Is a liquidator entitled to refuse distribution of pension plan funds pending a determination of damages?

Ontario, Canada

The following excerpt is from Canada (Attorney General) v. Standard Trust Co., 1995 CanLII 7398 (ON SC):

It is clear from the judgment that Swinfen Eady J. was dealing with a debt not yet proved. He specifically stated that it was not a claim in damages. The action against the pension plan members is in damages alone. I think that to extend the principle in Cherry v. Boultbee to an action for damages goes beyond the reasonable position put forward in the principle. To accede to the liquidator’s position would be to grant a Mareva injunction without consideration of the different requirements which have to be met before being granted by the court. I find that the liquidator is not entitled to refuse the administrator’s request for payment of the distributions pending determination of the action for damages.

There is another aspect of this situation which I am of the opinion would also prove fatal to the liquidator’s position. That arises from the special nature of the pension rights affecting the pension assets in the administrator’s hands. The administrator says it is a trustee for the pension fund assets and that the individual plan members against whom it is sought to apply Cherry v. Boultbee have no clear rights to the amounts received or receivable from the liquidator except under the provisions of the pension plan.

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