Re Tara Mines Pension Plan; Boliden Tara Mines v Cosgrave and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 09 March 2007
• Neutral Citation: [2007] IEHC 60
• Court: High Court
• Date: 09 March 2007

[2007] IEHC 60

THE HIGH COURT

COMMERCIAL

[No. 141 S.P./2006]

[No. 42 COM/2006]

BOLIDEN TARA MINES LTD v COSGROVE & ORS

IN THE MATTER OF THE TARA MINES PENSION PLAN

BETWEEN

BOLIDEN TARA MINES LIMITED

PLAINTIFF

AND

FRANK COSGROVE, TADG FARRELL, CHRISTOPHER GORMAN, JOHN KELLY, PETER MULLIN, ALAN BROXSON, IRISH PENSIONS TRUST LIMITED AND (BY ORDER) MICHAEL SHEILS

DEFENDANTS

TAXES CONSOLIDATION ACT 1997 PART 30 CH 1

PENSIONS ACT 1990 S2(1)

IRISH PENSIONS TRUST LTD v CENTRAL REMEDIAL CLINIC & ORS UNREP KELLY 18.3.2005 2005 IEHC 87 2005/316463

COURAGE PENSION SCHEMES RE 1987 1 WLR 495 1987 1 ALL ER 528

METTOY PENSIONS TRUSTEES v EVANS 1990 1 WLR157 1991 2 ALL ER 513

IGOTE v BADSEY 2001 4 IR 511

GULBENKIANS SETTLEMENT TRUSTS 1970 AC 508

GALLAGHER LTD v GALLAGHER PENSIONS LTD 2005 PLR 103 2005 EWHC 42

INVESTORS COMPENSATION SCHEME LTD v WEST BROMICH BUILDING SOCIETY 1998 1 WLR 896 1998 1AER 98

IRISH LIFE ASSURANCE COMPANY LTD v DUBLIN LAND SECURITIES LTD 1989 IR 253

LANSING LINDE LTD v ALBER 2000 PLR 15

AMP (UK) PLC v BARKER 2001 PLR 77

IMPERIAL GROUP PENSION TRUST LTD v IMPERIAL TOBACCO LTD 1991 1 WLR 589

MIHLENSTEDT v BARCLAYS BANK INTERNATIONAL LTD 1989 IRLR 522

NATIONAL GRID CO PLC v MAYES 2001 WLR 864

COMPANIES ACT 1963 TABLE A REG 115

NATIONAL GRID CO PLC & ORS v LAWS & ORS 1999 PLR 37

FINUCANE IRISH PENSIONS LAW & PRACTICE 2ED 2006 APPENDIX 12

GIBBON v MITCHELL 1990 1 WLR 1304

HASTINGS-BASS v INLAND REVENUE COMMISSIONERS 1975 CH 25

PENSIONS

Scheme

Amendment - Effect of amendment - Whether amendment applicable only to those members who were in active employment on date referred to in amendment - - Deed of Amendment to Pension Plan amended definition of "pensionable salary" - No special rules of construction - Rectification - Whether evidence that common intention outwardly manifested - Convincing proof - Cogent evidence - Irish Pensions Trust Ltd v Central Remedial Clinic & Ors [2005] IEHC 87 [2006] 2 IR 126 followed - Plaintiff required to prove on balance of probabilities - Implied obligation of good faith - Limitation of obligation on employer to act in good faith - Entitlement to relief under the rule in Hastings-Bass v Inland Revenue Commissioners [1975] Ch 25 not established - Claim dismissed (2006/141SP & 2006/42COM - Finlay Geoghegan J - 9/3/2007) [2007] IEHC 60Boliden Tara Mines Ltd v Cosgrove

The plaintiff company was the principal employer of the Tara Mines Pension Plan. The first to seventh defendants were or had been trustees of the Pension Plan and the eight defendant was joined as a representative beneficiary whose entitlements were such that they might be affected by the granting of relief. The proceedings concerned the construction of a 1999 Deed of Amendment. In particular, the plaintiff sought rectification of the Deed. In the alternative, the plaintiff claimed that paragraph D of the Deed should be set aside for mistake. Finally, the plaintiff claimed that the Deed was void.

Held by Finlay Geoghegan J. in dismissing the proceedings that the plaintiff had failed to adduce cogent evidence or indeed any evidence of the intention of the company at the time of the execution of the Deed. The plaintiff had not adduced evidence that the company executed the Deed under a mistake.

Reporter: R.W.

1 JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 9th day of March, 2007 .

2 1. The plaintiff ("the Company") is the principal employer of the Tara Mines Pension Plan ("the Pension Plan"). The first to sixth named defendants are the current trustees of the Pension Plan. The seventh named defendant ("IPT") was the trustee of the Pension Plan until 20th December, 1999. The eighth defendant is joined as a representative beneficiary whose entitlements are such that they may be affected by the granting of the relief sought by the Company. He replaced by consent an earlier representative beneficiary. Both have been granted an indemnity by the Company in respect of their costs herein.

3 2. The Pension Plan was established and is operated pursuant to trusts and rules declared by the Company. Since 1996, it is governed by a Deed of Amendment and Substitution of the 24th June, 1996, between the Company and IPT which consolidated and substituted earlier Deeds and Rule. The definition of "Pensionable Salary" in the schedule to the rules attached to the 1996 Deed was defined as meaning:

"the Member's annual rate of basic salary less an amount to be determined by the Employer but not exceeding one and a half times the annual rate of the Retirement Pension attributable to a single person payable under the Social Welfare Acts."

4 3. The deduction of an amount by reference to the retirement pension payable under the Social Welfare Acts from basic salary for the purposes of pensionable salary was and is known as "integration" and stated to be common in occupational pension schemes. The Pension Plan is an exempt approved scheme under the provisions of part 30 chapter 1 of the Taxes Consolidation Act, 1997 and an occupational pension scheme as defined by s. 2(1) of the Pensions Act 1990.

5 4. The Deed of Amendment of 19th October, 1999, ("The 1999 Deed of Amendment") at paragraph D. amends the definition of "pensionable salary" in the schedule to the 1996 Deed by the addition of the following at the end of such definition:

"provided in the case of a Member whose benefits are being calculated by reference to a date on or after the 20th February, 1998, it shall be his annual rate of basic pay excluding overtime, bonuses or other fluctuating emoluments provided further in the case of a Member in the category of employment of direct miner it shall be 1.25 times such annual rate of basic pay."

6 5. The effect of the first proviso in the amendment above is to remove integration for those members to whom it applies. It is a significant benefit, particularly for the lower paid workers.

7 6. The issues in these proceedings relate to the 1999 Deed of Amendment and are:

8 (1) Whether the first proviso in the above amendment applies to the class of members represented by the eighth defendant. Such members are those persons who were in receipt of benefits under the Income Continuance Plan of the Company on the 20th February, 1998.

9 (2) If the first proviso when properly construed does apply to such members then:

10 (i) Is the Company entitled to rectification of the Deed of Amendment to exclude such members.

11 (ii) In the further alternatives is the Company entitled to have such proviso set aside or declared void.

12 No relief is claimed in relation to the second proviso which amended the definition of pensionable salary for a member “in the category of employment of direct miner”.

Income Continuance Plans

13 7. The Company had two Income Continuance Plans. Their existence appear to have been of particular importance because of the physical demands relating to mining work. One was for the hourly paid workers who paid their own premium and another for the salaried workers for whom the Company paid the premium. Nothing turns on the existence of two separate plans and I propose referring in this judgment to those plans as a single Income Continuance Plan (ICP). The ICP was closed to new entrants from 2002. It was underwritten at the relevant time by the Norwich Union Insurance Company.

14 8. Under the terms of the ICP an employee accepted by reason of his disability, received after the deferred period an income benefit which, subject to periodic medical assessment, continued until age 65. I propose referring to persons in receipt of such benefits as ICP Beneficiaries. In addition to the income benefit the underwriter paid directly into the Pension Plan in respect of each ICP Beneficiary 15.4% of the ICP Beneficiaries” pensionable salary at the date of acceptance into the ICP. Such pensionable salary was increased for this purpose only at 5% compound per annum. An ICP Beneficiary ceased to be an employee of the Company but it is agreed remained an "active member" of the Pension Plan as that term is normally used. The years in receipt of benefit under the ICP were considered as years of service with the Company for pension benefit purposes.

15 9. In 1991, an issue had arisen as to whether the 5% annual increase provided for under the ICP should also apply to an ICP Beneficiary's basic salary used for the purpose of computing pension benefits under the Pension Plan. The dispute was referred, with other disputes relating to the Pension Plan to the Labour Court and was the subject of recommendation No. 14523 which is of some importance to the issues in these proceedings. In the course of the reference to the Labour Court, the Company offered to increase the basic salaries of ICP Beneficiaries used for pension purposes in line with the increases granted to the grade or category in which they were working when they went on ICP benefits. The Labour Court recommended acceptance of the Company's proposal on the basis of full backdating rather than the 5% compound increase claimed by the Unions. This was accepted and applied in relation to basic salary for benefits under the Pension Plan from 1st July, 1992. Notwithstanding, no formal amendment was made to the Pension Plan rules to give effect to this until the 1999 Deed of Amendment. Paragraph C of the 1999 Deed adds a new rule 16 to so provide. Its terms are not in dispute but are relevant to the construction of the 1999 Deed of Amendment.

Factual Background to 1999 Deed of Amendment

16 10. The following is a short summary of the facts leading to the 1999 Deed of Amendment. There is dispute between the parties as to the meaning and effect of certain of the agreements and decisions referred to below. Such disputes will be considered...