The Alberta Court of Appeal has upheld a $267,017 award to a pensioner for negligent misrepresentation after the Alberta Pensions Services Corp. provided mistaken estimates of the pensioner’s retirement benefits.
But the lawyer for Dr. William Calder and his wife says the ruling, which also validated a change in the ASPC’s interpretation of the governing legislation, doesn’t adequately cover the losses of the six couples she represented in the Calder suit and whose damages have yet to be negotiated with the APSC.
“Dr. Calder’s damages would have been quite close to $1.5 million had the court upheld the interpretation of the Public Sector Pensions Plan Act that the APSC had applied for almost two decades,” says Rita Richardson, founder of Richardson Law Office in Calgary. “I’ve never seen anything like this before, where the change in interpretation that affected so many people took place so many years after the original one had been established and consistently applied.”
Richard says about 25 pensioners were affected by the change in interpretation, with 23 seeing reductions in their pensions. “And there are about 100 employees who will be similarly affected when they retire,” she adds.
The case revolved around the PSPPA, which split the public service pension regime for managers into two separate plans: The Public Service Management Closed Membership Pension Plan, for those who had ceased employment before Aug. 1, 1992, and the Management Employees Pension Plan, for those who continued employment as managers thereafter.
Calder didn’t fit neatly into either plan. As a former manager from 1978 to 1986, he was a deemed member of the closed plan, but he returned to work as a manager in 1995.
The PSPPA provided that returning managers would be members of both plans, with benefits based on pensionable service before Aug. 1, 1992, and a proviso that pensionable service after that date “may be considered” in calculating benefits.
In 2009, APSC interpreted the proviso to include any salary earned after Aug. 1, 1992. In 2010, the ASPC assured Calder that this interpretation, which entitled him to a monthly pension of about $8,000, would rule. Based on this information, Calder retired in 2011 and began collecting his pension.
In 2012, APSC settled on a new interpretation that limited the calculation of benefits to salary earned between Aug. 1, 1992 and Jan. 1, 1994. Two years later, the APSC revised its calculation of Calder’s benefits and reduced his monthly pension to about $2,000.
The trial judge ruled that the 2012 interpretation was the correct one. In his view, the 2009 interpretation would lead to an absurdity that he described as “double-dipping.”
The Court of Appeal agreed. “This is what the trial judge described as double-dipping: the returning manager gets the benefit of a higher salary earned recently, but still has that salary adjusted [for the cost-of-living] on the assumption that it was earned at the old plan termination date,” the court wrote in its judgment. “The absurdity of this interpretation is heightened by contrast to the plight of management employees who worked continuously for Alberta. Having no access to the cost-of-living adjustment double-dip and other old plan benefits, they would receive far smaller pensions than returning managers.”
As the Court of Appeal saw it, the trial judge was also correct in holding that APSC wasn’t precluded from reinterpreting the legislation, which he had explained as follows: “. . . neither the law of trusts nor the law of contract can be stretched so as to compel the APSC to continue indefinitely to apply a statutory interpretation that has been determined to be incorrect, and to create absurd results. Such an obligation cannot reasonably be interpreted as a term of employment. Nor can it be properly characterized as a trust obligation owed by the administrator. Nor can it be the foundation of a ‘vested’ right as argued by the plaintiffs.”
According to Richardson, this ruling treats public pensioners differently from private pensioners. “It’s an unfortunate distinction that turns public pensioners into second-class citizens,” she says.
However that may be, the Court of Appeal did agree with the trial judge that the ASPC and the province were liable for negligent misrepresentation.
But the trial judge had been correct in ruling that Calder wasn’t entitled to be put in the position he would have enjoyed had the misrepresentation been true; rather, he was entitled only “to restitution for the damages flowing from the communication of inaccurate information,” which included Calder’s ability to exercise other options when planning his retirement and making spending decision.
In an email to Benefits Canada, Cara Alexander Brown, APSC’s manager of communications, confirmed that neither party has sought leave to appeal from the Supreme Court of Canada. “As there are still other members of the Calder class, as well as others outside the class who were similarly affected with whom we have not reached a settlement, we cannot comment on this matter at this time,” she added.