PENSION SCHEME

Trustee Solutions Ltd and others v Dubery and another: [2006] EWHC 1426 (Ch)

ChD: Lewison J: 21 June 2006

Under a company's occupational pension scheme, constituted by deed of trust, the normal retirement age was 65 for male members and 60 for females. The scheme's rules could be amended either by formal deed or by any "writing effected under hand" by the trustees and the company. Following a ruling of the European Court of Justice it became unlawful after 17 May 1990 to discriminate between men and women by providing for pension benefits to be payable on retirement at different ages, and, for pensionable service between 17 May 1990 and the operative date of any valid amendment to a pension scheme, male members of the scheme were entitled to be treated as if their normal retirement age was the same as that for females. In 1992 the claimant trustees purported to amend the rules of the company scheme by raising the retirement age for women to 65, by means of documents which were not signed either by the trustees or by, or on behalf of, the company. A booklet summarising the changes to the scheme was sent to members, in which it was stated: "if there are any differences between this booklet and the formal documents [constituting the scheme] the provisions in the formal documents will override those in this booklet." Subsequently the company went into liquidation without any dividend for the scheme, which, being in deficit, commenced winding up.

On the trustees' application against the defendants, representative members with competing interests under the scheme, the court's determination was sought on the questions: (1) whether the rules had been validly amended in 1992 so as to raise the normal retirement age for women; if not (2) whether a group estoppel had arisen which precluded those members who would benefit from a reduced retirement age from alleging that the rules had not been validly amended; and (3) whether a male member, who had accrued pensionable service after 17 May 1990, and who had attained the age of 60 before the commencement of the winding up, had an entitlement that fell within section 73(3)(b) of the Pensions Act 1995, so that he would be paid in priority to a deferred member falling within section 73(3)(f).

Lewison J held:
(1) As a matter of ordinary English legal usage, an instrument "under hand" was an instrument that the maker had signed, and there was no reason to construe the scheme's rules otherwise than in accordance with that usage. Accordingly, since it was a substantive requirement of a document amending the rules of the company's pension scheme that it was signed by the trustees and by or on behalf of the company, the scheme had not been validly amended.

(2) There were recognised difficulties in applying the principle of group estoppel to pension schemes so as to create estoppels binding on the members of the scheme, the trustees, and the sponsoring company alike. One such problem was the requirement of clear evidence of an intention or positive conduct to bind the general body of members to an assumption as to the yardstick by which contributions or benefits were to be calculated, and receipt of the benefit or payment of the contribution, without more, was unlikely to be sufficient. A further difficulty in the present case was that the estoppel was said to have bound former employees who had left the scheme before any of the relevant events, whereas such a person could not realistically be said to have shared any erroneous assumption. In general, explanatory booklets containing statements to the effect that, in the case of doubt or conflict, the scheme's rules or trust deed would prevail, did not on their own give rise to estoppels. In the circumstances, the evidence was too exiguous to give rise to an estoppel binding the general body of members, and, accordingly, male members of the scheme were entitled to be treated as if their normal retirement age was that applicable to females in respect of pensionable service since 17 May 1990.

(3) The phrase "where a person's entitlement to payment of pension . . . has arisen" in section 73(3)(b) of the Pensions Act 1995 included the case where a person was entitled to call for immediate payment of his pension. One of the primary functions of the normal retirement date was to act as a calculator for the accrual of pension, and an accrual in that sense was an entitlement to pension earned in a particular period of pensionable service. Therefore, it was possible for different normal retirement dates to apply to different periods of pensionable service, even though in the end there would only be one pension payable. Moreover, the effect of the decision of the European Court of Justice was to confer on male members the right to retire at 60 and that right could not be taken away. Accordingly, the entitlement to pension of members who had the right to retire for part of their service and who had attained the age of 60 at the date of the winding up fell within section 73(3)(b).

The first two questions were answered in the negative and the third question in the affirmative.

Appearances: Nicolas Stallworthy (Nabarro Nathanson) for the trustees; Paul Newman (Hill Dickinson LLP) for the first defendant; Barbara Rich (Eversheds LLP, Newcastle) for the second defendant.