Law Times

PAGE 10 almost 100 years, Canadian courts followed the rule promulgated by the Chancery Division in England in the 1907 case of Re Buckton. "Simply put, Buckton stated When are costs properly payable from a pension fund? W FOCUS BY JULIUS MELNITZER For Law Times hen do costs of pen- sion proceedings come out of the fund? For beginning with Kerry v. Ontario, currently on reserve in the Su- preme Court of Canada after be- ing heard in November 2008. In Kerry, a group of employees that litigants can get their costs out of the trust if the suit is truly an interpretive exercise or where the litigation is non-adversarial," says Brett Ledger, a senior partner with Osler Hoskin & Harcourt LLP's Toronto offi ce. But the Ontario Court of Appeal, in contrast to courts in British Columbia, Alberta, and Nova Scotia has taken a modifi ed approach in a trilogy of cases alleged that the employer had im- properly paid expenses and im- properly used surplus funds to satisfy contribution obligations. The Court of Appeal rejected the plaintiffs' arguments in their en- tirety and required them to pay the costs of the employer. Justice Eileen Gillese, who authored the reasons in all three cases in the trilogy, held that the Buckton principles, formulated in a trust case, were not "particularly helpful" in the pension context. Instead, she adopted the "pension trust approach" articulated by Jus- tice Maurice Cullity of the Ontario Superior Court in his 2006 ruling in Sutherland v. Hudson's Bay Co. "This approach recognizes that litigation necessary for the due administration of the trust can involve resolving the competing interest of different benefi ciaries groups," Ledger says. As Gillese saw it, this type of benefi t of a limited group." Costs were also payable from litigation was typically "required to determine the rights of benefi ciaries and arises as a result of ambiguity in the trust documents." But consistently with Buckton, the fund where the case was for the "benefi t of all the benefi cia- ries." According to Gillese, a pro- ceeding was brought for the ben- efi t of all the benefi ciaries when relief was sought for the benefi t of the fund itself and all plan ben- efi ciaries, and not for the personal benefi t of the plaintiff. But, in her view, the action was costs were not payable out of the fund if the action was adversarial. In the court's view, the plaintiffs' allegations were indeed adversarial in nature as they were about the "propriety of actions taken by those responsible for the admin- istration of the fund and its aim was to force the employer to make payments into the fund to the Alberta decision refers to Sedona Continued from page 9 point. Indeed, that is the test articulated in the Se- dona Canada Principles, which have fi lled a void in Canadian law by becoming a point of reference for courts dealing with e-discovery issues. Most recently, the Alberta Court of Appeal's June 2008 decision in Innovative Health Group Inc. v. Calgary Health Region made reference to Sedona. In November 2008, the Supreme Court dismissed an application for leave to appeal from the judgment. The principles, which were drafted by leaders in the legal and e-discovery fi elds to provide workable solutions to the challenges created for litigants with reference to the preservation, collection, processing, review, and production of electronically stored infor- mation, also deal with the complex question of what a party must preserve. Here, Principle 5 states that the parties "should be prepared to produce relevant electronically stored information that is reasonably accessible in terms of cost and burden." The commentary to the principle outlines the steps that should be taking to ensure that a litigation hold is properly in place and that relevant documents have been preserved. According to the commentary, the obligation is not to search all potentially relevant sources of information. Instead, "the more costly and burdensome the effort to access electronically stored information from a particular source, the more cer- tain the parties need to be that the source will yield relevant information." LT not so brought in Kerry, as there was no evidence of the degree of support for the plaintiff from plan members. And had the plaintiffs been successful, the proceeds would have gone into a fund that was held for the benefi t of a particular class of plan benefi ciaries. "A lot of litigation around pension plans would fall into the 'due administration of the trust' category," says Elizabeth Brown, a partner at Hicks Morley Hamil- ton Stewart Storie LLP's Toronto offi ce. "But it's the second catego- ry that deals with the scope of the benefi t that tends to cause more diffi culty on the costs issue." It wasn't much of a problem in March 16, 2009 • Law TiMes was both for the due administra- tion of the fund and the plaintiff was acting on behalf of all plan members and not for his personal benefi t. But the third case, the November 2008 decision on costs in Burke v. Hudson's Bay Co., does present diffi culties on analysis. Here, the plaintiff alleged that According to Gillese, the action HBC ought to have transferred a share of surplus to a successor pension plan when it sold a divi- sion of the company and trans- ferred the associated employees. Gillese dismissed the plain- tiff 's claim but allowed payment of costs from the plan. She ruled that the litigation was "aimed at ensuring the proper administra- tion of trust funds in an ongoing pension plan" and the "ambigui- ties in the plan documentation" had provoked the litigation. But Ledger, who with colleagues Christopher Naudie and Craig Lockwood, represented HBC, fi nds this reasoning curious. "The court did not seem to the trilogy's second case, MacK- innon v. Ontario Municipal Em- ployees Retirement Board. Gillese applied Kerry to award costs from the fund to the plaintiff, a current plan member who alleged that the defendants had breached their duties by making exorbitant pay- ments under various agreements. The Court of Appeal upheld the motion judge's decision to strike all the claims, except for those alleging breach of fi duciary obligations. The Law of ... The Law of Contracts, Fifth Edition Stephen M. Waddams This classic text has been cited repeatedly by the courts, including the Supreme Court of Canada. This work looks beyond the surface rules of this complex area of law to identify the underlying conflicting principles. The fifth edition has been revised and updated to incorporate all the latest developments in contract law. Hardbound • 782 pp. • 2005 • $160 • P/C 0819010005 • ISBN 0-88804-450-X The Law of Costs, Second Edition Mark M. 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Ledger also questions Gillese's conclusion that the litigation fell within the "spirit of the second category" in Kerry despite the fact that the benefi t of the proceedings would have accrued only to the transferred employees. "It's hard to understand why the transferred employees in Burke would not be considered a par- ticular class of benefi ciaries like the plaintiffs in Kerry," he says. LT For a 30-day, no-risk evaluation call: 1.800.263.2037 CA048 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com CA048 (LT 1-2x5).indd 1 3/11/09 1:38:56 PM LT1603

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