Irish Court of Appeal

THE COURT OF APPEAL

CIVIL

Neutral Citation Number: [2025] IECA 76

Appeal Number: 2024/204

 

 

 

Whelan J.

Noonan J.

Allen J.

 

PROCEDURE BY SPECIAL SUMMONS UNDER ORDER 3, RULE 6 AND ORDER 454, RULE 1 OF THE RULES OF THE SUPERIOR COURTS 1986 (AS AMENDED)

IN THE MATTER OF A TRUST DEED AND RULES OF THE VODAFONE IRELAND PENSION PLAN DATED 15 DECEMBER 2005 AND MADE BETWEEN VODAFONE IRELAND LIMITED OF THE ONE PART AND CELINE FITZGERALD, JAN MOTTRAM, JOSEPH MAHER, SARAH CALLERY AND EAMON FARRELL OF THE OTHER PART

AND IN THE MATTER OF A DEED OF AMENDMENT OF THE VODAFONE IRELAND PENSION PLAN DATED 5 APRIL 2012 AND MADE BETWEEN VODAFONE IRELAND LIMITED OF THE ONE PART AND JOSEPH MAHER, EAMON FARRELL, MIKE O'CONNOR, JOHN KEANEY, COLM LYONS AND PAUL RYAN OF THE OTHER PART

 

BETWEEN/

VODAFONE IRELAND LIMITED

PLAINTIFF/APPELLANT

- AND –

 

EAMON FARRELL, MIKE O'CONNOR, JOHN KEANEY, KATIE CRAIG, MICHAEL FARRELL, DAVID HARNEY AND IRISH PENSIONS TRUST LIMITED BEING THE TRUSTEES OF THE VODAFONE IRELAND PENSION PLAN

AND

 

(BY ORDER OF THE HIGH COURT MADE ON 20 FEBRUARY 2023)

GERARD FAHY

DEFENDANTS/RESPONDENTS

 

JUDGMENT of Mr. Justice Allen delivered on the 28^th day of March, 2025

 

Prologue

1.                  This is an appeal against a judgment and order of the High Court on a construction summons.  What is at issue is whether the rules of a defined benefit pension scheme confer an entitlement on the members of the scheme that their pensions will increase in line with the salaries paid by the employer - a right to pay parity - or leave the question of any increase in pension to the discretion of the employer. 

2.                  If, loosely, the issue might be thought to be whether the members are or are not entitled to pension increases as a matter of right, that would not be correct.  These proceedings are not concerned with the entitlement of the scheme members under their contracts of employment or by reason of their reliance on anything said or done by the employer.  Nor are they concerned with whether the pension scheme rules correctly reflect the members' pension entitlements under their contracts of employment.  As will be seen, the evidence and arguments on both sides was not always precisely focussed on what was and is the only issue: which is the correct construction of the scheme rules.

Introduction

3.                  By special summons issued on 25^th November, 2022 Vodafone Ireland Limited ("Vodafone") sought the direction and determination of the High Court regarding the proper interpretation of the Vodafone Ireland Pension Plan ("VIPP").  The special summons originally named the trustees of the pension plan as the defendants.  Later, Mr. Gerard Fahy - one of the cohort of members concerned - was joined to represent the interests of those members of the plan whose rights and entitlements were liable to be affected by the outcome of the proceedings. 

4.                  Remarkably, although what was at issue was the construction of one of the rules of one of the four schemes provided for by the trust deed and rules, there was a protracted exchange of affidavits, exhibits and expert evidence which eventually ran to eight folders and the hearing occupied the High Court Commercial List for seven days.

5.                  The special indorsement of claim on the special summons sought the determination of a number of questions as to the entitlements of the relevant scheme members or beneficiaries claiming in respect of the membership of those scheme members, and alternatively asked whether Vodafone was entitled to an order for rectification of the wording of the rule.  Of course, the summary procedure was not appropriate for a claim for rectification and the question of rectification was not pursued: but its inclusion in the first place betrayed the existence of a larger dispute as to what the entitlements of the relevant scheme members - if they were not limited by the scheme rules to the extent contended for by Vodafone - should be.  As the trial judge pointed out, the exchange of affidavits threw up issues of misrepresentation, estoppel and legitimate expectation which, although they might be relevant to the entitlements of the relevant members under their contracts of employment, were not before the court for determination in these proceedings.

Overview

6.                  The VIPP is a defined benefit occupational pension scheme with four schedules of rules, each pertaining to a different cohort of members, namely: Scheme A, which provides for the entitlements of what might be described as ordinary employees of Vodafone and former employees of Eircell Limited; Scheme B, which provides for the entitlements of the spouses and children of Scheme A members; Scheme C, which provides for the entitlements of Vodafone employees who are described as employees of eircom plc who were previously members of the eircom pension plan and who transferred employment to Eircell 2000 plc; and Scheme D, which provides for the entitlement of former members of the Cable and Wireless Limited Employee Benefit Scheme.

7.                  While the identification of the Scheme C members in the VIPP is clear, it is not immediately obvious.  The Scheme C members are those employees of Vodafone who started their careers as civil servants in the Department of Posts and Telegraphs but eventually - in circumstances which I will explain - came to be employed by Vodafone.

8.                  Historically, the responsibility for postal and telecommunications services in Ireland lay with the Minister for Posts and Telegraphs.  The Postal and Telecommunications Services Act, 1983 provided for the establishment of two companies, An Post and Bord Telecom Éireann.  The new companies - which at that time were State owned - were thenceforth to provide the services theretofore provided by the Department and were to be staffed by the staff theretofore employed by the Department, who were, in the main, established civil servants.

9.                  Bord Telecom Éireann changed its name to Telecom Éireann and was later re-registered and floated as eircom plc.

10.              The mobile phone division of eircom was called Eircell and the mobile phone business was carried on by a company called Eircell Limited, which was established in 1996 as a subsidiary of the then Telecom Éireann.   Some of the Eircell staff were directly employed by Eircell.  Others were seconded from Telecom Éireann - and continued to be employed by Telecom Éireann - and some or all of those seconded staff were staff who had transferred to Telecom Éireann from the Department of Posts and Telegraph.  

11.              The Eircell business was bought by the Vodafone group in 2001.  The liabilities and assets of Eircell Limited were first transferred to eircom, and then by eircom to a company then called Eircell 2000 plc, which is now Vodafone Ireland Limited.  With effect from 11^th May, 2001 most or all of the staff of Eircell - including a number of seconded former Department staff - transferred to Vodafone.  It is those former Department staff who are the Scheme C members.

12.              At the time of commencement of the proceedings there were 169 Scheme C members.  Of those, twelve were active members, 30 were deferred members and 127 were pensioners.

The legislative background and the trust deeds and rules

13.              The establishment in 1983 of the new post and telecommunications companies had implications for the staff whose employment would be transferred to those companies which, although they were to be State owned, would be private limited liability companies incorporated under the Companies Acts.  Immediately prior to the establishment of Bord Telecom Éireann on 1^st January, 1984 the telecommunications staff who were to transfer to the new company were civil servants and entitled to civil service pensions.  The legislation required that their terms and conditions - including as to pension entitlement - should be preserved.

14.              Section 45 of the Act of 1983 provided that save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned, a member of the staff of the Department of Posts and Telegraphs who was transferred should not, while in the service of An Post or Bord Telecom Éireann, as the case might be, receive a lesser scale of pay or be brought to less beneficial conditions of service than the scale of pay to which he was entitled and the conditions of service to which he was subject immediately before the transfer.

15.              Section 46 provided for the preparation and submission to the Minister for Posts and Telegraphs of a superannuation scheme for each of the companies providing for not less favourable conditions in respect of persons who, immediately before the transfer, were members of staff of the Department than those to which they were entitled immediately before the transfer.  Section 46(5) provided that:-

"(5)  Disbursement of pensions, gratuities and other allowances which may be granted to or in respect of persons who, immediately before the vesting day, were members of the staff of the Department of Posts and Telegraphs shall not be on less favourable conditions than would apply if the benefits referred to had continued to be paid out of moneys provided by the Oireachtas."

16.              The Telecom Éireann Main Superannuation Scheme was established - with effect from 1^st January, 1984 - by an interim trust deed dated 31^st July, 1984 and the staff who had transferred from the Department became members of that scheme.  The interim trust deed was supplemented by a definitive deed on 11^th May, 1988.

17.              On 26^th February, 1988 Bord Telecom Éireann, in exercise of the powers conferred by s. 46 of the Act of 1983 and with the concurrence of the Minister for Communications and the approval of the Minister for Finance, adopted the Telecom Éireann Main Superannuation Scheme, with effect from 28^th May, 1985.  Rule 10 of the 1988 scheme, under the heading "Pension Increases" provided:-

"The company may grant such increases in such pensions and preserved pensions under this Scheme as may be authorised from time to time by the Minister [for Communications] with the concurrence of the Minister for Finance."

18.              Section 46(9) of the Act of 1983 provided for a contribution by the Minister for Finance to the pension schemes to be established by An Post and Telecom Éireann in respect of the accrued entitlements of the transferring staff related to reckonable service before the vesting day.  Section 46 of the Act of 1983 was amended by s. 11 of the Telecommunications (Miscellaneous Provisions) Act, 1996 to extend the schemes to retired or deceased staff.  The amount of the liability of the Minister for Finance to contribute to the Telecom Éireann Scheme was fixed by the Telecom Éireann Superannuation (Amendment) Scheme, 1996 at IR£225.8 million and provision was made for the payment of that liability by the Minister to the trustees of the scheme.

19.              Telecom Éireann was privatised and floated in 1999 as eircom plc.  In anticipation of the privatisation, s. 46(4) of the Act of 1983 was amended by s. 5 of the Postal and Telecommunications Services (Amendment) Act, 1999 to provide for the entitlements of the former Department staff.  A new s. 46(4A) provided that:-

"(4A)  Every scheme for the granting of pensions, gratuities and other allowances on retirement or death to or in respect of — 

(a)  persons who are or were members of the staff of [Telecom Éireann] and who, immediately before the vesting day, were members of the staff of the Department of Posts and Telegraphs, or 

(b)  those persons who were members of the staff of the Department of Posts and Telegraphs and who retired or died before the vesting day as the Minister for Finance may specify,

shall provide for not less favourable conditions in respect of those persons than those to which they were entitled immediately before the vesting day.

20.              Section 46(5) of the Act of 1983 was amended to provide that:-

"(5) Disbursement of pensions, gratuities and other allowances which may be granted to or in respect of persons referred to in subsections (4)[the An Post staff] and (4A) [the eircom staff] shall not be on not less favourable conditions than would apply if the benefits referred to had continued to be paid out of moneys provided by the Oireachtas." 

21.              Following its establishment in 1996, Eircell Limited established a pension scheme for its employees by interim trust deed of 2^nd April, 1997 (with effect from 27^th May, 1996) and then by a definitive trust deed and rules dated 31^st March, 1998.  Rule 10 of Schedule I of the 1998 deed provided that:-

"[Eircell] may grant such increases in such pensions and preserved pensions under this scheme A as may be authorised from time to time by the Minister [for Public Enterprise] with the consent of the Minister for Finance."

22.              By deed of amendment dated 9^th March, 2001 - in anticipation of the demerger of Eircell from eircom - rule 10 was amended to remove the reference to Ministerial consent.  The new rule 10 provided that:-

"The Trustees (having obtained the advice of the Actuary) may grant such increases in such benefits under this scheme as may be agreed by the Company."

23.              On 11^th May, 2001 - which was the date of completion of the sale to Vodafone - Vodafone replaced Eircell as the principal employer under the Eircell scheme, which was then renamed the VIPP.

24.              A further deed of amendment of 2^nd November, 2001 further amended the 1998 deed by establishing a new Scheme C for those employees of eircom who had been members of the eircom scheme and who had transferred employment to Vodafone.  The new schedule III to the VIPP introduced by the deed of 2^nd November, 2011 provided that:-

"The Trustees may grant such increases in such pensions and preserved pensions under this scheme C as may be agreed by the Company."

25.              The 1998 deed as amended by the 2001 deed (and other deeds) was replaced by a trust deed and rules made on 15^th December, 2005.  The new rule 10 (which, as the High Court judge did, I will refer to as Rule 10, 2005 Deed) - which is what these proceedings are all about - provided:-

"10.  PENSIONS INCREASE

All Pensions under this Scheme C will increase in no less favourable a Manner than had the Member remained as a Member of the Eircom Scheme and will increase in line with the percentage increase in the relevant grade for that Member."

26.              It is convenient at this point to identify that the provision made by the same deed for the increase of the pensions payable to the Scheme A and Scheme B members - who had not come from the Department - was, as set out at Rule 10 of the Scheme A rules - under the heading "Pension Increases" – and Rule 19 of the Scheme B rules - under the heading "Increase in Pensions" – that:-

"Pensions under this Scheme A [or B] will increase in line with the consumer price inflation index subject to a maximum of 4% per annum; the first increase to take effect on the first anniversary of your retirement date.  Increases over this amount will be at the discretion of the Trustees and the Company."

27.              It is accepted by Vodafone that under the 2005 Deed and rules, the Scheme A and Scheme B members are entitled to an annual increase in their pensions in line with the consumer price index, subject to a maximum of 4% per annum, which in argument was described in shorthand as "CPI capped."  The Scheme C members, however - it is said - are not entitled to any increase.

Factual background

28.              As noted at the outset, there was a fairly extensive exchange of affidavits in the course of which both sides put before the High Court a considerable quantity of material which - they urged - supported their case.   The High Court judge looked at it all and - in her judgment - ruled that a good deal of what had been put forward was not admissible for the purpose of construing the scheme.  As I will come to, a significant part of Vodafone's appeal to this Court is that the judge erred in failing to have sufficient regard to the context in which the 2005 deed was executed.

29.              Before looking at the material which was put before the High Court, it is useful to recall the legal principles which are to be applied in construing a contract.  Those principles are by now well established and it is accepted that they were correctly identified by the High Court judge.  Of the dozens of cases included in the three thick folders of authorities which were filed, counsel referred to only a handful.  At this point I will refer to three or four of them.

30.                   In Brushfield Ltd. v. Arachas Corporate Brokers Ltd. [2021] IEHC 263, [2022] Lloyd's Rep. 638  McDonald J., having reviewed the Irish and English authorities, distilled the principles applicable to the construction of contracts in general and insurance contracts in particular.  The principles to be applied in the construction of contracts in general were set out at para. 110, sub-paras. (a) to (g) as follows:-

"The following principles emerge from those authorities:‑

(a)  The process of interpretation of a written contract is entirely objective. For that reason, the law excludes from consideration the previous negotiations of the parties and their subjective intention or understanding of the terms agreed;

(b)  Instead, the court is required to interpret the written contract by reference to the meaning which the contract would convey to a reasonable person having all the background knowledge which would have been reasonably available to the parties at the time of conclusion of the contract;

(c)  The court, therefore, looks not solely at the words used in the contract but also the relevant context (both factual and legal) at the time the contract was put in place;
(d)  For this purpose, the context includes anything which was reasonably available to the parties at the time the contract was concluded. While the negotiations between the parties and their evidence as to their subjective intention are not admissible, the context includes any objective background facts or provisions of law which would affect the way in which the language of the document would have been understood by a reasonable person.

(e)  A distinction is to be made between the meaning which a contractual document would convey to a reasonable person and the meaning of the individual words used in the document.  As Lord Hoffmann explained in the Investors Compensation Scheme case at page 912, the meaning of words is a matter of dictionaries and grammar.  However, in order to ascertain the meaning of words used in a contract, it is necessary to consider the contract as a whole and it is also necessary to consider the relevant factual and legal context.  ...

(f)  While a court will not readily accept that the parties have made linguistic mistakes in the language they have chosen to express themselves, there may be occasions where it is clear from the context that something has gone wrong with the language used by the parties and, in such cases, if the intention of the parties is clear, the court can ignore the mistake and construe the contract in accordance with the true intention of the parties.

(g)  As O'Donnell J. made clear in the MIBI case, in interpreting a contract, it is wrong to focus purely on the terms in dispute.  Any contract must be read as a whole and it would be wrong to approach the interpretation of a contract solely through the prism of the dispute before the court.  At para. 14 of his judgment in that case, O'Donnell J. said:

'It is necessary therefore to see the agreement and the background context, as the parties saw them at the time the agreement was made, rather than to approach it through the lens of the dispute which has arisen sometimes much later.'"

31.                   In Hyper Trust Ltd. v. FBD Insurance plc [2021] IEHC 78 McDonald J., at para. 31, set out a passage from the speech of Lord Neuberger in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 3 All E.R. 570 which had been approved by the Supreme Court in Emo Oil Ltd. v. Sun Alliance & London Insurance Company [2009] IESC 2.  The short passage on which counsel placed particular reliance was:-

"Similarly, when one is speaking of aim, or object, or commercial purpose, one is speaking objectively of what reasonable persons would have had in mind in the situation of the parties.  What the court must do must be to place itself in thought in the same factual matrix as that in which the parties were."

32.                   A little later in his judgment in Hyper Trust, McDonald J., having referred to and quoted fairly extensively from the judgment of Hildyard J. in Lehman Bros International (Europe) v. Exotix Partners llp [2020] Bus LR 67 emphasised that:

"... in considering the factual information reasonably available to the parties, the courts seek to identify what a reasonable observer would have expected and believed would be available to both contracting parties.  In my view, it would be inconsistent with that principle, if the commercial purpose of a contract was to be assessed by reference to information which was not reasonably available to both parties." [Emphasis original.]

33.              Finally, Re: Wogan's (Drogheda) Ltd. [1993] 1 I.R. 157 and In re Keenan Bros. Ltd. [1985] I.R. 401 were relied on for the proposition - which I do not understand to have been in issue - that later conduct is not admissible as an aid to the interpretation of a contract. 

34.              For present purposes, I emphasise that in construing a contract, the court is not entitled to have regard to (1) previous negotiations, (2) subjective intention, (3) subjective understanding, and (4) later conduct.

The documents relied on as evidence of the factual background

The establishment of the Eircell scheme

35.              The first in time of the documents relied on as evidence of the factual background to the 2005 Deed was a report dated 13^th January, 1997 of a meeting held on 10^th October, 1996 under the auspices of the Transitional Scheme of Conciliation and Arbitration of the Irish Telecommunications Board Joint Conciliation Council to discuss a "Management Side Proposal on Eircell Customer Operations".  This document recalled that there had been a previous meeting on 8^th February, 1996 and recorded a discussion of the pay and conditions of the staff who it was proposed would work in the then new Eircell Limited.  The report recorded that the management side had stated that "... seconded staff would continue to hold Telecom Éireann pay and conditions" and that "... the proposed pension arrangements, which it was intended would apply generally to externally recruited staff in Eircell, were favourable by comparison to competitive standards." 

The Terms and Conditions Agreement

36.              Many of the documents relied upon - mostly by the trustees and Mr. Fahy - were created in the context of the negotiations between eircom and Vodafone Group plc for the sale and purchase of the business of Eircell.  The evidence was that one of the preconditions stipulated by Vodafone Group plc was that at least 70% of the staff of Eircell would transfer to the new company which would be established to carry on the business.

37.              Among the exhibits introduced by Mr. Fahy was a "Terms and Conditions Agreement" made between eircom and the trade unions representing the Eircell/eircom staff transferring to the new company.  This was undated but was obviously made in late February or early March, 2001.  As to pensions, this confirmed that the then current pension entitlements for the various staff "will be maintained on no less favourable terms" and that transferring employees who had benefits in the eircom defined benefits scheme would remain members of that scheme until "new Eircell designs and establishes a pension scheme which will provide benefits on a no less favourable basis."

38.              By a letter dated 5^th March, 2001 from the group human resources director of Vodafone Group plc to eircom, Vodafone Group plc acknowledged and endorsed the Terms and Conditions Agreement and agreed that in the event of Eircell being acquired by Vodafone Group plc and becoming a subsidiary, "new Eircell" would be bound by the terms and conditions which might be changed only by agreement between the unions and "new Eircell" management. 

39.              A separate exhibit established that the Terms and Conditions Agreement was appended to the annual report of the National Executive of the Communications Workers' Union for 2001.

40.              Mr. Fahy referred also to the Offer Document, undated but created in or around April, 2001 - and necessarily before the acquisition - by which Vodafone Group plc confirmed that the existing employment rights, including pension rights, of the employees of Eircell Limited (including eircom secondees) who agreed to transfer to and become employees of Eircell 2000, would be fully safeguarded. 

The option to transfer to the VIPP

41.              On 13^th September, 2001 Eircell 2000 plc wrote to the previously seconded staff who had by then transferred their employment from eircom to Vodafone.  This presaged the establishment of a new section of the Eircell pension scheme to accommodate former eircom scheme members and said that "Future benefits that you accrue in the Eircell 2000 scheme will be on the same basis as those you would have accrued had you remained in the eircom scheme."  The transferring staff were given the option of leaving their accrued benefits in the eircom Scheme or transferring them to the Eircell 2000 Scheme. 

42.              Attached to the letter of 13^th September, 2001 was a summary of benefits under the eircom defined benefits scheme which, against the shoulder note "Increases to Pensions in Payment", indicated that "Increases to pensions in payment are in line with pay increases for the employees' relevant grade."  The summary was said to be a simplified summary and that to know more, staff could read a booklet entitled "Your personal guide to the Telecom Eireann Pension Schemes", which was also exhibited.

43.              The declared purpose of the booklet, which was dated 1989, was to provide staff with important information on the subject of pensions by way of a series of questions and answers designed to explain, in terms that were easily understood, what were described as the rather complex provisions of the Telecom Éireann Main Superannuation Scheme, 1988.  The last of the questions asked - under the sub-heading "Periodic increases in pension payments" - was:-

"Are pay increases granted to serving employees passed on to pensioners"

To which the answer was:-

"Yes, pensioners are granted periodic increases in pensions in line with pay increases to their relevant grade."

44.               It will be recalled that in 1996 the liability of the Minister for Finance to contribute to the Telecom Éireann Superannuation Scheme  in respect of the reckonable service in the Department of Posts and Telegraphs of staff who had transferred to Telecom Éireann was agreed at IR£225.8 million.  There was no direct evidence as to how that figure was calculated.

45.              The evidence was that at the time of the transfer of the staff to Vodafone, €36.7 million was paid by the trustees of the eircom Scheme into the VIPP to fund the accumulated past service obligations in respect of those who had opted to transfer to the VIPP.  That €36.7 million had been actuarially calculated to cover the increase in pensions in payment linked to anticipated future grade pay increases at CPI plus 2%.  To be clear, there was never any question that the pensions might be increased as the rate of CPI plus 2% as such.  Rather, it was recognised that salaries were likely to increase at a rate greater than CPI and the 2% was an estimate to cover that gap.

46.              As I will come to, the VIPP continued thereafter to be funded more or less on the same basis, that is, to cover a pay parity increase in pensions in payment.  There was a separate issue between the parties as to whether the premise of the continued funding on that basis was that the members were entitled to pay parity as of right, or whether the continued funding was provided as a matter of "prudence" to enable to exercise by Vodafone of a discretion to award such increases - if and when it decided to do so.  It seems to me, however, that the money provided by the Minister to the Telecom Éireann Scheme in 1996, and thereafter by the eircom Scheme to the VIPP in 2001 falls into a different category.  The proposition that Vodafone had an absolute discretion in the application of the money provided by the Minister is not immediately attractive.  It would mean that the prospects of a hypothetical Scheme C member who retired or deferred on, say, 12^th May, 2001 obtaining a pay parity increase which had been fully funded by the Minister would be dependent on the discretion of Vodafone.

47.              Hypothesis apart, Mr. Fahy joined the Department of Posts and Telegraphs in 1976 and was seconded to Eircell in or sometime after 1996.  By 2001 he had 24 or 25 years' service and the eircom Scheme was funded to provide for pay parity increase.  In practical terms, Mr. Fahy and his colleagues brought with them transfer values which took account of pay parity increases.  That, it seems to me, is highly relevant context.

The Mercer presentations to staff

48.              The administrator of the VIPP at all material times was Mercer, Human Resource Consulting.  Over the years, Mercer gave a number of presentations to staff in relation to their pension entitlements. 

49.              In September, 2001 Mercer gave a presentation to the Vodafone employees who were members of the eircom defined benefit pension scheme.  By then, the staff had moved their employment and under Revenue rules could not continue to participate in the eircom Scheme.  One of the slides showed - as was the fact - that a new section had been added to the 1998 Eircell trust deed and rules to accommodate ex-eircom members, in which "eircom terms and conditions [had been] replicated."  Another showed that this cohort of members would automatically participate in what was described as  the Eircell 2000 Scheme for future service with effect from 11^th May, 2001; but in respect of pre May, 2001 service had a choice either to defer benefits in the eircom Scheme or to transfer their accrued rights to the Eircell 2000 Scheme.   One of the incidents of deferring in the eircom Scheme was:- "Practice is to revalue benefits up to retirement in line with appropriate pay increases for relevant grade in eircom.

50.              In October, 2002 there was another presentation by a Mercer actuary.   One of the slides identified the main differences for ex-eircom members of the scheme as including that most did not qualify for State pension and that "Pension increases relate to increases in relevant pay grade."  It also highlighted that the contribution required by the ex-eircom members was 6.8% of salary, by contrast with the "co-ordinated members", whose contribution was 6.8% of salary, less twice the value of what was then called the old age pension.  Another slide suggested that the other scheme members could expect "Pension increase at lesser of inflation and 4% p.a."   

51.              The slides used for a presentation by Mercer in November, 2004 identified the same main differences for ex-eircom members.

Public service pensions

52.              The actuary consulted by the trustees in relation to these proceedings was Mr. John O'Connell, who swore a total of four affidavits and provided a report which he revised from time to time as the case progressed.  Among the exhibits to Mr. O'Connell's first affidavit were two chapters from the Final Report of the Commission on Public Service Pensions, which was published on 20^th October, 2023.  

53.              In its overview of public service pension terms in Chapter 3, the Commission identified the main features of such schemes as being that they were final salary defined benefit schemes.  It also noted that most public servants were in a modified class of PRSI in which they paid a lower rate of PRSI than applies to employees generally, and did not qualify for a range of benefits, including pensions.  Table at 3.2 highlighted: "Pension increases  In line with salaries (pay parity)".

54.              At para. 3.3 the Commission set out the historical development of the civil service pension schemes.  Significantly, for present purposes, the Commission reported that in the 1969 budget the Minister for Finance announced a decision in principle to adopt pay parity and that following a number of adjustments in the meantime, provision was made in 1975 for automatic increases in pensions from 1^st July each year in line with increases in salaries in the civil service.  A more detailed account of the history of pension increases in the public service was set out in Appendix 16.1.  At para. 3.3.46 it was noted that as of the date of the report, pension increases were applied in line with, and with effect from, the operative date of any relevant pay increases.  The report addressed separately the pension terms of established civil servants appointed before and after 6^th April, 1995 but the appointment of those who were later to become the VIPP Scheme C members obviously predated those significant changes.  Appendix 3.2 reported that since 1986, civil service pensions had been increased in line with relevant pay increases applicable to serving staff, and that such increases were effective from the same dates as the pay increases.

55.              Chapter 16 of the Commission report fleshed out the Pensions Increase Policy and outlined the issues which had arisen in the development of that policy.  The Committee recalled - as had been set out in Chapter 3 - that in general, increases were in the first instance effected on an administrative basis and later given statutory effect by means of regulations made under the Pensions (Increase) Act, 1964.  It noted that the Act of 1964 did not state how often or in what form pension increases should be made but suggested that any change which might be recommended in future pensions increase policy would need to take account of the reasonable expectations or pensioners, serving employees, and new entrants.

Minutes of the trustee meetings

56.              As it did in the High Court, Vodafone urges that in construing Rule 10, 2005 Deed, significant regard must be had to the minutes of the meetings of the trustees in the two years or so before the deed was made.  Part of Vodafone's argument is that the 2005 Deed was intended to have been a consolidation and that the High Court judge erred in not sufficiently taking that into account in construing the deed.

57.              The minutes of a trustees' meeting on 29^th January, 2004 record that an amendment to the trust deed and rules was requested to provide for the operation of a dispute resolution mechanism and that the trust deed and rules were being amended to accommodate a change in legislation which required that part time staff be permitted to participate in the scheme.  It is also recorded that:- "The trustees considered consolidation of all recent deed amendments into one revised deed.  It was agreed to defer this work to a later date."

58.              The minutes of a meeting on 3^rd November, 2004 record that there was discussion of a deed of amendment which had been drafted to close the defined benefit scheme to new members with effect from 1^st January, 2006, to the intent that all new entrants after that date would be assigned to a defined contribution scheme: which, a man from HR is recorded as having said, was "more appropriate to younger mobile employees."  It was noted that there had been extensive negotiations with the two main trade unions, who had agreed to the closure and - someone said - that "the benefits under the DC plan can actually be significantly more favourable to employees."  At the same time, it was noted that Vodafone had agreed, at the request of the trustees, to allow part-timers who had opted not to join the defined benefit plan one final opportunity to do so before the plan closed.  Finally, under the heading "Deed of Amendment" it was noted that:-

"In response to a Trustee comment that the Deed of Amendment was somewhat unclear in relation to previous amendments, YM [from human resources] advised that the main Trust Deed and all subsequent amendments would be revisited and that one overall comprehensive Deed would be produced."

59.              The minutes of the trustees' meeting of 25^th November, 2004 - under the heading AOB - noted that:-

"In response to a Trustee request it was agreed that the current Trust Deed review would take into account the new Internal Dispute Resolution procedures.  It will now include information on the new appeals procedure now that the references to the Minister no longer apply."

60.              The minutes of the meeting on 4^th May, 2005 noted that:-

"YM [from human resources] confirmed that the consolidated Trust Deed would be available for review at the next trustee meeting and would take into account the new Internal Dispute Resolution procedures."

61.              The minutes of the meeting of 15^th December, 2005 - which, it will be recalled was the day on which the 2005 Deed was executed - record:-

"Consolidated Trust Deed and Rules

Maria O'Connell [Mercer] attended the meeting to present the final version of the consolidated Trust Deed and Rules to the Trustees.  YM [HR] advised that both the Company and the Trustees are satisfied that the necessary amendments have been made to bring the Deed and Rules into line with the Pensions Act and to ensure that all previous Company agreements are accurately reflected in the Deed."

62.              The last document said to be relevant context to the 2005 Deed was a Vodafone internal memorandum dated 18^th March, 2005 which addressed two issues said to have been raised by the trustees for consideration by the company, which were the normal retirement age and the indexation of pensions in payment.  The cohort affected by these issues was the Scheme A members and it is perhaps for that reason that the underlying trustee minutes were not exhibited.  While the issues did not affect the Scheme C members, the manner in which those issues were resolved is, in my view, significant.

63.              This memorandum of 18^th March, 2005 recalled that at the time of establishment of (old) Eircell in 1996 it was decided that Eircell should have a pension scheme separate to that of Telecom Éireann and with different conditions.  A collective agreement made at that time recorded that the Eircell Scheme should have pension and lump sum benefits calculated as per the Telecom Éireann main scheme and "indexation of pension benefits to Consumer Price Index subject to a maximum of 4% per annum.  Increases over this amount would be at the discretion of the Trustees and the Company."  Those terms of the collective agreement - it was said - were not given effect to at the time.  There is a diverting account of the opposition of the Minister for Finance to the incorporation of the agreed terms into the Eircell pension scheme and Eircell's determination that the staff should have the agreed indexation whether the Minister agreed or not.   It will be recalled that the rule adopted in 1998 (with effect from 27^th May, 1996) was that Eircell might grant such increases as might be authorised by the Minister for Public Enterprise with the consent of the Minister for Finance.

64.              In any event, the position as of 18^th March, 2005 was that Vodafone recognised that there was a divergence between the collective agreement, the explanatory booklet and the Mercer presentations, on the one hand, and the trust deed and rules, on the other, in relation to retirement age and indexation.  The memorandum concluded that the position was reasonably clear - that there was a collective agreement for indexation of pensions in payment at CPI capped at 4% and an option to retire at age 60 - and the recommendation was that the scheme rules should be amended accordingly.

65.              The minutes of the trustee meetings are relied on by Vodafone as evidence of a factual background of a common intention to consolidate the 1998 Deed and the various amending deeds which were executed over the intervening years with a view to - or at least in the hope that they might justify - reading down Rule 10, 2005 Deed by reference to the provision in the earlier deeds which would have left any increase in the Scheme C members' pensions in the discretion of Vodafone.  In my firm view - with no disrespect - that reliance is entirely misplaced.  If anything, the documents point the other way.

66.              It is quite true that the 1998 Deed was extensively patched over the years by a number of amending deeds to the point that the trust deeds and rules could have done with a bit of tidying up.  But it is, to my mind, perfectly clear that it was recognised both by the trustees and Vodafone that substantial further amendment was required.  The requirement for an internal dispute resolution procedure applied to the scheme generally, that is, it would apply to all of the members of the scheme.  The requirement for the amendments in relation to retirement age and to provide for the indexation of pensions in payment at the rate of CPI capped at 4% applied only to the Scheme A and Scheme B and not the Scheme C members, but they were substantive amendments.  Moreover, those amendments were required because the rules did not reflect the entitlements of the Scheme A and Scheme B members. 

67.              In my view, the minutes of 29^th January, 2004 show a recognition that a substantive amendment of the rules was required to make provision for internal dispute resolution and a suggestion that - rather than applying another patch to the 1998 Deed - there should be a new deed.  Between then and the adoption of the VIPP on 15^th December, 2005 there was repeated reference in the minutes to a consolidated deed, but it is quite clear from a comparison of the deeds - as well as from the minutes themselves and the memorandum of 18^th March, 2005 - that the 2005 Deed was far more than a mere consolidation.

68.              Vodafone sought to make much of the fact that there was no collective agreement for the change of the entitlements of the Scheme C members, which there was not.  However, the premise of that argument was that what I will refer to as Rule 10, 2001 Deed correctly reflected the entitlement of the Scheme C members; or more correctly, excluded any entitlement of the Scheme C members to any pension increase. 

69.              Vodafone sought to make much of the fact that the entitlement of the Scheme A and Scheme B members to CPI capped increases was based on a collective agreement, which it was.  However, that collective agreement dated back to the establishment of Eircell in 1996 and the new rules in the 2005 Deed were introduced implement what had long before been agreed with the staff.   The 1998 Deed, as amended in the case of what are now the Scheme A and Scheme B members by the deed of 9^th March, 2001, and in the case of the Scheme C members by the deed of 2^nd November, 2001, provided for such increases for all staff as might be agreed by the Company.  The 2005 Deed introduced new rules for both cohorts.  But in the same way that there was no intervening collective agreement for any change in the position of the Scheme C members, neither was there any such intervening collective agreement for any change in the position of the Scheme A and Scheme B members.

70.              I mentioned earlier the pushback from the Department of Finance to (old) Eircell's proposal to write into the 1998 scheme an entitlement to a CPI capped pension increases which it had agreed with the unions.  It is interesting to contemplate what the reaction from that quarter might have been to a proposal at that time that thenceforth the policy in relation to pay parity for civil servants announced in 1969, developed over the immediately following years, and consistently implemented since 1975 should be immediately reversed and that thenceforth civil service pensions should be increased - if at all - as the Minister in the exercise of his absolute discretion might determine.

The revaluation of the VIPP

71.              The VIPP was subject to triennial actuarial valuation.  In each of 2004, 2007 and 2009 the valuations reflected the inclusion of pay parity increases for Scheme C members.  There was a dispute or a discussion between the actuaries as to whether - as the trustees and Mr. Fahy contended - the valuations were evidence that the Scheme C members were entitled to pay parity increases, or whether - as Vodafone contended - merely made provision for the possibility that Vodafone might in the future decide to grant pension increases.

72.              The actuaries, on the one hand, agreed that the interpretation of the 2005 Deed was not a matter for them and, on the other, appear to have engaged in speculation as to the basis on which the revaluations - in which they were not involved - had been made by their colleagues.  They did agree that the actuarial assumptions used in the valuations were not determinative of core pension entitlements, which were to be determined by the trust deed and rules.  The High Court judge does not appear to have dealt expressly with the arguments based on the revaluations, but it is quite clear - and neither party to the appeal contended otherwise - that the revaluations after 2005 were clearly subsequent conduct based on subjective understanding and so inadmissible as an aid to construing Rule 10, 2005 Deed.

73.                   The 2001 and 2004 revaluations, however, were admissible as factual context.  The 2004 revaluation, as I have said, noted that in May, 2002 the VIPP took on liabilities in respect of the accrued pension rights of former eircom employees and that a bulk transfer of €36.7 million had been received from the trustees of the eircom Scheme.

The 2012 Deed

74.              The dispute which eventually gave rise to these proceedings appears to have first arisen in 2009, specifically in the context of the aftermath of global financial crash.  The provision for pay parity increases was very expensive to fund.  Vodafone took the position that pension increases were discretionary.  The trustees disagreed.  Eventually, on 5^th April, 2012, a new trust deed was executed by which the trustees and Vodafone agreed that for Scheme C members:-

(1)          Pension increases for the benefits attributable to pensionable service prior to 15^th December, 2005 would be discretionary, i.e. subject to the consent of Vodafone;

(2)          Pension increases for the benefits attributable to pensionable service between 15^th December, 2005 and 20^th May, 2012 would be guaranteed and would be calculated by reference to the percentage increase of the pensionable remuneration "payable to employees in the employment grade applicable to that Member";

(3)          Pension increases for the benefits attributable to pensionable service after 20^th May, 2012 would be discretionary.

75.              The special indorsement of claim sought the determination of all questions relating to "Scheme C, Rule 10 as amended by the 2005 Deed and Rules, and as amended by the 2012 Deed" including whether the VIPP Scheme C provisions had been validly and effectively amended by the 2012 Deed for all Scheme C members, irrespective of the date on which they left service; but the exclusive focus of the arguments in the High Court was on Rule 10, 2005 Deed.  One of the arguments advanced by Vodafone was that the 2012 Deed created an additional benefit in the form of a guaranteed increase in respect of pensionable service between 15^th December, 2005 and 20^th May, 2012 but that argument was directed to the construction of Rule 10, 2012 Deed and - it seems to me - begged the question as to the effect of Rule 10, 2005 Deed.

76.              As I will come to, this argument resurfaced in the notice of appeal where, at Ground No. 1, it was said that the 2005 Deed provided for discretionary increases and that "accordingly" the 2012 Deed created an additional benefit.  In this ground Vodafone suggests that irrespective of her conclusions in relation to the construction of Rule 10, 2005 Deed, the judge ought to have answered question (iii) in the special indorsement of claim - as to whether the VIPP had been validly and effectively amended by the 2012 Deed - in the affirmative.  In fact the judge did not address this question at all, because it was not argued.

77.              In his first affidavit filed on 8^th May, 2023 Mr. Fahy addressed the 2012 Deed in six paragraphs.  Mr. Magill, in response, deposed that Mr. Fahy's discussion of the legal interpretation of the 2012 Deed was not relevant to the issues under consideration and said that he would make no further comment in respect of same.  I accept the submission of counsel for Mr. Fahy that that exchange took the effect of the 2012 Deed out of the case.

78.              I note for completeness that after the High Court judgment was delivered on 14^th May, 2024 the matter came back into the list on 19^th June, 2024 in respect of final orders and costs.  No submission was then made that the judge had not but ought to have addressed this question. 

79.              I accept the submission of the trustees and Mr. Fahy that the question is not before this Court.

The comparator issue

80.              In 2016 Vodafone changed the basis or comparator for the guaranteed increases under the 2012 Deed from "employment grade applicable to that member" to "Active Scheme C member".  

81.              I pause here to say that one of the issues which the High Court was asked to determine was the question of the appropriate comparator.  The Vodafone remuneration model had moved away from grades to individual performance and local role market benchmarking.  At the same time, the number of active Scheme C members had dwindled. The trial judge found that the appropriate comparator was the average percentage salary increase across general Vodafone staff and there is no appeal against that part of the judgment and order of the High Court.

The High Court judgment

82.              For the reasons given in a comprehensive written judgment delivered on 14^th May, 2024 ([2024] IEHC 280) the High Court (Roberts J.) concluded that the correct interpretation of Rule 10, 2005 Deed was that it provided Scheme C members with a guaranteed entitlement to pension increases on a pay parity basis in line with the percentage increase in the relevant grade for that member.  I will examine the judge's reasoning in detail when addressing the arguments on the appeal, but in very broad terms the judge first identified the only issue before the court as the interpretation of Rule 10, 2005 Deed; took account of the background of the employment history of the Scheme C members; disregarded the actual performance or practice of funding of pension increases after 2005; took account of the use of similar words elsewhere in the 2005 Deed; took account of the entitlements of the Scheme A members - comparing their entitlements with those contended for in respect of the Scheme C members; and took account of the consequences of the construction contended for by Vodafone.

The appeal

83.              By notice of appeal filed on 21^st August, 2024 Vodafone appealed against the judgment and order of the High Court on ten grounds, each with a number of sub-grounds.

84.              The grounds of appeal ran to eight pages but in his oral presentation counsel for Vodafone identified four respects in which the trial judge was said to have erred in her approach to the documents and the background.

85.              First, it was said, the judge failed to properly understand and consider the legislative context.  Second, it was said, she failed to analyse the totality of the relevance evidence of context.  Thirdly, it was said, the judge wrongly excluded admissible and highly relevant evidence.  And fourthly, it was said - to a slightly lesser extent - the judge afforded weight to marginal and sometimes irrelevant context. 

86.              It was accepted that the judge had correctly identified the principles applicable to the interpretation of a contract in general and of a pension scheme in particular, but it was argued that the judge failed to apply those principles properly or appropriately.  The trial judge, it was said, gave primacy and almost exclusive attention to a literal or linguistic approach to the words used.  The judge's reference - acknowledged to have been a passing reference - to a purposive approach was, it was said, replete with errors.

The first ground - erroneous conclusion

87.              The first ground of appeal is that the judge erred in her conclusion that Rule 10, 2005 Deed provided Scheme C members with a guaranteed entitlement to pay parity increases, when the correct interpretation was that it provided for discretionary increases.  With no disrespect, this simply asserts that the judge erred without saying how.  This ground goes on to assert that the 2012 Deed created an additional benefit; but again, the premise of this is simply that the 2005 Deed did not confer the benefit which the judge found that it did.

The second ground - text in context

88.              The second ground is that the judge erred in the application of the text in context approach to contractual interpretation as required by the decision of the Supreme Court in Law Society of Ireland v. Motor Insurers Bureau of Ireland [2023] 1 I.R. 479.  Variously, it is said that the judge failed to conduct a full or proper analysis of the admissible context and its relevance to Rule 10 and that the judge erred in determining the meaning of Rule 10 almost exclusively on the basis of a literal analysis of certain of the words used, which offends against the "text in context" approach.

89.              In oral argument, counsel for Vodafone emphasised the difference in the judgments of the Supreme Court in M.I.B.I. as to the correct approach to be taken in the application of the principles.  The essence of the argument, as I understood it, was that the judge looked first at the text before looking at the context, rather than looking at both together.

90.              Drawing heavily on the analysis in the judgment of McKechnie J. in M.I.B.I. of the dissenting judgment of Clarke J. in that case, counsel submitted that the judge identified Rule 10 as ex facie sufficiently clear to confer the entitlement contended for by the trustees and Mr. Fahy on behalf of the members, and had then moved to consider whether there was in any other relevant clauses, the agreement as a whole, the legislative background, or the other external circumstances any one or more factors which were of sufficient weight to compel a derogation from what was seen as the plain, obvious and most plausible meaning.  That, he submitted, was not the correct approach.  Rather, the correct approach was that set out in the majority judgment of O'Donnell J. (as he then was), the essence of which was described by McKechnie J. at para. 90 as being:-

"... a single exercise taking into account such factual matrix, in the broader sense, as may be relevant. Therefore, it is not a case of first interpreting the wording of the agreement alone and only then considering the background if there should be any uncertainty as to its meaning.  As stated again in Rainy Sky SA v. Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, the 'unitary exercise' set out means that from the outset the court considers both the language used and the context in which it is used."

91.              As to whether the trial judge erred in the approach she took, it must first be stated that the judge (at para. 91) identified M.I.B.I. as the leading authority on contractual interpretation which sets out the "text in context" approach, and the explanation of that approach in the judgment of O'Donnell J. in which he said (at para. 7) that the meaning of the relevant provisions of an agreement should "be determined from a consideration of the agreement as a whole" and "not an interpretation in which some aspects win out over others" and continued:-

"Rather it is a case of providing an interpretation of the agreement as a whole, which not only relies on those features supportive of the interpretation, but also most plausibly interprets the entire agreement and in particular those provisions which appear to point to a contrary conclusion. Even if the majority of factors appeared to tend broadly to one side of the argument, that interpretation cannot be accepted if it is wholly and fundamentally irreconcilable with some essential features. ... It is important therefore to test any interpretation of a clause against the understanding of the agreement to be gleaned from what is said, and sometimes not said, elsewhere in the agreement."

92.              At para. 92 of her judgment, Roberts J. cited para. 13 of the judgment of O'Donnell J. in M.I.B.I. where he said:-

"... It is not merely therefore a question of analysing the words used, but rather it is the function of the court to try and understand from all the available information, including the words used, what it is that the parties agreed, or what it is a reasonable person would consider they had agreed.  In that regard, the court must consider not just the words used, but also the specific context, the broader context, the background law, any prior agreements, the other terms of this Agreement, other provisions drafted at the same time and forming part of the same transaction, and what might be described as the logic, commercial or otherwise, of the agreement. ..." 

93.              Thus, it can clearly be seen - and in fairness to Vodafone, it was not contested - that the trial judge correctly identified that she was required to adopt a "text in context" approach.  The criticism is that - having identified the correct approach - the judge failed to follow it.

94.                   The rather vague suggestion at ground 2(i) that the judge erred in failing to conduct a full or proper analysis of the admissible context and its relevance to Rule 10, 2005 Deed was restated at ground 2(iii) as an argument that the judge erred in failing to have any or any proper regard to (and/or disregarding) significant context and/or evidence of such context in six particular respects.

95.              It was first said that the judge failed to have any or any sufficient regard to and/or disregarded the 2001 Deed and relevant background documentation, including the Terms and Conditions Agreement of 5^th March, 2001.  Grounds of appeal, like pleadings, often follow a formula and the grounds in this case are no exception.  That said, it seems to me that there was no justifiable basis for the suggestion that the trial judge either failed to have regard to, or disregarded, either the 2001 Deed or the Terms and Conditions Agreement.  Both were identified in that section of the judgment which dealt with the "Background to the VIPP and Scheme C" and the substance of them was set out: in the case of the 2001 Deed in that section, and in the case of the Terms and Conditions Agreement at paras. 49 and 50, under the heading "The evidence adduced by the parties."  Both were referred to in the judge's summary of "The varying interpretations suggested in respect of Rule 10, 2005 Deed", where the judge set out the significance which Vodafone urged should be given to the difference between the entitlements of the Scheme C members under the 2001 Deed and the 2005 Deed and the significance which the trustees and Mr. Fahy urged should be attached to the assurances given to the staff at the time of their proposed transfer to Vodafone in 2001.  The judge's conclusion (at para. 137) that Rule 10, 2005 Deed contained substantive changes can only be understood as a reference to the difference in language between Rule 10, 2005 Deed and Rule 10, 2001 Deed.  The judge had previously identified the general employment history of the Scheme C members - which obviously included the change in employment in 2001 in which the Terms and Conditions Agreement was central - as part of the relevant context in which Rule 10, 2005 Deed was to be construed.

96.              Ground 2 (iii) goes on to suggest that the judge erred in failing to have any or any proper regard to the explanatory booklet for the Scheme C members; the minutes of the trustee meetings and the 18^th March, 2005 memorandum; the 2011 minutes of the trustee meetings; the stated position of the trustees' solicitors in correspondence in 2018 and 2019 with the Financial Services and Pensions Ombudsman in response to a complaint by Mr. Fahy; and the fact that there was no contemporaneous evidence demonstrating any intention to provide guaranteed increases for Scheme C members, or demonstrating a collective bargaining agreement to that effect.

97.              At para. 41 of the High Court judgment, the judge noted that the evidence was very extensive.  She assured the parties and the reader that she had considered all of the evidence in full but would refer only to the key points.  Among what the judge identified as the key points were the trustee minutes and the 18^th March, 2005 memorandum.  At para. 137, the judge identified the absence of contemporaneous evidence as to the circumstances in which the wording of Rule 10 changed in the 2005 Deed as one of the extraordinary features of the case.  There was no collective bargaining agreement expressly to the effect that the Scheme C members were to have pay parity pension increases but there was a collective bargaining agreement in the Terms and Conditions Agreement to which Vodafone Group plc subscribed on 5^th March, 2001 that the ex-eircom staff would in the future have pensions which were no less favourable that those which they theretofore had.  The focus of the judge's analysis at paras. 120 to 139 on the change in the wording of Rule 10, 2005 Deed reflected Vodafone's core argument that there was no reason why the new rule should be construed as meaning anything different to the previous rules.

98.              I have already addressed the arguments made in  relation to the trustee minutes and the 18^th March, 2005 memorandum.  While it is true that these documents did not feature in the judge's analysis, it is quite clear that she did not accept the proposition in support of which Vodafone relied on them, namely, that the 2005 Deed was simply a consolidating deed: which it plainly was not.

99.              The correspondence between the trustees' solicitors and the Financial Services and Pensions Ombudsman ("FSPO") to which it was said the judge failed to have any or any sufficient regard is a letter of 19^th June, 2019 which was written in response to a letter from the FSPO of 23^rd May, 2019 in the context of a complaint made to that office by Mr. Fahy.  This letter more or less repeated the position previously taken by Vodafone in a letter of 8^th August to Mr. Fahy.

100.          Mr. Fahy's complaint, in a nutshell, was that the transfer value which he had been offered for his accrued rights did not take account of an entitlement to pay parity increases.  The trustees rejected Mr. Fahy's complaint on the ground that he was not entitled to pay parity.  Vodafone now contends that there was evidence to be found in the trustees' correspondence in 2019 of the factual context in which the 205 Deed was made which the High Court ought to have taken into account.

101.          In a long letter - running to eight pages - Vodafone identifies a number of assertions which are said to be - and which indeed are - at variance with the trustees' present position.  The trustees' position in 2019 was that from the time of establishment of the scheme any increase in pensions in payment for Scheme A and Scheme B members was discretionary and subject to the consent of the Company; that the rules which established Scheme C were the same; that the 2005 deed was a consolidating deed; and that at the time of the 2005 Deed there had been no proposal or discussions or negotiations to change the members' entitlement.  These are all relied on as statements of fact relevant to the context in which the 2005 Deed was executed.  Vodafone emphasised that in responding to a request from the FSPO, the trustees were bound by s. 59 of the Financial Services and Pensions Ombudsman Act, 2017 not to obstruct the work of the FSPO.  Counsel said he "was not relying on [the letter] to try to fix the trustees with a characterisation of what the 2005 Deed did or didn't do [but] for the purpose of the facts it discloses."    

102.          In reading in for the appeal and at the oral hearing I could not understand the significance which Vodafone sought to attach to this letter.  On consideration, I still do not.  Insofar as the letter says what the various deeds provided, it is correct and neither adds to nor takes from what can be seen from the deeds themselves.  It is common case that in the time immediately before the execution of the 2005 Deed there were no discussions or negotiations in relation to the entitlements of the Scheme C members; and it is common case that no legal advice was taken as to the potential consequences of the change. 

103.          As to whether the 2005 Deed was a consolidating deed, all that is said in the letter is that it was proposed that a consolidating deed would be prepared - which it was.  Even if the letter had gone as far as suggesting that the 2005 Deed was a consolidating deed, that would have been a matter of opinion.  Anything that might have been said about the intention of trustees would have been inadmissible as going to subjective intent; and anything that might have been said or conveyed as to the trustees' understanding of the effect of the 2005 Deed would have been inadmissible as going to later subjective understanding.

104.          I have to say that I am uncertain what to make of Vodafone's reference to s. 59 of the Act of 2017.  The proposition appears to be that the legislative context in which the FSPO's questions were asked and answered somehow makes the answers given by the solicitors to the FSPO more reliable than the submissions of counsel - on the instructions of the same firm of solicitors - to the Court.  If that is what is behind the reference to s. 59, I do not accept that it is correct.

105.          It is the fact that the position later taken by the trustees as to the effect of the 2005 Deed was directly contrary to the position taken in the correspondence with the FSPO.   That goes to show that one or other position is wrong, but not which.

106.          The same applies to the earlier response to the complaint under the internal dispute resolution procedure provided for by the VIPP to the effect that the practice of granting increases over many years did not go to whether the increases were discretionary or guaranteed.

107.               I find it impossible to separate the fact of the trustees' position from the reasons for which they took that position.  The determination records the transfer of the eircom employees to Vodafone and summarised the arrangements made for the transfer of their pension entitlements.  To the extent that it sets out facts, those facts can and have been otherwise objectively established.  The fact is that the trustees initially took the view that Mr. Fahy was not entitled to the transfer value for which he contended and now take a contrary view.  It follows that on one or other occasion they were wrong, but I do not see that any of the facts relied on on either occasion goes to show that the conclusion on the other occasion was wrong.   It seems to me that in truth Vodafone's reliance on this material is directed to fixing the trustees with their earlier assessment of the effect of the trust deed and rules.  In Edington v. Fitzmaurice (1885) 29 Ch D 459 Bowen L.J. observed that the state of a man's mind is as much a fact as the state of his digestion.  But if the trustees' belief or understanding in 2018 was a matter of fact, evidence of it is not admissible as providing context in which the deed is to be construed.

108.          This also disposes of Ground 4, which is that the judge erred in failing to recognise that the trustees' case as to the meaning of Rule 10, 2005 Deed was significantly undermined by conflicting correspondence and minutes which reflected that they at all times believed and understood that Rule 10, 2005 Deed provided for discretionary increases. 

Purposive perspective

109.               The next ground of appeal - Ground No. 2(iv) - was that the judge erred in approaching the construction of Rule 10, 2005 Deed "from a purposive perspective".  This is based on a single paragraph of the judgment, para. 134, and is said to fail to meet the "text in context" requirement.

110.               What was said at para. 134 was that the construction contended for by Vodafone –  that the Scheme C members were entitled to nothing - would in fact leave the Scheme C members worse off than the Scheme A and Scheme B members - who were entitled to CPI capped.  That cannot be gainsaid.  Such an outcome - said the judge - would appear to fly in the face of the legislative provisions which were introduced for the very purpose of recognising the need to protect the Scheme C members' valuable pension status as former civil servants.  That, it seems to me, cannot be gainsaid either.  These observations - which were made well into the judge's analysis - do not betray a departure from the "text in context" approach.

111.               To what the judge said, I would add that the construction of Rule 10, 2005 Deed contended for by Vodafone would have meant that so much of the bulk transfer of €36.7 million to the VIPP as took account of the Scheme C members' right or expectation of pay parity increases would have been available to fund the entitlement of the Scheme A and Scheme B members to CPI capped increases.

112.               The judge's consideration of the practical consequences of the construction contended for by Vodafone was not based on a purposive construction of the clause.

The difference in language between Rule 10, 2001 Deed to Rule 10, 2005 Deed

113.               The next ground - Ground 2(v) - suggests that the judge erred in interpreting Rule 10, 2005 Deed as a significant substantive change from the content of the 2001 Deed.  It is said, first, that the judge found that there was a lack of contemporaneous information regarding the circumstances in which the wording of Rule 10 was changed - which she did - secondly, that there was no evidence of synallagmatic context supporting that interpretation, and thirdly, that the judge failed to have any or any proper regard for the established principles on the interpretation of pension deeds and the long-term duration of those contracts.

114.          It seems to me that Vodafone's insistence that there was no synallagmatic context focusses exclusively on the period between the 2001 and 2005 Deeds.  No less, the argument fails to engage with the ratio of the judgment under appeal which was that the legislative and factual background to the 2005 Deed - which was synallagmatic context - was that the Scheme C members had been repeatedly promised that their pensions would be on no less favourable terms than they were entitled to as civil servants.  Much of Vodafone's argument was directed to the letter of first the Telecom Éireann Main Superannuation Scheme and later the eircom Scheme which provided that increases would be in the discretion of first the Minister and later the Company.  If the Scheme C members' hopes and prospects of increases which they had left behind were discretionary - so the argument went - they were no worse off in the VIPP, in which their prospects were limited to a hope that Vodafone - if it sufficiently funded the VIPP to be in a position to do so - would exercise its discretion in favour of increases.  But as the judge pointed out, the legislative and industrial relations guarantees which the Scheme C members had were not of parity with their erstwhile colleagues in eircom, or their colleagues before that in the civil service, but of "no less favourable" terms.   

115.          In the High Court, the case made on behalf of the trustees and Mr. Fahy was that civil servants - and their successor positions - were entitled to pension increases on a pay parity basis, and the case made on behalf of Vodafone was that they were not.   The judge decided that it was not necessary to determine that issue because there was no need for Rule 10, 2005 Deed to provide for the same or identical pension increases as the eircom Scheme, merely that the pensions of the Scheme C members would increase in "no less favourable" a manner.  There was no issue that the construction of Rule 10, 2005 Deed for which the trustees and Mr. Fahy contended would have resulted in an increase in any less favourable a manner than they were entitled to under the eircom Scheme.

116.          Ground 2(vi) suggested that the judge erred in failing to have any or any proper regard to the established principles on the interpretation of pension deeds and the long-term duration of such contracts but this was not developed, either in the written submissions or oral argument.  In the section of her judgment where she set out "The Law applying to contractual interpretation", the judge referred to the approach to the interpretation of pension deeds set out in the judgment of Kelly J. in Irish Pensions Trust Ltd. v Central Remedial Clinic [2006] 2 IR 126; of Charleton J. in Greene v. Coady [2015] 1 I.R. 385, and of Finlay Geoghegan J. in Boliden v. Cosgrove [2007] IEHC 60.  Beyond the bare assertion in the notice of appeal, there was no submission as to why it might have been thought that the judge erred in the application of the principles.

Evidence of the understanding of the parties

117.          Ground No. 3 suggests that the High Court judge erred in holding that the admissible context did not include, or in excluding from the admissible context, "evidence of the understanding of the parties as to the basis on which pension increases were to be determined in respect of the Scheme C members prior to the amendment of [Rule 10, 2005 Deed]." 

118.          The sub-grounds identify the trustees' correspondence with the FSOP, which is said to have demonstrated an unequivocal understanding on both sides that Rule 10, 2001 Deed conferred an unfettered discretion on Vodafone in respect of increases.  As a matter of fact the judge clearly recognised the substantive change in the language of Rule 10, 2005 Deed but she did so by a juxtaposition of the deeds and not what may have been the common understanding.  In that, in my view, the judge as perfectly correct.  Evidence of subjective understanding is not admissible as an aid to construction, and this applies no less to a shared understanding as to different understandings.

119.          Ground 3(iii) suggests that the judge erred in excluding from the admissible context the evidence of Mr. Fahy - who was at the time a director of Vodafone and who was a signatory to the 2005 Deed - that Rule 10, 2005 Deed was introduced to reflect the de facto operation of the fund and valuation assumptions; and his view that the issue was complex.  If what is behind this is that Mr. Fahy recognised at the time that one of the valuation assumptions for Scheme C provided for pay parity increases and that as of 2005 the scheme had been funded by reference to that assumption, that was common case.  However, if what is behind this is that the judge should have drawn an inference from Mr. Fahy's evidence of his belief as to what the entitlements of the Scheme C members were, that was a matter of subjective intention or subjective understanding and so was inadmissible.

120.          As to Mr. Fahy's view that the issue was complex, Mr. Fahy is a telecommunications engineer and I am not sure that he was strictly speaking competent to express any view on the complexity or otherwise of the issue.   But the four banker's boxes, seven days in the High Court, and two days in this Court all rather tend to show that he was correct.

121.          Vodafone in its written submissions contends that the High Court judge did not advert to the minutes of a trustee meeting of 14^th January, 2011 which was said to have been the only evidence relevant to the purpose of the amendment of Rule 10, 2005 Deed.  These minutes recorded that Mr. Eamonn Farrell then recalled that he had been a trustee "when the Consolidation of the Trust Deed took place. ... He confirmed his understanding was that the wording was agreed to reflect the 'de facto' operation of the fund and to reflect the valuation assumptions that had been used in the transfer of funds from eircom to Vodafone ... Also, that there was no change to the assumed benefit for any member, nor a change in the actuarial valuation of the fund."  It seems to me that there is no inconsistency between Mr. Farrell's recollection as recorded in the minutes and the position taken by the trustees in this litigation.  More to the point, the minute is an ex post facto record of Mr. Farrell's subjective understanding.

122.          Vodafone's oral submissions touched upon what was referred to as the Chartbrook principle but the grounds of appeal did not suggest that the judge had erred in failing to apply it.  At para. 98 of her judgment, the judge - citing the Dublin Port Company v. Automation Transport Ltd. [2019] IEHC 499, where McDonald J. followed the approach taken by Lord Hoffmann in Chartbrook Ltd. v. Persimmon Homes Ltd. [2009] 1 AC 1101 - noted that:-

"98.  A court can as a matter of construction construe the contract as if it had been corrected for an obvious mistake ' ... in any case where the court, having regard to the relevant factual background, can come to a clear conclusion that (a) the parties to a contractual document have failed to express themselves correctly such that there are obvious mistakes in the document and (b) it is equally obvious how those mistakes should be corrected.'

123.               At para. 138, the judge found that the Chartbrook principle could not be invoked in this case because even if there was an obvious mistake in Rule 10, 2005 Deed - which she did not believe to be the case - it was not at all obvious how this could be corrected.

124.     With the caveat that the point was not covered by the grounds of appeal and that the point, although touched upon in argument was not developed, it seems to me that the judge was clearly correct in her conclusion.  If it is not impossible in theory, it must be enormously difficult in practice for a party to argue for the correction by interpretation of an "obvious" mistake without firstly acknowledging that a mistake has been made and then demonstrating with precision what the alleged mistake is said to be.  In this case the arguments on both sides were directed to the correct interpretation of Rule 10, of the 2005 Deed in light of the factual background.  Once that issue had been resolved in favour of the trustees and Mr. Fahy, any argument that it should be construed otherwise necessarily fell away.

Practice versus entitlement

125.          Ground No. 5 goes to the heart of the High Court judgment.  It suggests that the judge erred in holding (at para. 128) that she did not have to determine the issue of the difference between practice and entitlement under a pension scheme, and in particular under the eircom pension scheme.   In sub-ground (i) it is suggested that the core legal issue was whether civil servants had a legal entitlement to pay parity increases and, whether, if there was such an entitlement, it transferred across to the eircom Scheme, and then to the VIPP.   In sub-grounds (ii) and (iii) it is said that the judge erred in failing to determine the practice versus entitlement issue in circumstances where she had held that the relevant context included "the general employment history of Scheme C members moving from P&T (civil service) to Vodafone (private sector)" and - according to the notice of appeal - that "discretionary increases would 'appear to fly in the face' of the legislation protecting Scheme C members' 'valuable pension status as former civil servants'".  

126.          I have touched on this at para. 110.  This, as I emphasised at the outset, was a construction summons.  Vodafone sought the direction and determination of the High Court as to the proper interpretation of Scheme C, Rule 10, 2005 Deed and specifically asked whether, properly construed, Scheme C, Rule 10, 2005 Deed did or did not provide for "guaranteed" pension increases.  The evidence and arguments ranged far and wide and threw up a variety of issues as to misrepresentation, estoppel and legitimate expectation.  The High Court judge acknowledged the difference between practice and legal entitlement.  It is true - and the judge noted - that a significant amount of evidence was introduced on both sides to support the parties' arguments as to whether civil servants had an entitlement to pay parity pension increases and the impact of replacing Ministerial consent with Company consent.  There was also a good deal of evidence and argument directed to the entitlement of the Scheme C members' erstwhile eircom colleagues.  But the only issue before the High Court the correct construction of Rule 10, 2005 Deed. 

127.          I think that it is fair to say that a large part of the case made by the trustees and Mr. Fahy was that the Scheme C members should have the same pensions as civil servants - specifically, pre-1995 civil servants - in fact have.  The focus of Vodafone's case was on the letter of the law - ultimately by reference to the Pensions (Increase) Act, 1964 and the Ministerial discretion which could be traced back to the Telecom Éireann Main Superannuation Scheme, 1984.  The legislative and factual background was important but only as background.  The judge decided the case by reference to the legal entitlement of the Scheme C members under the VIPP.  I think that I can safely say that it would have caused consternation if, along the way, the High Court had pronounced on the rights of employees who were not - and whose employers were not - before the court.   

128.          While Vodafone contends that the judge erred in finding that she did not have to determine the issue of the difference between practice and entitlement, it does not engage with the judge's reasoning for that finding.  The legislative and industrial relations context in which the High Court was asked to construe Rule 10, 2005 Deed was that the pensions of the Scheme C members were to be "no less favourable"  than those which they had left behind, first in the Department of Posts and Telegraphs, and later in eircom.  In the real world, it is difficult to imagine a more favourable pension scheme than that in fact enjoyed by pre-1995 civil servants but there is no reason in principle why a scheme might not provide for - say - a pension based on two thirds salary.  In this case, the trustees and Mr. Fahy did not make the case that the construction of Rule 10, 2005 Deed for which they were contending would have provided less favourable pension terms than they otherwise would have been entitled to.  If Vodafone was correct in the construction for which it contended, the Scheme C members would not have been entitled to any increase at all.  As the judge found, a scheme which confers an entitlement to any increase is necessarily more favourable - and so, not "not less favourable" - than a scheme under which the members have no entitlement.

129.          The core issue to be determined was not - as Vodafone submits - the legal entitlement of civil servants or eircom employees to pay parity but the legal entitlement of the Scheme C members under the scheme to increases on that basis.  The fact that the judge identified the employment history of the Scheme C members as part of the relevant context did not give rise to a requirement that she should determine their previous pension entitlements.   Ground No. 5(iii) does not encapsulate the judge's finding at para. 134.  What the judge was doing there was comparing the outcome of Vodafone's argument for Scheme C members - who would have no entitlement to any increase - by comparison with the Scheme A and Scheme B members who were entitled to CPI capped increases.  On Vodafone's case, provision for a discretionary increase gave rise to no right.

Will increase ...

130.          Ground No. 6 focuses on the words "will increase" in Rule 10, 2005 Deed.

131.          It is said that the judge erred in placing undue emphasis on the term "will increase" and the lack of any reference to Vodafone discretion or consent.  But it seems to me that these are two sides of the same coin.  If the pensions were going to increase automatically, as a matter of right, there was no room for discretion or consent.  I agree with the reasoning of the judge at para. 136 that the construction contended for by Vodafone would entail reading into Rule 10, 2005 Deed the words "if such increases are granted" which are simply not there.  It is said that the phrase "will increase" is ambiguous as to whether the increases were to be discretionary or guaranteed.  I cannot agree.  "Will" means will.  I do not believe that the judge's observation that the clause was not drafted in a straightforward way can change the plain meaning of the words used.  Nor do I understand the judge's observation that there was scope for ambiguity as a finding that it was ambiguous.  Even if there was ambiguity, the resolution of any ambiguity would not have been inconsistent with its existence.

132.          Ground No. 7 suggests that the judge erred in the conclusions she came to based on a comparison of Rule 10, 2005 Deed, Scheme C and the wording of Scheme A and Scheme B.  In para. 130 the judge set out the wording of Rule 10 of Scheme A - "Pensions under this Scheme A will increase etc." and noted that identical provision was made for increases for Scheme B.  She noted that it was agreed that the 2005 Deed provided for guaranteed increases for Scheme A and Scheme B, with any greater increase being at the discretion of Vodafone and the trustees.  In para. 133, the judge compared the wording.  There was, she said, no provision in Rule 10, 2005 Deed for discretionary increases and that she could not see how it could credibly be argued that the words "will increase" could give rise to a guaranteed increase for the Scheme A and Scheme B members, but not for Scheme C members: where in fact that phrase was used twice.

133.          Ground No. 7 (i) suggests that the judge failed to have regard to the entirely different history and context of the wording for the Scheme A and Scheme B increases, which, it is said, were guaranteed increases arising out of collective bargaining agreements.  It is true that the indexation of the Scheme A and Scheme B increases were the subject and outcome of negotiated collective bargaining agreements, but so was the entitlement of the Scheme C members to pensions that were "no less favourable".

134.          Ground No. 7(ii) suggests that the approach taken in para. 133 was contradictory.  First, it is said, the wording of Rule 10, 2005 Deed was described by the judge as being "in very different terms" and that the fact that the 2005 Deed called out discretionary increases above CPI capped for the Scheme A and Scheme B members was found to be relevant to the interpretation of Rule 10, 2005 Deed.  However, it is said, the judge then took the provisions as directly comparable by giving the phrase "will increase" the same meaning.  This, it is said, completely ignores the fact that the source of the guaranteed increases for Scheme A and Scheme B was a collective agreement.

135.          This submission, in my view, would escalate the 1996 collective agreement from factual background to the source of the right to an increase.  If it had come to it, the 1996 collective agreement may or may not have provided sufficient context for an interpretation of the previous Scheme A and Scheme B rules which would have conferred a right to an increase.   If it would not have justified what in effect would have amounted to a reading up of the relevant rules, it would surely have been a solid basis for a claim against Vodafone for a declaratory order and an order requiring the agreed provision to be put in place.  However, what happened was that the view was taken - as recorded in the internal Vodafone memorandum of 18^th March, 2005 - that the former rule did not reflect the agreed pension terms and the Scheme A and Scheme B rules were amended or corrected so that they would do so.  The new rules were absolutely clear and no recourse was necessary to the factual background to determine their effect.

136.          The report of the Irish Telecommunications Board Joint Conciliation Council of 13^th January, 1997 (to which I referred at para. 35) of the discussions in 1996 between management and the unions of the pay and conditions of the staff who it was proposed would work in the then new Eircell Limited recorded that the management said had stated that "... seconded staff would continue to hold Telecom Éireann pay and conditions" and that "... the proposed pension arrangements, which it was intended would apply generally to externally recruited staff in Eircell, were favourable by comparison to competitive standards."  Recognising that I may be on somewhat thin ice in saying so, it seems to me to be significant that the negotiation of a guaranteed pension increases for the directly recruited staff - only - sits uneasily with the proposition that the seconded staff had no such entitlement.

137.          Ground No. 8 revisits para. 134 of the judgment, this time focussing on the comparison between the Scheme C members and the Scheme A and Scheme B members.  Vodafone argues that the judge erred in holding that discretionary increases would leave the Scheme C members "worse off than Scheme A and B members" and that such an outcome "would appear to fly in the face of the legislative protections which were introduced for the very purpose of recognising the need to protect the Scheme C members' valuable pension status as former civil servants."  This conclusion is said to have ignored the fact that the 2001 Deed provided for discretionary increases; to have been unsupported by any finding as to what the "Scheme C members' valuable pension status as former civil servants" actually meant; and failed to take account of the fact that pension increases under the eircom Scheme were discretionary.

138.          There is overlap between this ground and Ground No. 5, which I have already addressed.

139.          The issue before the High Court was the correct construction of Rule 10, 2005 Deed.  Rule 10, 2001 Deed was part of the background but the obvious change in the wording pointed to a different meaning.  Again, the premise of Vodafone's reliance on Rule 10, 2001 Deed is that the Scheme C members' prospects of pension increases were correctly reflected in the 2001 rule and not in Rule 10, 2005 Deed. 

140.          There is no suggestion that the judge was wrong in her conclusion that if the pension increases were discretionary, the Scheme C members were entitled to nothing.  It was accepted by Vodafone not only that as a matter of construction of the 2005 Deed the Scheme A and Scheme B members were entitled to CPI capped increases, but that the 2001 rules did not reflect the terms to which those members were entitled under the 1996 collective agreement.  Part of the factual context was that the new Scheme C Rule 10 was introduced at the same time as the rules were changed to correctly implement the entitlements of the Scheme A and Scheme B members.  The rules were changed for the Scheme A and Scheme B members because they were wrong.  There was a paucity of evidence as to why the wording of Scheme C Rule 10 was changed, but if Rule 10, 2001 Deed was right, why change it?  The proposition that the increases or under the eircom Scheme were in the absolute discretion of eircom calls for the construction of the eircom Scheme: which the High Court was not asked to do and could not do.  For the reasons already given, I agree with the judge that a scheme which conferred an entitlement to any increase was necessarily more favourable - and so, not "not less favourable" - than a scheme under which the members had no entitlement.

141.          Ground No. 9 suggests that the judge erred in holding that Vodafone's argument that any increases were entirely discretionary did not sit comfortably with the second half of Rule 10, 2005 Deed which stated that pensions would increase: "in line with the percentage increase in the relevant grade for that Member."  The judge's interpretation - it is said - renders the reference to the eircom Scheme otiose or redundant.

142.          I cannot agree.  Vodafone's position was that any increases were at its discretion.  Absent any criteria by reference to which that discretion was to be exercised - the existence of which might have founded a right on the part of the Scheme C members that the discretion should be exercised by reference to such criteria - the discretion contended for was an absolute discretion.  The argument at this point airbrushes out the stipulation that pensions will increase in line with the percentage increase in the relevant grade but the point the judge was making was that a provision which allowed Vodafone to grant either a pay parity increase or no increase at all "did not sit comfortably" with an absolute discretion.  That, in my view, was perfectly correct.

143.          I pause here to say that neither side addressed the significance - if any - of the stipulation in s. 46(5) of the Act of 1983 that the pension conditions should be not less favourable than would apply if the benefits had continued to be paid out of moneys provided by the Oireachtas.  The dispute which has given rise to these proceedings had its origins in the expense which Vodafone faced in continuing to fund the VIPP on the same basis as it had theretofore been funded.  It seems to me that - had it come to it - the legislative fiction that the wherewithal would be available from money provided by Oireachtas Éireann might have been a significant factor in assessing nature of any discretion on the part of Vodafone following the substitution of the private companies for the Ministers.

144.          The inclusion in Rule 10, 2005 Deed of the reference to the eircom Scheme was a bit of a puzzle.  The judge recognised this at para. 122 and engaged with it.  She found that the only way in which that reference made sense was against the background of the employment history of the Scheme C members who had transferred from the eircom Scheme to the VIPP scheme and to see the "no less favourable" language as reflecting the statutory right first provided for in s. 46 of the Act of 1983.  On this point, Vodafone's argument is not without substance.  The judge was quite correct in identifying the origin of the "no less favourable manner" in the Act of 1983.  However, I am inclined to the view - as Vodafone submits - that the reference in Rule 10, 2005 Deed to the eircom Scheme may very well have been a throwback to the Terms and Conditions Agreement and to the rights of the Scheme C members under that agreement rather than the eircom pension scheme but I do not think that anything turns on that.  At paras. 123 to 128 the judge carefully set out Vodafone's argument in relation to what the entitlement of the Scheme C members would have been had they remained in the eircom Scheme.  If the judge had accepted that argument, there would have been an inconsistency in Rule 10 between a derived prospect of discretionary increases and an unambiguous provision for pay parity increases.  But the judge found that she did not need to go there and, in my view, she was correct in that approach.

145.          Ground No. 9(ii) of the grounds of appeal suggests that:-

"(ii)  The correct interpretation of Rule, 10, 2005 Deed is that if pension increases are granted by Vodafone, then Vodafone has a further discretion as to the amount of any increase 'in line with the percentage increase in the relevant grade for that Member'". [emphasis original]

146.          Leaving to one side the difficulty that this interpretation appears to contemplate discretionary increases not exceeding pay parity, rather than in line with pay parity, it is, on its face, based on the introduction of a word - "if"- which is not to be found in the rule.

147.          The net result of the judge's analysis was to give effect to the clear words of Rule 10, 2005 Deed that pensions "will increase in line with the percentage increase in the relevant grade for that member".

A consolidating deed

148.               Ground No. 10 suggests that the judge erred in holding that Rule 10, 2005 Deed contained substantive changes in language which could not be explained merely by consolidation.  The sub-grounds hark back to the minutes of the trustee meetings and the memorandum of 18^th March, 2005, which I have already addressed.  Sub-ground (iii) points to the substantive changes which had been identified before the 2005 Deed was drafted and executed, including the requirement to provide for an internal dispute resolution procedure and the need to implement the collective agreement for the Scheme A and Scheme B members which had been negotiated "as far back as 1997/1998": all of which, in my view, go to show that the 2005 Deed was not a consolidating deed.  The judge noted, and took into account, the absence of any contemporary evidence as to the circumstances in which the wording of Rule 10, 2005 Deed came to be changed and concluded that it could not be explained merely by consolidation.  I entirely agree.  The judge noted the significant difference between Rule 10, 2001 Deed and Rule 10, 2005 Deed and the absence of any stated reason for the change.  However, it simply did not follow from the absence of such evidence that there was no such intention.  To my mind, Vodafone's persistent reference to Rule 10, 2001 Deed underlines rather than explains the difference in Rule 10, 2005 Deed.  The High Court was entitled to take into account any admissible evidence of factual background but the trustees and Mr. Fahy were not obliged to vouch the construction for which they contended by reference to contemporaneous evidence.

149.               It is now said that the judge's finding in relation to the 2005 Deed was equivocal and that it is unclear whether the judge "agreed that an exercise in consolidation had occurred."  It seems to me that the argument that the 2005 Deed involved "an exercise in consolidation" is not really the argument made in the High Court and rejected by the judge.  The substance of the argument made was that the 2005 Deed was merely a consolidating deed.  To the extent that it drew together the patchwork of the 1998 Deed it was "an exercise in consolidation".  But there were in the 2005 Deed generally, and in Rule 10 in particular - as the judge put it - "substantive changes in language that could not be explained merely by consolidation."

Some further arguments

150.               Vodafone's written submissions identified a number of documents which were not specifically considered and analysed by the judge.  However, this does not really go anywhere.  The judge set out to identify the key documents and in my view she successfully did so.  It was not necessary that the judge should have embarked on a line by line analysis of 1,230 pages of exhibits in three folders.  I have earlier identified and quoted from a number of the documents which Vodafone contends should have been analysed by the High Court judge.  They do not advance Vodafone's case.

151.               Vodafone in its written submissions recalled that in the High Court it had opened extensive authority highlighting the clear difference between contractual conditions and practices, and the difficulty that arises in arguing that practices, representations or simplified statements in booklets can give rise to enforceable legal obligations.  None of these authorities, it is said, were addressed by the trial judge.  It is correct that the judge did not refer to these cases.  She did not need to.  She spelled out at the start of her judgement that the proceedings were a construction summons and were not concerned with legitimate expectation.

152.               In section 3 of the judgment under appeal the trial judge summarised the background to the VIPP and Scheme C and in section 4 the background to the dispute.  In section 5 she identified the main points which emerged from the extensive exchange of affidavits and the cross-examination of the experts and in section 6 the relevant principles of law.  Before turning to the competing arguments as to the construction of Rule 10, 2005 Deed, the judge took stock of what she was required to do.  At para. 99 she said:-

"99.  I am satisfied that in seeking to interpret the 2005 Deed I must have regard to the nature and circumstances of it. As a pension deed it is a formal legal document prepared and drafted by specialists (even if not drafted by lawyers as the evidence here appears to indicate). It was designed to operate in the longer term, defining member's rights into the future and in circumstances which might change over time. There is no evidence it was a document drafted under obvious time pressures. I must consider the plain meaning of the words used in the 2005 Deed (not just in Rule 10 itself) but recognise that this is not an isolated exercise of interpreting those words removed from all context.  In my view, the relevant context in this case (which would have been known to all parties at the time) includes the general employment history of Scheme C members moving from P&T (civil service) to Vodafone (private sector); the relevant legislative provisions enacted in relation to that employment transfer; the manner in which the VIPP was operating at the time and any stated reasons or objectives for introducing the 2005 Deed.  Admissible context as an aid to interpretation in this case does not include correspondence or positions taken by parties after the fact whether to indicate their subjective understanding of the 2005 Deed or otherwise. It does not include specialist technical expert evidence of complex pensions law which was not available to the parties at the time. Nor does it  include looking with the benefit of hindsight at how other schemes or pensioners may have fared since the 2005 Deed."

153.               It is now urged on behalf of Vodafone that the judge's description that the Scheme C members moved from P & T (civil service) to Vodafone (private sector) was wrong.  In fact, it is said - and it is the fact - Telecom Éireann had been privatised before the move to Vodafone.  The judge's reference to the legislative provisions enacted in relation to the employment is said to have been fine, so far as it goes, but the judge did not note that those conditions had been replicated throughout the 2001 Deed.  It is said that if the reference to the manner in which the VIPP was operating at the time is a reference to the 2001 Deed there was a conflict, "because even though the trustees accept that it was discretionary, but the discretion was exercised in favour of granting increases, the position they adopted in the court below was to say, actually, it wasn't really discretionary at all."

154.               It seems to me that the criticism of para. 99 of the judgment is unwarranted. Before getting to para. 99, the judge had meticulously traced the transfers of employment and the various schemes and amendments.  It seems to me that she was plainly alive to the intermediate privatisation of Telecom Éireann and to the provision made by the Act of 1999 for the preservation of the pension rights of those who eventually became the Scheme C members.  To my mind, the "legislative provisions in relation to the employment transfer" clearly encompassed the amendments to s. 45 of the 1983 Act made by the 1999 Act.  If there was any ambiguity in the judge's reference in para. 99 to the manner in which the VIPP was operating "at the time", it was immediately dispelled by the reference to whether there was any stated reason or objectives for introducing the 2005 Deed.  Vodafone's arguments as to the relevance of Rule 10, 2001 Deed in the construction of Rule 10, 2005 Deed of the 2001 Deed were set out at para. 105(A). 

155.               Vodafone contends that the judge erred in ruling to be inadmissible the correspondence recording the positions taken by the parties after the fact, whether to indicate their subjective understanding of the 2005 Deed or otherwise.  Specifically, it is argued that evidence of the trustees' own understanding - although recorded after the event - had a direct bearing on "the objective understanding of both the Trustees and the Company in 2001 and up to 2005 when the 2005 Deed was executed."  It is settled that the subjective understanding of the parties is immaterial to the construction of a contract.  This principle applies as much to a shared understanding as to different understandings.  With no disrespect, the notion of an objective understanding of both parties is a contradiction in terms.  This evidence is also said to have been admissible on the grounds that it showed that the parties believed they entered into a particular agreement in circumstances where they were maintaining that they entered a different one.  This point - it is said - was extensively canvassed in the High Court but not addressed in the judgment. 

156.               It seems to me that the admissibility of this evidence was dealt with.  This correspondence - like much of the other material relied upon on both sides - evidenced the subjective understanding of the parties and was inadmissible.  Such evidence might have been admissible in a rectification action, but the judge was careful at the outset to identify the parameters of the proceedings and to emphasise in particular that it was not an action for rectification.

157.               The prohibition on less favourable terms meant that the terms of the Scheme C members' pension entitlements could not be diminished, not that the scheme rules could not be changed.  The issue between the parties was what Rule 10, 2005 Deed meant.  If Rule 10, 2001 Deed fell short, there was no impediment to a change in the rule and no requirement for a collective agreement before any such change.  The factual matrix included the 2001 Deed but it also included the entitlement to no less favourable terms.

Conclusion

158.               For all these reasons I find that Vodafone has failed to show that the High Court judge erred in the approach which she took to the construction of Rule 10, 2005 Deed; in her findings as to the admissibility of the evidence tendered on both sides; in her analysis of the admissible evidence; or in her conclusion as to the correct interpretation of the VIPP.

159.               I would dismiss the appeal and affirm the order of the High Court.

160.               As this judgment is being delivered electronically, Whelan and Noonan JJ. have authorised me to say that they agree with it and with the orders proposed.  

161.               I would encourage the parties to engage on the question of the costs of the appeal.   If agreement cannot be reached within fourteen days of the electronic delivery of this judgment, the parties should notify the Court of Appeal Office and the panel will reconvene to hear the parties as to the proper allocation of the costs.

Result:     Appeal dismissed.