IN THE HIGH COURTS OF JUSTICE
||Royal Courts of Justice Strand
London WC2A 2LL
||22nd July 2011
B e f o r e :
MR JUSTICE SALES
|| PIONEER GB LIMITED
||- and -
||(1) ROBERT ARTHUR WEBB
(2) INDEPENDENT TRUSTEE SERVICES LTD
(3) DEBRA JUNE RYAN
(together the Trustees of the Pioneer GB Limited Pension and Life Assurance Scheme)
(4) GEOFFREY CLIVE WOOD
(sued in the capacity of representative member of the Pioneer GB Limited Pension and Life Assurance Scheme)
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MR ANDREW SPINK QC AND MR DAVID E. GRANT (instructed by Baker & McKenzie LLP) appeared on behalf of the Claimant
MR KEITH BRYANT (instructed by Burges Salmon LLP) appeared on behalf of Defendants 1, 2 and 3
MR RICHARD HITCHCOCK (instructed by Osborne Clarke) appeared on behalf of Defendant 4
HTML VERSION OF JUDGMENT
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MR JUSTICE SALES:
- This is an application by the claimant for summary judgment on a claim for rectification of a Consolidating Deed and rules for an occupational pension and life assurance scheme, to which it is party, executed on 11th July 1995 ("the Consolidating Deed"). The material part of the Consolidating Deed which the claimant seeks to rectify is the provision which defines "Normal pension date" for the purposes of the Scheme. The Consolidating Deed contains this definition:
"Normal pension date means:
(a) in the case of a Member who is a director or an executive of an Employer and who has been so notified in accordance with Rule 1(a), the Member's 60th birthday;
(b) in the case of a female Member whose Pensionable Service commenced before 1st April 1989, the Member's 60th birthday, and
(c) in the case of any other member, the Member's 65 th birthday."
- The claimant says the definition of Normal pension date in these terms was included in error. It should have stated that, apart from those members referred to in sub-paragraph (a), the Normal pension date for all members of the scheme would be the member's 65 th birthday. By the present application, rectification of the definition of "Normal pension date" to reflect this is sought. It is a change which would have the effect of somewhat reducing the value of benefits for members of the Scheme who joined the scheme before 1st April 1989 and hence would reduce the extent to which the claimant is obliged under the relevant instruments governing the operation of the Scheme to provide funding for it. If the Consolidating Deed is not rectified the additional cost to the claimant would be of the order of £1.2 million.
- The current trustees of the scheme are the first to third defendants ("the Current Trustees"), respectively: Mr Webb, ITS and Ms Ryan, as I will refer to them. None of the current trustees was a trustee at the time the Consolidating Deed was executed. At that time the trustees of the Scheme were: Christopher John Hood ("Mr Hood"); Christopher Ivor Stroud ("Mr Stroud"); Paul David Carpenter ("Mr Carpenter") and Sharon Bridget O'Rourke ("Ms O'Rourke").
- The Current Trustees adopt a neutral position on the claimant's application for summary judgment. The fourth defendant, Mr Wood, is joined as a representative of those members of the scheme governed by the Consolidating Deed whose interests would be detrimentally affected by the rectification of the Consolidating Deed sought by the claimant. The fourth defendant has been fully and carefully advised by Mr Richard Hitchcock of counsel. On the basis of that advice, he does not seek to oppose the application made by the claimant. In the course of the hearing I made an order giving Mr Wood representative capacity in relation to that class of persons.
The Factual Background
- By a declaration of trust dated 30th April 1974 the claimant established an occupational pension scheme for its employees with itself as trustee. The declaration provided for scheme rules to be adopted. Scheme rules, known as the principal rules, were adopted in the form of an instrument dated 12th November 1974. Under the principal rules the claimant was both trustee and the principal company. The principal rules included provision for amendment of the rules of the Scheme as follows:
"The Trustees and the Principal Company may from time to time make further Supplementary Rules and may make different Supplementary Rules for different Members or groups of Members. They may also from time to time alter, amend, add to or revoke the principal rules or the supplementary rules or any of them ... Any further Supplementary Rules and any alteration, amendment, addition or revocation shall come into effect when it is adopted in the same manner as the Principal Rules."
Over time a series of supplementary rules were adopted by the claimant as trustee and principal company in exercise of this power of amendment.
- On 17th May 1990 the European Court of Justice ("ECJ") handed down its judgment in Barber v. Guardian Royal Exchange  ICR 616 in which it concluded that it was contrary to what was then Article 119 of the EC Treaty (now Article 157 of the Treaty of the Functioning of the European Union) for a pension scheme to provide a different normal retirement age for men and women. The Barber judgment left open important questions about how the ruling might affect existing members of occupational pension schemes, particularly in relation to pension rights already accrued under such schemes. It was a ruling which required major adjustments throughout the pension world.
- By the 13th supplementary rules, adopted by the claimant on 6th August 1990 under the power of amendment in the principal rules, the rules of the claimant's occupational scheme were amended thus:
"Normal Retirement Date - The Normal Retirement Date shall be the 65th anniversary of the birth of a male Member; the 60th anniversary of the birth of a female Member who joined the Scheme prior to 1st April 1989; and the 65 th anniversary of the birth of a female Member who joined the scheme on or after 1st April 1989 and the definition of "Normal Retirement Date" in Rule 1 of Part 1 of the Principal Rules, shall be read as amended accordingly."
- A further set of references went to the ECJ in what became known as the Coloroll litigation, designed to secure elucidation regarding the effect of the Barber judgment. Pending any decision in Coloroll from the ECJ, advisors to pension funds drew the attention of their clients to the issues likely to be addressed in that litigation and to steps which might need to be taken in light of it. The claimant's pension advisors at the time, Noble Lowndes, gave advice on
these issues to the claimant (in this judgment I will refer to Noble Lowndes and the claimant's other pension advisors from time to time as "the advisors").
- In assessing the facts I have had the benefit of contemporaneous documentation and witness statements from most of the individuals directly involved on behalf of the claimant and from all the trustees of the Scheme in July 1995 who executed the Consolidating Deed, except Mr Stroud, who could not be traced. The account which follows is drawn from these materials.
- In September 1991 the advisors noted to the claimant that the normal pension ages for members of the Scheme would need to be reviewed in light of the principle applied in Barber and recommended to the claimant (which at this stage was both the principal company and trustee of the Scheme) that the retirement ages of all members should be revised and equalised at 65.
- In August 1992 the advisors wrote again to Mr Stroud, in a letter dated 3rd August 1992. This letter referred to a discussion that had been had regarding the equalisation of retirement ages for "existing females" at 65. From context, it is clear that this was a reference to the idea that all female members of the Scheme, including those who had been members prior to April 1989, should have their normal retirement dates for the purposes of the Scheme amended to their 65th birthday. In this way, they would be "equalised" with the normal retirement date for male members of the Scheme. At that time, the advisors recommended that the introduction of such changes should be deferred until such time as the results of the Coloroll litigation were known.
- On 4th March 1994 there was a meeting attended by Mr Stroud, Mr Hood, Ms O'Rourke and Mr Carpenter, together with a representative from the advisors and a representative from Scottish Equitable. The minutes which were drawn up describe this as a meeting of the trustees of the Scheme. It is clear that by this stage it was contemplated that changes would be made to the Scheme in order to remove the claimant as a trustee of the Scheme, to be replaced by individual trustees who it was contemplated would be Mr Stroud, Mr Hood, Ms O'Rourke and Mr Carpenter. At that meeting there was discussion of the desirability of producing a full definitive Deed and set of rules in relation to the Scheme. There was also discussion about the question of equalisation of retirement ages and it was agreed that that would be reviewed at the point where the Coloroll judgment was finally issued.
- On 28th September 1994, the Coloroll judgment was issued by the ECJ: Coloroll Pension Trustees Limited v. Russell  ICR 179. That judgment clarified the effect of the Barber ruling as follows. For pensionable service prior to 17th May 1990 it was not unlawful for male and female pension benefits to be provided by reference to different retirement ages; a scheme could be amended so as to equalise benefits for men and women if the rules of the scheme permitted such amendment; the nature of the amendment could be either to reduce the normal male retirement age or to increase the normal female retirement age or both, provided both sexes were treated equally; and for pensionable service between 17th May 1990 (the date of the Barber judgment) and the operative date of any amendment, male persons from the disadvantaged class should be granted the same advantages as those enjoyed by persons in the favoured class. The advisors did not revert to the claimant and the proposed new trustees immediately after the Coloroll judgment was handed down.
- Meanwhile, the advisors commenced work on drawing up a Consolidating Deed and Rules. A first draft had been sent to Mr Stroud on 23rd August 1994, but this did not deal with the equalisation issue because that draft preceded the Coloroll judgment. However, in the covering letter the advisors indicated that that would be an issue which would need to be considered later. The next trustees' meeting, so called, took place on 7th October 1994, but no reference was made to the Coloroll j udgment.
- On 12th January 1995 there was a further meeting of the trustees (so called), attended by Mr Stroud, Mr Hood, Ms O'Rourke and Mr Carpenter with a representative from the advisors. Prior to that meeting an agenda had been sent out by the advisors including, as item 10: "Equalisation of Retirement Ages, see paper November 1994". This was a reference to a paper prepared by the advisors for consideration by the company and the persons who it was contemplated would be appointed as trustees. That paper referred to the Coloroll judgment and it is clear from it, particularly in the context in which it was issued, that the recommendation of the advisors was that the trustees should discuss a proposal for equalisation of retirement age for female members of the Scheme who had joined before April 1989 upwards to 65.
- At the meeting there was discussion of the continuing work on production of the Consolidating Deed and Rules and also discussion of the issue of equalisation of retirement ages. On that point the minute records:
"The Trustees debated at length the question of the requirement to equalise retirement ages for all members of the Scheme in accordance with the European Court ruling. In this connection, the Secretary's paper of November 1994 was discussed and in principle, the decision was that retirement ages should be equalised at 65 for all members.
It was recognised that for the period May 1990 to the date of change, an unequalised position applied and, therefore, male members of the Scheme would, for that period, have their benefits treated as having a 60 retirement age.
New female employees post 1989 had already been employed on 65 retirement age. However, the change to 65 retirement age in respect of existing female members, for future service only, did represent a decrease in benefit should they still wish to retire at age 60. It was recognised, however, that a retirement age of 65 would allow additional service to accrue and a higher Final Pensionable Salary apply.
In terms of action, the Secretary was requested to speak to the actuary to establish the cost of providing illustrative quotations for existing female members. Also, to provide, by the end of February, appropriate notifications for the members to enable a change date of April 1995 to be adopted for this purpose."
It is clear from this minute and from the witness statements before me that the persons participating in that meeting positively decided on that occasion that the retirement age for women who were already members of the Scheme prior to April 1989 should be equalised upwards to 65 and that that should be the retirement date for all members of the Scheme (other than the class of executive members, to which I have referred).
- Meanwhile, on 15th February 1995 a change was effected to the Scheme whereby the claimant was replaced as trustee by the four individuals to whom I have referred. From that time on they are the relevant trustees for the purposes of deciding upon the effect of amendments to the principal rules and other rules governing the Scheme.
- On 27th February 1995 there was a meeting of the trustees of the Scheme, now properly so called, again attended by a representative from the advisors. The progress on the definitive Consolidating Deed was discussed and it was noted it remained necessary for the trustees to meet with the claimant to brief it on any changes proposed - that is to say, with a view to the trustees and the claimant jointly exercising the power of amendment contained in the principal rules. At the same meeting the trustees reviewed the proposal for equalisation of retirement ages and considered draft announcements, which had been prepared by the advisors, to be issued to employees and members of the Scheme explaining that change. I am satisfied on the evidence before me that the trustees on this occasion treated their previous decision that the retirement ages should all be equalised up to 65 as continuing to have effect and decided to take steps to give effect to that decision reached by them, in particular, by issuing announcements to members about the change to equalise retirement ages. There was some debate about the form of the announcements with the advisors.
- A briefing paper for the claimant dated March 1995 was prepared by the advisors, which had been reviewed in draft by the trustees. The briefing paper sought to explain to the claimant the most significant areas of change to be included in the new Consolidating Deed. It did not refer to the question of equalisation of retirement ages, even though it was clear from the two meetings of the trustees in January and February of 1995 to which I have referred that the decision of the trustees was that the retirement ages should be equalised at 65 for all members of the Scheme. I do not have evidence from the advisors, so the reason why the briefing paper did not include reference to that is a matter for speculation. Doing the best I can on the material before me I conclude, as Mr Spink QC for the claimant submitted, that this was a matter which by error dropped off the radar screen at this stage so far as the work on the Consolidating Deed was concerned.
- So far as the announcements were concerned, various forms of announcement were prepared. One appears to have been addressed to all the claimant's employees and members of the Scheme. Another was addressed to the male members of the Scheme. Another announcement was addressed to the distinct group of female members of the Scheme. All of the announcements indicated that the intention was that retirement ages should be equalised upwards for all members to 65. The general announcement to all Scheme members included this statement:
"After very careful consideration the Company and the Trustees have now established how best to comply with the European Court's judgments to equalise benefits under the Scheme for members who joined before 1st April 1989. These changes, which will come into effect from 1st April 1995, give all female members a Normal Retirement date of 65. Additionally, it has been necessary to slightly change the calculation of pensions for male members who joined before 1st April 1989 so they enjoy the same terms as their female peers."
- On the evidence it is clear that the trustees at the time approved those announcements, which were signed by Mr Stroud for and on behalf of the trustees on 27th March 1995. I am also satisfied on the evidence before me that the relevant persons acting for the claimant also saw and approved those announcements for the claimant. Those relevant persons were Mr Yamamoto, who was the managing director of the claimant at the time, and Mr Hood, who was the commercial director of the claimant at the time. In particular, on the basis of Mr Hood's evidence, I am satisfied that those two gentlemen had the relevant authority on behalf of the claimant to act in approving that change to the retirement dates and, as will be seen in due course, effecting the changes to the principal rules by means of the Consolidating Deed without needing to obtain further approval within the claimant's governing structures. That is principally because between them they had authority to engage in formal actions on behalf of the claimant without reference to a decision of the full Board of the claimant where the financial consequences for the claimant of action taken by them would be minimal or beneficial, which was the case in relation to the proposed equalisation of retirement ages in this case.
- On 11th July 1995 the Consolidating Deed was executed. The intended change to equalise retirement ages for men and women at 65 had been omitted from it. The Consolidating Deed was executed as a deed by the trustees at the time, i.e. Mr Hood, Mr Stroud, Mr Carpenter and Ms O'Rourke. It was signed on behalf of the claimant by Mr Yamamoto as company director and Mr Hood as company secretary. I am satisfied on the evidence before me that each of the persons who signed and executed that deed acted on the assumption that it included equalisation of men's and women's retirement ages under the Scheme at age 65. It is a long and very detailed document and I accept the evidence from them that by this stage they assumed that the Consolidating Deed reflected the decision on equalisation of retirement ages which had already been made and that it reflected what had already been said in the announcements, which, on the evidence, had probably in fact been sent out shortly before 1st April 1995. I am therefore satisfied on the evidence before me that the claim for rectification is properly made out.
- I should mention that I am satisfied that the claim for rectification is made out by reference to either of the two rather different legal approaches which appear from the authorities as they stand at the moment might represent the true applicable legal rule. In Mr Spink's skeleton argument he refers to a certain tension in the authorities as to whether a claim for rectification depends upon it being shown that the relevant consensus between the persons acting to produce an instrument having legal effect is required to be a matter ascertained objectively from things said and done before and at the time when they act in creating the instrument (as suggested in the speech of Lord Hoffmann in Chartbrook Limited v. Persimmon Homes  UKHL 38;  1 AC 1101) or whether a more subjective approach might be appropriate having regard to the specific subjective understanding of the persons so acting (as might be derived from Munt v. Beasley  EWCA Civ 370, as referred to in Colorcon v. Huckell  EWHC 979 (Ch)). Whichever of these approaches might be the correct approach in law, I am satisfied on the material before me that the relevant test has been satisfied. It is clear on the materials that each of the trustees and Mr Hood and Mr Yamamoto positively believed that the Consolidating Deed included the changes necessary to effect the equalisation of retirement ages, which they had all agreed upon. Although I have no witness statement from Mr Stroud, I am satisfied that the proper inference to be drawn is that he shared the same understanding as everyone else, since he had participated in the important meetings and had himself signed the announcements to which I have referred.
- Insofar as it is necessary to identify objective indications from the time that that was the consensus arrived at, when looking at the joint intention of the claimant and the trustees (which is the relevant intention for the purposes of reviewing exercise of the amendment power in the principal rules), I am satisfied that such an intention was objectively manifested at the relevant time - in particular, by reason of the participation of Mr Hood and Mr Stroud wearing both their personal hats and their company hats at the meetings in February and January of 1995 and from the approval given to the announcements by the claimant before they were issued to their employees.
- For these reasons, I consider that it is right to proceed to give summary judgment in favour of the claimant and to make an order for rectification as sought.
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