that could result 
    in an award of damages.

[27]

Concerning the claim for punitive damages, while there may arise a 
    situation where a claim for punitive damages could be advanced in the absence 
    of a valid claim for general damages, such a result seems to me impossible 
    on the facts of this case.  The same conduct relied upon for an award of general 
    damages, breach of fiduciary duty, appears to be the underpinning sought for 
    an award of punitive damages.  The respondents face the same problem in advancing 
    this claim as they do in advancing a claim for general damages.  If, as I 
    have held, the claim for general damages cannot succeed because of the terms 
    of s.15(2)(b), a similar result must follow concerning the claim advanced 
    for punitive damages arising from the questioned acts of the Board.  In the 
    circumstances of this case, it is plain and obvious that the punitive damages 
    claims cannot succeed and so no valid cause of action exists in that regard.

[28]

Since the pleadings of the respondents fail to disclose any valid cause 
    of action that would result in an award of either general or punitive damages, 
    the order certifying this proceeding as a class proceeding is not sustainable.  
    I would therefore allow the appeals from the certification order, but without 
    costs, in accord with the judgment of this Court in
Samos Investments 
    Inc. v. Pattison
(2002), 5 B.C.L.R. (4th) 21, 2002 BCCA 442.



The Honourable Mr. Justice Hall



I agree:



The Honourable Madam Justice Prowse



I agree:

The Honourable Mr. Justice Donald








