



COURT OF APPEAL FOR ONTARIO

CITATION: Lacroix v. Canada
    Mortgage and Housing Corporation, 2012 ONCA 243

DATE: 20120418

DOCKET: C53012 & C53034

Doherty, Laskin and Simmons JJ.A.

BETWEEN

Nicole Lacroix and Rosie Ladouceur

Plaintiffs (Appellants)

and

Canada Mortgage and Housing Corporation and Marc
    Rochon, Claude Poirier-Defoy, Jim Millar, Karen Kinsley, Gerald Norbraten,
    Jean-Guy Tanguay, David Metzak and Brian Knight being the Trustees of the Canada
    Mortgage and Housing Corporation Pension Fund

Defendants (Respondents)

BETWEEN

Frank McCann and David Guffie

Plaintiffs (Appellants)

and

Canada Mortgage and Housing Corporation and Marc
    Rochon, Claude Poirier-Defoy, Jim Millar, Karen Kinsley, Gerald Norbraten,
    Jean-Guy Tanguay, David Metzak and Brian Knight being the Trustees of the Canada
    Mortgage and Housing Corporation Pension Fund

Defendants (Respondents)

William J. Sammon and James B. Barnes, for the
    appellants, Nicole Lacroix and Rosie Ladouceur

Paull N. Leamen and Tara M. Sweeney, for the appellants,
    Frank McCann and David Guffie

J. Brett Ledger, Andrea Laing and Lauren Tomasich, for
    the respondents

Heard: July 13, 2011

On appeal from the judgment of the Divisional Court
    (Wilson, Karakatsanis and Bryant JJ.), dated June 16, 2010, with reasons
    reported at 2010 ONSC 65, 90 C.P.C. (6th) 169.

Laskin J.A.:

[1]

The central question on these appeals is whether a court has
    jurisdiction to order the Canada Mortgage and Housing Corporation to partially
    terminate its pension plan or to award damages based on a partial termination.

A.

overview

[2]

Between 1995 and 2000 CMHC laid off half of its workforce.  Many, though
    not all, laid-off employees elected to take the commuted value of their pension
    benefits out of the CMHC pension plan and leave the plan.

[3]

A few years after CMHC began to reduce its workforce, it decided to use
    part of the surplus in its pension plan to enhance the benefits of plan
    members.  CMHC gave two benefit enhancement packages, the first at the
    beginning of 1999, and the second at the beginning of 2001.  However, those
    employees who had left the plan were not eligible for these enhanced benefits. 
    Their exclusion spawned the two class proceedings now before this court.

[4]

Nicole Lacroix and Rosie Ladouceur represent a group of former CMHC
    employees who did not receive either package of benefit enhancements. 
    Initially, they claimed that CMHC committed a breach of trust and breach of
    fiduciary duty by depriving them of these benefit enhancements.  Common issues
    relating to their benefit enhancement claim have already been certified.

[5]

Frank McCann and David Guffie represent a group of former employees who
    received the first benefit enhancement package, but not the second package. 
    Their action has not yet been certified as a class action.

[6]

On the motions that give rise to these appeals, each set of plaintiffs
    now seek to certify common issues relating to their claim that CMHC contravened
    the conflict of interest provisions of the federal
Pension Benefits
    Standard Act, 1985,
R.S.C. 1985 (2nd Supp.), c. 32, by failing to
    partially terminate its pension plan.  As a remedy for this contravention, the
    plaintiffs ask the court to order partial termination or damages premised on a
    partial termination.  In addition, McCann/Guffie seek to certify a common issue
    relating to their claim that CMHC misrepresented to them that it would give
    only one package of benefit enhancements.

[7]

The motion judge, Charbonneau J., declined to certify any of these
    proposed common issues.  He held that the issues relating to the partial
    termination claim did not give rise to a viable cause of action.  He also held
    that the other requirements for certification under s. 5(1) of Ontarios
Class
    Proceedings Act, 1992,
S.O. 1992, c. 6, had not been met.  He refused to
    certify the misrepresentation claim because it did not raise a common issue.
[1]
Finally, he rejected the plaintiffs request that their costs be paid out of
    the pension fund.
[2]

[8]

The Divisional Court dismissed the plaintiffs appeals.  In addition to
    upholding the findings of the motion judge, the Divisional Court concluded that
    a court has no jurisdiction to order CMHC to effect a partial termination of
    its pension plan and has no jurisdiction to award damages based on a partial
    termination.

[9]

The plaintiffs obtained leave to appeal to this court.  On their appeal
    they raise four issues, of which the first is by far the most important and
    took up most of the oral argument:

(a)     Does the
    claim relating to partial termination disclose a cause of action under s.
    5(1)(a) of the
Class Proceedings Act
?

(b)     Did the motion
    judge err in concluding that the issues proposed for certification do not meet
    the requirements of s. 5(1)(b),(c) and (d) of the
Class Proceedings Act
?

(c)     Did the
    Divisional Court err in upholding the motion judges finding that the
    misrepresentation claim advanced by McCann/Guffie does not raise a common
    issue?

(d)     Did the
    motion judge err in failing to award the appellants their costs from the CMHC
    pension fund?

B.

factual history

[10]

The
    factual history giving rise to these class proceedings is thoroughly set out in
    the reasons of the motion judge and the Divisional Court.  Here, I will briefly
    summarize those facts necessary to understand the issues on appeal.

(a)

The CMHC Pension Plan

[11]

CMHC
    is a federal crown corporation.  It is the settlor and sponsor of the CMHC
    pension plan, and the administrator of the plan.  The individual defendants are
    the trustees of the plan.

[12]

CMHCs
    pension plan was established by a trust agreement, which was made in 1960 and
    later amended in 1992.  The plan is a defined benefit plan.  And it is an
    ongoing plan, which is federally regulated under the
Pension Benefits
    Standards Act
, S.C. 1985 (2nd Supp.), c. 32.

(b)

CMHC downsized its workforce starting May 1995

[13]

Two
    programs, by which CMHC cut its workforce in half, are relevant to these
    proceedings.   The first  called the Workforce Adjustment Program  occurred
    from May 1995 to 1996.  The second  called the Transition  began in January
    1997 and continued for several years.

[14]

Employees
    dismissed under either program who were not eligible for or did not choose
    early retirement were given three options:

Take the commuted value of their CMHC pension benefits;

Transfer their pension contributions and service into
    the pension plan of a new employer; or

Remain in the CMHC pension plan as inactive members,
    and receive a deferred pension payable at age 60.

[15]

The
    plaintiffs representing the two classes in these proceedings elected the first
    option  to take the commuted value of their pension benefits  although at
    different times.

(c)

CMHCs surplus decisions and its two benefit enhancement packages

[16]

By
    the 1990s, CMHCs pension plan moved into a surplus position.  The surplus came
    about because of increases in the actuarial value of the assets of the pension
    fund.  Initially the actuarial surplus was quite small, less than $10 million. 
    However, it grew to $64.8 million by 1995, to $101.3 million by 1996, to $123.7
    million by 1998, and to nearly $200 million by 1999.

[17]

CMHCs
    Board of Directors decided to apply a portion of the actuarial surplus to
    enhance the pension benefits for plan members.  It did so by two benefit
    enhancement packages.

[18]

The
    first package of benefits was given to all those who were members of the
    pension plan on January 1, 1999.  The Board allocated $128.7 million of the
    actuarial surplus for benefit enhancements.  This sum included $100 million to
    be notionally shared between CMHC and the plan members based on their
    respective contributions to the pension fund over the history of the plan.

[19]

The
    second package of enhanced benefits was given to all those who were members of
    the pension plan on January 1, 2001.  This time, the CMHC Board allocated
    $124.5 million of the actuarial surplus for increased benefits.  This amount
    again was shared with the plan members based on historic contribution rates to
    the fund.

[20]

Two
    critical facts about these surplus decisions underlie this litigation.  First,
    no CMHC employee who had left the pension plan before the effective date of
    each benefit enhancement package received the enhanced pension benefits.

[21]

Second,
    while the plan members benefited from the allocation of the actuarial surplus
    to these two packages, so too did CHMC.  Although CHMC did not actually
    withdraw any money from the pension plan, it used its allocated share of the
    actuarial surplus to offset the costs of some of the benefit enhancements, to
    forgive a $59.4 million corporate debt that it owed to the pension fund, and to
    implement contribution holidays for the company and the remaining plan
    members.  CMHC then allocated what was left of its share of the actuarial
    surplus for its future benefit.

[22]

At
    the heart of the class plaintiffs complaint is their allegation that in making
    these surplus decisions, CMHC acted in its own interest and in the interest of
    the remaining plan members, but at the expense of the interest of the departing
    plan members.  To remedy what they say is CMHCs unfair treatment of them, the
    plaintiffs seek access to the surplus in the plan, and a pro rata share in the distribution
    of that surplus.

(d)

The class plaintiffs

[23]

Nicole
    Lacroix and Rosie Ladouceur are the representative plaintiffs in the first
    class proceeding.  Both were long-time employees of CMHC, who lost their jobs
    when CMHC downsized.  Both elected to take the commuted value of their pension
    benefits and leave the plan before January 1, 1999.  They, therefore, did not
    receive either of the two benefit enhancement packages given by CMHC to its
    remaining employees.

[24]

Frank
    McCann and David Guffie are the representative parties in the second class
    proceeding.  They too were long serving employees of CMHC, who lost their jobs
    during the corporations downsizing.  Both McCann and Guffie received the first
    benefit enhancement package but then elected to take the commuted value of
    their pension and leave the plan before January 1, 2001.  They, therefore, did
    not receive the second benefit enhancement package.

(e)

OSFI did not declare a partial termination of the CMHC pension plan

[25]

OFSI,
    the Office of the Superintendent of Financial Institutions, oversees federally
    regulated pension plans.  As my colleague Gillese J.A. discussed in
Lomas
    v. Rio Algom Ltd.
, 2010 ONCA 175, 99 O.R. (3d) 161, the Superintendents
    role in determining whether a pension plan should be wound-up  in whole or in
    part  is a key aspect of a carefully calibrated legislative scheme.
[3]

[26]

The
    evidence in the record in these proceedings shows that OSFI has never declared
    what the appellants seek  a partial termination of a pension plan.  However,
    the evidence stopped short of showing any policy whereby OSFI defers decisions
    on partial termination to plan administrators.

[27]

Moreover,
    as the Divisional Court noted at para. 49 of its reasons, OFSI considered and
    decided against ordering a partial termination of the CMHC pension plan. 
    Instead, the Superintendent approved CMHCs surplus sharing decisions and its
    two benefit enhancement packages.  The appellants did not seek judicial review
    of OFSIs determination not to declare a partial termination.

C.

relevant legislation

[28]

Two
    pieces of legislation are relevant to this litigation: the federal
Pension
    Benefits Standards Act
(PBSA) and the provincial
Class Proceedings Act
,
    S.O. 1992, c. 6.

(a)

The
Pension Benefits Standard Act

[29]

In
    these appeals the important provisions of the PBSA are those dealing with
    conflicts of interest and plan terminations.

[30]

Section
    8(10) addresses conflicts of interest.  Where an entity is both an employer and
    an administrator of a pension plan and the two roles come into conflict, s.
    8(10)(b) requires the administrator to act in the best interests of the plan
    members:

8(10) If there is a material conflict of interest
    between the role of an employer who is an administrator, or the role of the
    administrator of a simplified pension plan, and their role in any other
    capacity, the administrator

(a)     shall, within thirty days after becoming
    aware that a material conflict of interest exists, declare that conflict of
    interest to the pension council or to the members of the pension plan; and

(b) shall act in the best interests of the members
    of the pension plan.

[31]

Where
    an administrator breaches s. 8(10), s. 8(11) gives the Superior Court broad
    jurisdiction to fashion an appropriate remedy:

8(11) If an administrator contravenes subsection
    (10), a court of competent jurisdiction may, on application by the
    Superintendent or any other interested person, make any order on such terms as
    the court considers appropriate.

[32]

The
    appellants contend that as CMHC acknowledged a breach of s. 8(10) for the
    purpose of the motions before Charbonneau J., as a remedy for that breach the Superior
    Court of Justice either should order CMHC to partially terminate its pension
    plan or should itself order a partial termination.

[33]

Under
    s. 29 of the Act, both the Superintendent and an administrator can partially
    terminate a pension plan but plan members have no right to seek a partial
    termination.
[4]


[34]

Section
    29(2) of the Act gives the Superintendent authority to declare a whole or
    partial termination of a pension plan, provided specified criteria are met:

29(2) The Superintendent may declare the whole or
    part of a pension plan terminated where

(a) there is any suspension or cessation of
    employer contributions in respect of all or part of the plan members;

(b) the employer has discontinued or is in the
    process of discontinuing all of its business operations or a part thereof in
    which a substantial portion of its employees who are members of the pension
    plan are employed; or

(c) the Superintendent is of the opinion that the
    pension plan has failed to meet the prescribed tests and standards for solvency
    in respect of funding referred to in subsection 9(1).

[35]

The
    appellants accept that none of the criteria in s. 29(2) has been established,
    and therefore that the Superintendent cannot declare a partial termination of
    the CMHC pension plan under s. 29(2).

[36]

However,
    s. 29(5)
[5]
of the Act also gives the administrator of a pension plan authority to
    terminate the whole or part of a pension plan:

29(5) An administrator who intends to terminate the
    whole or part of a pension plan or wind up a pension plan shall notify the
    Superintendent in writing of that intention at least sixty days before the date
    of the intended termination or winding-up.

[37]

Finally,
    s. 29(12) specifies the rights of plan members on a partial termination:

29(12) Where a plan is terminated in part, the rights
    of members affected shall not be less than what they would have been if the
    whole of the plan had been terminated on the same date as the partial
    termination.

[38]

The
    appellants say that there is an interplay between s. 8(11) and s. 29(5). 
    They argue that s. 8(11) gives the court the power to review an administrators
    failure to terminate a plan under s. 29(5).  The appellants submit that CMHC
    has contravened s. 8(10) of the Act, and therefore, under s. 8(11), the court
    should order it to partially terminate its pension plan in accordance with s.
    29(5).

(b)

The
Class Proceedings Act

[39]

Section
    5(1) of the
Class Proceedings Act
sets out the requirements for
    certification:

5(1)  The court shall certify a class
    proceeding on a motion under section 2, 3 or 4 if,

(a)     the pleadings or the notice of application
    discloses a cause of action;

(b)     there is an identifiable class of two or
    more persons that would be represented by the representative plaintiff or
    defendant;

(c)     the claims or defences of the class
    members raise common issues;

(d)     a class proceeding would be the preferable
    procedure for the resolution of the common issues; and

(e)     there is a representative plaintiff or
    defendant who,

(i)      would fairly
    and adequately represent the interests of the class,

(ii)      has produced a
    plan for the proceeding that sets out a workable method of advancing the
    proceeding on behalf of the class and of notifying class members of the
    proceeding, and

(iii)     does not have,
    on the common issues for the class, an interest in conflict with the interests
    of other class members.

[40]

With
    the exception of the misrepresentation claim asserted by McCann and Guffie, my
    reasons focus on the requirement in s. 5(1)(a): do the appellants pleadings
    disclose a cause of action?  The misrepresentation claim turns on whether it
    meets the requirement in s. 5(1)(c): does it raise a common issue?

D.

the appellants conflict of interest allegation

[41]

In
    their pleadings the appellants allege that they beneficially own the surplus in
    the pension plan.  They then say that CMHC was in a conflict of interest under
    s. 8(10) of the PBSA between its role as employer and its role as plan
    administrator.  Because CMHC was in a conflict of interest, it was required to
    act in the best interests of the plan members.  According to the appellants,
    CMHC could only do so by partially terminating its pension plan.  Instead, CMHC
    kept the entire surplus in the plan and used part of it for its own benefit and
    the benefit of the remaining plan members, at the expense of the departing plan
    members.  CMHC thus contravened s. 8(10).

[42]

For
    the purpose of the appellants certification motions and its own jurisdiction
    motion,
[6]
CMHC has acknowledged that the appellants can establish the necessary facts to
    prove a contravention of s. 8(10) of the Act.  CMHCs acknowledgment has
    largely narrowed the parties debate in these appeals to a single but
    fundamental question: assuming CMHC contravened s. 8(10) of the Act, does the
    court have jurisdiction under s. 8(11) to order it to partially terminate its
    pension plan or to award damages premised on a partial termination?  Although
    in his ruling on the earlier jurisdiction motion brought by CMHC, the motion
    judge accepted that the court might have jurisdiction, the Divisional Court
    concluded that the court did not have this jurisdiction.

[43]

If
    the court does not have jurisdiction, the partial termination claim does not
    disclose a cause of action, and the proposed common issues relating to that
    claim should not be certified.

E.

judicial history of these proceedings

[44]

The
    judicial history of these proceedings has been lengthy and complicated.  That
    history is best understood in the context of the two theories of liability put
    forward by the appellants: one, the appellants were wrongly excluded from the
    benefit enhancement packages, and two, CMHC breached its statutory and
    fiduciary duty by failing to partially terminate its pension plan.  The
    following is a summary of the previous decisions of the motion judge in these
    proceedings, his decisions that are under appeal and the decision of the
    Divisional Court.

(a)

The previous proceedings before the motion judge

In 2000, in the Lacroix/Ladouceur action, the motion
    judge certified, on consent, common issues that challenged the propriety of
    CMHCs decision to refuse to give the two benefit enhancement packages to those
    employees who elected to take the commuted value of their pension benefits and
    leave the plan.  Appendix A lists these common issues that have been certified
    on consent.

In 2003, Lacroix/Ladouceur successfully moved to expand
    their existing claim by adding former members of the plan who had taken the
    first benefit enhancement package, but left the plan before receiving the
    second benefit enhancement package (the McCann/Guffie class plaintiffs).

Also, in 2003, Lacroix/Ladouceur moved to certify
    additional common issues relating to CMHCs failure to partially terminate the
    pension plan.  That motion was dismissed by the motion judge.  Appeals to the
    Divisional Court and this court were dismissed.  The Supreme Court of Canada
    refused leave to appeal.

In 2007, the motion judge ordered that the claims of
    McCann/Guffie be severed from those of Lacroix/Ladouceur and that they be
    asserted in a separate proceeding.

Also, in 2007, the motion judge permitted
    Lacroix/Ladouceur to amend their statement of claim and again seek
    certification of issues relating to CMHCs failure to partially terminate the
    pension plan.

In 2008, CMHC moved under r. 21.01(3)(a) or (d) to stay
    the Lacroix/Ladouceur action on the ground that the court has no jurisdiction
    either to order a partial termination for breach of s. 8(10) of the PBSA or to
    award damages for CMHCs failure to partially terminate the plan.  The motion
    judge dismissed CMHCs motion.  In doing so, he relied on the decision of the
    Divisional Court in
Lomas v. Rio Algom
(2008), 89 O.R. (3d) 130.  He
    said at paras. 27 and 29:

I agree with the plaintiffs that section 8 may be interpreted
    as granting to the Superior Court jurisdiction to deal with clear cases of
    breach of conflicts in proper circumstances.  The defendants [have] the onus on
    this motion to convince the court that it is clear that the Superior Court has
    been completely deprived of its inherent jurisdiction to deal with breaches of
    legal duties in similar factual circumstances.  I am not convinced that this is
    the case.  This is particularly so on the very restricted evidentiary record
    before me.



The issue in
Lomas (supra)
is more similar to the
    issue in this case.  Moreover, the remedy sought by the plaintiffs in this case
    is not a declaration of partial termination as in the
Lomas
case but
    an award of damages which has no direct incidence on the pension plan itself
    and which is the remedy usually contemplated for breaches of legal obligations.

(b)

The decisions of the motion judge under appeal

[45]

The
    decisions of the motion judge now under appeal arise from motions brought by
    each of the class plaintiffs.  Lacroix/Ladouceur again brought a motion to
    certify additional common issues relating to CMHCs failure to partially
    terminate its pension plan.  Appendix B lists these proposed additional common
    issues.  McCann/Guffie brought a companion motion to certify common issues
    relating to partial termination in their action.  Appendix C lists these
    proposed common issues.

[46]

In
    the Lacroix/Ladouceur action, the motion judge declined to certify the proposed
    additional common issues relating to partial termination, though he did certify
    as a common issue a claim for punitive damages in relation to the benefit
    enhancement claim.  In the McCann/Guffie action, the motion judge declined to
    certify any of the proposed common issues.

[47]

In
    respect of both motions, the motion judge found significant deficiencies under
    all five branches of the test for certification in s. 5(1) of the
Class
    Proceedings Act
.  He concluded:

The claim based on CMHCs duty to partially terminate
    the plan or for damages for its failure to do so did not constitute a viable
    cause of action.  The motion judge so held, even though he had ruled in CMHCs
    2008 jurisdiction motion that the court may have jurisdiction over a partial
    termination;

The class definition irrationally excluded members and
    former members of the CMHC pension plan, and lacked a rational connection to
    the proposed common issues;

The proposed issues relating to partial termination are
    not common, and, if certified, would create conflicts among class members;

The appellants failed to show that a class proceeding
    was preferable; and

The appellants proposed litigation plan was
    inadequate.

[48]

The
    motion judge also addressed the misrepresentation claim in respect of the
    second benefit enhancement package that was unique to the McCann/Guffie
    action.  He did not certify that claim as, in his view, it did not raise a common
    issue.  There was no common representation and no class-wide reliance.  Thus,
    the claim can only be resolved by individual trials.

[49]

After
    receiving written submissions on costs, the motion judge ordered the appellants
    to pay the respondents the costs of the motions.  He also declined to award the
    appellants their own costs from the CMHC pension fund.

(c)

The decision of the Divisional Court

[50]

The
    Divisional Court upheld the conclusions of the motion judge and dismissed the
    appellants appeals.  Moreover, the Divisional Court gave an additional reason
    for dismissing these appeals: the court has no jurisdiction over the proposed
    issues relating to partial termination.  This added reason was based on this
    courts decision in
Rio Algom
,

which reversed the Divisional
    Courts decision in that case, and which was released after the motion judges
    decision.

(d)

Current status of the claims

[51]

Pending
    our decision, Lacroix/Ladouceur have a certified action for common issues
    relating to their benefit enhancement claim.

[52]

McCann/Guffie
    do not have a certified action because, as they admitted before the Divisional
    Court, their proposed common issues entirely depend on their assertion that
    CMHC breached its duty under s. 8(10) by failing to partially terminate its
    pension plan.  The respondents have agreed to consent to an order certifying
    common issues relating to a benefit enhancement claim similar to that advanced
    by Lacroix/Ladouceur, but so far McCann/Guffie have not pleaded that claim.

F.

Concurrent jurisprudential developments

[53]

These
    proceedings have been ongoing for over a decade, and still have not progressed
    past the certification stage.  At various times the Lacroix/Ladouceur
    plaintiffs have amended their pleadings to reformulate an identifiable class,
    to advance new claims and, most important, to put forward a new theory of
    liability  the partial termination theory  for which they seek to certify
    several additional common issues.

[54]

In
    large part, it seems to me, the appellants have attempted to recast their
    lawsuits and their submissions to meet the obstacles to their claims presented
    by developments in the jurisprudence, and especially the obstacle presented by
    two cases from this court,
Hembruff v. Ontario Municipal Employees
    Retirement Board
(2005), 78 O.R. (3d) 561 and
Rio Algom
.

[55]

When
    these proceedings began, the case law was well settled that individual plan
    members have no claim to payment or distribution of the surplus from an ongoing
    pension plan.  The right to the surplus crystallizes on the termination of a
    plan because only then does the surplus become ascertainable:  see
Schmidt
    v. Air Products Canada Ltd.
, [1994] 2 S.C.R. 611.  However, the appellants
    did seem to have a claim for damages for breach of trust and breach of
    fiduciary duty arising out of CMHCs failure to give departing plan members
    either or both of the benefit enhancement packages.  Common issues relating to
    that claim were certified in the Lacroix/Ladouceur action in 2000.

[56]

Then,
    in 2005, this court released its decision in
Hembruff
.  In that
    decision, Gillese J.A. concluded that plan members who take the commuted value
    of their pension benefits and leave the plan give up any entitlement to future
    benefit enhancements.  She wrote at para. 123:

Mr. Lyon admitted that he read and understood that statement,
    and understood that he would no longer be a member of OMERS if he withdrew his
    CVP.  In my view, it is self-evident that if an individual ceases membership in
    the OMERS pension plan, he or she gives up eligibility for any benefit
    enhancements that might be implemented thereafter.  Having chosen to withdraw
    their funds from the plan and invest those funds elsewhere, such individuals
    cannot later be heard to complain that they are not receiving additional
    benefits from the plan they chose to leave.  As Cumming J. stated in
McMaster
    University v. Robb
, [2001] O.J. No. 5480, 37 C.C.P.B. 252 (S.C.J.) at
    para. 11:

Anyone choosing to remove the commuted value of his/her
    benefits would be well aware that s/he is giving up any continuing claim to any
    benefits under the Plan.  A choice is made on a basis of what is assumed will
    be financially best for the individual for the future and expert advice can be
    obtained to assist in making that choice.  Individuals are responsible for the
    choices they make.

[57]

Hembruff
thus put in jeopardy the Lacroix/Ladouceur benefit enhancement claim, and
    likely prompted the appellants to focus their claim on issues relating to
    CMHCs failure to partially terminate its pension plan.  Soon after it was
    advanced, that claim found some support in the majority reasons of the
    Divisional Court in
Rio Algom
, which I referred to earlier, and which
    at least held that it was not plain and obvious that the court lacked
    jurisdiction to order a partial termination.

[58]

Moreover,
    in
Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services)
,
    2004 SCC 54, [2004] 3 S.C.R. 152, the Supreme Court of Canada had already held
    that members of a pension plan affected by a partial termination may, depending
    on the terms of the plan, be entitled to their pro rata share of the surplus
    from the date of partial termination on the same basis as if the plan were
    fully terminated on that date.  Thus, the Divisional Courts decision in
Rio
    Algom
and the Supreme Court of Canadas decision in
Monsanto
together seemed to provide the appellants and the class members they represent
    with a route to access the surplus in the CMHC pension plan.

[59]

Then,
    in 2010 this court released its decision in
Rio Algom
.  In that case,
    in the context of a pension plan regulated under Ontarios
Pension Benefits
    Act
, R.S.O 1990, c. P-8, Gillese J.A. wrote that the court had no
    authority to order an employer to commence proceedings to wind-up a pension
    plan.  As I said in reviewing the judicial history of these proceedings, the
    Divisional Court relied on this courts ruling in
Rio Algom
to
    conclude that the common issues relating to partial termination, which the
    appellants propose for certification, do not disclose a cause of action.

[60]

I
    turn now to the issues on the appeals.

G.

analysis

(a)

Does the claim relating to partial termination disclose a cause of
    action under s. 5(1)(a) of the
Class Proceedings Act
?

[61]

To
    be certified as a class proceeding, the pleading must disclose a cause of
    action.  In the Lacroix/Ladouceur proceeding, common issues relating to the
    claim for benefit enhancements have already been certified.  McCann/Guffie have
    not proposed common issues relating to a separate or stand alone benefit
    enhancement claim.  On these appeals, the issues proposed for certification 
    though worded somewhat differently by each set of appellants  relate to the
    claim for partial termination.
[7]


[62]

Thus,
    the fundamental question on these appeals is whether the court has jurisdiction
    to order a partial termination, or to order CMHC to effect a partial
    termination of its pension plan.  As I understand their argument, the
    appellants put their position on both bases.  However, they stress the argument
    that the court has jurisdiction under s. 8(11) of the PBSA to order CMHC to
    partially terminate its pension plain in accordance with s. 29(5) of the Act. 
    I use the two formulations of the question interchangeably.  For the purpose of
    determining the courts jurisdiction they amount to the same question:  see
Rio
    Algom
(C.A.), at para. 30.

[63]

If
    the court does not have this jurisdiction, then the claim of each set of
    appellants relating to partial termination does not disclose a cause of action,
    and the common issues relating to that claim cannot be certified.  The plain
    and obvious test applies to the question of the courts jurisdiction.  Unless
    it is plain and obvious that the court has no jurisdiction to order a partial
    termination, the plaintiffs will have met this branch of the test for
    certification.  See
Cloud v. Canada (A.G.)
(2005), 73 O.R. (3d) 401
    (C.A.).

[64]

The
    submissions of the parties on the question of the courts jurisdiction raise
    the following issues:

(i)      As a
    matter of statutory interpretation, does the court have jurisdiction under s.
    8(11) of the PBSA to order CMHC to partially terminate its pension plan?

(ii)      Does this
    courts decision in
Rio Algom
apply to the appellants partial
    termination claims?

(iii)     Should
Rio
    Algom
be reconsidered in the light of the Supreme Court of Canadas
    decisions in
Burke v.  Hudsons Bay Co
., 2010 SCC 34, [2010] 2
    S.C.R. 273
,
and
Monsanto
, and the minority opinion of
    Bastarache J. in
Buschau v. Rogers Communications Inc
., 2006 SCC 28,
    [2006] 1 S.C.R. 973?

(iv)     Does the
    court have jurisdiction under s. 8(11) of the PBSA to award damages equivalent
    to a pro rata share of the distribution of the surplus on a partial
    termination?

(v)     Did the
    CMHC effect a backdoor partial termination of its pension plan, or
    crystallize the surplus, by using a portion of the surplus for its benefit
    and the benefit of the remaining plan members?

(vi)     Should the
    courts choice of remedy for the breach of s. 8(10) of the PBSA be certified as
    a common issue?

(i)

As a matter of statutory interpretation, does the court have
    jurisdiction under s. 8(11) of the PBSA to order CMHC to partially terminate
    its pension plan?

[65]

For
    convenience I reproduce the key provisions of the PBSA  s. 8(10) and (11), and
    s. 29(2) and (5):

8(10) If there is a material conflict of interest
    between the role of an employer who is an administrator, or the role of the
    administrator of a simplified pension plan, and their role in any other
    capacity, the administrator

(a) shall, within thirty
    days after becoming aware that a material conflict of interest exits, declare
    that conflict of interest to the pension council or to the members of the
    pension plan; and

(b) shall act in the best interest of the member
    of the pension plan

8(11) If an administrator contravenes subsection
    (10), a court of competent jurisdiction may, on application by the
    Superintendent or any other interested person, make any order on such terms as
    the court considers appropriate.

29(2) The Superintendent may declare the whole or
    part of a pension plan terminated where

(a) there is any suspension
    or cessation of employer contributions in respect of all or part of the plan
    members;

(b) the employer has
    discontinued or is in the process of discontinuing all of its business
    operations or a part thereof in which a substantial portion of its employees
    who are members of the pension plan are employed; or

(c) the Superintendent is
    of the opinion that the pension plan has failed to meet the prescribed tests
    and standards for solvency in respect of funding referred to in subsection
    9(1).

29(5) An administrator who intends to terminate the
    whole or part of a pension plan or wind up a pension plan shall notify the
    Superintendent in writing of that intention at least sixty days before the date
    of the intended termination or winding-up.

[66]

The
    essence of the debate between the parties on the question whether the court has
    jurisdiction to order partial termination may be put as follows:

On the one side, the appellants say that s. 8(11) gives
    the court broad jurisdiction to remedy a contravention of s. 8(10)  a
    jurisdiction that includes the power to order a partial termination in an
    appropriate case.  If Parliament had intended to preclude the court from
    ordering partial termination it could have said so expressly.

On the other side, the respondents say that s. 29
    contains specific provisions governing plan termination  provisions that
    recognize the expertise of the Superintendent and vest the office of the
    Superintendent with exclusive jurisdiction to supervise the whole or partial
    termination of a pension plan.  This specific regime for plan termination in s.
    29 shows that Parliament could not have intended the court to use its general
    remedial authority in s. 8(11) to order an employer to terminate its pension
    plan.

[67]

Each
    side of the debate has merit if ss. 8 and 29 are each looked at in isolation. 
    However, at bottom, the debate raises an issue of statutory interpretation. 
    And statutory interpretation requires the court to look at provisions of a
    statute, not in isolation, but in their entire context.  In doing so, the court
    tries to determine the most appropriate interpretation, one that best reflects
    the intent of the legislation scheme.

[68]

The
    starting point is Elmer Driedgers modern principle of statutory interpretation,
    a principle the Supreme Court of Canada has repeatedly applied to interpret
    legislation:

Today there is only one principle or approach, namely, the
    words of an Act are to be read in their entire context and in their grammatical
    and ordinary sense harmoniously with the scheme of the Act, the object of the
    Act and the intention of Parliament.

See, for example,
Rizzo & Rizzo Shoes Ltd.
    (Re)
, [1998] 1 S.C.R. 27; and
Bell ExpressVu Limited Partnership v.
    Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559.

[69]

When
    ss. 8 and 29 are looked at in the light of the scheme and object of the PBSA,
    it is evident that Parliament did not intend to give courts the authority to order
    employers to terminate their pension plans.

Scheme of the Act

[70]

In
    s. 29 Parliament has provided that only two persons may initiate the
    termination of a pension plan.  First, under s. 29(2), the Superintendent has
    discretion to terminate a pension plan if the enumerated criteria are met. 
    Second, under s. 29(5), an administrator may initiate the termination of a
    pension plan.  That the statute recognizes an employers right to terminate a
    plan is to be expected because in Canada pension plan coverage is voluntary in
    the sense that employers may choose whether to establish one for their
    employees.  However, an administrators right to terminate a plan under s.
    29(5) is subject to the supervision of the Superintendent, who must be given
    advance notice of any termination proposed by an administrator.

[71]

Two
    points that flow from s. 29 are important for deciding whether courts can order
    a plan termination.  First, s. 29 shows that Parliament has given supervisory
    authority over all plan terminations to the Superintendent.  Undoubtedly, it
    has done so because it recognizes that the termination of a plan, either in whole
    or in part, is a complex and highly technical matter, and thus a matter that
    demands specialized expertise.  The office of the Superintendent has this
    expertise; courts do not.
[8]

[72]

Second,
    Parliament has not given plan members the right to seek the termination of a
    pension plan.  Their right, if aggrieved, is to ask for the Superintendents
    assistance.

[73]

Having
    regard to the detailed regime for plan termination in s. 29  a regime that
    recognizes the expertise of the Superintendent and does not recognize a right
    of employees to ask for a termination  it makes little sense to say that Parliament
    intended courts to have jurisdiction to order the termination of a plan at the
    instance of disaffected employees.

[74]

The
    scheme of the Act thus shows that impliedly, though not expressly, Parliament
    has excepted terminations from the remedies available to the court under s.
    8(11) of the PBSA.  The wording of s. 8(11) supports this conclusion.  One of
    the parties that may apply for relief under s. 8(11) for a contravention of s.
    8(10) is the Superintendent.  I cannot accept that Parliament could have
    intended to permit the Superintendent to circumvent the carefully tailored
    mandate for plan termination in s. 29 by resorting to s. 8(11) to terminate a
    plan.

Object of the Act

[75]

The
    object of the PBSA, like its scheme, supports the respondents position.  The
    case law is replete with discussion about the object of pensions and pension
    legislation:  see, for example,
Monsanto
,
Buschau
, and
Rio
    Algom
.

[76]

A
    main object of pensions is to provide long-term financial security to workers
    after their withdrawal from active employment.  Pension legislation, such as
    the PBSA, establishes expert regulatory supervision over and minimum standards for
    pension plans.  The overall aim of the legislation is to protect and safeguard
    the pension rights and benefits of current and former plan members.  In the
    words of Deschamps J. in
Monsanto
at para. 38 (speaking of the Ontario
    legislation):

The Act thus seeks, in some measure, to ensure a balance
    between employee and employer interests that will be beneficial for both groups
    and for the greater public interest in established pension standards.

[77]

Giving
    the court jurisdiction to order an employer to partially terminate its pension
    plan on the application of a group of former employees undermines these
    important objects of the statute.  Doing so would disregard the regulatory
    expertise of the Superintendent.  It would threaten the balance between
    employers and employees.  And ultimately, it could put the long term survival
    of pension plans at risk.  As Bastarache J. noted in
Buschau
, at para.
    97, if a plan can be terminated by the action of members or other
    beneficiaries, then the fair and delicate balance between employer and
    employee interests (
Monsanto Canada
, at para. 24) will be disrupted
    in a manner which is contrary to the legislative objective of encouraging the
    establishment and maintenance of private pension plans.

[78]

For
    these reasons, I conclude that as a matter of statutory interpretation, courts
    have no jurisdiction under s. 8(11) of the PBSA to order CMHC to effect a
    partial termination of its pension plan.

(ii)

Does this courts decision in
Rio Algom
apply to the
    appellants partial termination claims?

[79]

The
    respondents submit that the courts decision in
Rio Algom
provides an
    additional and compelling ground to dismiss these appeals.  They say that the
    Divisional Court correctly applied
Rio Algom
to reject the appellants
    claims relating to partial termination.  The appellants submit that
Rio
    Algom
does not govern the question whether the court has jurisdiction over
    partial termination under s. 8(11) of the PBSA.

[80]

Rio
    Algom
was decided under the provincial
Pension Benefits Act
.  A
    group of aggrieved employees sought the wind-up of Rio Algoms pension plan.  By
    the time the case reached this court, the employees had conceded that the court
    could not directly order the wind-up or termination of a pension plan.
[9]
However, they contended that the court could order the employer to commence
    wind-up proceeding under s. 68(1) of the provincial statute, a provision
    similar to s. 29(5) of the PBSA.

[81]

Gillese
    J.A., writing for the court, rejected the employees contention.  In doing so,
    she relied on the Supreme Court of Canadas decision in
Bushau
.  In
Buschau
,
    the Supreme Court held that the common law rule in
Saunders v. Vautier
 which allows trust beneficiaries to terminate a trust in certain
    circumstances  does not apply to pension trusts.

[82]

However,
    Gillese J.A. concluded that
Buschau
stood not merely for this narrow
    proposition, but for the broader proposition that a court cannot compel an
    employer to commence proceedings to wind up a pension plan.  She concluded that
    ordering an employer to commence wind-up proceedings is tantamount to
    ordering the wind-up of a pension plan.  As the court cannot make the latter
    order, it cannot make the former order.  In her words, at para. 78:  If the
    court were to order Rio Algom to commence wind up proceedings, it would violate
    the legislative scheme and amount to an unauthorized usurpation of the
    authority delegated to the Superintendent and Tribunal.

[83]

In
    these appeals, the appellants are, in substance, asking the court to do what
    the employees in
Rio Algom
asked the court to do: order the employer
    to begin proceedings to terminate  here partially terminate  the pension
    plan.
[10]
This court rejected the relief sought by the employees in
Rio Algom
;
    the respondents submit that we should similarly reject the relief the
    appellants seek on these appeals.  The appellants, however,  attempt to avoid
    the impact of
Rio Algom
on the ground that it was decided under the
    provincial
Pension Benefits Act
while the present appeals are to be
    resolved under the federal PBSA.   The appellants point out that s. 8(10), and
    especially s. 8(11), have no counterpart in the provincial Act.

[84]

I
    accept that to be so.  The provincial statute contains no provision giving the
    court the broad remedial power found in s. 8(11) of the PBSA.  However, the
    absence of such a power in the provincial statute is of no consequence in these
    appeals.  The analysis in
Rio

Algom
still applies to the
    partial termination claim put forward by the appellants for three reasons.

[85]

First,
    Gillese J.A. noted at para. 34 of her reasons in
Rio Algom
, on matters
    pertaining to plan termination, the two statutes do not markedly differ.

[86]

Second,
Buschau
, which Gillese J.A. relied on in concluding that a court
    cannot compel an employer to wind up or terminate a pension plan, was decided
    under the PBSA.  Indeed, in
Buschau
, the Supreme Court of Canada said
    that s. 29(2) of the PBSA dictates the circumstances when partial termination
    should be declared.  Plan members dissatisfied with the actions of their
    employer may ask the Superintendent to intervene.  In short, their recourse is
    to the Superintendent, not the court.

[87]

Gillese
    J.A. applied similar reasoning in holding that a court cannot order an employer
    to commence wind up proceedings under s. 68 of the Ontario
Pension Benefits
    Act
at the request of a plan member.  Moreover, at para. 59 of her
    reasons, she expressly referred to
Buschau
.  She said:

The core reasoning in
Buschau
is that the members of a
    pension plan do not have the right to compel an employer to wind up the pension
    plan.
The decision in Buschau is not confined to the methods by which wind
    up is to take place
. [Emphasis added.]

Thus, it matters not that the appellants seek a
    partial termination under s. 8(11) of the PBSA, a provision without an
    equivalent in the Ontario statute.  As Gillese J.A. said, employees have no
    right to compel an employer to terminate (or partially terminate) a pension
    plan, no matter what route they use to try to obtain that result.

[88]

Third,
    the policy reasons that underlie the conclusion of Gillese J.A. in
Rio
    Algom
are the same as those that underlie the Supreme Court of Canadas
    decision in
Buschau
.  On this point, I agree with the following passage
    from para. 60 of the reasons of the Divisional Court:

Both
Rio Algom
and
Buschau v. Rogers
    Communications Inc.
, [2006] 1 S.C.R.  973 rely upon similar policy
    considerations.  Pension plans serve broad and long-term societal functions in
    providing economic support during retirement.  Before a pension plan is wound
    up, surplus is only an actuarial concept and individuals entitled to the
    surplus assets do not have a specific interest in them.  Members should not be
    able to deprive future employees of the benefit of a pension plan and often
    have only a passive and limited right with regard to employer decisions
    concerning the future of their plan and trust fund.  They are not without
    recourse because they can alert the Superintendent of their concerns, who can
    act in an appropriate case: see
Buschau
at paras. 17, 31, 34.

[89]

I
    conclude that although
Rio Algom
was decided under a different
    statutory regime, its reasoning and rationale apply to the appellants claims
    for partial termination under the PBSA.
Rio Algom
is therefore a
    compelling authority in support of the respondents position on these appeals
    unless it is open to reconsideration.

(iii)

Should
Rio Algom
be reconsidered in the light of the Supreme
    Court of Canadas decisions in
Burke
and
Monsanto
and the
    minority opinion of Bastarache J. in
Buschau
?

[90]

The
    appellants contend, in the alternative, that if
Rio Algom
applies to
    terminations under the PBSA, it should nonetheless be reconsidered because it is
    at odds with the Supreme Court of Canadas unanimous decisions in
Burke
and
Monsanto
and with Bastarache J.s minority reasons in
Buschau
. 
    I would reject this contention.

Burke

[91]

The
    appellants fasten on the statement of Rothstein J., at para. 45, that pension
    legislation is not a complete code; rather its purpose is to establish minimum
    standards and regulatory supervision to protect those entitled to pension
    benefits.  The appellants then argue that a higher standard than that found in
    the PBSA will be needed to protect their equity in the surplus.

[92]

Burke
does not assist the appellants.  In that case, the Supreme Court had to decide
    whether an employer or plan administrator was required to transfer pension
    surplus to a successor plan on the sale of a division of the companys
    business.  As Rothstein J. noted, this was a novel issue that could not be
    resolved by the pension legislation alone.

[93]

However,
    Rothstein J. was careful to distinguish the case before him, and for example,
    the situation in
Buschau
.  At para. 46 of his reasons, he said:  By
    contrast, in
Buschau
, the application of the trust rule in
Saunders
would have allowed the employees to circumvent the statutory procedure and
    defeat the objective of the legislative scheme.

[94]

The
    reasons in
Burke
are thus entirely consistent with Gillese J.A.s
    statement in
Rio Algom
at para. 59: I accept that
Buschau
dictates
    that where a statutory scheme exists for the termination and wind up of pension
    plans, it must be followed.  The statutory process  is not to be circumvented
    by the courts.  Here, the appellants seek to use the court to circumvent the
    scheme for plan termination in s. 29 of the PBSA.  In
Burke
, unlike
    these two appeals, the statutory scheme did not yield a complete answer.

Monsanto

[95]

The
    appellants argue that a court ordered partial termination is consistent with
    the policy considerations underlying the Supreme Court of Canadas decision in
Monsanto
. 
    The appellants say that we should prefer these policy considerations to those
    relied on in
Rio Algom
.  I do not agree because
Monsanto
was an
    entirely different case from the one we must resolve.

[96]

Monsanto
did arise in the context of a large downsizing and a surplus, as do the appeals
    before us.  But,
Monsanto
does not deal with the question before us:
    whether there should be a partial termination.  In
Monsanto
a partial
    termination had already taken place.  The Supreme Court had to decide a
    different question: how the individual rights of the plan members on a partial
    termination affected the timing of the distribution of surplus.

[97]

Deschamps
    J. held that the best interests of plan members required that they receive
    their pro rata share of the surplus on partial termination, rather than waiting
    for a full wind up of the plan.  She cited the following policy considerations
    in support of her conclusion:
[11]

No unfairness to plan members would result as the fund
    would still be in surplus after distribution;

Not recognizing the beneficial interest of the
    downsized employees at the time of partial termination would put them in a
    worse position than the ongoing employees, as they have lost their jobs and
    their level of pensionable earnings has been reduced;

The downsized workers should be subject to the risks of
    the plan while they are part of it but not after termination;

If the downsized employees are required to wait for a
    full wind up at an indeterminate date in the future, some may no longer be
    reachable; and

Because the actuarial surplus becomes an actual surplus
    and vests in the plan members upon plan termination, distribution on partial
    wind up is consistent with the trust principles outlined in
Schmidt v. Air
    Products
.

[98]

These
    policy considerations assume that a partial termination has taken place and
    explain why surplus should be distributed at that time.  These policy
    considerations do not apply when a partial termination has yet to take place. 
    Instead, the policy considerations at play in
Rio Algom
(and
Buschau
)
     which stress the importance of pensions in providing long-term income
    security  govern the two appeals before us.

Buschau

[99]

The
    appellants rely heavily on the minority reasons of Bastarache J. in
Buschau
. 
    As I said, in that case, the court unanimously held that the members of a
    pension plan regulated under the PBSA could not invoke the common law rule in
Saunders
    v. Vautier
[12]
to terminate the plan.

[100]

Deschamps J.,
    writing for the majority, held that Parliament intended the provisions of the
    PBSA dealing with plan termination to displace the common law rule.

[101]

Bastarache J.,
    writing for the minority, largely agreed with the reasons of Deschamps J.  He
    held that allowing plan members to unilaterally terminate a pension plan would
    be inconsistent with the objective of the Act.  He concluded at para. 100: The
    unilateral right of members to terminate the Plan simply does not exist in this
    case.  To this extent, his reasons are consistent with those of Gillese J.A.
    in
Rio Algom
.

[102]

However, at the
    end of his reasons, in a section headed The Issue of Good Faith, Bastarache
    J. discusses plan members right to ask for a distribution of the surplus and
    an employers obligation to act in accordance with s. 8(10).  In the following
    passage at para. 103, he seems to suggest that a court might review a decision
    about plan termination to ensure that it complied with s. 8(10)(b) of the PBSA:

Any termination of the Plan and amendments to it must be
    examined on the basis of its terms and conditions, in consideration of the
    applicable provisions of the
PBSA
. What would constitute an abuse of
    the employers power or would otherwise offend community standards of
    reasonableness in the contemplated use of the Premier Plan assets for the
    benefit of present and future employees of RCI must be determined on that
    basis alone. In essence then, what is permitted and what is abusive will have
    to be determined in future proceedings according to the standard set in s.
    8(10)(
b
) of the
PBSA
which states that [w]here the employer
    is the administrator pursuant to paragraph 7(1)(
c
), if there is a
    material conflict of interest between the employers role as administrator and the
    employers role in any other capacity, the employer . . . (
b
) shall
    act in the best interests of the members of the pension plan.

[103]

It seems to me,
    however, that this passage is of little help to the appellants.  It is obiter. 
    And, Bastarache J.s reasons as a whole support the paramountcy of the PBSA
    regime for plan terminations.  Moreover, even in this passage, Bastarache J.
    does not go so far as to say that a court can order an employer to effect a
    partial termination.  Thus, I am not persuaded that his minority reasons cast
    doubt on this courts decision in
Rio Algom
.

(iv)

Does the court have jurisdiction under s. 8(11) of the PBSA to award
    damages equivalent to a pro rata share of the distribution of the surplus on a
    partial termination?

[104]

The appellants
    put forward an alternative position: they are not asking the court to order a
    partial termination, instead, they are simply asking the court to award
    damages, a power the court undoubtedly has.  They contend that their claim is
    fundamentally a damages claim.  However, the damages the appellants seek are a
    pro rata share of the surplus that would be distributed to them on a partial
    termination.

[105]

The Divisional
    Court rejected the appellants position.  It concluded, at para. 71, that a
    court does not have jurisdiction to grant damages based upon the hypothetical
    distribution of surplus on wind up following a partial termination of the
    pension plan.  The Divisional Court explained at para. 72 of its reasons that
    a damage award would amount to an indirect partial termination:

On partial termination and wind up, distribution comes from the
    surplus assets of the plan. An order for damages comes out of the employers
    funds. However the surplus (to which the employer has contributed) would remain
    in the fund. Presumably, such an order would result in either a windfall to
    other plan members, or would result in a surplus that is not attributable to
    any plan members. If the damage award comes from the fund, or if the employer
    seeks recovery from the fund, in fact the court has indirectly ordered a
    partial termination. The essence of the claim is for a share of the surplus,
    even though characterized as damages.  An order of damages that uses a
    hypothetical partial termination as a measure for damages is effectively an
    indirect partial termination order.

[106]

I agree.  Again,
    as Gillese J.A. said in
Rio Algom
, at para. 30, the court cannot do
    indirectly what it cannot do directly.  As the court has no jurisdiction to
    order a partial termination of CMHCs pension plan, it has no jurisdiction to award
    damages premised on a partial termination.

(v)

Did CMHC effect a backdoor partial termination of its pension plan, or
    crystallize the surplus, by using a portion of the surplus for its own
    benefit and the benefit of the remaining plan members?

[107]

Lacroix/Ladouceur
    also argue that by sharing $253.2 million of a $432 million surplus between
    itself and the remaining employees to the exclusion of the laid off employees,
    CMHC effected a backdoor partial termination.  McCann/Guffie essentially make
    the same argument, claiming that CMHCs action crystallized the surplus.  In
    effect, they say, when CMHC used the surplus it converted a fluctuating
    actuarial calculation into a discrete sum of money.  Implicitly the appellants
    ask the court to declare that this is what has occurred.  Neither argument was
    made before the motion judge or the Divisional Court.

[108]

I do not agree
    with either argument.  As CMHC points out, the arguments are backwards.  A
    surplus may be said to crystallize on a partial termination because only on
    termination (or wind up) can plan members be entitled to share in the surplus.
[13]
But, the converse is not true.  An employers decision to use actuarial surplus
    to fund benefit enhancements for plan members does not result in a partial termination,
    or convert an actuarial surplus into a crystallized surplus.

[109]

Put differently,
    an employers use of surplus in an ongoing plan does not by itself impose an
    obligation to declare a partial termination or change the rights of plan
    members.  To say that it did would have the perverse effect of discouraging
    employers from implementing benefit enhancements.  Rothstein J. made this point
    in
Burke,
at para. 83:

The fact that an employer may voluntarily choose to increase
    pension benefits out of surplus funds or otherwise, does not change the nature
    of the employees interest in the pension fund or extend fiduciary obligation
    to voluntary actions of the employer.  The employees equitable interest is
    limited to their defined benefits.

[110]

For these
    reasons, the arguments on backdoor partial termination or crystallization of
    the surplus cannot succeed.

(vi)

Should the courts choice of remedy for the breach of s. 8(10) of the
    PBSA be certified as a common issue?

[111]

Having
    determined that the court cannot order a partial termination, I now turn to the
    appellants final alternative argument.   They submit that the court should
    simply certify as a common issue the choice of remedy for a breach of s. 8(10),
    and leave it to the trial judge to fashion the appropriate order.  I do not
    agree with this submission.

[112]

If the
    appellants prove a breach of s. 8(10), then the court will have to decide the
    appropriate remedy.  However, on my assessment of the law, that remedy cannot
    include an order for partial termination or an award of damages premised on
    partial termination.  As discussed above, that assessment is consistent with
    the opinion of Gillese J.A. in
Rio Algom,
at paras. 85-87.  Thus, I
    see no merit in leaving to the trial judge as a common issue the choice of an
    appropriate remedy.  The question of remedial jurisdiction should be resolved
    now, at the certification stage.

[113]

I have concluded
    that it is plain and obvious the court has no jurisdiction under s. 8(11) of
    the PBSA to grant the appellants the remedies they seek.  Accordingly, their
    claim for partial termination or damages based on a partial termination does
    not disclose a cause of action.  On that ground alone I would not certify their
    proposed common issues relating to partial termination.  Nevertheless, I will
    briefly address the remaining branches of the test for certification under s.
    5(1) of the
Class Proceedings Act
.

(b)

Did the motion judge err in concluding that the issues proposed for
    certification do not meet the requirements of s. 5(1)(b),(c) and (d) of the
Class
    Proceedings Act
?

[114]

In addition to
    holding that the appellants claims did not constitute a viable cause of
    action, the motion judge found that the appellants had failed to satisfy the
    other requirements for certification.  Specifically, in respect of s. 5(1)(b)
    of the Act, he found that the proposed class plaintiffs did not have a rational
    relationship with the proposed common issues and irrationally excluded
    individuals with the same claim.

[115]

In respect of s.
    5(1)(c) of the Act, the motion judge found that the proposed issues relating to
    the partial termination claim were not common issues and, if certified, would
    create conflicts among class members.

[116]

In respect of s.
    5(1)(d) of the Act, the motion judge found that a class proceeding was not the
    preferable procedure to resolve issues relating to the partial termination
    claim because that claim raised many technical issues inextricably linked to
    the PBSA regime.  In short, [t]he Superintendent acting under the purview of
    the statutory framework is the preferable procedure to
decide those issues:
Lacroix v. Canada Mortgage and Housing Corp
.
    (2009), 68 C.P.C. (6th) 111 (S.C.), at para. 146.

[117]

Finally, the
    motion judge also concluded in respect of s. 5(1)(e) of the Act, that the
    appellants litigation plan is vague and incomplete and the proceedings will
    soon become unmanageable.

[118]

Although the Divisional
    Court did not expressly address the motion judges findings on s. 5(1)(b), (c),
    (d) and (e) of the Act, it did uphold his findings.

[119]

In this court,
    the appellants submit that the motion judge erred in his findings on s.
    5(1)(b), (c) and (d) of the Act, and that their litigation plan can be
    restructured to make it workable.  In response, CMHC submits the motion judge
    reasonably found that the appellants had not set out a properly identifiable
    class, had not proposed issues relating to partial termination that were common
    and had not met their onus of showing that a class proceeding would be a
    preferable procedure.  The motion judges findings, CMHC argues, are entitled
    to substantial deference, especially as they were upheld in the Divisional
    Court.  As the Supreme Court of Canada said in
Ontario (Attorney General)
    v. Bear Island Foundation
, [1991] 2 S.C.R. 570, at p. 574, the principle
    of appellate deference is all the stronger in the face of concurrent findings
    of both courts below.

[120]

I find
    considerable merit in the position of CMHC.  However, as I would dismiss these
    appeals on the ground that the partial termination claims does not disclose a
    cause of action, a restructuring of the litigation plan does not assist the
    appellants and it is unnecessary to resolve definitely whether the motion
    judges findings on s. 5(1)(a), (b), (c) and (d) of the Act should be upheld.

(c)

Did the Divisional Court err in upholding the motion judges finding
    that the misrepresentation claim advanced by McCann/Guffie does not raise a
    common issue?

[121]

The
    McCann/Guffie claim alleges CMHC misrepresented to the class that there would
    be only one package of benefit enhancements  in other words, it would be a
    one time only benefit.  The motion judge refused to certify issues relating
    to their claim because he found no evidence of a common misrepresentation and
    no evidence from which reliance  an essential element of the cause of action 
    could be inferred on a class wide basis.  The Divisional Court deferred to his
    findings.  McCann/Guffie submit that the Divisional Court erred in doing so.  I
    do not accept their submission.

[122]

The motion
    judges findings on the misrepresentation claim were findings of fact, and they
    were firmly grounded in the record.  The alleged common misrepresentation on
    which McCann/Guffie relies occurred when the first package of benefit
    enhancements was distributed.  At the time CMHCs Board explained that it did
    not intend to make regular use of surplus for the benefit of members, and that
    this package was an unusual circumstance.  McCann/Guffie maintain that the
    Boards explanation amounts to a one time only representation.  However, for
    example, in his cross-examination, Mr. Guffie acknowledged that he did not
    believe that CMHC literally meant one time only.  Indeed, he understood that
    should the fund again be in a surplus position, CMHC could similarly enhance
    the benefits of plan members.  Mr. Guffies evidence alone undermines the
    McCann/Guffie assertion that the alleged misrepresentation was a common
    misrepresentation.

[123]

Similarly, the
    evidence in the record undermines the notion that class-wide reliance can be
    inferred or assumed.  Mr. Guffie himself elected to take the commuted value of
    his benefits before the alleged misrepresentation occurred.  And, he conceded
    that he would have made the same decision regardless of the misrepresentation. 
    Other class members, too, may have elected to take the commuted value of their
    pension before the alleged misrepresentation, and still other class members may
    have made their election without regard to what the CMHC Board represented.

[124]

Reliance need
    not always be treated as an individual issue in class proceedings.  In some
    cases, class-wide reliance may be inferred from the facts.  See
O.P.S.E.U.
    v. Ontario
, 13 C.P.C. (6th) 178 (S.C.), at para. 68, per Cullity J.; and
CC&L
    Dedicated Enterprise Fund (Trustee of) v. Fisherman
(2001), 18 B.L.R. (3d)
    260 (S.C.), per Cumming J.  This, however, is not one of those cases.  On the
    record before him, the motion judge reasonably found that reliance was very
    much an individual issue.

[125]

The motion judge
    also reasonably held that even if CMHC had a duty to notify the plan members
    that they had a right to share in an eventual distribution of surplus and that
    they would forgo that right if they left the plan, and that, therefore, its
    breach of this duty amounted to a misrepresentation by omission, still
    class-wide reliance could not be inferred.  CMHC would be entitled to defend
    the claim on the basis that individual members decisions to leave the plan
    were unconnected to the misrepresentation:  see
Plaza Fiberglass
    Manufacturing Ltd. v. Cardinal Insurance Co.
(1994), 18 O.R. (3d) 663
    (C.A.).

[126]

For all these
    reasons, the Divisional Court did not err in upholding the motion judges
    finding that the McCann/Guffies one time only misrepresentation claim did
    not raise a common issue.  I would not give effect to this ground of appeal.

(d)

Did the motion judge err in failing to award the appellants their costs
    from the CMHC pension fund?

[127]

The motion
    judge rejected the appellants request that their full indemnity costs be paid
    out of the CMHC pension fund.

[128]

In this court,
    the appellants submit, as they did in the Divisional Court, that the motion
    judge erred in denying their request.  They put their case for costs from the
    fund on two bases: they contend that the question who owns the surplus lies at
    the heart of their actions and that the answer to this question will benefit
    all plan members; and they contend that this litigation concerns the due
    administration of the trust by CMHC.

[129]

The Divisional Court
    noted that, in accordance with the decisions of this court, public policy
    permits costs to be payable out of a pension fund in two categories of cases:
    first, where proceedings are brought to ensure the due administration of the pension
    trust fund; or where proceedings are brought for the benefit of all
    beneficiaries.  However, the Divisional Court did not agree that these
    proceedings fell under either category.  It deferred to the motion judges
    exercise of discretion on costs, at para. 124:

In our view, the certification judge correctly articulated the
    law, exercised his discretion and made no error in principle. Nor did he
    misapprehend the facts. His decision makes sense based on the history of this
    case and the nature of the claim. We see no basis to interfere with the
    exercise of his discretion.

[130]

I, too, see no
    basis to interfere with the motion judges refusal to award the appellants
    their costs from the fund.  In addition to attracting significant deference,
    the motion judges determination is consistent with the Supreme Court of
    Canadas decision in
Nolan v. Kerry (Canada) Inc.
, 2009 SCC 39, [2009]
    2 S.C.R. 678.  There, Rothstein J. for the majority upheld this courts refusal
    to order that the costs of former employees of a pension plan be paid out of
    the pension fund.  He noted, at paras. 121-127, that costs of litigation should
    be paid from a pension fund only where (a) the litigation is concerned with the
    due administration of the trust, and there exists some legitimate uncertainty
    about how to administer the trust; and (b) where the dispute is not
    adversarial.

[131]

This litigation
    does not meet either of these two criteria.  This litigation is not aimed at
    ensuring the proper administration of pension funds in an ongoing plan.  It
    will not benefit all plan members.  Rather, it is an attempt by a group of
    former plan members to gain access to the surplus, and extract a portion of
    that surplus for their own benefit.  Viewed in this light, the appellants
    objective in this litigation cannot possibly benefit existing plan members, or
    concern the due administration of the fund.

[132]

Moreover, this
    litigation is highly adversarial.  In both proceedings, the appellants have
    called into question the appropriateness of CMHCs actions.  They have asserted
    breaches of trust, and of fiduciary and statutory duties, and have even sought
    punitive damages.  This is not in any sense a non-adversarial dispute.

[133]

I would not give
    effect to this ground of appeal.

H.

conclusion

[134]

The Divisional
    Court was correct in concluding that a court has no jurisdiction to order CMHC
    to partially terminate its pension plan or to award damages premised on a
    partial termination of the plan.

[135]

The Divisional
    Court did not err in upholding the motion judges decision that the
    misrepresentation claim advanced by McCann/Guffie does not raise a common
    issue.

[136]

The motion judge
    did not err in refusing to award the appellants their costs out of the pension
    fund.

[137]

Therefore, I
    would dismiss both appeals.  In accordance with the agreement of the parties, I
    would order that the appellants pay to the respondent CMHC its costs of the
    appeal in the amount of $20,000, inclusive of disbursements and applicable
    taxes.  The appellants shall determine their respective contributions to this
    amount.

Released: DD Apr 18, 2012                                  John
    Laskin J.A.

I
    agree Doherty J.A.

I
    agree Janet Simmons J.A.






appendix a

Common Issues Certified on Consent as listed by the
    Divisional Court at para. 31:

1.  Do members of the proposed class have an equitable
    and/or beneficial interest in the pension fund surplus which entitled them to
    an equitable share of what the defendants have characterized as "benefits
    enhancements" funded out of surplus?

2.  If the answer to 1 is yes, did the election by the
    members to take the commuted value of their pension terminate any beneficial
    right or interest they might have had in the surplus by virtue of the trust
    and/or fiduciary relationship?

3.  If the answer to 2 is no, did the failure of the
    defendants to include members of the class to the extent of their equitable
    share in what the defendants have characterized as "benefits
    enhancements" funded from surplus amount to breach of trust or fiduciary
    duty?

4.  If the answer to 3 is yes, are the class members
    entitled to any remedy and, if so, on what basis?

5.  If the answer to 2 is yes, should those class members

a)  whose commuted value transfer election was reduced
    by the amount of the maximum income tax limit, but

b)  who were permitted by CMHC to leave any commuted
    value balance over such limit in the plan to be received as a transfer
    restriction annuity rather than a residual cash payment (TRD sub-class),
    nevertheless be entitled to have any beneficial right or interest in the
    surplus determined as if their commuted value transfer had not occurred or only
    to the extent of the value of the transfer restriction annuity as was done by
    CMHC.



appendix B

The Lacroix/Ladouceur plaintiffs proposed the
    following additional common issues before Charbonneau J.:

(i)  Does the surplus in the CMHC pension fund belong to
    the plan members?

(ii)  If the answer to (i) is yes, did CMHC breach its
    trust, fiduciary and/or statutory duties to the class members by failing to
    declare a partial termination of the pension fund trust pursuant to s. 29(5) of
    the PBSA for the benefit of the class members and if so, what is their remedy?

(iii) (If the election by the class members to take the
    commuted value of their pension terminated any beneficial right or interest in
    the surplus), are the defendants estopped by their conduct from alleging same,
    assuming reliance?

(iv) Were the defendants guilty of conduct that justifies an
    award of punitive and/or exemplary damages?

appendix
    c

The McCann/Guffie plaintiffs proposed the following
    common issues before Charbonneau J.:

(i)  Did CMHC hold the pension fund surplus in trust for
    the class members?

(ii)  Did CMHC breach its trust, fiduciary and/or
    statutory duty by failing to pay the class members their full pro rata share of
    surplus when it distributed surplus on the 1st day of January, 1999?

(iii)  Did CMHC breach its trust, fiduciary and/or
    statutory duty by failing to pay the class members their full pro rata share of
    surplus when it distributed surplus on the 1st day of January, 2001?

(iv) Did CMHC and the Trustees breach their trust,
    fiduciary and/or statutory duty to the class members by allowing CMHC to
    allocate for itself approximately 60% of the surplus that was distributed on
    the 1st January 1999 and the 1st January 2001?

(v)  Did CMHC breach its trust, fiduciary and/or statutory
    obligations to the class members by failing to declare partial termination of
    the pension plan fund trust pursuant to s. 29(5) of the PBSA?

(vi) Did the Defendant Trustees breach their trust,
    fiduciary and/or statutory obligations by failing to ensure that CMHC declared
    a partial termination of the pension fund trust pursuant to s. 29(5) of the
    PBSA for the benefit of the class members?

(vii) Did CMHC make a common representation and/or
    warranty to the class members that the surplus distribution that occurred on
    the 1st January 1999 was to be one time only?

(viii) If the answer to (vii) is yes, will reliance on
    such representation and/or warranty by the class members be assumed?

(ix) If the answers to any one of common issues
    (i)(ii)(iii)(iv) and (v) are yes, to what remedy are the plaintiffs entitled?

(x) Are the class members entitled to exemplary and/or
    punitive damages and, if so, in what amount?





[1]

Lacroix v. Canada Mortgage and Housing Corp
. (2009), 68 C.P.C. (6th)
    111 (S.C.) and
McCann v. Canada Mortgage and Housing Corp.
(2009), 75
    C.P.C. (6th) 156 (S.C.).



[2]

McCann v. Canada Mortgage and Housing Corp.
(22 May 2009), Ottawa,
    07-CV-37862 (S.C.) and
Lacroix v. Canada Mortgage and Housing Corp.
(22 May 2009), Ottawa, 99-CV-10694 (S.C.)



[3]

Rio Algom
deals with the provincial legislation; these two appeals
    deal with the federal statute.  However, as I will discuss, the
    Superintendents supervisory role is a critical aspect of both statutory
    regimes.



[4]
Section 29 was amended in 2010 by S.C. 2010 c.12.  In these reasons, I refer to
    the provision previously in effect, as it governs this litigation.



[5]
Under the 2010 amendment, the right of an administrator to partially terminate
    a pension plan has been removed.  Now, only the Superintendent can partially
    terminate a plan.



[6]
See para. 44 below.



[7]
Apart from the McCann/Guffie misrepresentation claim, which I deal with
    separately below.



[8]
Under the recent amendments to s. 29  see footnote 5 at para. 36  only the
    Superintendent can initiate a partial termination. This amendment further shows
    Parliament's intent to rely on the expertise of the Superintendent for
    decisions on plan terminations.



[9]
They made that concession because of the Supreme Courts decision in
Buschau
.



[10]
I use wind up of a pension plan and termination of a pension plan
    interchangeably.



[11]
See paras. 39-40 and 44-46.



[12]
(1841),
    41 E.R. 482.



[13]
Depending on the terms of the plan documents.


