Hydro One’s appeal to the Ontario Divisional court regarding pensions was dismissed recently, marking a second legal defeat for the utility company in a year.

The case involves pension payouts to 73 former middle managers who were fired in 2002 as part of a cost-reduction program without adequate adjustments being made to their pensions. While unionized workers who lost their jobs during the same period were able to negotiate their retirement packages with Hydro One, the managers were denied an opportunity to do so, prompting them to ask the Financial Services Commission of Ontario (FSCO) to order a partial windup of the Hydro One pension plan. Their request was denied on the basis that the 73 employees did not constitute a “significant number” of members of the plan.

The employees appealed to the Financial Services Tribunal (FST) which ruled in their favour. Hydro One then appealed the decision to the Divisional Court, which dismissed the appeal in late March on the grounds that the term “significant number” could be determined by looking at categories of employees within the pension plan and did not have to be determined by comparing the number of terminated employees against the total number of active plan members.

Howard Goldblatt, a partner with the law firm Sack Goldblatt Mitchell in Toronto and one of two lawyers representing the 73 managers, says the entire case came down the definition of “significant.” “[Hydro One’s] position is that 73 is not significant among the thousands of people in the pension plan,” he explains. “Our position is that it’s contextual. Seventy-three is significant when one compares the group that was adversely affected within the entirety of the plan. They were looking at an absolute number and we were saying it depends on the context.”

In its decision, the Divisional Court pointed out that the attitude of Hydro One’s management was one of, “there were too many employees, and on average, they were too senior in age.” As such, the FST was correct in finding that the merger “was an excuse, rather than a reason to further thin out staff, particularly staff with some seniority.”

Goldblatt says Hydro One is planning to appeal the decision, and may ultimately turn to the Supreme Court of Canada. “Partial windup issues have in fact been dealt with in the Supreme Court in the Monsanto case. But this is somewhat different.”

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