Judgment Delivered In ‘Omega Pharma’ Case

Judgment was delivered in the case of Holloway & Others v Damianus BV & Others (known as the "Omega Pharma" case) on 25 July 2014.

Overview

The Court directed the employers participating in the Omega Pharma Ireland Pension and Death Benefit Scheme to pay €2.23 million to the scheme trustees pursuant to a contribution demand issued by the trustees on the wind up of the scheme.

This judgment shed light on a number of issues around the validity and enforcement of contribution demands. The judgment also considered the appropriateness of the statutory funding standard provided for under the Pensions Act 1990 (as amended) as a funding measure on the wind up of a pension scheme and highlighted the importance of employer engagement, particularly where there is a consultation requirement in a scheme's governing documentation.

Background

In October 2012, the principal employer of the Omega Pharma Ireland Pension and Death Benefit Scheme gave three months' notice of its intention to cease contributions to the scheme. The contribution obligation of the employer under the scheme was set out at Clause 8.1 of the trust deed which provided that the employers were required to pay to the trustees "the moneys which the Trustees determined, after consulting the Actuary and the Principal Employer, to be necessary to support and maintain the Fund in order to provide the benefits under the Scheme." The scheme was fully funded by reference to the statutory funding standard set out in the Pensions Act 1990 (as amended) at the time the termination notice was served.

The trustees took the advice of the scheme actuary and advised the employers of the sum that they had determined was required to secure the benefits payable under the scheme. The trustees formally requested the principal employer to enter into a consultation process. When the principal employer refused to engage, the trustees issued a contribution demand in the amount of €3,010,000 (later revised downwards to €2.23 million following the transfer out of the scheme of two members).

Following the service of the demand, the trustees requested an urgent meeting with the employers and referred to the possibility of legal proceedings if the matter could not be satisfactorily resolved. When this proved fruitless, the trustees issued proceedings to enforce the demand.

Judgment

A number of issues were disputed before the court, including the construction of the trust documents, the effect of the termination notice...