Leave to appeal granted in Kerry case

The Supreme Court of Canada has granted leave to appeal in the Elaine Nolan, et al. v. Kerry (Canada) et al. case.

Plaintiffs had sought leave to appeal last year’s decision by the Ontario Court of Appeal, which is now open to reconsideration by the Supreme Court.

In June, the Court of Appeal ruled that the introduction of a defined contribution (DC) component to the pension plan didn’t create a second plan and thus found that cross-subsidization is not prohibited by the trust agreement.

The Kerry pension plan was amended to introduce a DC component, and the defined benefit (DB) portion had a surplus, which the employer then used to fund its contributions to the DC portion.

The other major issue the Court of Appeal dealt with was the question of payment of expenses.

It stated that the original Kerry plan text did not contain a provision dealing with payment of plan or fund expenses and concluded that “the failure of the original plan documents to directly address the payment of expenses does not lead to the conclusion that the company is obliged to pay them. In accordance with general trust practice and principles, the trust fund would bear the expenses.”

“Some of these very important issues that the Court of Appeal looked at in Kerry are going to get another look,” says Gary Nachshen, a partner with Stikeman Elliott LLP in Toronto. “The Supreme Court generally doesn’t hear a lot of pension cases, so this is significant.”

He expects that a hearing might be held in the fall, and a decision could be made in 2009.

Click here to visit BenefitsCanada.com’s special online section on the case, The Kerry Decision.

To comment on this story, email craig.sebastiano@rci.rogers.com.