Airways Pension Scheme Trustee Ltd v Mark Owen Fielder

JurisdictionEngland & Wales
JudgeMr Justice Zacaroli
Judgment Date11 November 2019
Neutral Citation[2019] EWHC 3032 (Ch)
CourtChancery Division
Docket NumberCase No: PE-2018-000015
Date11 November 2019

[2019] EWHC 3032 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

THE HONOURABLE Mr Justice Zacaroli

Case No: PE-2018-000015

Between:
Airways Pension Scheme Trustee Limited
Claimant
and
(1) Mark Owen Fielder
(2) British Airways Plc
Defendants

Jonathan Hilliard QC, David Southern QC and Henry Day (instructed by Eversheds Sutherland (International) LLP) for the Claimant

Michael Furness QC (instructed by Hogan Lovells International LLP) for the First Defendant

Michael Tennet QC and Sebastian Allen (instructed by Linklaters LLP) for the Second Defendant

Hearing dates: 31 October 2019 and 1 November 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Zacaroli Mr Justice Zacaroli
1

At a hearing commencing on 31 October 2019 the corporate trustee (the “Trustee”) of the Airways Pension Scheme (the “Scheme”) applied to the court for approval of its decision to enter into a settlement agreement with the second defendant, British Airways plc (“BA”).

2

During the open part of the hearing (and before going into private session to receive confidential submissions on behalf of the Trustee and on behalf of the first defendant, the representative beneficiary of the Scheme) an issue arose as to the test which the court should apply in determining the Trustee's application.

3

Counsel for the Trustee, Mr Hilliard QC (supported by counsel for BA, Mr Tennet QC), submitted that the test to be applied is that applicable to the second category of case identified by Robert Walker J in a decision given in chambers in 1995 and cited by Hart J in Public Trustee v Cooper [2001] WTLR 901:

“The second category is where the issue is whether the proposed course of action is a proper exercise of the trustees' powers where there is no real doubt as to the nature of the trustees' powers and the trustees have decided how they want to exercise them but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers. Obvious examples of that, which are very familiar in the Chancery Division, are a decision by trustees to sell a family estate or to sell a controlling holding in a family company. In such circumstances there is no doubt at all as to the extent of the trustees' powers nor is there any doubt as to what the trustees want to do but they think it prudent, and the court will give them their costs of doing so, to obtain the court's blessing on a momentous decision. In a case like that, there is no question of surrender of discretion and indeed it is most unlikely that the court will be persuaded in the absence of special circumstances to accept the surrender of discretion on a question of that sort, where the trustees are prima facie in a much better position than the court to know what is in the best interests of the beneficiaries.”

4

It is common ground that the test to be applied in a case falling within this second category is whether the Trustee's decision is one that a reasonable body of trustees could arrive at. As explained in Lewin on Trusts (18 th ed) at 29–299 (now Lewin on Trusts (19 th ed) at 27–079), cited with approval by David Richards J in Re MF Global UK Ltd [2014] EWHC 2222 (Ch), at [32]:

“Once it appears that the proposed exercise is within the terms of the power, the court is concerned with limits of rationality and honesty; it does not withhold approval merely because it would not itself have exercised the power in the way proposed.”

5

Mr Furness QC, counsel for the representative beneficiary, agrees that in a case where a trustee seeks the approval of the court for a settlement agreement without there having been a previous order of the court permitting the trust fund to be expended on litigation, then the test is merely one of rationality. He contends, however, that where, on a previous Beddoes application ( Re Beddoe [1893] 1 Ch 547), the Trustee has been permitted to expend Scheme funds on litigation, then a more nuanced approach is necessary. While accepting that there may be aspects of an overall settlement agreement where the court is bound to defer to the Trustee (so that the court's role is necessarily limited to a rationality test) he contends that there is an additional requirement that the court reaches its own determination as to whether the settlement agreement as a whole is in the best interests of the Scheme.

6

During the course of the hearing on 31 October 2019, I announced my conclusion that the correct approach in this case was to apply the rationality test applicable in the second category of case identified in Public...

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