Province offers pension plan bailout for co-ops

The Toronto Star referred to it as a “rare” offer of funds. For a number of agriculture co-ops, a conditional offer from the province of $20 million to help settle litigation over a pension fund could be a lifeline.

In 2005, the Ontario Superior Court of Justice certified a class action suit on behalf of all persons entitled to payments under the Participating Co-operatives of Ontario Trusteed Pension Plan. The defendants in the class action include current and former trustees of the plan, a former investment consultant and asset manager, former and current custodian trustees, and legal advisors of the pension fund. In late March, 2003, pension cheques to retired workers were cut by about 50 per cent.

A lack of funds in the pension plan was cited, according to the “amended-amended statement of claim” filed later that year.

In a separate court action, now before the Financial Services Tribunal, part of the Financial Services Commission of Ontario, a number of Ontario farm co-ops were named as defendants, including Gay Lea Foods Co-operative Limited, the Ontario dairy co-op which is considering amalgamation with Agropur in Quebec.

The amended-amended statement of claim can be viewed on the website of the complainant’s counsel, Koskie Minsky LLP, at http://www.koskieminsky.com/client_links/ParticipatingCooperatives/home.aspx

One issue before the tribunal is whether all the employers are “jointly and severally liable.” Bigger co-ops such as Gay Lea will have to pay the share of small cash-strapped co-ops if they can’t, says Michael Mazucca of Koskie Minsky, lawyer for the pensioners.

Posted on that website is a copy of an undated letter signed by Greg Sorbara, Ontario’s Minister of Finance. The letter says that the government agreed “to make $20 million available to facilitate an orderly wind up of the plan.” The funds “are conditional on certain terms and conditions being met and the parties reaching and ratifying a negotiated settlement that resolves all outstanding issues in a mutually acceptable manner and results in the litigation being settled.”

Mazucca says that Sorbara’s conditions include a “global” settlement of both legal cases. Confidential mediation is under way and Mazucca says that agreement might be reached next year.

Sorbara wrote that the government had already provided $10.8 million in loan guarantees to six of the participating co-operatives to help them serve their members during the mediation process.

The provincial money will settle only part of the claims and at least some plaintiffs think settling the case with tax dollars is not enough. “I’m owed 100 cents on the dollar. Why would I settle for anything less?” says one person who has paid for years into the pension program.