THE CITY OF SAINT JOHN, N.B., SPONSORS A DEFINED benefit pension plan for its employees, a plan which is, and has been for some time, seriously underfunded.

The Saint John Transit Commission, a separate corporation that is essentially controlled by the Common Council of Saint John, has no pension plan for its employees. The Amalgamated Transit Union, Local 1182, applied to the New Brunswick Superintendent of Pensions invoking a portion of the province’s Pension Benefits Act and asked the Superintendent that members of the union be recognized as employees of Saint John and therefore eligible for the city’s pension plan.

The Superintendent determined that he did not have the jurisdiction to decide whether or not a worker is an employee of a particular employer.

The union, utilizing a section of the Pension Benefits Act, required the Superintendent to “refer” his decision to the Labour and Employment Board of New Brunswick. The Board concluded that the Superintendent had an implied authority to determine whether individuals belong to a class of employees for whom a pension plan had been established.

As a result of the Board’s ruling, the City of Saint John, the Saint John Pension Board and the Superintendent sought judicial review before a Justice of the Court of Queen’s Bench of New Brunswick. Ultimately, the Queen’s Bench Justice determined that the requested function was beyond the scope of the powers of the Superintendent. This decision was appealed by the union to the New Brunswick Court of Appeal. In their decision issued last June, the three justices of the Court were divided, but two of the three justices said the decision of the Board should be reinstated.

Interestingly, both the majority judgment and the dissent in the Court of Appeal disagreed with the standard of review adopted by the Queen’s Bench Court, choosing the standard of “reasonableness” rather than the standard of “correctness.” The majority of the Court of Appeal, while utilizing the same “reasonableness” standard of review, reversed the Queen’s Bench Court and reinstated the decision of the Board.

This is especially interesting given one of the justice’s points, which looked at the relationship between the Superintendent and the Board. He pointed out that the right of “referral” from a decision of the Superintendent to the Labour and Employment Board is something more than a right of “appeal.” Proceedings before the Board on a “referral” are to be considered a hearing on the issue decided upon by the Superintendent. The Act specifically stipulates that the Superintendent is a party to the proceedings on a referral to the Board, the decision of the Superintendent is automatically “stayed” upon a referral to the Board, and the Superintendent on a referral to the Board “is responsible to present a case in support of any decision or order made by the Superintendent.”

Another justice from the Court of Appeal supported the Queen’s Bench Court in quashing the decision of the Board, concluding that the Board’s reasoning “…taken as a whole, cannot support its decision.”

In this context then, the majority of the Court of Appeal concluded that the decision of the Board was reasonable in finding that the Superintendent had the implicit authority under the Act to decide whether the union members were employees of Saint John for the purposes of its pension plan. The primary significance of this decision for plan sponsors is that the Superintendent may have implied powers that go beyond his explicit powers as detailed in the Act. This has implications for plan design, costs and administration, as was seen in this case.

An application for Leave to Appeal has been made to the Supreme Court of Canada. It remains to be seen whether or not the Supreme Court of Canada will take up this issue and, if it does, where it will go with it.

William Goss is a partner with Stewart McKelvey in Saint John, N.B.

For a PDF version of this article, click here.