O'Rourke v Meadowvale Pension Scheme
| Jurisdiction | Ireland |
| Judge | Ms. Justice Eileen Roberts |
| Judgment Date | 23 March 2023 |
| Neutral Citation | [2023] IEHC 148 |
| Court | High Court |
| Docket Number | 2020 No. 79SP |
In the Matter of An Application by
And by Order
[2023] IEHC 148
2020 No. 79SP
THE HIGH COURT
Trustees – Shareholding – Divestment – Applicants seeking an order pursuant to the provisions of Order 3 rule 1(2) and (6) of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of the High Court answering and determining questions – Whether the shareholding in the notice party acquired by the Meadowvale Pension Scheme continued to be vested in the applicants
Facts: The applicants, Mr and Ms O’Rourke, were trustees of the Meadowvale Pension Scheme (the Scheme). The Scheme was the registered owner of shares in African Gateway Convention and Exhibition Precinct Proprietary Ltd, who was joined as a notice party to the proceedings by order of the High Court dated 15 April 2021. On 31 August 2011 the trustees of the Scheme sought to wind up the Scheme, having previously purported to transfer to a third party the Scheme’s ownership of shares in the notice party. However, the Scheme remained the registered owner of the shares in the notice party and it was accepted that the purported transfer of shares was ineffective. The applicants issued a special summons on 3 March 2020 seeking an order pursuant to the provisions of Order 3 rule 1(2) and (6) of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of the High Court, answering and determining the following questions, as questions which affected the rights or interests of a person or persons under a trust and which arose in the course of the administration of the trust. The two questions were agreed as follows: (1) Have the trustees of the Scheme properly and effectually divested themselves of the entire of the shareholding in the notice party? (2) If the answer to the previous question is in the negative, then does the shareholding in the notice party acquired by the Scheme on 9 December 2005 continue to be vested in the trustees of the Scheme? It was accepted at the hearing of the matter that the court was only required to determine the second question above as the applicants accepted that the trustees of the Scheme failed to properly divest themselves of the relevant shareholding. The notice party argued that the shareholding registered in the name of the dissolved Scheme was prima facie property to which the State was entitled as bona vacantia. The applicants argued that the trust assets (shares) never left the hands of the trustees despite the purported winding up of the Scheme and therefore the shares remained vested in the trustees.
Held by Roberts J that the trustees continued to hold the notice party shares on trust and they did not validly divest themselves of those shares at any time. Roberts J held that the trustees continued to hold those shares subject to the terms of the Scheme. Roberts J held that the deed of wind up did not have the effect of terminating the Scheme, albeit that that was its original objective.
Roberts J, as the parties had already agreed, answered the first question posed in the proceedings in the negative. Roberts J held that due to non-compliance with the provisions of the relevant shareholders agreement, the trustees of the Scheme did not effectually divest themselves of the Scheme’s shareholding in the notice party. Roberts J answered the second question posed in the positive. Roberts J found that the shareholding in the notice party acquired by the Scheme on 9 December 2005 continued to be vested in the trustees of the Scheme.
Questions determined.
JUDGMENT of Ms. Justice Eileen Roberts delivered on 23 March 2023
. The applicants Gerard O'Rourke and Majella O'Rourke are trustees of the Meadowvale Pension Scheme (the “ Scheme”). The Scheme is the registered owner of shares in African Gateway Convention and Exhibition Precinct Proprietary Limited, who was joined as a notice party to these proceedings by order of the High Court dated 15 April 2021.
. On 31 August 2011 the trustees of the Scheme sought to wind up the Scheme, having previously purported to transfer to a third party the Scheme's ownership of shares in the notice party. However, the Scheme remains the registered owner of the shares in the notice party and it is now accepted that the purported transfer of shares was ineffective.
. Against that background, the applicants issued a special summons on 3 March 2020 seeking an order pursuant to the provisions of Order 3 rule 1(2) and (6) of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of this court, answering and determining the following questions, as questions which affect the rights or interests of a person or persons under a trust and which arise in the course of the administration of the trust. The two questions are agreed as follows:
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(1) Have the trustees of the Meadowvale Pension Scheme properly and effectually divested themselves of the entire of the shareholding in African Gateway Convention and Exhibition Precinct Proprietary Limited (the notice party)?
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(2) If the answer to the previous question is in the negative, then does the shareholding in the notice party acquired by the Scheme on 9 December 2005 continue to be vested in the trustees of the Meadowvale Pension Scheme?
. It was accepted at the hearing of this matter that this court is only required to determine the second question above as the applicants now accept that the trustees of the Scheme failed to properly divest themselves of the relevant shareholding. This arises in circumstances where the applicants now concede that neither did they give written notice to the notice party in accordance with clause 9 of the relevant shareholders agreement nor was the required consent of the other shareholders obtained to the purported transfer by the applicants of the shares to Davycrest Nominees.
. The question before this court therefore is whether the shareholding in the notice party which had been acquired by the Scheme on 9 December 2005, continues to be vested in the trustees following the purported winding up of the Scheme. The notice party argues that the shareholding registered in the name of the dissolved Scheme is prima facie property to which the state is entitled as bona vacantia. The applicants argue that the trust assets (shares) never left the hands of the trustees despite the purported winding up of the Scheme and therefore the shares remain vested in the trustees.
. In order to answer the second question, it is necessary to consider the Scheme and the background to the transactions at the centre of these proceedings.
. The Scheme was established as an irrevocable trust by deed of trust dated 1 September 1996 (the “ Trust Deed and Rules”) entered into between Chieftain Construction Limited (as Principal Employer) of the one part and Gerard O'Rourke and Majella O'Rourke and Planlife Trustee Services Ltd (as Trustees) of the other part.
. The purpose of setting up the Scheme was to hold pension assets for and on behalf of the applicants being Gerard O'Rourke and Majella O'Rourke. The principal asset of the Scheme (which was acquired in December 2005 as set out below) was a shareholding in the notice party (previously called Pretoria International Convention and Environment Centre (“ PICEC”), which is a company incorporated and registered in the Republic of South Africa.
. The Scheme was approved by the Irish Revenue Commissioners by letter dated 3 November 1997 as a retirement benefits scheme for the purposes of Chapter II, Part 1 of the Finance Act 1972 with effect from 1 September 1996 and the letter confirmed the Scheme would be treated as an “ exempt approved scheme” for the purposes of section 16 of that Act with effect from 1 September 1996.
. By letter dated 24 October 2008, the Scheme was confirmed as registered with The Pensions Board as a small self-administered pension scheme with a start date of 1 September 1996. The trustees where Majella O'Rourke, Gerard O'Rourke and Planlife Trustee Services Ltd.
. On 9 December 2005, Gerard O'Rourke in his capacity as a trustee of the Scheme entered into a shareholders agreement to acquire 30% of the share capital of the notice party through acquiring 30% of the issued share capital held by two existing shareholders in the notice party, namely Community Investment Holdings (Pty) Ltd and Bantsho Investment Holdings (Pty) Ltd. The Scheme was registered as the “ registered proprietor” of 30 ordinary shares in the notice party on 1 January 2007. This registration remains in place.
. The shareholders agreement imposed a number of restrictions on the transfer of shares by a shareholder in the notice party. It is now accepted by the applicants that those restrictions were not complied with when the trustees sought to transfer the shares to Davycrest Nominees. The shareholders agreement is governed by the substantive laws of South Africa. The notice party does not however dispute that the Scheme is to be interpreted in accordance with the laws of Ireland.
. In or about 2010, the applicants wished to restructure their pension arrangements. This restructure envisaged the transfer of the applicants' pension benefits from the Scheme to another entity known as the Melita International Retirement Scheme. This restructuring required the notice party shares to be transferred from the Scheme to Davycrest Nominees, which was the entity which would hold these shares on behalf of the Melita International Retirement Scheme.
. In order to make this share transfer, the trustees of the Scheme entered into a deed of...
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Ineffective Scheme Wind-Up: A Cautionary Tale For Pension Trustees
...High Court case of O'Rourke v Meadowvale Pension Scheme [2023] IEHC 148 (the Case) found that a deed purporting to wind-up a pension scheme over a decade ago was not legally The trustee had failed to properly transfer certain assets out of the scheme before attempting the wind-up, so the tr......