Indalex Appeal Allowed

The much awaited Supreme Court of Canada decision in Sun Indalex Finance, LLC et al. v. United Steelworkers et al. (Indalex) was released on February 1, 2013. The Supreme Court was split, but agreed with the Court of Appeal that a deemed trust arose from s. 57(4) of the Pension Benefits Act, Ontario (PBA) for wind-up deficiency payments. However, the Supreme Court unanimously disagreed with the Court of Appeal and held that the deemed trust would not have "super-priority" over DIP lenders. The Supreme Court did agree with the Court of Appeal that Indalex had a fiduciary duty in respect of its pension plans, and had breached that duty. Despite this, the majority of the Court disagreed with the Court of Appeal's remedy and held that a constructive trust was not the appropriate remedy for the breach.