DEC-P2014-002

Equality Officer’s Decision No: DEC-P/2014/002

Parties

Mac Namara and Seven Named Complainants

(Represented by the ESB Retired Staff Association)

-v-

Trustees of the ESB Defined Benefit Pension Scheme

(Represented by Matheson- Solicitors)

File No: PEN/2013/24-31

Date of issue: 18 July, 2014

Headnotes: Pension Acts 1990- 2012 – sections 66, 70 and 81E –equal pension treatment – age - frivolous, vexatious and misconceived

1. DISPUTE

This dispute involves claims by eight named complainants (see Appendix A) that they were discriminated against by The Trustees of the ESB Defined Benefits Pension Scheme (“the respondent”) on grounds of age, in terms of section 66(2) of the Pensions Acts 1990-2012 and contrary to section 70 of those Acts in relation to the application of the Government Pension Levy (“the pension levy”) to the benefits they receive as retired members of the ESB Defined Pension Scheme (“the Scheme”).

2. BACKGROUND

2.1 The complainants are all retired employees of the respondent and are in receipt of pension benefits from the ESB Defined Benefit Pension Scheme as a consequence of that employment. The complainants state that the Government introduced the pension levy as part of the Finance (No. 2) Act, 2011and submit that as a consequence of the manner in which this levy was applied to the Scheme, they were discriminated against by the respondent on grounds of age contrary to the Pensions Acts, 1990-2012. The respondent rejects this assertion and notwithstanding this submits that the complaints are frivolous, vexatious and misconceived pursuant to section 81E (as amended) of the Pensions Acts, 1990-2012.

2.2 The complainants referred individual claims to the Equality Tribunal on 13 December, 2012. In accordance with his powers under section 77 of the Employment Equality Acts, 1998-2011 the Director delegated the complaints to the undersigned - Vivian Jackson, Equality Officer, for investigation, decision and for the exercise of other relevant functions of the Director under Part VII of the Acts as they apply to the Pensions Acts, 1990-2012. My investigation of the claims commenced on 5 March, 2014 - the date they were delegated to me. On delegation of the claims to me I noted the respondent had argued that the claims were frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)). The respondent submitted that this issue should be addressed in the first instance before any investigation of the substantive aspects of the claims should proceed. Having carefully considered the arguments advanced I decided to proceed along the lines submitted by the respondent and a Hearing to deal with that matter and any other matter connected thereto took place on 16 May, 2014. A small number of matters arose at the Hearing which required further clarification and gave rise to correspondence between the parties and the Equality Officer. This process concluded in late May, 2014.

3. SUMMARY OF RESPONDENT’S CASE

3.1 The respondent submits that the complainants’ claims are frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)). The respondent advances this argument under two separate strands – (a) that the claims are time barred and (b) that the claims do not relate to a rule of the Scheme.

3.2 The respondent states that section 81E(5) of the Pensions Acts, 1990-2012 require claims, in the first instance, to be referred to the Tribunal within six months of the date of termination of the relevant employment. It adds that this period can be extended to a maximum period of twelve months under section 81E(6) of the Acts. The respondent notes that all of the complainants ceased employment with the respondent before the period(s) provided in either of these subsections – ranging from 1 year and 9.5 months to 16 years and 1.5 months (see Appendix A). It submits therefore that the claims are unsustainable as a matter of law and should be dismissed pursuant to section 77A of the Employment Equality Acts, 1998-2011 (as applied to section 81E of the Pensions Acts, 1990-2012). In this regard the respondent seeks to rely on the Tribunal’s Decision in Giblin v Bank of Ireland Asset Management Ltd[1] wherein the Tribunal followed the judgement of the Supreme Court in In Farley v Ireland & Others[2]. In conclusion on this aspect of its arguments the respondent rejects the complainants’ assertion that the timelimits prescribed at section 81E of the Acts are irrelevant and argues that these timelimits go to the core of the Tribunal’s jurisdiction to investigate claims under the Acts, adding that the Tribunal would be acting ultra vires its authority were it to disregard them.

3.3 The respondent states that section 70 of the Pensions Acts, 1990-2012 provides as follows: - “... the principle of equal pension treatment is that there shall be no discrimination on any of the discriminatory grounds (including, subject to section 68(2), indirect discrimination) in respect of any rule of a scheme”. It further notes that section 68 of the Acts defines indirect discrimination in terms of the rules of a scheme and that section 65 of the Acts defines “rule” as follows – “in relation to a scheme, means a provision of a scheme, by whatever name it is called.”. The respondent states that the pension levy was introduced by the Government under The Finance (No. 2) Act, 2011 which amended the Stamp Duties Consolidation Act, 1999 by inserting a new section 125B in this latter statute. The respondent adds that this provision provides (at subsection 12) as follows: -

“Notwithstanding any provision of any enactment (including this Act), or any rule of law, or anything contained in the rules of a scheme, being a scheme approved by the Commissioners, or the terms and conditions of any contract, being a contract approved by the Commissioners, if under this section –

(a) [not relevant ….]

(b) A chargeable person who is an administrator pays an amount to the Commissioners in respect of the duty in relation to the assets of a scheme, or where an amount in respect of the duty in relation to the assets of a scheme has been paid to the Commissioners by any other chargeable person, the aggregate of the of the amount of duty paid by the administrator and the other chargeable person shall be deemed to be a necessary disbursement from those assets, and the benefits payable currently or prospectively to any member under the scheme may accordingly be adjusted by the trustees, but the diminution in value of those benefits shall not exceed the amount disbursed from the assets attributable at the valuation date to the scheme’s liabilities in respect of that member, and any such adjustment of benefits by the trustees shall not result in the scheme ceasing to be a scheme approved by the Commissioners.”.

3.4 The respondent states that it is “an administrator” of the Scheme in terms of the Stamp Duties Consolidation Act, 1999 and is therefore a “chargeable person” under that statute with the consequent statutory obligations and powers pursuant to section 125B(12) of that Act. It adds that the pension levy applied to all pension schemes and whilst there was no option but to pay the Revenue Commissioners the appropriate “duty”, section 125B(12) grants Trustees discretion in how the levy is funded and specifically permits that the benefits (current or future) to any member of the Scheme may be adjusted as necessary to discharge this statutory obligation. The respondent submits that in making the decision to reduce benefits to members of the Scheme in order to fund the cost of the pension levy, the Trustees were exercising statutory authority conferred on them by section 125B(12) of the Stamp Duties Consolidation Act, 1999 (as amended) and they were not invoking any rule of the Scheme. It argues that it is clear from section 68 and 70 of the Pensions Acts, 1990-2012 that for a claim to come within the ambit of those statutes that it must relate to an alleged breach of the principle of “equal pension treatment”. It adds that in order to offend the principle of “equal pension treatment” the matter complained of must relate to discrimination on any of the protected grounds “in respect of any rule of a scheme”. The respondent submits that the instant claims clearly do not relate to any discrimination in respect of any rule of the Scheme, rather they concern the exercise by the Trustees of statutory powers conferred on them. It further submits that in those circumstances the claims are frivolous, vexatious and misconceived and should be dismissed pursuant to section 77A of the Employment Equality Acts, 1998-2011 (as applied to section 81E of the Pensions Acts, 1990-2012).

4. SUMMARY OF COMPLAINANTS’ CASE

4.1 The complainants reject the respondent’s contention that their claims are frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)) The complainants are all retired employees of the respondent and are in receipt of pension benefits from the ESB Defined Benefit Pension Scheme as a consequence of that employment. The complainants state that membership of the Scheme was a compulsory requirement under the conditions of their employment with the respondent and that contributions to the Scheme were made by both the respondent and staff on a ratio of 2:1. The complainants further state that previous funding shortfalls in the Scheme were generally addressed by increased funding by both the respondent and employees. They add that it the instant claims the respondent wrote to The ESB seeking financial assistance towards payment of the pension levy and the respondent refused to do so. The complainants contend that the respondent should have more vigorously pursued the ESB to pay all, or a significant portion of , the costs associated with the levy, in accordance with (i) what the complainants say was custom and practice (in particular they refer to a quote by Mr. PJ Moriarty, a former ESB Chief Executive and Chairman in 1984, wherein he commented that “the spirit in which the Superannuation Fund has operated since its foundation has been that the ESB is the Guarantor of last resort against any financial difficulty”) and (ii) their contention that the Scheme is a “Balance of Cost Scheme” under Table 20 of the Energy (Miscellaneous Provisions) Act, 1995 and as such places responsibility solely on the ESB for any deficits that may arise in the Scheme’s funds. They submit that the respondent’s failure in this regard did not protect their best interests as members of the Scheme and that the Trustees decision to reduce the retired members’ benefits to fund the levy amounts to discrimination of them on grounds of age in terms of section 66(2)(f) and contrary to section 70 of the Pensions Acts, 1990-2012. They add that this decision was communicated to them in writing by an undated letter from the Chairperson of the Trustees sometime in November, 2012. A copy of this letter was furnished to the Tribunal. The complainants compare the actions of the Trustees in the instant case, by effectively passing the cost of discharging the pension levy on retired members, to those of other Schemes where the cost was absorbed by the Scheme itself. In the course of the Hearing the complainants were unable to point to any rule of the Scheme which they claim amounts to discrimination on grounds of age in terms of the principle of equal pension treatment.

4.2 The complainants submit that the timelimits prescribed at section 81E of the Pensions Acts, 1990-2012 are irrelevant in the instant case. In support of this assertion they state the pension levy was only introduced under the Finance (No. 2) Act, 2011and therefore it could not have been contemplated by the pension’s legislation. They add that the decision to fund the levy by reducing their benefits from the Scheme was only communicated to them in November, 2012 and they referred their claims to the Tribunal about a month later, which is well within the timelimits prescribed.

4.3 In conclusion, the complainants reject the respondent’s assertion that the claims are frivolous, vexatious or misconceived in terms of the Acts. In this regard they rely on the ordinary and common meaning of these words arguing that their claims could not be considered as “not having any serious purpose or value” , “annoyed, frustrated or worried” and “failing to understand correctly” – the standard dictionary meaning (respectively) of frivolous, vexatious and misconceived.

5. CONCLUSIONS OF EQUALITY OFFICER

5.1 The issue for decision by me is whether or not the complainants’ claims are frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)). In reaching my decision I have taken into consideration all of the submissions, both written and oral, submitted to the Tribunal as well as evidence advanced at the Hearing.

5.2 Section 77A of the Employment Equality Acts, 1998-2011 provides as follows: -

(1) The Director may dismiss a claim at any stage if of the opinion that it has been made in bad faith or is frivolous, vexatious or misconceived or relates to a trivial matter.”.

This provision is applied to Section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Acts, 2004). In Farley v Ireland & Others[3] the Supreme Court stated as follows –

“So far as the legality of the matter is concerned frivolous and vexatious are legal terms, they are not pejorative in any sense….It is merely a question of saying that so far as the plaintiff is concerned if he has no reasonable chance of succeeding then the law says that it is frivolous to bring the case. Similarly, it is a hardship on the defendant to have to take steps to defend which cannot succeed and the law calls this vexatious.”.

These principles were subsequently reiterated by the Supreme Court in Fay v Tegral Pipes Ltd & Others[4]. A claim is misconceived if it is incorrectly based in law[5]. This concept overlaps to some extent with “frivolous” in the sense that the latter has been interpreted primarily as “unsustainable” by the Superior Courts in this jurisdiction. In light of the foregoing it is clear that when deciding whether or not to dismiss a claim as frivolous, vexatious or misconceived in terms of Section 77A of the Acts (as it applies to the Pensions Acts, 1990-2012) I must be satisfied that the complainants have no reasonable chance of succeeding in their claims.

5.3 The respondent advances the argument that the claims are frivolous, vexatious and misconceived pursuant to section 77A of the Employment Equality Acts, 1998-2011 under two separate strands – (a) that the claims are time barred and (b) that the claims do not relate to a rule of the Scheme. I shall look at the time limit issues in the first instance. Section 81E of the Pensions Acts, 1990-2012 provides, in the first instance, that a complainant must refer a complaint to the Tribunal within “six months from the date of termination of the relevant employment”. The section further provides that this period can be extended to a maximum of twelve months for “reasonable cause”. Appendix A to this Decision sets out the periods for each of the complainants between termination of their (respective) employment with the respondent and the date of referral of the claims. This period ranges from 1 year and 9.5 months to 16 years and 1.5 months and these details were accepted by each of the complainants during the course of the Hearing.

5.4 The complainants argue that that the timelimits are irrelevant in the instant case as the pension levy was only introduced under the Finance (No. 2) Act, 2011and therefore it could not have been contemplated by the pension’s legislation. In addition, they state that the decision to fund the levy by reducing their benefits from the Scheme was only communicated to them in November, 2012 and they referred their claims to the Tribunal about a month later, which is well within the timelimits prescribed. The respondent rejects this arguing that the timelimits prescribed at Section 81E of the Pensions Acts, 1990-2012 are unequivocal and go to the core of the Tribunal’s jurisdiction under the legislation. It further argues that the Tribunal would be acting ultra vires its authority were it to disregard them. The essence of the complainants’ latter argument is that the alleged act of discrimination took place in November, 2012 and that they referred their claims within a month of that act. This seeks to apply the timelimits prescribed at section 77 of the Employment Equality Acts, 1998-2011 to the instant case and to disregard the timelimits prescribed in the pensions legislation for claims under those statutes. The complainants offered no authority for such a proposition. I am of the view that it is not permissible for the Tribunal to adopt such an approach and concur with the respondent’s argument that any departure from the application of those timelimits would be ultra vires its authority. The timelimits prescribed at section 81E of the Pensions Acts, 1990-2012 are clear and unambiguous and must be applied notwithstanding the fact that the pension levy came into operation after they came into force. These timelimits require a claim to be referred to the Tribunal at the maximum, within twelve months of the date of termination of a complainant’s employment. In the case of each of the eight complainants this maximum timelimit was not complied with. I therefore find that the complainants have no prospect of succeeding in their claims and I dismiss them as frivolous and vexatious in accordance with section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)).

5.5 Whilst my conclusions in the preceding paragraph dispenses with the matter I have decided, in the interest of completeness, to address the second strand of argument advanced on behalf of the respondent. – that the claims do not relate to a rule of the Scheme. The respondent submits that effect of sections 68 and 70 of the Pensions Acts, 1990-2012 is that (i) for a claim to come within the ambit of those statutes it must relate to an alleged breach of the principle of “equal pension treatment” and (ii) in order to offend the principle of “equal pension treatment” the matter complained of must relate to discrimination on any of the protected grounds “in respect of any rule of a scheme”. It further submits that the instant claims do not relate to any discrimination in respect of any rule of the Scheme, rather they concern the exercise by the Trustees of statutory powers conferred on them pursuant to section 125B of the Stamp Duties Consolidation Act, 1999 - as amended by the Finance (No. 2) Act, 2011. The essence of the complainants’ arguments is that the respondent ought to have more vigorously pursued their former employer for financial assistance in meeting the cost of the pension levy, in accordance what they believe is (i) custom and practice in terms of meeting shortfalls in the Scheme and (ii) a statutory obligation on the ESB under the Energy (Miscellaneous Provisions) Act, 1995. They argue that as a result of this failure the respondent decided to fund the cost of the levy by reducing the benefits paid to them under the Scheme and that this action amount to discrimination of them on grounds of age contrary to the pensions legislation. They were however, unable to point to any rule of the Scheme which the respondent invoked in reaching this decision.

5.6 It is clear to me that on previous occasions when the Scheme ran into difficulties the issues were resolved through operation of the internal industrial relations machinery, with the assistance of the State dispute relations machinery, if necessary. It is common case that on the most recent occasion when the Scheme ran into financial difficulty the ESB refused to make a contribution to defray the cost of discharging the pension levy. Whilst such a decision may or may not be contrary to custom and practice in the organisation or to a provision of the Energy (Miscellaneous Provisions) Act, 1995, such matters are not issues which can be determined by this Tribunal and any remedy which the complainants may have in this regard lies elsewhere. It is clear that section 125B of the Stamp Duties Consolidation Act, 1999 (as amended) renders the Trustees, as “an administrator” of the Scheme (in terms of that Act) a “chargeable person” under that statute with the consequent statutory obligations and powers pursuant to subsection 12 of that section. I accept the respondent’s evidence that the pension levy applied to all pension schemes and that there was no option but to pay the Revenue Commissioners the appropriate “duty”. I further note that the provision grants Trustees discretion in how the levy is funded and specifically permits that the benefits (current or future) to any member of the Scheme may be adjusted as necessary to discharge this statutory obligation. I am satisfied that the Trustees were exercising this statutory discretion when it decided to fund the levy by reducing benefits to members of the Scheme and I find, as a fact, that they were not invoking any rule of the Scheme in doing so. I concur with the respondent’s argument that for a breach of the principle of “equal pension treatment” to arise contrary to the Pensions Acts, 1990-2012 (sections 68 and 70) a claim must relate to discrimination on any of the protected grounds “in respect of any rule of a scheme”. That is not the case in the instant claims. In the circumstances I find that the claims are frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011 ( as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)).

6. DECISION OF THE EQUALITY OFFICER

I have completed my investigation of these claims and make the following Decision in accordance with section 79(6) of the Employment Equality Acts, 1998-2011 (as applied to section 81H of the Pensions Acts, 1990-2012). I find that the complainants’ claims are frivolous, vexatious and misconceived in terms of section 77A of the Employment Equality Acts, 1998-2011, (as applied to section 81E of the Pensions Acts, 1990-2012 by section 81J of those Acts (as amended by section 66 of the Equality Act, 2004)) and I dismiss all eight claims on that basis in accordance with powers conferred on me under that provision.

_______________________________________

Vivian Jackson

Equality Officer

18 July, 2014

APPENDIX A

Details of eight complainants

 [1] DEC-E2011-161

[2] [1997] IESC 60

[3] [1997] IESC 60

[4] [2005] 2IR 261

[5] See Keane v Minister for Justice [1994] 3 IR 347