Judgement in the recent case of Scraggs v Pension Board  (91 JR) was delivered by Mr Justice Hogan on the 19th November, 2013. A number of notice parties were joined to the proceedings.
The applicant in this case was a former employee of the Bank of Ireland. He took voluntary redundancy in March 2002 and subsequently became a deferred member of the Bank’s staff pension fund.
The applicant took judicial review proceedings concerning a complaint which he made to the Pensions Board following the introduction of the pension levy after the Finance (No.2) Act 2011. In essence Section 4 of the 2011 Act inserted a new section in the Stamp Duty Consolidated Act, i.e. Section 125B, which provided for “stamp duty of an amount equal to 0.6% of the chargeable amount” for the ears 2011 to 2014. The chargeable amount is based on the value of the assets of the scheme on 30th June for each of the three years. Section 125B defines a chargeable person as “the trustees or other persons having the management of the assets of the scheme” and further provides that where a chargeable person disposes of or appropriates an asset in accordance with S125B(5)(a) then no action “shall lie against the chargeable person in any Court by reason of such disposal or appropriation”.
In this case the payment of the levy for 2011 and 2012 involved the payment by the administrators of the Bank of Ireland pension scheme of the sum of €35.5m to the Revenue Commissioners. Following discussions between the Bank and Trustees of the Scheme, the Bank were not willing to absorb the costs involved in payment of the levy. The Trustees thereafter elected to exercise the powers expressly conferred upon them by section 125B(12) to reduce the benefits payable to members of the Scheme to fund the cost of the levy. All members of the scheme were notified of the decision by circular letter in July 2012. The net result of the decision meant that members benefits would be reduced by just over 1%.
The applicant Mr Scraggs was very disappointed his pension payment would be reduced. At this time there was also a significant deficit in the scheme and the bank agreed to create a charge in the sum of €250 million over its own resources in respect of any shortfall in respect of the assets of the scheme. It was also noted that the Trustees had provided in the circular letter of July 2012 that
“Before reaching a decision, the Trustees met with senior representatives of the Bank, who stated that, in their view, the Pensions Levy is a tax introduced by the State and, as such, should be covered by members…..”
The applicant thereafter engaged in correspondence with the trustees of the scheme and the Pensions Board. The Bank stated in October 2012 that the pension levy was a tax imposed by legislation “on the assets of private pension funds and…does not require an employer to pay the levy or otherwise compensate members for the levy”.
The Pensions Board also replied to the applicant in 2012 stating that they had no grounds to form a view that the trustees had contravened the Pensions Act but also provided that they were not commenting on possible grounds he may have for a civil claim or a complaint to the Pensions Ombudsman. The Pensions Board noted that the payment of the pensions levy was set out in taxation legislation and the Pensions Board had no powers in this case.
The Applicant further contended that the trustees must get all necessary funding from the bank to maintain solvency and that the trustees could lawfully only exercise the power of the pension reduction for the benefit of the scheme and its members and for no other purpose or motive. The Pensions Board replied stating that they had nothing to add to earlier correspondence.
The Applicant contended that the Pensions Board failed properly to investigate his complaint and should have commenced an in investigation under Section 19 of the Pensions Act 1990. The Board felt it was justified in not exercising its discretionary powers to commence an investigation of the kind contemplated by the Act.
The Pension Board’s investigative functions
The High Court noted that the 1990 that the powers contained in the 1990 Act were directed towards cases where serious wrong doing might be suspected and considered Section 18 in detail. It also noted that the Board can apply pursuant to Section 63A(1)(a) for an order suspending the trustees of the scheme “pending completion of an investigation by or on behalf of the Board into the state and conduct of the scheme.” The Board is also entitled to apply to Court pursuant to Section 90(1) of the 1990 Act for an injunction. The Court referred to a series of cases which confirmed that any decision maker called upon to exercise a judgement must do so in a manner which is bona fide, not reasonable and factually sustainable (The State (Lynch) v. Cooney  I.R. 337, 361 per O’Higgins C.J. and Mallak v. Minister for Justice  IESC 59 per Fennelly J).
The High Court observed in the present case that the Pension Board’s bona fides was not in question and there could be no view that the complaint was one which properly came within the ambit of the investigative powers of the Board.
The High Court concluded that the Board’s decision not to invoke its statutory powers under the 1990 Act could not be said to be factually unsustainable or unreasonable. “The Board has plainly explained the criteria which it applied in considering the applicant’s case. It considered that the trustees had no case to answer in respect of a breach of the requirements of the 1990 Act….”
Judge Hogan concluded “………….I can find no basis on which it might reasonably be said that the Board was remiss in not commencing its statutory investigative powers”.
The High Court dismissed the Applicant’s claim for mandamus against the Board.