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Member, Beacon International Group, Ltd.
TORONTOCanadian retailer Hudson's Bay Co. does not have to share a portion of its pension surplus with workers of a unit it sold two decades ago, the Ontario Court of Appeal ruled.
The Court of Appeal Tuesday overturned a lower court ruling that the company had to transfer a share of a $94 million surplus to a plan created for the Northern Stores Division it sold in 1987.
As part of the sale agreement, the division, which became Winnipeg-based North West Co., agreed to employ 1,200 Hudson's Bay workers and to establish a new pension plan comparable with the Hudson's Bay plan. Toronto-based Hudson's Bay agreed to transfer cash assets equal to the pension liabilities of the transferred employees, but would have no further obligation for their pension benefits, under the agreement.
The former employees filed a complaint in the early 1990s asking for a court order that Hudson's Bay transfer a share of the surplus to the new plan or to a trust. A lower court judge concluded that some employees had a reasonable expectation, based on written communications, that part of the surplus would be used to improve their pensions and that the company did not own the surplus. The failure to transfer surplus assets to the new plan constituted a breach of trust, according to the lower court judge.
The Ontario Court of Appeal, though, ruled that the company had no obligation to transfer any portion of the surplus under the terms of its pension plan agreement and the absence of legislation mandating such transfers.