Telus 2006 Annual Report Download - page 19

the Court of Appeal. On November 2, 2006, the Ontario Superior Court of Justice ruled that the
lawsuit should be treated as a representative action by all bondholders and not just the named
plaintiffs. The magnitude of damages payable by the Company remains to be determined. The
magnitude of damages will depend in part on the method of calculating damages, which
remains to be litigated. TELUS had accrued an estimate of damages as part of financing costs
for the second quarter of 2005, and increased its accrual in the fourth quarter of 2006 to take
into account the November ruling.
On December 16, 1994, the TWU filed a complaint against BC TEL with the Canadian Human
Rights Commission (the “CHRC”), alleging that wage differences between unionized male and
female employees in British Columbia were contrary to the equal pay for work of equal value
provisions in the Canadian Human Rights Act. In December 1998, the CHRC advised it would
commence an investigation of the TWU complaint and following the investigation of preliminary
matters referred the complaint to conciliation under the Canadian Human Rights Act.
Conciliation did not result in resolution and the matter was referred back to the CHRC for further
investigation. Included in the terms of the ratified settlement of the 2005 collective agreement
between TELUS and the TWU, was a letter of agreement under which the Company has agreed
to establish a pay equity fund of $10,000,000 to be paid out to persons covered by the
complaint subject to the TWU’s withdrawal of the complaint and the CHRC’s acceptance of and
concurrence that the complaint is withdrawn and settled. On December 21, 2005, the TWU
withdrew and discontinued this complaint. Subsequently, in a letter dated January 30, 2006 TELUS
was advised by the CHRC that it would take no further proceedings and close its file on the matter.
Two lawsuits were commenced against TELUS and other defendants in the Alberta Court of
Queen’s Bench on December 31, 2001 and January 2, 2002 respectively, by plaintiffs alleging
to be either members or business agents of the TWU. In one action, the three plaintiffs alleged
to be suing on behalf of all current or future beneficiaries of the TELUS Corporation Pension
Plan (“TCPP”), and in the other action, the two plaintiffs allege to be suing on behalf of all
current or future beneficiaries of the TELUS Edmonton Pension Plan (“TEPP”). The statement
of claim in the TCPP-related action named TELUS, certain of its affiliates and certain present
and former trustees of the TCPP as defendants, and claims damages in the sum of
$445 million. The statement of claim in the TEPP-related action named TELUS, certain of its
affiliates and certain individuals who are alleged to be trustees of the TEPP and claims
damages in the sum of $15.5 million. In May 2002, the statements of claim were amended by
the plaintiffs and include allegations, inter alia, that benefits provided under the TCPP and TEPP
are less advantageous than the benefits provided under the respective former pension plans,
contrary to applicable legislation, that insufficient contributions were made to the plans and
contribution holidays were taken and that the defendants wrongfully used the diverted funds,
and that administration fees and expenses were improperly deducted. TELUS has filed
statements of defence to both the original and the amended statements of claims. As a term of
settlement of the 2005 collective agreement between TELUS and the TWU, the TWU has
agreed to not provide any direct or indirect financial or other assistance to the plaintiffs in these
actions, and to communicate to the plaintiffs the TWU’s desire and recommendation that these
proceedings be dismissed or discontinued. TELUS has been advised by the TWU that the
plaintiffs have not agreed to dismiss or discontinue these actions. The likelihood of the actions
being determined adversely against TELUS is still being evaluated, but TELUS believes it has
good defences to the actions. Should the lawsuits continue because of the actions of the court,
the plaintiffs or for any other reason, and their ultimate resolution differ from management’s
assessment and assumptions, a material adjustment to the Company’s financial position and
the results of its operations could result.
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