John P Greene and Others v Danny Coady and Others
| Jurisdiction | Ireland |
| Judge | Mr Justice Charleton |
| Judgment Date | 04 February 2014 |
| Neutral Citation | [2014] IEHC 38 |
| Court | High Court |
| Docket Number | [2012 No. 7254 P] |
| Date | 04 February 2014 |
[2014] IEHC 38
THE HIGH COURT
BETWEEN:
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FINANCE ACT 1972 S14
PENSIONS ACT 1990 S2(1)
HASTINGS-BASS (DECEASED), IN RE; HASTINGS-BASS & ORS v INLAND REVENUE CMRS 1975 CH 25 1974 2 WLR 904 1974 2 AER 193
SIEFF & ORS v FOX & ORS 2005 1 WLR 3811 2005 3 AER 693 2005 EWHC 1312 (CH)
KEANE EQUITY & THE LAW OF TRUSTS IN THE REPUBLIC OF IRELAND 2ED 2011 PARAS 10.49-10.50
KILDARE CO COUNCIL v BORD PLEANALA UNREP MACMENAMIN 10.3.2006 2006/32/6869 2006 IEHC 173
EDGE & ORS v PENSIONS OMBUDSMAN & ANOR 2000 CH 602 2000 3 WLR 79 1999 4 AER 546 2000 ICR 748 1999 PENS LR 215
BRAY v FORD 1896 AC 44
MCGHEE & ORS SNELLS EQUITY 32ED 2010 PARA 7.018
MCGHEE & ORS SNELLS EQUITY 32ED 2010 PARA 7.038
DREXEL BURNHAM LAMBERT UK PENSION PLAN, IN RE 1995 1 WLR 32 1994 PENS LR 75
MCGHEE & ORS SNELLS EQUITY 32ED 2010 PARA 7.036
SARGEANT v NATIONAL WESTMINSTER BANK PLC 1991 61 P & CR 518
MCGHEE & ORS SNELLS EQUITY 32ED 2010 PARA 7.019
IRISH PENSIONS TRUST LTD v CENTRAL REMEDIAL CLINIC & ORS 2006 2 IR 126 2005/31/6463 2005 IEHC 87
COURAGE GROUPS PENSION SCHEMES, IN RE; RYAN & ORS v IMPERIAL BREWING & LEISURE LTD & ORS 1987 1 WLR 495 1987 1 AER 528
METTOY PENSION TRUSTEES LTD v EVANS 1990 1 WLR 1587 1991 2 AER 513 1990 PENS LR 9
BOLIDEN TARA MINES LTD v COSGROVE & ORS UNREP SUPREME 21.12.2010 2010/4/935 2010 IESC 62
ARMITAGE v STAVELEY INDUSTRIES PLC 2006 PENS LR 191 2005 AER (D) 03 (JUL) 2005 EWCA CIV 792
HALSBURYS LAWS OF ENGLAND 1ED VOL 28 PARA 364
RSC O.54 r1
RSC O.3 r4
RSC O.3 r2
RSC O.3 r1
ICDL GCC FOUNDATION FZ-LLC & ANOR v EUROPEAN COMPUTER DRIVING LICENCE FOUNDATION LTD UNREP SUPREME 14.11.2012 2012/18/5066 2012 IESC 55
SPREAD TRUSTEE CO LTD v HUTCHESON & JOHNSON 2012 2 AC 194 2012 2 WLR 1360 2012 1 AER 251 2012 PNLR 1 2011 UKPC 13
TRUSTS (GUERNSEY) LAW 1989 S34(7) (GUERNSEY)
TRUSTS (AMDT) (GUERNSEY) LAW 1990 S1(F) (GUERNSEY)
ARMITAGE v NURSE & ORS 1998 CH 241 1997 3 WLR 1046 1997 2 AER 705 1997 PENS LR 51 1997 74 P & CR D13
ROBINS & ORS v SECRETARY OF STATE FOR WORK & PENSIONS 2007 AER (EC) 648 2007 ECR I-1053 2007 2 CMLR 13 2007 ICR 779 2007 IRLR 270 2007 PENS LR 55
EEC DIR 80/987 ART 8
HOGAN & ORS v MIN FOR SOCIAL & FAMILY AFFAIRS & ORS 2013 3 CMLR 27 2013 IRLR 668 2013 PENS LR 185
PENSIONS ACT 1990 S50
COMPANIES ACT 1963 S285(2)
COMPANIES (AMDT) ACT 1982 S10
USEDSOFT GMBH v ORACLE INTERNATIONAL CORP 2012 AER (EC) 1220 2013 BUS LR 911 2012 3 CMLR 44 2012 ECDR 19 2013 RPC 6
PENNINGTON COMPANY LAW 7ED 1995 993
CHARTERBRIDGE CORP v LLOYDS BANK LTD 1970 CH 62 1969 3 WLR 122 1969 2 AER 1185
FORDE COMPANY LAW 3ED 1999 PARA 14.47
COMPANIES (AMDT) ACT 1983 S40
Equity - Company pension fund - Trustees - Breach of trust - Action for damages - Acceptance of offer to close liability - Wilful default - Conflict of interest - Whether trustees acted reasonably
The plaintiffs in these proceedings were the beneficiaries or potential beneficiaries of the pension fund of Element Six Limited in Shannon, County Clare. The defendants were the trustees of that fund. The plaintiffs claimed damages for breach of trust against the trustees for accepting an offer of €37.1m from Element Six Limited on the 25 th of November 2011, as the contributor to the fund, to close its liability to contribute from the end of 2011. The plaintiffs asserted that the defendants should have made a contribution demand for €129.2m to make up the funding deficit and that their failure in this respect was a wilful default. The plaintiffs also claimed that the decision on the issue was impaired by a conflict of interest; that it took irrelevant matters into account; that it ignored relevant issues; and that it was a decision no reasonable body of trustees would have made.
The Court held that the relevant test for the determination of wilful default was whether the default was one that no reasonable body of trustees would make. The Court then considered the chronology of events. It was noted that a pension fund deficit of €100m was discovered in 2008. The 'bind' the trustees found themselves in included the possibilities of insolvency, the Shannon plant shutting down and a loss of jobs for the workers. Moreover, pressure from Element Six Limited included an arbitrary deadline of the 24 th of October 2011 to accept their offer to close its liability as well as the threat that, if a contribution demand was made, the Shannon branch would be wound up. The events were characterised by 'a threatening position' and 'lack of opportunity' for the trustees to negotiate. Held by Charleton J., in the circumstances, the trustees acted reasonably 'in all of their actions'.
On the issue of conflict of interest, it was found by the Court that four of the defendant trustees stood to gain. Following a consideration of the evidence, however, the Court found that no conflict influenced the trustees in any way. The Court also noted that in making the decision to wind up the trust before the 1 st of January 2012, these four defendants acted against their interests by losing the benefit of a 3% increase in their pension. The Court found that the trustees acted honestly, objectively and in good faith. The Court rejected the plaintiff submission that the defendant trustees were not exonerated by the exemption clause set out in Clause 9 of the trust deed. It was held that it was 'always possible' for a trust deed to provide exemption where the core obligation of trustees to act toward the good of the beneficiaries was not interfered with and, in these proceedings, the trustees were determined to have acted in the best interests of the beneficiaries.
The Court concluded that the decision whereby the trustees declined to make a contribution demand and accepted the company"s offer of €37.1m in winding up the pension scheme was 'not one with which any court could take issue'; it was a reasonable response to a difficult situation. It was also concluded that the trustees were not influenced by a conflict of interest—their decision having been made entirely in the interests of the beneficiaries. Moreover, it was determined that the defendants did not take any irrelevant factors into account or ignore relevant factors. The plaintiffs" claim was therefore dismissed.
Mr Justice Charleton delivered on the 4th of February 2014
2 1.0 The plaintiffs are beneficiaries or potential beneficiaries of the pension fund of Element Six Limited at Shannon Industrial Estate in County Clare. The defendants are the trustees of that fund. The plaintiff beneficiaries claim damages against the defendant trustees for breach of trust in accepting, on 25 th of November 2011, an offer of €23.1 million (plus €14 million outside that fund) from Element Six Limited, as the contributor of the pension fund, to close its liability to contribute from the end of 2011. Instead, the plaintiff beneficiaries claim that the defendant trustees should have made a contribution demand for €129.2 million, or more, to make up the funding deficit to the pension fund and that their failure to do so was a wilful default. The trustees divided equally on the issue: the three company nominees voting in favour and the three worker nominees voting against with the chairman Danny Coady exercising his casting vote in favour. That vote is alleged by the plaintiff beneficiaries to have been vitiated by conflict of interest, to have taken into account irrelevant matters, to have ignored relevant issues and to be a decision that no reasonable body of properly informed trustees could have taken. Of the six defendant trustees, three came from company management; Danny Coady, Siobhán Duffy and Dermot Tuite....
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