Schmidt v. Air Products Canada Ltd.

Schmidt v. Air Products Canada Ltd.

Where plan documents and trust instruments demonstrate an express trust (Catalytic) the trust governs surplus and employer could not appropriate surplus absent an explicit reservation of revocation; the 1959 Catalytic trust continued and amendments purporting to vest surplus in employer were ineffective so Catalytic-derived surplus belongs to employees; the Stearns plans contained no trust and expressly contemplated reversion of surplus to the employer, so Stearns-derived surplus belongs to employer; the Air Products plan permitted actuarial consideration of surplus and therefore allowed contribution holidays; general actuarial surplus rules apply subject to plan wording and legislation.

Citation
[1994] 2 SCR 611
Parties
Appellant / Respondent: Air Products Canada Ltd.; Appellant / Respondent: William M. Mercer Limited; Appellant / Respondent: Confederation Life Insurance Company; Appellant / Respondent: T. J. Westley; Respondent / Appellant: Gunter Schmidt (on behalf of beneficiaries of the Stearns Catalytic Ltd. Pension Plans)
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
9 June 1994
Procedural Posture
Appeal to the Supreme Court of Canada / Final Judgment on Appeal From Alberta Court of Appeal
Outcome
Appeal (File No. 23047): dismissed as to Catalytic surplus (employees entitled), allowed as to employer's entitlement to contribution holiday; Cross-appeal (File No. 23057): dismissed — Air Products entitled to surplus traceable to Stearns plans and to take contribution holiday.
Legal Topics
Pension Surplus, Contribution Holiday, Resulting Trust, Trust Revocation and Amendment, Plan Interpretation, Entitlement on Plan Termination
Source Language
English
Pensions Trusts Contracts Equity Pension Surplus Contribution Holiday Resulting Trust Trust Revocation and Amendment +2 more

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Parties

Air Products Canada Ltd.

Appellant / Respondent

William M. Mercer Limited

Appellant / Respondent

Confederation Life Insurance Company

Appellant / Respondent

T. J. Westley

Appellant / Respondent

Gunter Schmidt (on behalf of beneficiaries of the Stearns Catalytic Ltd. Pension Plans)

Respondent / Appellant

Procedural Posture

Appeal to the Supreme Court of Canada / Final Judgment on Appeal From Alberta Court of Appeal

Legal Issues

  1. 1 Whether the pension fund (Catalytic and Stearns) was impressed with a trust
  2. 2 Whether employer entitled to surplus on termination of defined benefit plans
  3. 3 Whether an employer may revoke or partially revoke a pension trust by exercise of an amending power

Ratio Decidendi

Where plan documents and trust instruments demonstrate an express trust (Catalytic) the trust governs surplus and employer could not appropriate surplus absent an explicit reservation of revocation; the 1959 Catalytic trust continued and amendments purporting to vest surplus in employer were ineffective so Catalytic-derived surplus belongs to employees; the Stearns plans contained no trust and expressly contemplated reversion of surplus to the employer, so Stearns-derived surplus belongs to employer; the Air Products plan permitted actuarial consideration of surplus and therefore allowed contribution holidays; general actuarial surplus rules apply subject to plan wording and legislation.

Court Disposition

Appeal (File No. 23047): dismissed as to Catalytic surplus (employees entitled), allowed as to employer's entitlement to contribution holiday; Cross-appeal (File No. 23057): dismissed — Air Products entitled to surplus traceable to Stearns plans and to take contribution holiday.

Orders

  • Former Catalytic employees entitled to surplus in pension fund traceable to former Catalytic plans; appeal dismissed on that ground
  • Air Products entitled to take contribution holiday under terms of Air Products plan; appeal allowed on that ground and Air Products not required to repay $1,465,400 taken as contribution holiday from Catalytic-derived actuarial surplus