June 28, 2010
On June 25, 2010 the Court released its reasons for decision on the annuity matter motion. To view these reasons please click here. The decision restores the payment of annuities to a group of retirees of Nortel who stopped receiving these payments as of January 14, 2009, the date the company filed for CCAA protection. The annuities in question were created with deferred compensation that the individuals in question had accrued during their employment with Nortel. For tax reasons the annuities were structured so that Nortel received the payments from Sun Life, and then passed them on to the individual annuitants.
After an analysis based on contract and trust law principles, the Court found that Nortel was being unjustly enriched by retaining the annuity payments, and noted that Nortel was merely a conduit through which payments flowed to the ultimate annuitant. The Court imposed a constructive trust in order to restore these annuity payments to the individual annuitants.