January 30, 2018
On January 15, 2018, the Newfoundland Court of Appeal released its Reference decision on the interpretation of the “deemed trust” provisions in the Newfoundland Pension Benefits Act (“NLPBA”).
As we previously reported, the Newfoundland and Labrador government referred certain legal questions relating to the interpretation of the NLPBA to the Court of Appeal after certain issues from the insolvency of Wabush Mines in Labrador and its on-going proceedings under the Companies’ Creditors Arrangement Act (“CCAA”) were brought to the attention of the government. The Reference was heard over the course of two days and involved many intervenors, including Koskie Minsky LLP as Representative Counsel of all Salaried Retirees and Employees of Wabush Mines. We made submissions on behalf of the Salaried Retirees and Employees and filed a supplemental submission on the Administrator’s lien and charge.
In their Reference decision, the Newfoundland Court of Appeal has stated two important conclusions that we believe are helpful to pension plan members in an underfunded pension plan:
- The NLPBA “deemed trusts” operate to create a trust (a priority claim) over all the amounts that an employer owes to a pension plan that it has not paid and thereby leave the plan underfunded and cause pension benefit reductions; and
- The pension plan administrator’s lien and charge operates as a back up protection to the deemed trusts, and creates a secured claim (i.e., also a priority claim) in favour of the administrator also for all of the amounts that an employer owes to a pension plan that it has not paid.
We are hopeful the legal conclusions in the Reference decision will be of assistance to the Wabush Mines retirees in the upcoming hearing before the Quebec Court of Appeal, which is tentatively scheduled for June 11 and 12, 2018.