Seeking Court directions as a tool for pensions trustees

Speed read

The special summons procedure is a process open to pension scheme trustees when seeking the guidance of the Court in the form of directions. The special summons procedure is designed for proceedings that can be heard on affidavit only, without the need for pleadings or oral evidence.

The special summons procedure is particularly well-suited for pension scheme trustees facing uncertainty as to the interpretation of provisions in the relevant scheme trust deed and rules. In these circumstances, it is often advisable for trustees to consider seeking the Court’s directions on legal interpretation issues, particularly if there is a degree of urgency involved.

Trustee applications for directions

The special summons procedure is set out in the Court rules. It involves the preparation of a document called a “Special Summons”, which identifies the directions sought and the specific legal questions for the Court to determine, along with an affidavit grounding the application, setting out the relevant factual background. The special summons is the sole pleading under this procedure and therefore must set out clearly the grounds relied upon and the reliefs sought.

There is no documentary equivalent to a defence in the special summons procedure. Instead, the other party (for example, the pension scheme’s employer or beneficiaries) would be entitled to deliver a replying affidavit, and a further exchange of affidavits may arise.

The special summons procedure is designed to deal with issues of law rather than issues of fact and the Court will form its own view on those issues. While parties may wish to adduce expert actuarial or other evidence, this should be considered carefully on a case-by-case basis as doing so could give rise to costs, delays and admissibility disputes. Moreover, the Courts have commented recently on the role of actuarial evidence and guidance from the regulator in determining issues of legal interpretation – as Mr Justice Sanfey stated in Masterson & Ors v Córas Iompair Éireann [2024] IEHC 222, “the view of experts as to what may be appropriate in actuarial terms in given circumstances is unlikely to be relevant to the court’s task. Still less relevant is the view of the experts or the [Pensions] Authority on what the words of the rules or the 1990 [Pensions] Act mean”.

Therefore, parties at the hearing will generally rely on written legal submissions and affidavit evidence, subject to the entitlement of a party to serve notice to cross-examine. While a party is entitled to cross-examine on any affidavits delivered in the proceedings, this is often unnecessary where the issues for determination are legal only. At the hearing, the Court has a broad discretion to make any orders determining the issues of law in dispute as may be just.

Application for entry into the Commercial Division of the High Court

When making an application seeking the Court’s directions, trustees should also consider seeking to have their application heard by the Commercial Division of the High Court/Commercial Court (the Commercial List) if the matter is one which meets the criteria for entry. The Commercial List determines complex commercial cases in which the value of the dispute exceeds the current monetary threshold of €1m.

Commercial List Judges are experienced in commercial disputes and generally deal with the larger complex pensions cases in Ireland. In addition, the Commercial List is designed to be a fast-track Court and is normally able to hear cases more promptly than in the general High Court lists. This approach can be extremely advantageous for trustees in seeking time-efficient resolution of these sort of issues.

The following steps are typically involved when issuing a special summons and seeking entry into the Commercial List: 

1. Issue and service of special summons, with supporting verifying affidavit. As noted above, the special summons must include a detailed indorsement of claim setting out the grounds and reasons for the application. The application is grounded upon affidavit sworn on behalf of the applicant (the trustee) for the purpose of verifying facts, the relief sought by the application, and verifying the reasons for the relief sought. The special summons and verifying affidavit are filed and issued in the Central Office of the High Court. 
2. If trustees wish to seek permission to have the proceedings enter the Commercial List, then without delay, an application seeking entry to the Commercial List should be issued and filed. This application is made by way of notice of motion and grounded upon an affidavit, verifying the relevant facts and reliefs sought.
   Entry into the Commercial List is at the discretion of the Court. There are several minimum thresholds to be met before the Court can consider such an application. For the purposes of this context, it would  likely be that the inherent commercial nature of the matter be offered to the Court, as well as any details of the monetary nature of the issue/dispute for Court consideration (i.e. it exceeds €1m). The applicant must also show that they did not delay in bringing the application seeking entry into the Commercial List.
   There is a Court stamp fee of €5000 for all Commercial List entry applications. If the entry application to the Commercial List is unsuccessful, or if no entry application is made, the proceedings would be managed by the Deputy Master in the Master’s list. This would be a lengthier process, compared to the Commercial List. For instance, parties may not expect to receive a hearing date until two years after issuing the special summons.
3. If the entry for application to the Commercial List is successful, the applicant will then be required to bring an application seeking initial directions from the Court regarding the exchange of affidavits between the parties. This often occurs on the same date as the application for entry hearing or shortly thereafter.  
   The parties may appear before the Court again after initial directions have been complied with (for example, to set down additional directions for evidence), if necessary.
4. Depending on the complexity of the matter, parties can sometimes expect to have a hearing date set down approximately six months from the date of entry into the Commercial List. However, in some cases, this may take up to one and a half years if there are protracted pre-hearing disputes between the parties.
5. Once the substantive hearing has taken place, the Judge will usually ‘reserve’ their judgment in the matter, (i.e. deliver judgment at a later date). It is therefore important for parties to recognise that they are unlikely to receive a judgment at the conclusion of a trial. Depending on the workload of the Judge assigned to hear the case, the parties may not receive a reserved judgment for a number of months after the trial hearing. Either party can then appeal a judgment within a short, prescribed timeframe.
6. After the delivery of a judgment, the Court typically determines the issue of costs as between the parties. The general rule in litigation is that ‘costs follow the event’ which means that the losing party is liable for the winning party’s costs albeit the level of recovery for the winning party is likely to be c.60-65% of the costs actually incurred. In pensions litigation, trustees are generally entitled to be indemnified for their costs from the trust fund. However, the determination of costs remains a matter for the Court’s discretion and will depend on the nature of the Court’s application and determination.
   Prior to commencing any litigation, it is imperative that trustees consider and obtain appropriate advice on the terms of the relevant trust deed, not only on whether the terms contain an express power to commence legal proceedings, but also on whether there are any specific terms relating to trustee costs in legal proceedings. 

Conclusion

While the special summons procedure is an effective tool, it is important that if considering using this procedure, early legal advice is sought. This is of critical importance if entry to the Commercial List is desired, as lack of delay when seeking entry is an important factor. At all stages of the proceedings, trustees must have regard to their duties, particularly the duty to act for the benefit of the scheme beneficiaries.  

For further information in relation to this topic, please contact ALG’s Pensions, Disputes & Investigations group, or your usual ALG contact.

Date published: 14 May 2024