Citation:
Williams v. College Pension Board; Williams v. Bradshaw,
2007 BCCA 19
Date: （略）
Dockets: CA033080 & CA033100
Docket: CA033080
Between:
Anthony Williams, Ashley Dermer, Michael Griffin and Richard Scott
Plaintiffs
(Respondents)
And
College Pension Board of Trustees, John Cook, Dan Bradford,
Paul Martin, Jack Bradshaw, Marilyn Duggan, Andy Jani, Bruce Kennedy,
Tom Kozar, Cliff Neufeld, Valerie Mitchell, Bonnie Pearson,
Roseanne Moran, Dominique Roelants and John Wilson
Defendants
(Appellants)
And
College Institute Educators’ Association of British Columbia,
Post Secondary Employers’ Association, and
Her Majesty the Queen in Right of British Columbia
Intervenors
- and -
Docket: CA033100
Between:
Anthony Williams, Ashley Dermer, Michael Griffin and Richard Scott
Plaintiffs
(Respondents)
And
College Pension Board of Trustees, John Cook, Dan Bradford,
Paul Martin, Marilyn Duggan, Andy Jani, Bruce Kennedy,
Tom Kozar, Cliff Neufeld, Valerie Mitchell, Bonnie Pearson,
Roseanne Moran, Dominique Roelants and John Wilson
Defendants
(Appellants)
And
Jack Bradshaw
Defendant
(Appellant)
And
College Institute Educators’ Association of British Columbia,
Post Secondary Employers’ Association, and
Her Majesty the Queen in Right of British Columbia
Intervenors
Before:
The Honourable Madam Justice Prowse
The Honourable Mr. Justice Donald
The Honourable Mr. Justice Hall
C. Ferris, L. Chamzuk
Counsel for the Appellant Board of Trustees
J. Elwick, G. Pun
D. Klein, M. Zigler
Counsel for the Appellant Bradshaw
Counsel for the Respondents
Place and Date of Hearing:
Vancouver, British Columbia
4 December 2006
Place and Date of Judgment:
Vancouver, British Columbia
11 January 2007
Written Reasons by:
The Honourable Mr. Justice Hall
Concurred in by:
The Honourable Madam Justice Prowse
The Honourable Mr. Justice Donald
Reasons for Judgment of the Honourable Mr. Justice Hall:
[1] The appellants appeal from an order of Mr. Justice Sigurdson certifying the respondents’ action as a class proceeding. The reasons for judgment in that decision can be found at 254 D.L.R. (4th) 536, 2005 BCSC 788.
[2] The certification was ordered pursuant to the Class Proceedings Act, R.S.B.C. 1996, c. 50, s. 4 of which provides, in part, as follows:
4 (1) The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met:
(a) the pleadings disclose a cause of action; …
[3] The appellants submit on this appeal that the respondents have failed to make out a cause of action. If this submission is accepted, then the respondents would not have satisfied a key requirement of the Class Proceedings Act and the certification order should be set aside.
[4] The respondents maintain that they have a valid cause of action for damages, including punitive damages, against the appellants arising out of an allegation of breach of fiduciary duty. Specifically, they allege that the appellants’ administration of a pension plan, under which the respondents are beneficiaries, breached the duty of impartiality and even-handedness of the defendants to administer the fund in the best interests of all Plan members and for the sole benefit of Plan members.
Background and Legislative Provisions
[5] The respondent plaintiffs are retired members of the College Pension Plan (the “Plan”), which is constituted under the Public Sector Pension Plans Act, S.B.C. 1999, c. 44 (the “PSPPA”). The Plan was designed to provide benefits to instructors, librarians and senior administrative staff of colleges designated under the College and Institute Act, R.S.B.C. 1996, c. 52. Covered by the Plan are three categories of beneficiaries: active members, deferred vested members and retired members.
[6] Schedule A of the PSPPA establishes the appellant Board of Trustees (the “Board”) as being responsible for the administration of the Plan and for the management of the Pension Fund. The Pension Fund is a trust fund continued under the PSPPA to fund the benefits provided for in the Plan.
[7] In April 2000, the Board promulgated the College Pension Plan Regulation, B.C. Reg. 95/2000, which set out rules governing the Plan. Section 13 of Schedule A of the PSPPA authorizes the Board to adopt such regulations.
[8] Section 15 of Schedule A authorizes and, under some circumstances, requires the Board to make amendments to the rules governing the Plan. The relevant provisions read as follows:
15 … (2) The partners may direct the board to amend the pension plan rules and the board must amend the rules if
(a) the partners have first received and considered the advice of the board respecting both the cost and the administrative impact of implementing the proposed amendment, and
(b) the proposed amendment is not inconsistent with subsection (1) or the trustees' fiduciary responsibilities. …
[9] The term “partners” is defined in s. 1 of Schedule A as “the government, the Post Secondary Employers' Association, the College Institute Educators' Association and the British Columbia Government and Service Employees' Union”.
[10] The dispute in this case arises from amendments made pursuant to s. 15. These amendments resulted from a directive dated April 12, 2001 from the partners to the Board to amend the Plan. This directive is termed the “Partners’ Agreement”.
[11] The rationale behind the Partners’ Agreement was based on an actuarial valuation of the Plan showing an actuarial surplus of $120,000,000 in the Plan as of August 31, 2000. The partners wished to allocate the actuarial surplus as follows:
(a) $75,000,000 retained in the Plan to protect all plan members against potential future adverse actuarial experience;
(b) $20,000,000 retained in the Plan and allocated to insulate active contributing members from a contribution increase for five years between January 1, 2002 and December 31, 2006;
(c) $20,000,000 retained in the Plan and allocated to insulate the college and institute employers from contribution and rate increases over the same period; and
(d) $5,000,000 to provide enhancements for retired members (about one-half by way of cash payments to retired members and one-half to enhance post-retirement group benefit packages).
[12] In late 2001, the Board enacted two amending regulations implementing the terms of the Partners’ Agreement: B.C. Reg. 266/2001 and B.C. Reg. 314/2001. The former authorized the Board to make a one-time lump sum payment to each person who was a retired member of the Plan as of December 31, 2001. The latter authorized the benefit improvements and contribution reductions set out in the Partners’ Agreement.
[13] In the present proceeding, the respondents have alleged that this allocation of the actuarial surplus denied them an allocation of benefits proportionate to benefits granted to active members and employers. The respondents submitted that in passing the amending Regulations the appellants had breached their fiduciary duties toward the respondents because they had failed to treat all parties in an even-handed fashion. Damages, both general and punitive, are sought as a remedy for the alleged breach of duty.
[14] It should be noted that a subsequent actuarial valuation of the Pension Fund, performed as of August 31, 2003, indicated an actuarial deficit, also called an unfunded liability, of $50,000,000. In response to this situation the Board adopted a later amendment, B.C. Reg. 445/2004, cancelling the temporary contribution rate reduction and holiday and increasing the contribution rates for the Plan’s active members and employers. Both the former “surplus” valuation and the later “deficit” valuation demonstrate the notional or transitory nature of periodic actuarial valuations and demonstrate that pension plan values can and do fluctuate, sometimes quite dramatically.
The Positions of the Parties
[15] The appellants argue that the present action cannot succeed because there exists no proper basis for any claim for damages by the respondents. They submit that s. 15(2)(b) of Schedule A sets out as a precondition to the enactment of any amendment that such amendment must be consonant with the Board’s fiduciary responsibilities. If an amendment is adopted in breach of the Board’s fiduciary duties, such breach will have the effect of nullifying the amendment, as a requisite precondition for enactment will not have been met. It is submitted that any such amending regulation would be void for lack of jurisdiction. That being the case, according to the appellants, the impugned changes to the Plan should be set aside, and matters would revert to the status quo prior to the amendment and the respondents would be unable to advance any successful claim for damages.
[16] The appellants further submit that the pleadings do not assert sufficient facts to support any claim for punitive damages. They contend that, in any case, an action in punitive damages cannot stand alone and the punitive damages claim should be struck out. The appellants submit that if the respondents have any legal remedy available to them, it would be an order declaring the amending regulations invalid, not an award in damages. The respondents have expressly disclaimed any intention to seek such a remedy.
[17] The respondents assert that their pleadings disclose actions against the Board in breach of statutory and general fiduciary duties. They attack not the regulations but, rather, the appellants’ alleged failure to effect an even-handed distribution of the actuarial surplus. In other words, the respondents do not wish to undo the effect of the amending regulations or to take away benefits that were granted thereunder; they contend here and contended before Sigurdson J. that the Board breached its fiduciary duties in failing to take proper steps to ensure that retired Plan members received benefits correlative to those received by other Plan participants and seek a remedy in damages.
Analysis
[18] The respondents submit that it is not plain and obvious that their damages claims cannot succeed. They submit that when the Board, in allocating the $120,000,000 surplus in the Plan in 2001, only allocated about $5,000,000 in immediate cash and other benefits to retirees and utilized $40,000,000 to grant contribution holidays and other benefits to the employers and active members, they failed to fulfil their fiduciary responsibility to act in an even-handed fashion. They submit that damages, both general and punitive, are a fit remedy for this failure of the appellants to provide them with benefits commensurate with benefits provided to the other parties to the Plan. It was submitted in argument by the respondents that the Board could have awarded additional benefits to the respondents to balance the benefits provided to the employer and active members by the amending Regulations. This failure, they submit, provides a valid foundation for the present action.
[19] The appellants take issue with the decision of the Chambers judge finding a validly pleaded cause of action and the order certifying the action under the Class Proceedings Act. I note that the argument advanced in this Court seems to be focussed in a slightly different fashion from the attack mounted by the appellants, aside from Mr. Bradshaw, before the Chambers judge. Before the Chambers judge it was submitted that the only remedy properly open to the respondents was to attack the Regulations by way of judicial review.
[20] Sigurdson J. thus described the argument at para. 53 of his reasons:
The intervenors and defendants say that if judicial review is available to attack the regulation it is the only way, and not merely the preferable, way of proceeding. Indeed they go one step further. Not only must the proceeding be brought by judicial review, they submit, but the action has a fatal flaw in that it violates the collateral attack rule. The action, the defendants say, cannot be brought while the trustees’ decision is outstanding and has not been quashed because the regulation implementing the Partners’ Agreement amounts to a binding determination that the amendment was not in breach of fiduciary duty. The regulation operating as a bar to the attack by the plaintiff, they say, is a species of res judicata, and the plaintiffs’ action for collateral or consequential relief based upon that conduct is a collateral attack and bound to fail. Thus, there can be no action for compensatory damages because the Board acted lawfully (pursuant to the unattacked regulation).
[21] The judge answered that submission as follows in his reasons: (paras.57-62)
Does it follow that where there is a breach of a private duty alleged and the underlying conduct may be the subject of judicial review (and there is as well a claim for damages), the challenge must be brought by judicial review?
The question, at this stage, is not what is the preferable procedure, but whether it is plain and obvious that there is no cause of action because there is a decision that must be first set aside before a damage claim can be advanced. The defendants and intervenors have not provided me with any authority stating that where there is a private law claim for damages that might also be characterized as conduct reviewable by judicial review, that the proceeding must first be brought by way of judicial review. Although the defendants rely on the decision of Berscheid v. Ensign, [1999] B.C.J. No. 1172 (S.C.), that decision merely says that judicial review must be brought by way of petition; it does not decide the point here.
I have concluded that it is not plain and obvious that there is no reasonable cause of action disclosed in the plaintiffs’ statement of claim.
Accepting that the decision of the trustees implementing the agreement might be characterized as an exercise of a statutory power and that it may be possible to attack the decision under judicial review, I nevertheless do not think that it is plain and obvious that the claim must fail if that regulation is not first successfully attacked. It is at least arguable that the relevant legislation required only that the arrangement not be in breach of fiduciary duty, and that the adoption of such an agreement does not constitute a binding determination that the arrangement is not in breach of fiduciary duty.
The plaintiffs say that the claim for damages for breach of fiduciary duty may exist even in light of the unchallenged regulation and even if the regulation might be said to amount to an implicit determination that there was no breach of fiduciary duty. The plaintiffs’ submission receives some support, if only by analogy, from the decision of the Supreme Court of Canada in Wells v. Newfoundland, [1993] 3 S.C.R. 199.
Although Wells may not be directly on point, there are parallels relevant to the issue of whether there is a cause of action disclosed….
[22] His Lordship observed, “I am not persuaded that, even if the conduct complained of is subject to judicial review, it is necessarily incapable of sustaining a claim for breach of fiduciary duty” (at para.64). After considering several other objections to certification advanced before him by the appellants, Sigurdson J. certified the action as a class proceeding.
[23] In this Court the appellants advance an argument based on statutory construction. They submit that s.15(2)(b) of Schedule A, properly construed, is a complete answer to the claims of the respondents. That is so, it is submitted, because a precondition to the enactment of the amending Regulation adopted by the Board in 2001 is that any such amendments must not be inconsistent with the fiduciary responsibilities of the Board. The argument is that if the amendments amounted to a breach of the fiduciary duty or responsibilities of the Board, then the amendments are and were of no force or effect and any claim of the respondents for damages based on the effect of their passage must fail.
[24] The appellants submit that the Chambers judge fell into error when he placed any reliance upon the case of Wells v. Newfoundland, [1999] 3 S.C.R. 199, 177 D.L.R. (4th) 73. In that case the plaintiff Wells sued for wrongful dismissal from the Public Utilities Board of the Province of Newfoundland. Wells had been employed as a commissioner by the Province under a contractual arrangement. When the Crown restructured the Board, eliminating the position of Wells, he was found to be entitled to damages for wrongful termination of his contract. The Supreme Court of Canada held that although the Province possessed the authority to enact legislation denying an individual a remedy for termination of employment, the legislature had not plainly done so in the case of Wells and therefore a suit lay for damages. The Supreme Court observed at para. 55 of the judgment:
The Crown had a contractual obligation to the respondent, which it breached by eliminating his position. As his right to seek damages for that breach was not taken from him by legislation, he is entitled to compensation.
[25] In my opinion, Wells is not an authority that supports the arguments of the respondents in the present case. It seems to me that the Chambers judge fell into error in relying upon that authority which dealt with a wholly different factual circumstance than what is at issue in the case at bar. Here, the requirement that the Board members must act in accordance with their fiduciary responsibilities to beneficiaries of the Plan is a precondition of the validity of the Regulations complained of by the respondents. That is a very different issue from the Wells case where what was at issue was whether the legislation eliminating his position plainly took away any claim for damages for breach of contract.
[26] I am in agreement with the submission of the appellants that if a court were to find that the amending Regulations 266/2001 and 314/2001 were passed in breach of the fiduciary duty of the Board, then such amendments were void from their inception. The core allegation of the respondents is just that, namely that the Board breached its fiduciary duty to the respondent plaintiffs. Although the respondents have disclaimed any wish to strike down the Regulations in these proceedings, the striking down of the Regulations would be an inescapable corollary of a successful allegation of a breach of fiduciary duty or responsibility by the Board. They are thus met with the insuperable objection on the part of the appellants that if their allegations should be ultimately successful, no action is maintainable because the foundation for them, the amending Regulations, are swept away. Because of this impossible conundrum at the heart of the case advanced by the respondents, I consider the Chambers judge ought to have held that there was no valid cause of action pleaded by the respondents and his failure to so find was in error. In light of the terms of s.15(2)(b), I consider the respondents are not able to advance any successful claim for general damages against the Board for the reasons set forth above. Thus their pleading fails to disclose any valid cause of action that could result in an award of damages.
[27] Concerning the claim for punitive damages, while there may arise a situation where a claim for punitive damages could be advanced in the absence of a valid claim for general damages, such a result seems to me impossible on the facts of this case. The same conduct relied upon for an award of general damages, breach of fiduciary duty, appears to be the underpinning sought for an award of punitive damages. The respondents face the same problem in advancing this claim as they do in advancing a claim for general damages. If, as I have held, the claim for general damages cannot succeed because of the terms of s.15(2)(b), a similar result must follow concerning the claim advanced for punitive damages arising from the questioned acts of the Board. In the circumstances of this case, it is plain and obvious that the punitive damages claims cannot succeed and so no valid cause of action exists in that regard.
[28] Since the pleadings of the respondents fail to disclose any valid cause of action that would result in an award of either general or punitive damages, the order certifying this proceeding as a class proceeding is not sustainable. I would therefore allow the appeals from the certification order, but without costs, in accord with the judgment of this Court in Samos Investments Inc. v. Pattison (2002), 5 B.C.L.R. (4th) 21, 2002 BCCA 442.
“The Honourable Mr. Justice Hall”
I agree:
“The Honourable Madam Justice Prowse”
I agree:
“The Honourable Mr. Justice Donald”
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