The Tara Mines Pension Plan Boliden Tara Mines Ltd (plaintiff/appellant) v Cosgrove and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Hardiman
• Judgment Date: 21 December 2010
• Neutral Citation: [2010] IESC 62
• Court: Supreme Court
• Date: 21 December 2010

Boliden Tara Mines Ltd v Cosgrove & Ors

IN THE MATTER OF THE TARA MINES PENSION PLAN

Between:

BOLIDEN TARA MINES LIMITED

Plaintiff/Appellant

and

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

Defendants

[2010] IESC 62

Hardiman J.

Macken J.

McKechnie J.

104/2007

THE SUPREME COURT

Abstract:

Equity - Rectification - Deed of Amendment - Pension plan - Intent - Definition of member - Integration - Mistake of parties - Trial judge - Appeal - Whether rectification of Deed of Amendment would be granted

Facts: The proceedings related to an appeal from a decision of the High Court and was confined to rectification sought of the Deed of Amendment by the insertion of the word "member," so that the definition of "pensionable salary" in the Schedule was altered. The proceedings related to the Company's pension scheme and the execution of the Deed of Amendment in 1999. The technical effect of the rectification sought would be that the practice of "integration" of members into the scheme would cease only in the case of members who were in active employment. The intention of the parties was that the Deed was to eliminate "integration". A mistake was alleged to have happened and the Deed had gone further that this and the evidence provided outlining the intent of the parties and this mistake was not controverted. The representative defendant did not contradict any of the deponents in the High Court proceedings who swore affidavits. The trial judge had made findings as to the manner in which the Deed was approved.

Held by the Supreme Court per Hardiman J (Macken, McKechnie JJ. concurring) that the evidence on behalf of the parties was clear, free of ambiguity and consistent with their actions. The learned trial judge had addressed herself to an issue not in the rectification proceedings- the issue of what was or was not agreed between the parties to the industrial relations discussion which predated the amendment to the Deed. The representative defendant did not counterclaim that if the deed fell to be amended it damaged the position of those whom he represented. The present case related to the question of whether the Deed entered into properly expressed the intentions of the company and its trustees. There was ample evidence unchallenged as to the intention of the Company and of the trustees and that it established that the Deed did not express that intention. The Court would therefore grant a rectification in the terms claimed.

Reporter: E.F.

IRISH PENSIONS TRUST LTD v CENTRAL REMEDIAL CLINIC & ORS 2006 2 IR 126 2005/31/6463 2005 IEHC 87

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

JOSCELYNE v NISSEN & ORS 1970 2 QB 86 1970 2 WLR 509 1970 1 AER 1213

BANCO AMBROSIANO SPA & ORS v ANSBACHER & CO LTD & ORS 1987 ILRM 669

KERR & ORS KERR ON THE LAW OF FRAUD & MISTAKE 7ED 1952 672

SPRY THE PRINCIPLES OF EQUITABLE REMEDIES 7ED 2007

THOMAS BATES & SON LTD v WYNDHAMS (LINGERIE) LTD 1981 1 WLR 505 1981 1 AER 1077 1981 41 P & CR 345

Mr. Justice Hardiman

1 This is an appeal from the judgment of the High Court (Finlay Geoghegan J.) delivered on the 9^thMarch, 2007, and of the order of that Court perfected the 14^th March, 2007. The effect of this judgment and order was to dismiss all of the plaintiff's claims.

2 The scope of the plaintiff's claim is now considerably narrowed and on the hearing of this appeal was confined to a claim for:

"… rectification of paragraph D of the Deed of Amendment by the insertion after the word "member" where it first appears of the following words namely "(other than a member receiving a benefit under the Employers Income Continuance Plan as of the 20^th February, 1998)" so that the definition of 'pensionable salary' in the Schedule to the Rules shall then read as follows:"

3 'Pensionable salary shall mean the members' annual rate of basic salary less an amount to be determined by the Employer but not exceeding 1½ times the annual rate of the retirement pension attributed to a single person payable under the Social Welfare Acts provided in the case of a member (other than a member receiving benefit under the Employers Income Continuance Plan as of the 20^th February, 1998) whose benefits are being calculated by a reference to a date on or after the 20^th 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'."

4 As appears above, this case is about the Plaintiff Company's pension scheme. This has been twice amended, in 1996 and in 1999. These amendments relate to the meaning of the term "pensionable salary". This action relates to an amendment effected in the latter part of the year 1999.

5 The Company operates a pension scheme for its employees. The benefit of this scheme also applies to former employees who are drawing benefits from one of the Company's two Income Continuance Plans. These two Plans may for practical purposes be treated as one, as the learned trial judge did.

6 Under the terms of the Income Continuance Plan, an employee may be accepted into this Plan by reason of disability from working. If this happened he received (after a deferral period), an income benefit which was subject to periodic medical assessment. Subject to such assessment, the benefit continued to be available until the age of 65. A person who derived the benefit from this plan had his employment terminated but, by reason of the terms of the Pension Plan was deemed to be an active member of that Plan so that, at the appropriate age, he could draw a pension. A percentage of an Income Continuance Plan Beneficiary's pensionable salary at the date of acceptance into the Plan was paid to the Pension Plan.

7 Accordingly, for practical purposes, a disabled employee's years spent in receipt of the benefit under the Income Continuance Plan were considered for Pension Plan purposes as years of service with the Company.

8 A dispute arose about the year 1991 as whether the annual compound increase of 5% provided under the Income Continuance Plan should apply also to a beneficiary's salary for the purpose of computing pension benefits. This dispute was referred to the Labour Court and was the subject of a recommendation to the effect that the Company's offer to increase the basic salaries of Income Continuance Plan beneficiaries be used for pension purposes, in line with the increases granted to the grade or category in which they were working when they went on the Income Continuance Plan benefits. This was in lieu of the 5% compound increase which had been claimed by the Union.

9 This Deed of Amendment forms an essential part to the background of the present dispute. The background to it goes back to about 1996. The Company is a zinc producer and in that year was in a poor and worsening competitive position. It appears to have been agreed that major changes were necessary if the Company was going to survive.

10 In July, 1996, a Plan called "Tara 2005" was introduced but was not acceptable to the employees. Following recourse to the Labour Relations Commission, a Joint Working Group was created and this started work in March, 1997. This in turn recommended a joint strategy be agreed between management and Unions to implement a new scheme of work organisation, specific to the Company.

11 A further body, the Joint Steering Committee, was established in June, 1997, to implement the change process identified in the Joint Working Group's report. This report had identified the Pension Plan as a major issue. Accordingly, the Joint Steering Committee appointed yet another body, the Pensions Project Group to investigate the Pension Plan and report back.

12 This group presented a final report on the 18^th July, 1997. Its proposals related to changes to the definition of pensionable salary, indexation, funding, normal pension date and the identity of trustees.

13 The proposal as to the definition of pensionable salary substantially involved the elimination of "integration" i.e. an end to the practice of making a deduction from the basic salary for pension purposes to represent the amount based on the Social Welfare Pension available to a single person.

14 The Joint Steering Committee is said to have agreed proposals on the 25^th November, 1997. These are set out at para. 15 of the judgment of the learned trial judge. These proposals were approved by the employees in January of 1998. They were also approved by the Company in a manner which is not precisely clear, though the fact of approval cannot be gainsaid, and no attempt do so was made.

15 The proposals agreed by the Joint Steering Committee, extended to the following matters:

(1) The elimination of integration,

16 (2) An increase in the direct miners' pensionable salary to 1¼ times basic salary,

17 (3) An extra supplement to be paid, in the form of a bridging pension, between the ages of 62 and 65 years,

18 (4) A reduction in the compulsory retirement age to 62 years,

19 (5) Member trustees to be elected to the Board of Trustees of the Scheme.

20 Following these approvals in March, 1998, a meeting was held between representatives of the Company and of Irish Pensions Trust. The changes proposed to the Pension Plan were reviewed at that meeting. Subsequently a notice was prepared by Irish Pension Trust addressed "to all active employees as of the 20^th February, 1998", outlining what were described as "Pension Plan Improvements".

21 A year later, in March, 1999, Mr. Alan Doherty of Irish Pensions Trust gave instruction to that Company's legal department to prepare...