Ellsworth v. Trustees et al. Date:, 2013 BCPC 67

Citation: Ellsworth v. Trustees et al. Date: 20130314 2013 BCPC 0067 File No: 1238645 Registry: Robson Square IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CARL WARREN ELLSWORTH CLAIMANT AND: TRUSTEES OF THE BOILERMAKERS LODGE 359 HEALTH AND WELFARE PLAN, TRUSTEES OF THE BOILERMAKERS PENSION PLAN, TRUSTEES OF THE BOILERMAKERS NATIONAL PENSION PLAN AND TRUSTEES OF THE BOILERMAKERS NATIONAL HEALTH AND WELFARE PLAN DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE EHRCKE Appearing on their own behalf: Carl Ellsworth Counsel for the Defendants: Laura Bevan Place of Hearing: Vancouver , B.C. Date of Hearing: February 15, 2013

Date of Judgment: March 14, 2013 [ 1 ] Mr. Ellsworth claimed against the trustees of the Boilermakers lodge 359 pension plan and health and welfare plan, and the trustees of the national plans were added as defendants on the application of the initial defendants. [ 2 ] The Boilermakers lodge 359 is the British Columbia lodge, which has its own pension and health and welfare plans. The national plans cover much of the rest of Canada, including Alberta. [ 3 ] Mr. Ellsworth was a member of lodge 359 for many years.

On retirement on July 1, 2008 in B.C., he began receiving pension and health and welfare benefits under the B.C. plans and ceased his union membership. He then went to Alberta to work and, pursuant to a collective agreement, his employer made pension and benefit contributions on his behalf to the national plans. He did not join the union in Alberta. After a short period, the benefits vested and Mr. Ellsworth became entitled to a pension and health and welfare benefits.

It was not in evidence how long the claimant worked in Alberta, but exhibit 1, a benefit statement, shows his national plan membership as starting on July 1, 2008, vesting on December 31, 2009, and indicates total pension contributions to January 31, 2012 of $29,682 and a welfare dollar bank of zero. I also note from the court record that Mr. Ellsworth was working in Alberta in April, 2012, and was permitted to attend the mediation by telephone. [ 4 ] The plans have linkages and the trustees have entered into reciprocity agreements.

The objective of these is for benefits to follow the member to the member’s home plan. Thus, benefits for a B.C. lodge member who temporarily works in Alberta are transferred to British Columbia. As long as the member is still working, the effect is to accrue benefits in British Columbia. Once a member is retired, the effect is to help support the trust funds on which the plans depend. This has always been the case where a retired B.C. boilermaker works in B.C. after retirement. [ 5 ] At the time Mr. Ellsworth first went to work in Alberta, reciprocity was voluntary. Mr.

Ellsworth did not elect it, and his benefits stayed in Alberta, where he built up his entitlement to a pension and health and welfare benefits. Effective June 1, 2009, pursuant to amendments to the reciprocity agreements, reciprocity became mandatory. Mr. Ellsworth objects to this and wants to be restored to the position he would have been in had reciprocity not been applied to him, including return to the national plans of contributions made on his behalf and transferred to British Columbia. [ 6 ] The claimant and three witnesses for the defendants testified.

They were: Susan Bird, president of McAteer Employee Benefit Plan Services Ltd., the company which currently administers the national plans and administered the B.C. plans in June 2009 when reciprocity became mandatory, Jonathan Forster, a business representative for lodge 359, and a trustee of the B.C. plans since 2004, and Barbara Bilsland, president of the company which currently administers the B.C. plans, who was an employee of McAteer in June 2009. [ 7 ] My understanding is that the claimant bases his claim on 2 points: 1.

Mandatory reciprocity cannot and does not apply to the claimant because of the language of the Alberta and British Columbia pension legislation and the relevant agreements. In particular, the mandatory reciprocity agreements do not apply to him because they do not conform with some

definitions in the Alberta and B.C. pension legislation; retired members are not included in the reciprocity provisions of the agreements; and/or a recital in the original pension reciprocity agreement of June 1, 2007, and a similar recital in an agreement of September 2010, preclude mandatory reciprocity. 2. The burden of mandatory reciprocity falls unfairly on people in his position.

Language of Agreements and Statutory Provisions [ 8 ] I am not satisfied that, because of the language of the agreements or statutes, mandatory reciprocity does not apply to the claimant. [ 9 ] Exhibit 2 contains a series of trust and reciprocity agreements. It is clear from the trust documents that the British Columbia trustees have the authority to enter into reciprocal agreements (tab 7, para. 4.2(xiv) respecting pensions; tab 8, para. 4.2(xiv) respecting health and welfare funds).

There are similar provisions respecting the trustees of the national plans. [ 10 ] The amendments making reciprocity mandatory effective June 1, 2009 are at tab 15 for the health and welfare plan and tab 16 for the pension plan. They are very brief and refer to “plan members” in the context of protecting the privacy of information received. [ 11 ] The original pension reciprocity agreement, at tab 13, generally used the term “member” in providing for voluntary reciprocity, without defining that term.

The original health and welfare reciprocity agreement, at tab 1, dates back to 1975 and refers to “members of Lodge 359 employed in the jurisdiction of a Non-B.C. Lodge, or vice versa”. [ 12 ] There is a more formal reciprocity agreement respecting pension funds that was signed September 17, 2010, with detailed provisions and formulas for transferring benefits. It was effective February 1, 2010, and is at exhibit 2, tab 18. This agreement uses the term “temporary member”, which is defined as “An employee employed temporarily outside the trade and/or geographical jurisdiction of

his Home Fund which is a party to this Agreement, and within the trade and/or geographical jurisdiction of any other Trust Fund which is a party to this Agreement.” “Home Fund” is defined as the “Trust Fund which is within the trade and geographical jurisdiction of the local union to which the Temporary Member belongs.” Although there was not oral evidence on this, it appears that the full amount of the benefits paid by an employer is not transferred, rather it is an amount determined by a formula.

The claimant referred to this in his written submissions. [ 13 ] The Alberta Employment Pension Plans Act, R.S.A. 2000, defines ““member” as, “in relation to a pension plan that has not been terminated, an employee or former employee who has made or is required to make contributions to the plan or on whose behalf the employer is or was required by the plan to make contributions to it and who has not terminated membership or commenced a pension.” [ 14 ] Mr.

Ellsworth would fall within this definition with respect to his position in Alberta, and, if I understand him correctly, contends that this means that he does not fall within the mandatory reciprocity agreements. I cannot see that falling within this definition has any relevant implications. There is no requirement that the agreements conform to statutory

definitions or use the same terminology. I also note that, as pointed out by the claimant in his submissions, the Act does not prevent him from accruing benefits in Alberta. However, the legislation also does not prohibit mandatory reciprocity agreements. [ 15 ] The British Columbia Pension Benefits Standards Act , R.S.B.C.1996, defines “former member”, in relation to a pension plan, as including someone who has begun receiving a pension. It defines “member” to include someone on whose behalf pension contributions have been made who is not yet receiving a pension. Mr.

Ellsworth would be a former member under the B.C. statute. But again, I have not been shown any requirement that the reciprocity agreements, which refer to “members” or, in the 2010 agreement, “temporary members”, are required to use the same

definitions as the statutes. In addition, there is nothing in the British Columbia legislation prohibiting mandatory reciprocity. [ 16 ] The claimant also submits that the reciprocity agreements do not specifically refer to retired or former members and therefore do not apply to him. The essence of his argument is that there is no definition in the agreements that clearly includes him and others in his position. The defendants submit that the claimant is a B.C. plan member – he receives his pension and health and welfare benefits from the B.C. pension and health and welfare plans.

If he were not a member he could not receive these benefits. [ 17 ] The language of the various agreements could be more consistent and specific. In particular, the reciprocity agreements should have been more carefully drafted to clearly define who is covered and specifically include retirees who continue to work. The definition of Home Fund in the agreement of September 17, 2010 contemplates current union membership.

However, in interpreting these agreements, the courts are guided by the trust documents as a whole to determine intent, and, where there is ambiguity, by the intent of the parties as shown by their conduct and statements: Ottawa Pension Plan v. Cybulski (2001) 30 C.C.P.B. 95 (Ont. Sup. Ct.); United Brotherhood of Carpenters and Joiners of America, Local 1598 (Re) , 2009 BCSC 727 . [ 18 ] Looking at the parties’ intent, I am satisfied that the reciprocity agreements and amendments do include the claimant and other retirees in his position.

Those in receipt of a pension are not expressly excluded in the agreements, and the evidence, which I will review in detail below, indicates that the trustees who entered into the mandatory reciprocity agreements specifically intended to include B.C. retirees working in Alberta. [ 19 ] I also note that a different

interpretation could be lead to anomalies. For example, respecting the 2010 agreement, a determination that B.C. was not the claimant’s home fund because he does not currently belong to the union would not make sense in terms of the total scheme. The claimant collects his pension and is entitled to benefits under the B.C. plans. [ 20 ] The recital initially referred to by the claimant is part of the pension reciprocity agreement of June 1, 2007, at tab 13. It reads: “Whereas, it is the intent of the National Plan Trustees and the B.C.

Plan Trustees not to prevent a member from qualifying for pension benefits solely because lack of employment opportunities dictate that he work for various employers and/or in the jurisdiction of each Plan, which results in his pension contributions being split between Plans;” The claimant argues that mandatory reciprocity in his case has this effect. However, the claimant did not lose future pension benefits because he has been working in another jurisdiction. His pension benefits no longer accrue because he is retired and receiving a pension.

If he worked in B.C., he would be in the same situation. [ 21 ] Looking at the agreement as a whole, this recital likely refers to the case where a non-retired member must work in another jurisdiction, and it is desirable that his pension benefits continue to accrue in his home jurisdiction rather than be split. This

interpretation is supported by the recital in the agreement of September 17, 2010 with slightly different wording (tab 18). [ 22 ] In

summary on these points, while I appreciate and have considered the problems with the language of the agreements referred to by the claimant, particularly the

definitions, the

interpretation he proposes would thwart the intention of the trustees who entered into the agreement. Fairness [ 23 ] This leaves the substantive question of fairness. In law, the issue is whether, in making reciprocity mandatory, the trustees breached their fiduciary duty to the claimant and others in his position. The burden is on the claimant to prove on a balance of probabilities that the trustees breached their fiduciary duty. [ 24 ] The factual context based on the evidence is as follows. At the time Mr.

Ellsworth retired and began to collect a pension, he understood he could not continue to accrue pension benefits in the British Columbia or increase his health and welfare benefits. He is a former pension trustee for the union, and was a trustee at the time the initial reciprocal agreement respecting pensions was entered into.

[ 25 ] In recent years the number of members of the B.C. plan working in Alberta has increased. Demographics have changed, and a significant number of members are taking early retirement without reduced benefits, and then continuing to work. This is expensive for the plans. The health and welfare benefits of retired members are subsidized from the trust funds. It was noted by various people involved that retirees from lodge 359 were going to work in Alberta and, increasingly, not electing voluntary reciprocity (see exhibit 2, tab 13, letter of Feb. 9, 2009).

There was also evidence about the financial crisis of 2008 and the effect on pension funds. The Boilermakers national plan had to reduce benefits and increase contributions. [ 26 ] Mr. Forster testified that there have been times in the past where benefits in B.C. were reduced. He was a signatory to the mandatory reciprocity agreements. He said that the discussion at the time concerned the aging workforce. Early retirement is very expensive for the plan, but the trustees wished to preserve the formula which allows for it. Many retirees were drawing pensions and then working outside the jurisdiction.

The trustees did not want there to be an incentive to take early retirement and then work elsewhere and continue to accrue pension benefits. They did not want to have to reduce benefits. The mandatory reciprocity agreement was passed unanimously. The idea was for contributions to follow the member back to his or her home plan. Respecting heath and welfare benefits, which are heavily subsidized for retirees, the trustees wanted to keep the amount payable by retired members low. [ 27 ] Ms. Biland testified that currently, the health and welfare subsidy amounts to 80%.

The benefits include life insurance, medical premiums, extended health care, and a good dental plan. She said that the reason for mandatory reciprocity was to stabilize and maintain the funds and to try to limit the drain of employees retiring but continuing to work elsewhere. [ 28 ] United Brotherhood of Carpenters and Joiners of America, Local 1598 (Re) , cited above, concerned the allocation of pension contributions for three members of the Carpenters union who were working in a Boilermakers shop.

Their pension plan was the Carpenters plan, and there were agreements providing for the employer to remit contributions to the Carpenters Union. The Boilermakers collective agreement provided for higher employer pension contributions than the Carpenters collective agreement. The issue was whether the excess contributions should go into the Carpenters pension funds or to the individual employees. The trustees took the position that there were no excess contributions in that all contributions made on behalf of a member were to go into the plan, which was in essence a joint enterprise.

The case required a determination of whether the three individuals were “employees” and bound by the Carpenter’s trust agreement and plans. [ 29 ] Madam Justice Smith cited Electrical Industry of Ottawa Pension Plan v. Cybulski , cited above, respecting the criteria for judicial review of trustees’ decisions.

The courts will intervene where the trustees: “1) have failed to exercise the discretion at all 2) have acted dishonestly 3) have failed to exercise the level of prudence to be expected from a reasonable businessman; 4) have failed to hold the balance evenly between beneficiaries, or have acted in a manner prejudicial to the interest of a beneficiary.” (para. 40) [ 30 ] The courts consider the economic and social purpose of the agreements, and the intention of the parties.

As noted earlier, the courts may be guided not only by the language of the documents but by the conduct and statements of the parties. [ 31 ] In United Brotherhood of Carpenters , the court upheld the position of the trustees, and ruled that the funds should be paid to the pension and benefit plans. The case illustrates the joint nature of these plans. Contributions are made for the benefit of all. [ 32 ] Neville v. Wynne et al , 2005 BCSC 483 , concerned a reduction of benefits, in the wake of a funding crisis, which was greater for non-retired members than for retired members.

In finding that the trustees acted properly, the court noted that it is not unusual for changes to affect different members of a plan differently, and that “It must be left to the trustees to navigate these shoals and determine the nature of the change that will achieve a fair result.” (para 43) [ 33 ] In this case, the trustees clearly exercised their discretion and there is no suggestion that they acted dishonestly. Nor was there a lack of prudence – the amendments were based on the need to prudently maintain the funding for the plan.

The only issue is whether they failed to hold the balance between beneficiaries. Mandatory reciprocity applies to all members, not only retired members. Contributions made on behalf of retired plan members working in British Columbia go into the plans although those members do not accrue additional benefits, in contrast to the former situation of members working in Alberta, who could elect either way. The concern of the trustees was to preserve existing benefits, especially the current retirement formula. Early retirees are expensive for the plan.

In all the circumstances, I am not satisfied that the trustees breached any duty to act fairly or hold the balance between beneficiaries. Adequate funding of the plans is a benefit to all. [ 34 ] For these reasons, the claim is dismissed. Costs [ 35 ] The defendants ask for the cost of flying Ms. Bilsland from Arizona to Vancouver. I am not aware of why this was necessary, and as such will not award this amount. However, the defendants are at liberty to set a date for submissions on costs.