Judgment Title: Boliden Tara Mines -v- Cosgrove
Neutral Citation:  IESC 62
Supreme Court Record Number: 104/07
High Court Record Number: 2006 141 SP
Date of Delivery: 21/12/2010
Court: Supreme Court
Composition of Court: Hardiman J., Macken J., McKechnie J
Judgment by: Hardiman J.
Status of Judgment: Approved
Outcome: Allow Appeal
THE SUPREME COURT
Hardiman J. 104/2007
IN THE MATTER OF THE TARA MINES PENSION PLANBetween:
BOLIDEN TARA MINES LIMITEDPlaintiff/Appellant
FRANK COSGROVE, TADG FARRELL, CHRISTOPHER GORMAN, JOHN KELLY, PETER MULLIN, ALAN BROXSON, IRISH PENSIONS TRUST LIMITED and (BY ORDER)) MICHAEL SHEILS
JUDGMENT delivered by Mr. Justice Hardiman on the 21st day of December, 2010.
This is an appeal from the judgment of the High Court (Finlay Geoghegan J.) delivered on the 9th March, 2007, and of the order of that Court perfected the 14th March, 2007. The effect of this judgment and order was to dismiss all of the plaintiff’s claims.
The scope of the plaintiff’s claim is now considerably narrowed and on the hearing of this appeal was confined to a claim for:
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.
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.
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.
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.
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.
The 1999 Amendment.
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.
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.
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.
This group presented a final report on the 18th July, 1997. Its proposals related to changes to the definition of pensionable salary, indexation, funding, normal pension date and the identity of trustees.
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.
The Joint Steering Committee is said to have agreed proposals on the 25th 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.
The proposals agreed by the Joint Steering Committee, extended to the following matters:
(1) The elimination of integration,
(2) An increase in the direct miners’ pensionable salary to 1¼ times basic salary,
(3) An extra supplement to be paid, in the form of a bridging pension, between the ages of 62 and 65 years,
(4) A reduction in the compulsory retirement age to 62 years,
(5) Member trustees to be elected to the Board of Trustees of the Scheme.
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 20th February, 1998”, outlining what were described as “Pension Plan Improvements”.
A year later, in March, 1999, Mr. Alan Doherty of Irish Pensions Trust gave instruction to that Company’s legal department to prepare documentation to amend the Pension Deeds and Rules, to reflect the agreed changes.
The 1999 Deed of Amendment was executed under seal by both the Company and Irish Pension Trust, and is dated the 19th October, 1999.
New trustees were subsequently appointed.
Background to the proceedings.
A Mr. Oliver Hilliard was originally the eight-named defendant, and is described as the “representative defendant”. This means that he is a representative of the class of beneficiaries of the Pension Plan who would be affected by the amendment. He has now been replaced by Mr. Sheils.
Mr. Hilliard was an employee of the Company who left its employment in 1988, aged 51. He achieved his 65th birthday on the 1st July, 2002. Later that month he seems to have received information from the new trustees and administrations of the Plan about his pension benefits. This led to correspondence between Mr. Hilliard and the Pensions Board and between the latter body and the trustees.
The net point in this correspondence was that integration was being applied to Mr. Hilliard’s pensionable salary that is for pension purposes his basic salary was regarded as the actual basic salary as provided in the Income Continuance Plan, less a sum to reflect the availability of the Old Age Pension. After correspondence lasting two years the position of the Company emerged as follows:
The technical form of the rectification sought in this case has already been set out. The effect of this rectification, if granted, would be that the practice of “integration” would cease only in the case of those members of the Pension Plan who were in active employment (i.e. not on Income Continuance benefit) on the 20th February, 1998 or later. The only members of the Pension Plan whose benefits will be calculated by a reference to a date on or after the 20th February, 1998, and in respect of whom it is contended that the amendment does not apply are those members of the Pension Plan who were Income Continuance beneficiaries on that date. Mr. Hilliard was within that category at the time of his retirement as the representative defendant and so is Mr. Sheils who replaced him in that capacity.
Rectification was the principal, and is now the only, relief sought by the Company.
The parties in this case were agreed as to the legal principles applicable to an application of this sort, and indeed they had been agreed on these issues in the High Court as well.
In Irish Pensions Trust Ltd. v. Central Remedial Clinic  2 IR 126, at para. 114, Kelly J. considered the nature of rectification and what it required to be shown by someone who claims it. He says:
115. The circumstances in which rectification is available was authoritatively considered by the Supreme Court in Irish Life Assurance Company Ltd. v. Dublin Land Securities Ltd.  IR 253. In that case, Griffin J. speaking for the Supreme Court adopted the principles outlined by Lord Lowry LCJ in Rooney and McParland Ltd. v. Carlin  NI 138. At 146, the former Lord Chief Justice of Northern Ireland said:
(ii) The antecedent agreement need not be binding in law (for example it need not be under seal if made by a public authority or in writing and signed by the party if relating to a sale of land) nor need it be in writing, such incidents merely help to discharge the heavy burden of proof, and
(iii) A complete antecedent concluded contract is not required, so long as there was prior accord on a term of a proposed agreement, outwardly expressed and communicated between the parties, as in Joscelyne v. Nissan (this last case is quoted elsewhere in this judgment).”
The evidence of those witnesses who were officers or employees of the parties to the Deed who swore affidavits in this case, which will be summarised below, in my opinion shows an unusual degree of cogency and unanimity. The case was tried on affidavit and none of the witnesses whose affidavits were relied on by the plaintiffs was cross-examined on behalf of the representative defendant. Moreover, the evidence filed by on behalf of both parties to the Deed was to the same effect: the Deed of Amendment does not reflect the intention of either of Tara Mines or of Irish Pensions Trust and ought to be rectified so as to express the actual intention of these parties. This was to exclude members in receipt of Income Continuance benefit as of the 20th February, 1998, from the entitlement to exclude the deduction in respect of the Social Welfare Pension, known as “integration”.
Apart from this unanimity in the evidence on behalf of the plaintiff and of Irish Pension Trust, there was ample evidence, also summarised below, that the Company and the Trustees at all material times behaved, in their dealings with pensioners and in their statements, on the basis that the true position was as they intended it to be. This, indeed, is illustrated in the narrative of events in relation to the original representative defendant, Mr. Hilliard, as appears from the summary above.
Moreover, it is a feature of the evidence that there is a detailed explanation, again unchallenged by cross-examination, from the in-house lawyer in Irish Pension Trusts who, together with others, drafted the Deed of Amendment, as to how, precisely, an error occurred. This error gave rise to the situation in which the Deed as executed did not reflect the intention of the parties. It is vital to note that this evidence, too, was unchallenged by cross-examination.
The principal affidavit on behalf of the plaintiff/appellant was that of one of its executives, Mr. Christopher Blake. At Para. 19 he deposed:
(a) ‘Integration’ with the State Pension was to be eliminated for the then active and future members of the work force. In effect this meant that the Company’s pension plan would no longer take into account any pension paid from Social Welfare in calculating a pensioner’s pensionable salary post 20th February, 1998, for then active and future members retiring from that date;
(b) Direct miners’ pensionable salary was increased to 1.25 times basic salary;
(c) On retirement at age 62 a ‘bridging pension’ would be paid to age 65 referable to a multiple between one and two times the single person’s personal Social Welfare Pension.”
Similarly, an internal I.P.T. memorandum from Mr. Alan Doherty to I.P.T.’s in-house lawyer recorded, on the 20th July, 1999:
A meeting of the Joint Steering Committee for the purpose of clarifying aspects of which clarification had been requested was held on the 23rd February, 1999. In response to a specific request for clarification of the position of “employees on Income Continuance or going on Income Continuance”, the answer was given “they will receive Income Continuance up to the age of 65 and will then receive pension as per the old scheme (emphasis added).
Similarly, in I.P.T.’s document “Brief Outline of the revised Pension Plan”, eligibility was defined as “full time permanent salaried staff and hourly paid employees who have attained the age of 21”.
The minutes of the meeting of the 3rd March, 1998, between Tara Mines and IPT, i.e. between the parties to the Deed, record, at item 6 “it was confirmed that the Pension Plan changes will only apply to active employees. Announcement letters will specifically include them.”
How the mistake was made.
By reason of the Constitution of the Pension scheme, the consent of IPT, as trustee, was required to the Deed of Amendment. It was not controverted that the intention of the parties to the Deed was to eliminate “integration” in the calculation of pensionable salaries for employees of the appellant Company as at the 20th February, 1998 and thereafter. (The term “integration” has been explained above). The terms of the Deed of Amendment as executed went further than this intention and provided for the elimination of integration not only for current employees and future employees but also for former employees who were, as of the 20th February, 1998, in respect of Income Continuance benefit and who were not, therefore, in active employment with the Company.
The in-house lawyer who oversaw the drafting of the amendment explained the error as follows in her affidavit. At para. 7 it is stated:
Accordingly, there is unanimity in the evidence of all the persons engaged in the preparation of the Deed of Amendment as to what their several and mutual intention was. There is frank and un-glossed evidence from the in-house lawyer engaged by the trustee (Irish Pensions Trust, of the exact nature of the misapprehension which led her to think that express language was unnecessary to exclude former employees who are deriving an income continuance benefit from the proposal to end “integration”. None of this evidence was in any way controverted, challenged or glossed on its facts by counsel on behalf of the representative defendant. Although, as the next section of this judgment will show, there has been a good deal of discussion of the standard of evidence required in a rectification case, none of the authorities in my view features on its facts such cogency and unanimity of evidence as is found in this case.
Rectification and questions of Evidence.
The issues which arose on the trial of this matter in the High Court were exclusively issues of evidence. The representative defendant, who opposed the granting of the relief sought, did not contradict any of the deponents who swore affidavits on behalf of the plaintiff on their evidence. He did not put forward contradictory evidence himself.
In the words of the learned trial judge:
57. “The principal ground upon which the application for rectification is opposed on behalf of the representative beneficiary is that the evidence relied upon by the plaintiff and supported by I.P.T. and the current trustees to establish an intention of the Company and I.P.T. to exclude I.C.P. beneficiaries from the amendment in para. D of the 1999 Deed, falls short of the ‘convincing proof’ or ‘cogent evidence’ required in accordance with the principles set out above.”
It cannot be too strongly emphasised that, where evidence is presented on affidavit, a party who wishes to contradict such evidence must serve a Notice of Intention to Cross-examine. In a case tried on affidavit, it is not otherwise possible to choose between two conflicting versions of facts which may have been deposed to. In a case where there is no contradictory evidence an attack on the evidence which is before the Court must include cross-examination unless the contradicting party is prepared to rely wholly on a submission that the plaintiff has not made out its case, even taking the evidence it has produced at its height.
A claim for rectification is a claim for an equitable remedy whereby the Court orders that a written instrument be altered so that its text, as altered or “rectified”, expresses the actual intention or agreement of the parties. The principles applicable to an application for rectification, and in particular the rectification of an occupational pension scheme were considered by the High Court in Irish Pensions Trust Ltd. v. Central Remedial Clinic and Ors.  2 IR 126. There, Mr. Justice Kelly referred to the decision of this Court in Irish Life Assurance Company Ltd. v. Dublin Land Securities Ltd.  IR 253 and to its treatment of a decision of the English Court of Appeal on the question of the standard of proof required in such an application. The English case was Joscelyne v. Nissan  2 QB 86 where it was said, by Russell L.J. at p.98 of the Report:
I respectfully agree with the general approach in the quotation above but would also express the view that in Ireland, no form of words other than “proof on the balance of probability” should be used and that the multiplication of phrases may cause confusion. It appears clearly established in Irish law that there are but two standards of proof: that applicable in criminal proceedings, which require proof “beyond reasonable doubt” and that applicable in civil proceedings, where proof on the balance of probability is required.
The judgment of this Court in Banco Ambrosiano v. Ansbacher and Co.  ILRM 669 is authority for the proposition that there are only two standards of proof and that it would be difficult to express any intermediate standard and the attempt would introduce a vague and uncertain element into the law. The reasoning behind this was held to have been aptly put in a passage from Kerr on Fraud and Mistake, 7th edition, p.672:
Continuing, Henchy J. said:
No doubt the trier of fact will always bear in mind the particular difficulties of any particular case, or type of case and the scope for the Court to be imposed upon. Nonetheless, this is a civil case and therefore requires proof on the balance of probabilities. To achieve this standard, naturally, convincing evidence will be required.
I regard the statements just made as quite consistent with what is said in the 7th edition of Spry’s classic work on The principles of Equitable Remedies (London, 2007):
In this connection, it seems to me of great significance that there was in fact no dispute that the amendments to the Deed had been executed by the appellant and by I.P.T. I do not wish to say anything at all to take from the learned trial judge’s very proper insistence on cogency in evidence. But the cogent evidence will be directed to matters in issue in the proceedings.
While therefore the learned trial judge was quite correct to demand a high degree of cogency in the evidence, it is nevertheless difficult to avoid thinking that her very proper zeal in this direction may have led her to adopt a standard which certainly approaches, if indeed it does not mirror, the criminal standard. For example, her findings in relation to an absence of evidence of formal corporate approval by both Tara Mines and Irish Pensions Trust suggest a standard which is unnecessarily exacting. The Deed of Amendment was executed by Tara Mines but the learned trial judge found that “no evidence has been adduced of any decision taken by or on behalf of [that Company] to approve the Deed, nor to authorise the execution or affixing of the seal of [that Company] to the Deed; nor of the requirements of the Articles of Association of [that Company] in relation to the use of [its] seal”.
Where the due execution of a document has been deposed to by a witness who is not challenged, contradicted or cross-examined, I do not regard it as a significant defect in the evidence that the terms of a Company’s Articles of Association in relation to the use of its corporate seal have not been proved.
In light of these principles as to the law of evidence applicable on an application like the present, I turn to consider the central features of the evidence in this case.
The Sworn Evidence.
The following was established in the sworn evidence in the present case, and is representative of the purport of a good deal of other evidence:
(a) The Company’s contention that “… it was always intended by the Company and the Trustee of the Plan at the time the 1999 Deed of Amendment was executed… that the elimination of integration should apply only to members of the Plan who were or are employees of the Company in active employment as of the 20th February, 1998, or thereafter…”. (Affidavit of Christopher Blake, 12th March, 2006).
(b) “It was widely known that integration had been removed from the Pension Plan but, as already deposed to on behalf of the Company, this was only intended to be for those active members of the work force as at 20th February, 2008”. (Affidavit of Christopher Blake sworn the 7th December, 2006).
(c) “At all times it was the understanding of each of the current trustees that the elimination of integration was only intended to apply to members of the Pension Plan who reached normal pension age (62) after the 20th February, 1998, provided that such persons were in active employment with the Company as of the 20th February, 1998, or thereafter. In this regard I would emphasise that the three worker representatives of the trustees… were all members of the Pension Project Group that came up with the proposals which formed the basis of the Deed of Amendment. The initial three management representatives i.e. this deponent, the second defendant and Mr. Tully, were all aware of the details of the amendment in their capacity as senior members of the Company’s management throughout the process - i.e. prior to the setting up of the Joint Working Group, during its deliberations and following the implementation of the Joint Steering Committee proposals. As noted above, Mr. Broxon was similarly aware of the details of the amendments through his involvement with I.P.T.
The trustees are conscious of the fact that the improvements to the Pension Plan were as a consequence of agreed cost savings and productivity increases which were agreed with the Company’s active workforce, the only people who could deliver such savings and improvements. Throughout the Joint Steering Committee process, the Company only consulted and negotiated with its then active workforce”. (Affidavit of John Kelly, a Tara Mines Executive and Chairman of the Board of Trustees of the Tara Mines Pension Plan, in his affidavit sworn 11th July, 2006.)
(d) “In his Memorandum of 20th July, 1999, Mr. Doherty set out that the changes introduced on the 20th February, 1998, were to apply ‘to active employees and not to those on disability benefit’. In his subsequent Memorandum of 5 October, 1999, he referred to the draft Deed of Amendment which had been prepared by my colleague, Des Murray, and stated that he was not sure that the draft adequately reflected ‘the fact that the changes introduced as at 20th February, 1998, applied to active employees only (excluding previous withdrawals and income continuance claimants at that time)”. (Affidavit of Raymonde Kelly sworn 9 November, 2006).
It seems to me that the foregoing material is cogent evidence of the intention of both Tara Mines and of the Trustees. It is also in my view cogent evidence of the precise manner in which the Deed which was entered into by the parties whose intention is relevant, the Company and the trustees, failed to express their mutual intention.
The evidence on behalf of these parties is to my mind quite clear, free of ambiguity, and consistent with their actions. These actions, indeed, manifest several outward expressions of the intention which they say they formed, although I agree with the learned trial judge that further evidence of outward intention is unnecessary (though it may be much to be expected) in cases where there is other cogent evidence of intention.
I repeat, not for the first time, the fact that the witnesses whose evidence is quoted were not cross-examined or on behalf of the representative defendant. I do so because I think it to be a salient feature going to the weight of the evidence.
It appears to me that, to some extent, the learned trial judge addressed herself to an issue which was not the issue in these rectification proceedings: the issue of what was or was not agreed between the parties to the industrial relations discussions which predated the amendment to the Deed. While this is undoubtedly part of the narrative in the broader picture of the dealings between the Company, the trustees, and certain groups of workers and their trade unions, it does not appear to me to be an issue in the present proceedings. The representative defendant did not counterclaim that if the Deed fell to be amended it damaged the position of those whom he represented, and indeed it is hard to see how that case could have been made. But the present case relates to the question of whether the Deed entered into properly expressed the intentions of the Company and of the trustees, who are parties to the Deed and not any broader question involving other persons or interests.
I consider that there is ample evidence unchallenged in any relevant respect as to the intention of the Company and of the trustees and that it establishes that the Deed did not express that intention. I would therefore grant a rectification in the terms claimed.