An Ontario appeal court has denied an appeal by ING Canada Inc. in a suit with Transamerica Life Canada arising from Transamerica’s acquisition of NN Life Insurance Co. of Canada from ING in April 2000.

AEGON Canada Inc. and Transamerica Life Canada alleged that ING breached warranties arising from a share purchase agreement for the shares of NN Life that all required contributions had been made to the NN Life Pension Plan, and that the plan was fully funded on an ongoing and solvency basis.

The warranties related to ING’s practice of taking into account an actuarial surplus in assets of a trust that funded the Halifax Life Pension Plan when determining the assets required to fund the plan.

The Appeal Court agreed with a lower court ruling that found that ING had breached the warranty. “The application judge found that taking into account the Halifax Trust’s assets, when calculating obligations owed to non-Halifax employees, did not accord with accepted actuarial practice. I see no reason to interfere with that finding,” the appeal court judge said.

“Simply put, as NN Life cannot call upon the assets of the Halifax Trust to satisfy liabilities owed to the non-Halifax employees, it follows that there was no basis for NN Life to refer to the Halifax Trust’s surplus in determining its service costs to account for actuarial liabilities in relation to the non-Halifax employees,” the judge said. “The Halifax Trust obligation prevents the assets of that trust from ever being used to pay the benefits of non-Halifax employees. There is therefore no actuarial or legal basis for NN Life to have regard to the Halifax surplus in determining its funding obligation for the non-Halifax employees.”

In dismissing the appeal the court ordered costs of $45,792 against ING.

Last week, an Ontario appeal court ruled in a split decision in a related lawsuit. In that case, the Appeal Court said the lower court judge erred in striking parts of the ING defence.