WINNIPEG – The Supreme Court of Canada has upheld a lower court ruling that a pension surplus of $43.3-million that existed when the former Manitoba Telephone System was privatized in 1997 “belonged to the workers and retirees and must be repaid,” according to union leaders.
Unifor, formerly the Communications, Energy and Paperworkers union Local 7, has been fighting the case since 1997 along with the Telecommunication Employees Association of Manitoba Inc., the International Brotherhood of Electrical Workers (IBEW) and a group of retirees.
“Today the Supreme Court unanimously concluded that MTS wrongfully made use of the initial surplus as MTS received the full benefit of the surplus and the members received nothing,” Unifor said in a release issued Thursday.
“This is a great day and a long time coming for the unionized workers at MTS —a 17-year battle to wrestle back from a corporation money that belonged to the workers,” said Paul McKie, a Unifor national representative.
McKie said the high court reinstated the decision of the trial judge, who had ordered that the parties negotiate utilization of the funds and arrive at a mutually agreeable implementation process — or submit further evidence so the court could make that determination.
Unifor added that the Supreme Court further ordered that costs throughout the proceedings be paid on a solicitor and client basis out of the new plan trust fund, “meaning all legal costs incurred by the unions shall be repaid.”
Manitoba Telecom Services Inc. said it was reviewing with outside advisers the implications of the ruling, which it described as “complex” and would require further negotiations with the plaintiffs before the definitive impacts on the MTS pension plan and the company are known with certainty.
However, it said pension benefits are expected to be increased by $43 million, plus interest calculated at a rate equal to the pension plan’s rate of return since 1997, which could increase pension benefits in time by up to $147 million.
Meanwhile, as a result of a recent equity financing and the company’s strong cash flows, MTS “is expected to have sufficient liquidity to satisfy all its pension funding obligations” and to maintain its current credit rating.
“This is a very disappointing outcome, but we were prepared for this scenario and are confident that should we need to make additional pension payments this year, we can fully manage its financial impact while maintaining our long-term strategy for delivering shareholder value,” said Wayne Demkey, chief financial officer at MTS Allstream.