Airways Pension Scheme Trustee Ltd v Mark Owen Fielder
Jurisdiction | England & Wales |
Judge | Mr Justice Zacaroli |
Judgment Date | 11 November 2019 |
Neutral Citation | [2019] EWHC 3027 (Ch) |
Date | 11 November 2019 |
Docket Number | Case No: PE-2018-000015 |
Court | Chancery Division |
[2019] EWHC 3027 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
HEARING IN IN PRIVATE
JUDGMENT IN PUBLIC
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Zacaroli
Case No: PE-2018-000015
Jonathan Hilliard QC, David Southern QC, Stephen Arthur 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
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.
This is an application by the corporate trustee (the “Trustee”) of the Airways Pension Scheme (the “Scheme”) for approval of its decision to enter into a settlement agreement with the second defendant, British Airways plc (“BA”). The settlement will compromise, among other things, existing proceedings between the parties in respect of which an appeal is pending to the Supreme Court against a decision of the Court of Appeal dated 5 July 2018 ( British Airways plc v Airways Pension Scheme Trustee Ltd [2018] EWCA Civ 1533) (the “main proceedings”).
This is a public judgment setting out my conclusions and an outline of my reasoning. My detailed reasons were given in a private hearing – at which only the Trustee and the representative beneficiary, and their advisors, were present – and remain private.
The members of the Scheme have been represented by the first defendant, Mr Mark Fielder. Mr Fielder and his legal team have undertaken the task of scrutinising the Trustee's decision-making process and evaluating the overall merits of the settlement agreement. He has then drawn to the attention of the court any issues which he thinks the court should take into account when deciding whether or not to approve the agreement. It has not been Mr Fielder's role to approve or disapprove the settlement agreement. Rather, he has offered a critical assessment of the agreement with a view to assisting the court to take that decision.
The relevant question for me is whether the Trustee's decision to enter into the settlement agreement, and to continue with it in light of changed circumstances since it was entered into, are decisions which a reasonable body of trustees could have arrived at. As David Richards J said, in MF Global UK Ltd [2014] EWHC 2222 (Ch), at [32], citing Lewin on Trusts (18 th ed) at 29–299 (now Lewin on Trusts (19 th ed) at 27–079):
“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.”
It is common ground that the test has two aspects. First, process: has the Trustee properly taken into account relevant matters, and not taken into account irrelevant matters? Second, outcome: is the decision one which a rational trustee could have come to?
I have been greatly assisted by the comprehensive review of the Trustee's decision-making process undertaken on behalf of the representative beneficiary.
While I accept that it is necessary to review the Trustee's decision in light of factors which exist at the time it is made, it is nevertheless helpful to have regard to the matters which gave rise to the settlement. The starting point is the Government's decision in 2010 to increase public sector pensions and certain other state benefits annually by reference to CPI rather than RPI. This had the practical consequence of reducing the year-on-year increase to the benefits of Scheme members whose pensions increases are linked to Pension Increase (Review) Orders by about 1%.
The Trustee, in response, amended Rule 15 of Part VI of the Scheme's rules dated 1 April 2008 (“Rule 15”), to enable them to implement (by a super-majority of two-thirds) discretionary increases. In 2013 the Trustee resolved to grant an increase of 0.2%. The amendment, and the exercise of the discretionary increase power, were challenged in the main proceedings. As things stand following the decision of the Court of Appeal, the introduction of the power was for an improper purpose and thus invalid. It is common ground that there are reasonable prospects of success for either side in the pending appeal to the Supreme Court.
Another important piece of the background is that in 2012 the Scheme was in deficit, leading to a deficit payment plan requiring BA to pay several hundreds of millions of pounds into the Scheme. The position has, however, changed and the Scheme now has a substantial surplus. In the normal course, there would have been two further valuations since 2012, which would very likely have resulted in the...
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An application for directions by The Law Debenture Trust Corporation p.l.c. as trustee of the trusts identified below
...matters and whether the decision is one which a rational trustee could have come to ( Airways Pension Scheme Trustee Ltd v Fielder [2019] EWHC 3027 (Ch) at [5])); and iii) that the opinion as not vitiated by any conflict of interest under which the Trustee was labouring. 6 When addressing ......