Ontario court sides with IBM in pension benefits rectification case

By: Julius Melnitzer | April 25, 2024

An Ontario Superior Court ruling that allowed IBM Canada Ltd. to retrospectively rectify drafting errors that created unintended additional pension benefits for employees on disability leave augurs well for plan sponsors seeking similar relief going forward.

“The case clarifies that there is a specific test for rectification of pension plans and other unilateral instruments, which differs from the stringent test applied to the rectification of bilateral contracts,” says David Stamp, a litigation partner at Osler, Hoskin & Harcourt LLP and who represented IBM in the case.

More particularly, Justice Peter Osborne noted that “it is only the intention of the maker that is in issue” when dealing with rectification of unilateral contracts. “[For bilateral contracts] the test requires consideration of both ‘the knowledge and intentions of the other party,’ but in the case of unilateral instruments, there is no ‘other party.’”

The court ruled IBM had demonstrated that its pension plan was a unilateral instrument because: MORE . . .

Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or https://legalwriter.net/contact.

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