Gayle (Maxwell) and Others v Desnoes and Geddes Ltd and Others
| Jurisdiction | Jamaica |
| Judge | MANGATAL, J |
| Judgment Date | 28 July 2006 |
| Judgment citation (vLex) | [2006] 7 JJC 2809 |
| Court | Supreme Court (Jamaica) |
| Date | 28 July 2006 |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE CIVIL DIVISION
PENSION SCHEMES - CIVIL PROCEDURE
Fixed date claim form - Amendment -
Mr. Vincent Chen and Mr. Leonard Green instructed by Mrs. Sylvan Edwards of Chen Green & Co. for the Claimants.
Mrs. Sandra Minott- Phillips and Mr. Emile Leiba instructed by Mr. Peter Goldson and Miss Monica Ladd of Myers Fletcher & Gordon for the Defendants.
1. This judgment deals with a number of important issues involving pension funds. I wish at the outset to express my appreciation to the Attorneys-at Law who appeared for both sides. The industry and thoroughness that they displayed in making their submissions, both written and oral, was commendable.
2. In the fixed date claim form filed on their behalf, the Claimants state that they claim in their own right and claim as representatives of all persons who have contributed to the Pension Plan currently known as The Desnoes and Geddes Pension Plan "D&G Pension Plan". The Claimants are members of the D&G Pensioners Association "the Association" which was formed in 2003. The Claimants say they represent some 976 members of the Association.
3. The First Defendant Desnoes and Geddes Limited "D&G" is a limited liability company and trades under the name "Red Stripe", a name that is well-known in Jamaica and abroad.
4. The Second Defendant D & G Wines Limited "Wines" is a subsidiary of D&G and is in the process of Voluntary Liquidation. Documents filed by the Liquidator of Wines, Mr. Stephen Johnson, indicate that the nature of the business carried on by Wines was blending, bottling and distribution of wines and liquors. He has also indicated that Wines has not yet been fully wound up.
5. The remaining Defendants have been sued in the capacity of Trustees of the D&G Pension Plan.
6. This claim is concerned with the Employees' Pension Scheme for D&G "the D&G Pension Plan". In his Affidavit sworn to on 31 st March 2005, Mr. Ravi Rambarran, Actuary states that the D&G Pension Plan was established on April 1, 1971. On that date Life of Jamaica Limited "LOJ" was appointed the administrator and investment manager of the D&G Pension Plan. The last actuarial valuation as at December 2003 showed an actuarial surplus of $1,114 million or $ 1.114 billion in the Plan.
7. The Fixed Date Claim Form by which this claim was brought has asked for numerous declarations and various forms of relief. The main issues are as follows:
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(a) Is there a valid power to amend the Trust Deed dated 21 st September 1971 "the Principal Trust Deed"? In relation to this issue, the Claimants challenge four amendments carried out between 1979 and 1995 and an amendment which was proposed in 2003 but never carried out.
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(b) Have the Defendant employers D&G and Wines breached the implied duty owed to the members of the Pension scheme to act reasonably or fairly as employers? Have the Defendants/employers been guilty of any bad faith in dealing with employees?
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(c) If even the amendments are invalid, have the Claimants acquiesced in the exercise of the power of amendment and are they estopped from complaining about these matters now?
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(d) Should the Court grant an injunction to restrain the Defendants from amending the Rules of the D & G Pension Plan to provide that any surplus in the funds of the pension plans shall be payable to the employers or any of them?
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(e) Are the Claimants entitled to an order for specific performance of an agreement by D& G to provide its employees with a legally binding and enforceable pension plan including an enforceable Trust Deed conferring upon the employees the right to have certain worker nominated employees
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(f) If the amendments or any of them are invalid, what if any are the consequential effects on the D & G Pension Plan?
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(g) Were the trusts of the D& G Pension Plan terminated upon the occurrence of any of these amendments, in particular on 1 st January 1979 or on 19 th December 1985?
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(h) Should the fund of the D & G Pension Plan be distributed to all employees who have contributed to it from and since 1 st January 1979 in accordance with the provisions of the rules applicable upon a winding up of the Plan pursuant to Rule 15 of the Plan Rules in its unamended form?
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(i) From and after 1 st January 1979, should that portion of the fund attributable to members' contributions be held on resulting trust for the members who have made contributions to the fund from and since 1 st January 1979?
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(j) From and after 1 st January 1979, should that portion of the fund attributable to the employers contribution be held on a constructive trust in favour of the members who have made contributions to the fund at any time from and after the 1 st January 1979?
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(k) Should all funds imported into the D& G Pension Scheme and/ or the D& G Wines Limited Pension Scheme from the Guinness Pension Plan and all accretions thereto be held on a resulting trust and/ or constructive trust for all members of that (presumably Guinness) Plan?
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(l) Should the existing trustees be removed and new trustees be appointed to wind up the said pension schemes?
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(m) What is the appropriate order for costs to be made at the end of the day?
8. This matter came before me on the 21 st of March 2006 for adjudication of the issues outlined and a number of subsidiary matters. In or about April and May of 2005 I dealt with an application for specific disclosure of documents made in this matter. I heard and determined that discreet aspect of an adjourned case management conference. On the 21 st of March 2006 the Attorneys-at-Law for both sides indicated that the parties had consented to the substantive case being heard by me, notwithstanding that I had dealt with one aspect of the case management of the matter. This consent was given pursuant to Rule 27.7 (d) of the Civil Procedure Code 2002 "the C.P.R." which states:
27.7 The judge or master who conducts the case management conference may not try the claim except-
(d) where all the parties consent.
9. BACKGROUND AND HISTORY
The D & G Pension Plan was established by D&G as a superannuation fund upon irrevocable trust for the purpose of securing pensions on retirement for the present and future employees of D&G. According to the Affidavit of Mr. Stephen Johnson, who served as Legal Counsel and Company Secretary of D&G, Liquidator of Wines, and one of the Trustees of the D&G Pension Plan, the total membership of the Plan since its inception in 1971 numbers in the thousands.
10. D&G and named trustees made a trust deed on 21 September 1971 "The Principal Trust Deed" setting up the fund. There is no requirement under the laws of Jamaica for an employer to provide a pension plan, or for that matter to make any pension provision for its employees. Even the new Pensions (Superannuation Funds and Retirement Schemes) Act, 2004 which came into effect on the 1st day of March 2005, and which seeks to regulate the pensions industry in Jamaica far more rigorously than obtained previously, leaves it up to the employer to decide whether or not to establish a pension plan for its employees.
11. It is common ground that the D&G Pension Plan is and has been from its inception what is referred to as a Defined Benefit Scheme. The nature of a Defined Benefit Scheme is well-discussed in a number of the authorities cited and in the Affidavit of Actuary Mr. Ravi Rambarran. This means that the pension entitlement of members is calculated primarily by reference to a formula which has the members' earnings and length of service as important factors.
12. In a Defined Benefits Scheme, the pension which a member will ultimately receive on retirement is not dependent on the amount which he has contributed to the Pension Fund over the years. The members' entitlement is to the promised benefit. In such schemes, the employer bears the investment risk of providing the benefits as the employer has an obligation to provide the benefits if the investment performance is negative. In such schemes, the employer's risk is uncertain.
13. A "Defined Benefit Plan" can be contrasted and compared with a "defined contribution plan". In a defined contribution plan the members' benefits are based on the accumulated value of members' and employer's contributions and the cost of annuities. The investment risk is borne by the members because the benefits are dependent on the performance of the assets and interest rates at retirement. The employer's cost is certain and the employer is under no obligation to top up benefits if the investment performance is negative.
14. By a supplemental Trust Deed dated 1 st of January 1979 "the First Supplemental Trust Deed" made between D&G as the party of the First Part and Wines as the party of the Second Part and the then trustees of the Principal Deed of the Third Part and expressed to be supplemental to the Principal Trust Deed, it was sought, amongst other matters, to vary the Principal Trust Deed by recording Wines as employer under the Principal Trust Deed.
15. The Claimants say that the amendments sought are ultra vires the trustees and null and void and of no effect. They say that to constitute a settlement with Wines...
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