In certifying a pension class action by Brewers Retail Inc., an Ontario Superior Court judge denounced the Financial Services Regulatory Authority of Ontario for defying a decision of its predecessor, the Financial Services Commission of Ontario.

Justice Ed Morgan certified the class on Feb. 10, 2022, setting the stage for a settlement approval hearing. In March 2021, Brewers Retail brought a court application for certification of the class action following five years of negotiations with the FSCO over the company’s 2008 decision to de-index its pension plan for salaried employees that concluded in early 2019.

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The agreement stated the parties would use a class action to request court approval of a methodology to identify, compensate and bind individuals potentially affected by the indexing issue. The FSCO, which indicated it wouldn’t participate in the court action, confirmed it would accept Brewer’s amendments for registration if the court approved the settlement.

When the FSRA took over as regulator in June 2019, it confirmed the FSCO’s support for the settlement and its implementation. But in October 2019, the FSRA — without providing any rationale — advised it would object to the settlement.

In June 2020, Brewers filed new plan amendments that rescinded all of the indexing changes the company had implemented since 1974 and that the FSRA had determined were non-compliant.

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The FSRA wasn’t mollified. In November 2020, the regulator issued a notice of intended decision to reject the plan amendments. Brewers responded by requesting a hearing at the Financial Services Tribunal. It also confirmed its intention to proceed with a court application for certification of the class action for settlement purposes.

Over the FSRA’s objections, the FST adjourned the regulatory application to allow the court to make the first ruling on the proposed settlement. It accepted Brewers’ proposal to return to the FST to seek its approval once the court had made its decision.

The FSRA intervened in the case, arguing that the amendments deviated from other plans that the FSRA oversaw and from the Pension Benefits Act, that the court didn’t have jurisdiction to determine the validity of the amendments and that the FST hearing should proceed first.

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Citing a jurisprudential history that had determined the court had jurisdiction to decide pension-related disputes in the face of opposition by the regulator, Morgan determined that the parties had met the criteria for certification — more particularly, that the class action was the “preferable procedure” for resolving the issues between the parties.

As the FSRA had admitted, Morgan also noted the regulator’s concern wasn’t for the Brewers pensioners, who had agreed to the settlement. Rather, the FSRA’s counsel “expressed concern for the implications of this settlement for pensioners of other companies.” It was evident, added Morgan, that the Brewers’ pensioners were only a “small cog and not the driving hub” for the FSRA.

“In taking the position that [the] FSCO’s approval and the parties’ reliance thereon amounted to nothing more than discretionary advice that can be changed at will, is itself a disregard of the class members’ interests,” stated Morgan.

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The court, however, couldn’t decline jurisdiction on the basis “that it should subordinate the interests of the parties before it to that of parties other than those before it.”

The FSRA is seeking leave to appeal Morgan’s decision. The regulator didn’t respond to questions from Benefits Canada as the “issue is still being litigated and before the courts.”