1. Honda Group-UK Pension Scheme Trustee Ltd v Mercer Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Trower |
| Judgment Date | 15 December 2022 |
| Neutral Citation | [2022] EWHC 3197 (Ch) |
| Docket Number | Case No: PE-2022-000001 |
| Court | Chancery Division |
[2022] EWHC 3197 (Ch)
THE HONOURABLE Mr Justice Trower
Case No: PE-2022-000001
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
PENSIONS
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Paul Newman KC and George Spalton KC (instructed by Sacker & Partners LLP) for the Claimants
Nicolas Stallworthy KC and Nicholas Hill (instructed by Stephenson Harwood LLP) for the Defendants
Hearing dates: 12 – 14 July 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
In these proceedings the claimants are the current trustee and the current principal and participating employers of the Honda Group-UK Pension Scheme (the “Scheme”), a contracted-out occupational pension scheme originally established by an interim trust deed dated 30 November 1973. The defendants, Mercer Ltd and Sedgwick Noble Lowndes Ltd, provided what were described in the claim form as “actuarial, administration, benefits consultancy, documentation and related services in respect of the Scheme”, including during the period 1994 to 1999. The distinction between the two defendants is not relevant to the present applications, and I shall therefore treat them as the same for all material purposes.
The claimants allege that, in the conduct of their retainer to provide such services, the defendants acted in breach of duty by failing to act as reasonably competent specialist pensions advisers in relation to two specific issues. The first, called the “HUM benefits error”, was a failure, during the course of the drafting of a deed eventually completed in 1998, to notice and bring to the claimants' attention an error which had occurred in 1986 (the “1986 HUM benefits error”). This related to the incorporation of certain benefits into the Scheme rules in respect of members who were employed by the fifth claimant, Honda of the UK Manufacturing Ltd (“HUM”). The second, called the “LPI increase error”, was a failure to incorporate into the Scheme's rules the changes to annual increases to members' pensions in payment from fixed increases to 5% LPI prior to a deed of amendment dated 12 November 1999.
In circumstances to which I will come a little later in this judgment, the claimants seek to reformulate the HUM benefits error as a failure, when advising as to the manner in which amendments to the governing documents of the Scheme should be made by a definitive trust deed and rules dated 10 December 1998 (the “1998 Deed”), to advise that certain benefits could not be incorporated into the Scheme rules in respect of members who were employed by HUM by way of retrospective amendments to the governing documents of the Scheme.
The first application with which this judgment is concerned is made by the defendants and seeks an order that those parts of the claimants' particulars of claim and reply that relate only to the HUM benefits error be struck out pursuant to CPR 3.4(2) because they disclose no reasonable grounds for bringing the claim. The defendants also seek summary judgment against the claimants on those parts of the claim which they seek to strike out on the grounds that the claimants have no real prospect of success and there is no other reason for the case to be disposed of at trial. The defendants do not make similar applications in relation to the claimants' claim arising out of the LPI increase error.
There are two grounds for the defendants' application. The first is that any claim in respect of the HUM benefits error was already statute-barred by the time the claim form was issued in the Bristol District Registry on 21 December 2009. There is no doubt that the limitation period for any claim for breach of contract had long expired. The issue is whether any claim in tort seeking damages for negligence is also statute barred by operation of section 14B of the Limitation Act 1980 (the “1980 Act”). It is said by the defendants that any operative act of negligence in relation to the HUM benefits error (which is in any event denied) occurred on or before 21 October 1994, i.e., more than 15 years before the issue of these proceedings.
The second ground is that the particulars of claim, which were not served until 27 August 2021, seek to introduce new claims which are outside the scope of the claim form, originally issued almost 12 years earlier. The claim form seeks damages for losses sustained as a result of negligence by the defendant as the provider of certain services and in relation to certain advice in respect of the operation of the Scheme from 1978. The negligence is described as a failure properly to advise as to the manner in which amendments to the governing documents of the Scheme should be made and/or a failure to implement amendments adequately or at all.
The defendants’ case is that the claim form does not encompass the nature of the claims now advanced in the particulars of claim. It is said that the particulars of claim allege a different duty (viz. to give legal advice), a different breach (viz. that in 1998 the defendants should have given retrospective advice about how historic amendments to the Scheme's rules should have been made by the defendants’ predecessor, Noble Lowndes Pensions Limited (“NLP”) in 1986) and a different loss (viz. a ‘loss of a chance’).
Also listed for hearing at the same time was an application by the claimants for permission to file and rely upon amended particulars of claim, which they assert will deal with all or some of the complaints made by the defendants in their strikeout application. These include but are not limited to the reformulation of the HUM benefits error. In the alternative they seek permission to amend the claim form so that it incorporates within it such of the allegations in the particulars of claim as are said to fall outside the scope of the existing claim form. The defendants submitted that the application to amend the particulars of claim is misconceived. They said that the substance of the claim is unchanged from that advanced in the original particulars of claim.
The significant delay between the time at which the claim form was issued and the time at which the particulars of claim were served occurred because these proceedings were stayed pending the pursuit of two other actions brought by the claimants in an attempt to resolve the 1986 HUM benefits error. The first was a Part 8 proceeding brought by Honda Motor Europe Limited (“HME”) and HUM in October 2012 against a representative employee of HUM and Honda Group-UK Pension Scheme Trustee Ltd (the “Trustee”) in an attempt to deal with the 1986 HUM benefits error as a matter of construction of the relevant documentation. This claim was unsuccessful before Asplin J ( ( Honda Motor Europe Limited and others v Powell and another [2013] EWHC 3149 (Ch)) and in the Court of Appeal ( [2014] EWCA Civ 437). The other was a rectification claim, in which I was told that the defendants' solicitors acted for the claimants, which commenced on 1 August 2017, but which settled shortly before the trial in 2020.
The Scheme and the 1986 HUM benefits error
In order to understand the nature of the current claim, it is necessary to say a little about the history of the Scheme's governing documentation. This is a strike out application based on the statements of case, but both parties referred to parts of the documentary evidence and to some extent did so in documents not specifically referred to in the pleadings.
Although the Scheme was originally established by an interim trust deed dated 30 November 1973, the first definitive trust deed and rules governing its terms was dated 24 November 1981 (the “1981 DDR”). At some stage during the course of 1986, the then trustees of the Scheme together with the second claimant, HME then called Honda (UK) Ltd, the principal employer in relation to the Scheme, and HUM instructed NLP to provide advice in respect of the benefit structure which HUM may wish to offer to its employees if they were admitted to membership of the Scheme.
Having received NLP's advice on potential options, it was agreed between HME and HUM that HUM's employees would be admitted to membership of the Scheme, but with a benefit structure (the “HUM benefit structure”) differing from that of its existing members. The benefits to be offered to HUM employees were less generous in the following principal respects:
i) Benefits would be calculated by reference to HUM employees' average basic pay in the three best consecutive years in the 10 years before retirement, while existing members were entitled to a calculation based on pensionable earnings in the year before retirement.
ii) Dependants of HUM employees would be entitled to a pension on death of the member of half of the member's pension, while dependants of existing members were entitled to a pension of two-thirds of the member's pension.
iii) Benefits for HUM employees would include a lump sum payable on death in pensionable service amounting to 2 1/2; times the member's basic pay plus a refund of contributions, while the equivalent benefit for existing members was four times the member's earnings plus a refund of contributions.
iv) Pensions in payment for HUM employees were to be increased at a rate of 3% per annum, while increases for existing members were 5% per annum.
v) Members who were HUM employees would be required to contribute at...
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Are Your Insureds Exposed To Greater Risks By Ill-Defined Retainers?
...it can operate to defeat a limitation defence. We consider the recent case of Honda Group-UK Pension Scheme Trustee Ltd v Mercer Ltd [2022] EWHC 3197 (Ch), which explored whether the professional was under a continuing duty to detect a pre-existing error and which serves as a helpful remind......