2007 General Meeting Assemblée générale 2007 Montreal, Quebec 2007 General Meeting Assemblée générale 2007 Montreal, Quebec STIKEMAN ELLIOTT PD-7 Recent Legal Developments in Pensions Canadian Institute of Actuaries Montreal, Quebec November 29, 2007 Ari Kaplan KOSKIE MINSKY LLP Gary Nachshen STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT PD-7 Recent Legal Developments in Pensions Canadian Institute of Actuaries Montreal, Quebec November 29, 2007 Ari Kaplan KOSKIE MINSKY LLP Gary Nachshen STIKEMAN ELLIOTT LLP

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT Introduction Intend to canvass key Canadian court decisions rendered so far in 2007 in 6 broad areas relating to registered pension plans: Surplus assets in hybrid plans Employer insolvency Federal partial wind-up surplus Tax deregistration Actuarial responsibility New Brunswick deficit cases

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 1.Surplus Assets in Hybrid Plans Kerry (Canada) Inc. v. Ontario (Superintendent of Financial Services) (2007), 60 C.C.P.B. 67 (Ont. C.A.)  Administrative expenses payable from pension fund  DC contribution holidays from DB surplus  DB contribution holiday amendments  Litigation costs payable from pension fund Sutherland v. Hudson’s Bay Company (2007), 61 C.C.P.B. 171 (Ont. S.C.)  Adding new DC members to “closed” DB plan  How do we reconcile these cases with Aegon/Transamerica?

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 2.Employer Insolvency Re Ivaco Inc. (2007), 58 C.C.P.B. 159 (Ont. S.C.)  Payment can be made from Ontario PBGF to terminated pension plan of employer under CCAA protection, where FSCO undertakes not to enforce resulting Ontario PBA lien in manner that could prejudice other creditors of employer  Final step in long-running Ivaco pension saga that was contested before courts  Pension issues were settled in August and settlement was implemented in October  Appeal before Supreme Court of Canada on deemed trust/bankruptcy issue withdrawn as part of settlement

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 2. Employer Insolvency – continued Re General Chemical Ltd. (2007), 61 C.C.P.B. 266 (Ont. C.A.)  When PBA deemed trust falls away as result of employer’s bankruptcy, so does plan administrator’s associated lien and charge  Plan administrator seeking leave to appeal to Supreme Court Re Collins & Aikman Automotive Canada Inc., October 31, 2007 (Ont. S.C.) (not yet reported)  Standard language in initial CCAA order permitting but not requiring employer to make pension contributions during CCAA stay is sufficient to suspend special payments to underfunded pension plans, when CCAA interim financing predicated on such suspension

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 3.Federal Partial Wind-Up Surplus Cousins v. Canada (Attorney General) (2007), 60 C.C.P.B. 12 (F.C.T.D.) (“ Marine Atlantic ”)  Does Monsanto apply to plans registered under federal PBSA?  Differences between PBA and PBSA  Can OSFI “revisit” or “reconsider” a past approval to a wind-up report?  Currently on appeal to Federal Court of Appeal

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 4.Tax Deregistration Boudreau v. Minister of National Revenue (2007), 58 C.C.P.B. 1 (F.C.A.)  CRA may revoke plan registration retroactively, where registration conditions not met Ontario Inc. v. Minister of National Revenue (2007), 61 C.C.P.B. 86 (F.C.A.)  IPP created for former Teachers Plan member was not established for primary purpose of paying retirement benefits in respect of employment service, so CRA’s revocation of IPP’s registration upheld  Taxpayer seeking leave to appeal to Supreme Court

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 4.Tax Deregistration - continued Jordan Financial Ltd. v. Minister of National Revenue (2007), 62 C.C.P.B. 1 (F.C.A.)  Companion case to Ontario, involving former OMERS member  Also subject of Supreme Court leave application

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 5.Actuarial Responsibility Ontario (Superintendent of Pensions) v. Norton (2007), 59 C.C.P.B. 27 (Ont. C.J.)  Actuary acquitted of charges arising from Slater Steel pension plan valuation, alleging breach of professional standard of care under PBA  Role of actuary retained as expert by party to litigation Morneau Sobeco Limited Partnership v. Aon Consulting Inc. ( 2007), 59 C.C.P.B. 286 (Ont. S.C.)  Defendant Aon cannot bring “third party claim” against Slater executives, as part of lawsuit filed by Plan administrator against Aon

2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007 STIKEMAN ELLIOTT 6.New Brunswick Deficits Melanson v. New Brunswick (Attorney General) (2007), 58 C.C.P.B. 215 (N.B.C.A.)  Retroactive legislative alteration to priority scheme for distribution of assets among members of underfunded pension plans does not violate Charter of Rights and Freedoms Fraser Papers Inc. v. New Brunswick (Superintendent of Pensions) (2007), 60 C.C.P.B. 218 (N.B.Q.B.)  Pension regulator denied employer’s request to pay down solvency deficiencies over 15 years rather than 5 years