Jan 20, 2020
A recent article in Benefits Canada looks at the B.C. Supreme Court’s decision in Trustees of the IWA v. Wade, in which the Court decided that “an individual who was the ‘directing mind of a company’, but not a trustee of its pension plan, was personally liable for a contribution shortfall because he ‘knowingly assisted’ the company in breaches of its fiduciary duties.”
“The case is a heads-up, especially for small employers, to keep their accounts clean and pay their pension contributions in a timely fashion,” says Paul Litner, the chair of Osler’s Pensions and Benefits Group, who adds that it is the first time he’s seen a breach of trust award against a non-trustee who was a stranger to the trust.
Author Julius Melnitzer reports that what “attracted the personal nature of the liability was the fact that [the defendant] Wade was the sole director, officer and shareholder of Log Transport, the offending company, for seven years before the company got into financial trouble.” According to a source for the article, the defendant authorized payments out of the company’s general account when he knew that it included trust funds but didn’t take any money for himself.
The company operated pretty much as a “sole proprietorship,” Paul explains. The article states that while the defendant “may not have received a direct financial benefit — in the sense that the money in the general account was used for the benefit of the company — he did garner a tangible advantage, although there was no dispute that all his actions were taken on behalf of the company and not in a personal capacity.”
For more information, read Julius Melnitzer’s full article, “B.C. Supreme Court holds non-trustee liable for pension losses” in Benefits Canada.