The High Court has ruled that three employers are liable to pay €2.23 million to the trustees of an Irish defined benefit pension scheme after the employers failed to engage with requests to discuss its funding before winding up.
Mr Justice Michael Moriarty gave judgment on 25 July 2014 in plenary proceedings brought by trustees Paul Holloway, Timothy Crowley and Griet Vandenheede against Damianus B.V., Omega Teknka Limited and Chefaro Ireland Limited. The judgment describes Damianus B.V. as the principal employer and the other two companies as associated employers. The dispute concerned a contribution demand made as the scheme was being wound up.
The employers announced redundancies and plans to wind down the scheme in September 2012. On 1 October, the principal employer gave notice that it intended to stop contributions and proposed 31 December 2012 as the winding-up date. The trustees sought consultation on the amount needed to secure benefits and sent further requests in October and November. They received no response before issuing a €3.01 million demand on 7 December. Transfers by two members reduced the sum ultimately claimed to €2.23 million.
The parties disputed how to value members’ benefits. The employers argued the statutory minimum funding standard was appropriate and that the scheme was solvent on that basis. The trustees said that standard would not secure members’ benefits in the circumstances, while an annuity buy-out valuation alone would be excessive. The scheme actuary used a hybrid calculation combining annuity buy-out and standard transfer values.
The judge found that the employers’ contribution obligation continued until the stated discontinuance date of 31 December 2012. He rejected the employers’ interpretation that the scheme’s winding-up date was triggered by the notice itself. The trustees had consulted the scheme actuary and tried twice to consult the principal employer before setting the demand, the judgment said.
The court considered whether the trustees’ decision was one that no reasonable body of trustees could have made, applying the standard described in an earlier pension case. It concluded that issuing the demand did not fall outside that standard. The judge also found that the trustees acted in good faith to protect members’ interests and were left with little option after the employers’ silence.
The court therefore found the plaintiffs entitled to succeed in their claim for the discounted €2.23 million. The judge said he would hear the parties on costs; he indicated that the ordinary rule of costs following the event appeared applicable. The judgment did not make a final costs order.