Steria Ltd and others v Hutchison and others: [2006] EWCA Civ 1551

CA: Mummery, Jacob and Neuberger LJJ: 24 November 2006

When the complainant employee was promoted to a managerial position in 1994, he joined his employer's occupational final salary pension scheme for senior employees. A letter, from the employer's departmental pensions manager, inviting him to join the scheme stated that he could retire early from age 62 without actuarial reduction of pension due provided he had 20 years' pensionable service. The scheme's explanatory booklet accompanying the letter stated that the normal retirement date was at age 65; that early retirement would be possible from age 50 with the employer's consent, though there would be a reduction in pension because it would be paid early and for longer; that members who completed at least 20 years' service could retire from age 62 without reduction of benefits; and that the trust deed and rules governing the scheme prevailed over the booklet on any question of interpretation. The trust deed and rules provided that a member who retired before the normal retirement date of age 65 with the employer's consent would receive a reduced pension taking into account the actuary's advice as to the appropriate sum. The employee was informed in November 2002 that his normal retirement date was at 65 and that earlier retirement would only be at the employer's discretion. On the employee's complaint of maladministration, including that his normal retirement date should be treated as being at age 62 and that there should be no reduction in his pension if he drew it then before reaching 65, the Pensions Ombudsman held that the invitation letter and booklet contained clear and unambiguous representations that if the employee completed 20 years' service his normal retirement date was at age 62, that he had relied on those representations and that it would be unjust to permit the employer and the scheme's trustees to go back on them. The judge dismissed an appeal by the employer and trustees.

The employer and the trustees appealed.

The Court of Appeal held:
The statements in the employer's letter of invitation were binding on the trustees but had to be read together with the accompanying booklet and construed in the context of the whole to ascertain what representation or promise was made to the employee. So read, neither document made the representation or promise that his normal retirement date was altered from age 65 to 62, but made the more restricted representation or promise that, in the stated circumstances, which included the employer's consent, pension benefits could be taken at 62 without actuarial reduction, and there was nothing in the documents indicating that the employer or trustees were giving such consent. Further, the notice in the booklet expressly stating that the trust deed and scheme rules were to prevail made it impossible for the employee to establish reliance on the other statements, and the employee was also unable to show that he had suffered a detriment either to satisfy the requirements of estoppel by representation or as a factor in determining that it would be inequitable and unconscionable to deny that he was entitled to retire early on an unreduced pension without the employer's consent. There was no maladministration in the employer's and trustees' insistence that the normal retirement date applied and that the employee was not entitled to unreduced pension benefits on early retirement at age 62 without their consent.

The appeal was allowed.

Appearances: Brian Green QC and Paul Newman (Wragge & Co LLP, Birmingham) for the employer and trustees; Nigel Inglis-Jones QC and Nicolas Stallworthy (Levi Solicitors LLP, Leeds) for the complainant.