Holloway and Others v Damianus BV and Others

 
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[2015] IECA 19

Kelly J., Hogan J., Mahon J.

No. 1376/2014

Paul Holloway, Timothy Crowley And Griet Vandenheede
Plaintiffs/Respondents
and
Damianus BV, Omega Teknika Ltd. And Chefaro Ireland Ltd.
Defendants/Appellants

Trust deed – Trustees – Winding up – Plaintiffs/Respondents seeking a contribution amount – Whether defendants/appellants are liable for the amount claimed

Judgment of the Court delivered on the 10th day of February 2015
1

These are our reasons for dismissing the Defendants/Appellants appeal.

2

This is an appeal from an order of the High Court (Moriarty J) made on 31st July 2014 granting judgement against the Defendants/Appellants in the sum of €2,439,193.56 (inclusive of interest): See [2014] IEHC 383.

3

The Plaintiffs are the Trustees of the Omega Pharma Ireland (the second named Defendants/Appellants) Pension and Death Benefits Scheme (the ‘Scheme’). The first named Defendant/Appellant is a company registered in the Netherlands and is the principal employer under the Scheme. The second and third Defendants/Appellants are companies registered in Ireland, and are the associated employers in respect of the Scheme.

4

The Scheme is governed by Definitive Deed Rules dated 24th November 2004, made between the (then) trustees and the (then) principal employer.

5

On the 1st October 2012 the first Defendant/Appellant served notice on the Plaintiffs/Respondents in their capacities as Trustees of the Scheme, of its intention to discontinue contributions to it, and nominated 31st December 2012 as the winding up date, it sought agreement on that date. The Notice stated:

‘As Principal Employer of the Omega Pharma Ireland Pension and Death Benefits Scheme, we hereby give you three months written notice commencing from the date hereof, pursuant to clause 18 of the Definitive Deed Rules dated 24th November 2004 (‘The Definitive Deed’), of our intention to discontinue contributing to the Scheme. The date of expiry of the three months notice is the date specified for the purpose of clause 18.1.

We request that the Trustees agree that the date of the winding up of the scheme be 31 December 2012.

There is no Associated Employer (as defined in the Definitive Deed) that will take on the role of Principal Employer. Accordingly, there is no basis for the Trustees to defer the winding up of the scheme.’

5

The Trustees responded to this letter of 1st October 2012 by letter dated 26th October 2012. In that letter, the Trustees agreed to the suggested 31st December 2012 as the winding up date. They also advised the First Defendants/Appellants that the Scheme”s funds currently in place were insufficient to maintain the fund to enable it to support and provide the benefits under the Scheme, and that steps were being taken to ascertain the additional funding necessary to provide for the shortfall as of the winding up date.

6

Reference is made to clause 8.1 of the Trust Deed as the provision requiring the calculation of the funding shortfall and the basis for calculating the amount involved. The letter of 26th October 2012 sought to establish consultation with the first Defendant/Appellant in relation to these matters, and to commence such consultation on 26th November 2012, and requested that it contact the Trustees on or before 23rd November 2012 in that regard. There was no response to this letter.

7

A reminder letter was sent by the Trustees on 22nd November 2012, in which it was clearly stated that the final contribution amount would be determined after the 30th November 2012 if no response was received by then. In the event, no response was received, and the Trustees actuaries duly assessed the contribution amount at €3,010,000 by letter dated 7th December 2012, the trustees demanded payment of that sum. This sum was subsequently adjusted downwards to €2,250,000.00.

8

The first Defendant/Appellant did not respond to the letter of 7th December 2012 until 29th January 2013, following a further letter from the Plaintiffs/Respondents of 28th January 2013 in which reference was made to the possible institution of legal proceedings to recover the amount claimed. On 25th April 2013, the first Defendant/Appellant informed the Plaintiffs by telephone that, effectively, it did not intend to pay the amount. A formal demand letter seeking payment of €2,250,000 within seven days was despatched on 17th May 2013, following which legal proceedings were instituted on 19th June 2013. In due course the Defendants/Appellants delivered a full defence thereto.

9

Clause 8.1. of the Trust Deed provides as follows:

‘The Employers shall transmit to the Trustees all contributions (if any) collected by each of them respectively from the Members and, subject to the rights reserved to them by Clause 18, from time to time shall pay to the Trustees the monies which the Trustees determine, after consulting the Actuary and Principal Employer, to be necessary to support and maintain the Fund in order to provide the benefits until the Scheme.’

10

The other relevant clauses (in relation to these proceedings) of the Trustees are those numbered 18, 19 and 20.

11

Clause 18.1 provides as follows:

‘If an Employer ceases to carry on business, or gives three months written notice to the Trustees of its intention to discontinue contributions (or such lesser period as the Employer shall agree with the Trustees) it shall discontinue contributions to the Scheme, with effect from whichever of the following dates is applicable:

The ‘Discontinuance Date’:

(a) Immediately on ceasing to carry on business or where the Employer is an Associated Employer on such later date as that Employer agrees with the Trustees being not later than the Review Date next but one following the date the Employer ceases to carry on business;

Or

(b) The date specified in the notice or agreed with the Trustees.’

10

Clause 18.7 provides that in circumstances where the Principal Employer gives notice to discontinue contributions under Clauses 18. 1 or 18.2, and where no Associated Employer is willing to undertake the liabilities of the Principal Employer under the Scheme, the Scheme shall be ‘wound up and the Fund dissolved as described in Clause 20.’

11

Clause 19.1 provides as follows:

‘The Scheme shall be wound up on the day on which the first of the following events occur:

(a) On the Principal Employer being wound up, ceasing to carry on business or giving or being deemed by the Trustees to have given notice under Clause 18. 1 or 18.2 as applicable of its intention to discontinue contributions to the Scheme, unless …’

(b) On the expiry of notice by all the Employers under Clause 18.1 of their intention to discontinue contributions’

12

Clause 20.1 provides as follows:

‘As soon as may be practicable after the day upon which the first of the events specified in Clause 9 occurs (in this Clause called the ‘Winding Up Date’), the Fund shall be realised, subject to Clause 20.3(c). The Employers shall continue to be liable for contributions which have accrued due but are unpaid at the winding up date and for the costs, fees, charges and expenses of, or incidental to, the administration, management and determination of the Scheme…’

13

The Defendants/Appellants maintain that there are not liable for the amount claimed, or for any amount by way of contribution to the Pension Fund, and that a proper construction of the Trust Deed supports this position. In particular, they take issue with the Plaintiffs/Respondents contention that Clause 8.1 of the Trust Deed imposes an obligation on them to, in effect, fund the shortfall in the Pension Fund necessary ‘ to provide the benefits under the scheme’ as of the 31st December 2012, the agreed winding up date as indicated in their notification to the Trustees dated 1st October 2012. The Defendants/Appellants maintain that any liability on their part to fund any shortfall in the Pension Fund ceased as of 1st October 2012, and that in any event, such liability as existed was capped at the statutory Minimum Funding Standard (‘MFS’). It is their case that as of 1st October 2012 (or indeed, 31st December 2012) the MFS funding...

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