Boliden Tara Mines -v- Cosgrove [2010] IESC 62 (21 December 2010)

Judgment Title: Boliden Tara Mines -v- Cosgrove

Neutral Citation: [2010] 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


Judgments by	Link to Judgment	Result	Concurring
Hardiman J.	Link	Appeal allowed	Macken J., McKechnie J.

Outcome: Allow Appeal

THE SUPREME COURT

Hardiman J. 104/2007
Macken J.
McKechnie J.

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
JUDGMENT delivered by Mr. Justice Hardiman on the 21^st day of December, 2010.
This is an appeal from the judgment of the High Court (Finlay Geoghegan J.) delivered on the 9^th March, 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.

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:

‘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’.”

“The Trustees and the Company having taken legal advice now understand that the rules of the Scheme, as currently constituted do

not

reflect what was intended. The Company are now moving to seek rectification from the High Court to reflect what was intended which if granted will confirm that Mr. Hilliard was in receipt of his correct benefits since his normal pension date. If rectification is not granted then the trustees will ensure that his benefits are amended immediately and back dated to his pension commencement date.”

Rectification.

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 20^th 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 20^th 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 law.
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 [2006] 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:

“114. Rectification permits the Court to correct an instrument which has failed to record the actual intentions of the parties to an agreement. It is a discretionary equitable remedy.

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.

[1989] 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

[1981] NI 138. At 146, the former Lord Chief Justice of Northern Ireland said:

(i) There must be a concluded agreement antecedent to the instrument which is sought to be rectified, but

(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).”

Having adopted this passage Griffin J. giving the judgment of the Court proceeded as follows:

“Applying those principles to the facts of this case, and bearing in mind the heavy burden of proof that lies on those seeking rectification, the question to be addressed is whether there was convincing proof, reflected in some outward expression of accord, that the contract in writing did not represent the common continuing intention of the parties on which the Court can act, and whether the plaintiff can positively show what that common intention was in relation to the provisions which the appellant says were intended to exclude the vacant lands at Palmerstown.”

Evidence.
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 20^th 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:

“The principle changes to the pension arrangements arising from the Joint Standing Committee agreement which were embodied in the 1999 Deed of Amendment can be summarised as follows:

(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 20

^th

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.”

This account was supported by all deponents on behalf of Boliden Tara Mines Limited and Irish Pensions Trust. Moreover, it was consistent with the documentation created and circulated to the employees around that time: for example the communication from Irish Pensions Trust in embodying these changes was addressed “to all active employees as at 20^th February, 1998”. It relevant witnesses were not cross-examined.

Similarly, an internal I.P.T. memorandum from Mr. Alan Doherty to I.P.T.’s in-house lawyer recorded, on the 20^th July, 1999:

“Further changes were introduced on 20

^th

February, 1998, and again these only apply to active employees and not to those on disability benefit.”

The lawyer, in commenting upon a draft produced in-house said:

“I am not sure that [the draft] adequately reflects the fact that the changes introduced as at 20

^th

February, 1998, apply to active employees only [excluding previous withdrawals and Income Continuance Claimants at that time].”

A meeting of the Joint Steering Committee for the purpose of clarifying aspects of which clarification had been requested was held on the 23^rd 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 3^rd 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 20^th 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 20^th 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:

“I clearly understood, on the basis of Mr. Doherty’s memoranda of the 20

^th

July and the 5

^th

October, 1999, that the changes introduced on the 20

^th

February, 1998, were only to apply to ‘active employees’. I understood from this that ICP [Income Continuance Plan] beneficiaries were not to benefit from the changes introduced. However, I was of the view that the concerns expressed by Mr. Doherty in his memoranda of the 5

^th

October, 1999, were unfounded. I considered that there was no need for express wording excluding ICP beneficiaries as I considered that they were, by definition already excluded as they were no longer employees of the [appellant Company] and therefore no longer active beneficiaries of the plan. In effect, I considered that the amendment proposed to the definition of ‘pensionable’ salary… insofar as it made reference to a ‘member’ encompassed active members only and therefore excluded ICP beneficiaries.”

It is now agreed that express language should have been used to exclude Income Continuance Plan beneficiaries. The very frank and entirely credible account of the in-house lawyer as to why this was not done has not been contradicted, or in any way challenged on its facts. She was not cross-examined.

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. [2006] 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. [1989] 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 [1970] 2 QB 86 where it was said, by Russell L.J. at p.98 of the Report:

“We do not wish to attempt to state in any different phrases that which we entirely agree, except to say that it is in our view better to use only the phrase ‘convincing proof’ without echoing an old fashioned word such as ‘irrefragable’ and without importing from the criminal law the phrase ‘beyond all reasonable doubt’… it would be a sorry state of affairs if when that burden is discharged a party to a written contract could, on discovery that the written language chosen for the document did not on its true construction reflect the accord of the parties on a particular point, take advantage of that fact.”

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. [1987] 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, 7^th edition, p.672:

“In matters that regard the conduct of men mathematical demonstration cannot be expected or required. Like much of human knowledge on all subjects, fraud may be inferred from facts that are established. Care must be taken not to draw the conclusion hastily from premises that will not warrant it; but a rational belief should not be discarded because it is not conclusively made out. If the facts established afford a sufficient and reasonable ground for drawing the inference of fraud, the conclusion to which the proof tends, must, in the absence of explanation or contradiction, be adopted.”

Continuing, Henchy J. said:

“Proof of fraud is frequently not so much a matter of establishing primary facts as of raising an inference from the facts admitted or proved. The required inference must, of course, not be drawn lightly or without due regard to all the relevant circumstances, including the consequences of a finding of fraud. But that finding should not be shirked because it is not a conclusion of absolute certainty. If the Court is satisfied, on balancing the possible inferences open on the facts, that fraud is the rational and cogent conclusion to be drawn, it should so find.”

Banco Ambrosiano was a case of fraud but I would adopt what is said there in relation to the standard of proof in civil proceedings generally. If a conclusion is likely to have severe consequences for an individual, such as fraud, dereliction of duty, grave professional shortcomings, conduct generally considered disgraceful, the Court must of course be careful not to jump too easily to a conclusion on grounds that do not support it. But then, a court must avoid doing that in any case but should perhaps self consciously remind itself of that need in a case of particular sensitivity.

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 7^th edition of Spry’s classic work on The principles of Equitable Remedies (London, 2007):

“In early cases, when the doctrine of rectification had not been fully developed, the strength of the evidence that was required before the terms of a document would be rectified was much emphasised. More recently, when the application of the doctrine has become more clear, it has been established that the ordinary rules in regard to the standard of proof apply, although those rules may require that, according to the precise circumstances, particular evidence should be received with caution.”

Indeed, some of the cases show a tendency to apply too high, or too nice, a standard in such cases. Thus, in Thomas Bates and Son Ltd. v. Wyndhams (Lingerie) Ltd. [1981] 1 WLR 505, Buckley L.J. said:

“In some cases the standard has been equated with a criminal standard of proof ‘beyond reasonable doubt’. I think that the use of a variety of formulations to express the degree of certainty with which a particular fact must be established in civil proceedings is not very helpful and may indeed be confusing. The requisite degree of cogency or proof will vary with the nature of the facts to be established and the circumstances of the case. I would say that in civil proceedings a fact must be proved with that degree of certainty which justice requires in the circumstances of the particular case. In every case the balance of probability must be discharged, but in some cases that balance may be more easily tipped than others.”

I think the last sentence very aptly expresses the fairly simple insight which lies behind the use of different phrases. There is but one standard of proof (apart from criminal proceedings) which is the balance of probability, but in some cases that standard will be more easily met than in others. For example, a case where commercial parties have had their intentions expressed in a professionally drafted legal document, which document is later said not in fact to express the intentions of the parties’, will naturally call for evidence which is clear, coherent and convincing if the onus of establishing on the balance of probability that the parties’ intention was not correctly expressed is to be discharged. This is so obvious as to be almost a truism. The onus will, of course, be easier to discharge if the facts put forward are entirely uncontradicted notwithstanding that a representative of the class of persons interested in having the claim for rectification rejected was present and professionally represented, and did not cause the witnesses as to fact to be cross-examined.

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 20^th February, 1998, or thereafter…”. (Affidavit of Christopher Blake, 12^th 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 20^th February, 2008”. (Affidavit of Christopher Blake sworn the 7^th 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 20^th February, 1998, provided that such persons were in active employment with the Company as of the 20^th 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 11^th July, 2006.)

(d) “In his Memorandum of 20^th July, 1999, Mr. Doherty set out that the changes introduced on the 20^th 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 20^th 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.

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