Bca Pension Trustees Ltd (Claimant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 02 December 2015 |
| Neutral Citation | [2015] EWHC 3492 (Ch) |
| Docket Number | Case No: HC-2015-001163 |
| Court | Chancery Division |
| Date | 02 December 2015 |
[2015] EWHC 3492 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF THE BCA PENSION PLAN
AND IN THE MATTER OF SECTION 48 OF THE ADMINISTRATION OF JUSTICE ACT 1985
Royal Courts of Justice
7 Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Justice Snowden
Case No: HC-2015-001163
Mr. Paul Newman QC (instructed by Stevens & Bolton LLP) for the Claimant
Hearing date: 16 November 2015
This is a Part 8 Claim made pursuant to section 48 of the Administration of Justice Act 1985 ("section 48"). That section provides as follows:
"(1) Where —
(a) any question of construction has arisen out of the terms of a will or a trust; and
(b) an opinion in writing given by a person who has a 10 year High Court qualification, within the meaning of section 71 of the Courts and Legal Services Act 1990 has been obtained on that question by the personal representatives or trustees under the will or trust,
the High Court may, on the application of the personal representatives or trustees and without hearing argument, make an order authorising those persons to take such steps in reliance on the said opinion as are specified in the order.
(2) The High Court shall not make an order under subsection (1) if it appears to the court that a dispute exists which would make it inappropriate for the court to make the order without hearing argument."
The Claimant is the sole trustee ("the Trustee") of an occupational pension scheme known as the BCA Pension Plan (the "Plan"). The application has been made because of what appears to have been a mistake in the course of the consolidation of the rules of the Plan by which some words in the Plan's pension increase rule were inadvertently omitted from the consolidated text.
The Trustee has obtained an opinion from leading pensions counsel, Mr. Paul Newman QC, on the correct interpretation of the pension increase rule. Rather than seek to pursue formal rectification proceedings or to use the power of amendment in the Plan's rules, the Trustee now seeks, in reliance upon Mr. Newman's opinion, an order that it be authorised to administer the Plan on the basis that the Plan's pension increase rule should be interpreted as if the words previously deleted had not been deleted but are to be read back into the Plan.
The Application raises questions of (i) interpretation of the relevant rules of the Plan, (ii) the scope of section 48, and (iii) the appropriate notification that should be given to persons who are or might become entitled to benefits under the Plan. Although section 48 envisages that the application will be decided on paper and without a hearing, in the instant case I asked for a short hearing to explore some of the issues raised.
Background
By an interim trust deed dated 5 April 1996 Integrated Transport Systems Limited established an occupational pension scheme, which was then known as the ITS Pension Plan. The interim trust deed was replaced by a final trust deed and rules dated 24 March 1998 (the "Original Rules").
The pension increase rule in the Original Rules was Rule 23, which read as follows:
"(1) A pension under the Plan … increases on 1 st April each year after it starts to be paid. The rate of increase is determined in accordance with sub-rules (2) and (3).
Sub-rule (2) applies to a pension or part of it to which section 51 of the Pensions Act 1995 applies (pension attributable to pensionable service after 5 th April, 1997) and sub-rule (3) applies to a pension or part of it attributable to earlier pensionable service to which that section does not apply.
(2) The rate of increase attributable to a pension or part of it to which this sub-rule applies is the percentage increase in the Central Statistical Offices retail prices index over the Reference Period subject to a maximum of 5 per cent for any Reference Period. A Reference Period is determined by comparing the level of retail prices index for the month of February immediately preceding the 1 st April on which the increase is made with its level for the month of February of the previous year.
(3) The rate of increase attributable to a pension or part of it to which this sub-rule applies is 3 per cent. on the whole pension including any amount relating to the Member's guaranteed minimum pension."
Rule 23 of the Original Rules was drafted to comply with (the then recently introduced) section 51 of the Pensions Act 1995. Section 51 of the Pensions Act 1995 introduced a statutory regime under which occupational scheme pensions were to be increased in respect of that part of the pension attributable to pensionable service on or after 6 April 1997. The rate of the required increase was, at that time, the lesser of 5% and the increase in the retail price index over the prescribed period.
The name of the Plan was changed by a Deed of Alteration dated 8 February 2000 from the ITS Pension Plan to the BCA Pension Plan and the Trustee become trustee of the Plan.
On 30 March 2005, a Deed of Alteration (the "2005 Deed of Alteration") was entered into to reflect a statutory amendment to section 51 of the Pensions Act 1995 (s.51ZA of the Pensions Act 1995, as inserted by s. 278(7) of the Pensions Act 2004). The amendment to section 51 of the Pensions Act 1995 reduced the non-inflation related element of the statutory pension increase rate from 5 per cent to 2.5 per cent, in respect of that part of a pension attributable to pensionable service on or after 6 April 2005. The 2005 Deed of Alteration replaced Rule 23(2) of the Original Rules (wrongly identified in the Deed as Rule 26(2)) by the following clause:
"The rate of increase attributable to a pension or part of it to which this sub-rule applies is the percentage increase in the Central Statistical Offices retail prices index over the Reference Period subject to a maximum of 2 1/2 per cent for any Reference Period. A Reference Period is determined by comparing the level of retail prices index for the month of February immediately preceding the 1 st April on which the increase is made with its level for the month of February of the previous year."
The recitals to the 2005 Deed of Alteration recorded that the amendment did not apply to pensions in payment as at the date of the 2005 Deed of Alteration or to pension benefits already earned prior to 6 April 2005.
In late 2011 the Trustee's solicitors undertook a consolidation exercise of the Plan rules which resulted in the execution of a consolidated trust deed and rules dated 2 November 2011 (the "Consolidated Rules").
The corresponding provision to Rule 23 of the Original Rules (as amended by the 2005 Deed of Alteration), in the Consolidated Rules was Rule 22 which reads as follows:
"22 PENSION INCREASES
22.1 A pension under the Plan (except, unless the Principal Company decides otherwise and the Trustees agree, a pension under Clause 14.1.2 of the Trust Deed and a pension derived from a Member's voluntary contributions) increases on 1st April in each year after it starts to be paid as follows.
22.2 The rate of increase attributable to a pension or part of it to which this sub-rule 22.2 applies is the percentage increase in the Office for National Statistics retail prices index over the Reference Period subject to a maximum of 5 per cent (prior to 6 April 2005) and 2.5% (after 5 April 2005) for any Reference Period. A Reference Period is determined by comparing the level of the retail prices index for the month of February immediately preceding the 1st April on which the increase is made with its level for the month of February of the previous year.
22.3 The rate of increase attributable to a pension or part of it to which this Rule 22.3 applies is 3 per cent. on the whole pension including any amount relating to the Member's guaranteed minimum pension."
A comparison between Rule 23 of the Original Rules and Rule 22 of the Consolidated Rules is set out below, with the words in strikethrough showing the words deleted from Rule 23 of the Original Rules, and the words underlined showing the words that were inserted into Rule 22 of the Consolidated Rules:
"22 PENSION INCREASES
22.1 23(1) A pension under the Plan (except, unless the Principal Company decides otherwise and the Trustees agree, a pension under clause 15(1)(b)Clause 14.1.2 of the Trust Deed and a pension derived from a Member's voluntary contributions) increases on 1st April in each year after it starts to be paid as follows. The rate of increase is determined in accordance with sub-rules (2) and (3).
Sub-rule (2) applies to a pension or part of it to which section 51 of the Pensions Act 1995 applies (pension attributable to pensionable service after 5th April, 1997) and sub-rule (3) applies to a pension or part of it attributable to earlier pensionable service to which that section does not apply
22.2 23(2) The rate of increase attributable to a pension or part of it to which this sub-ruleRule 22.2 applies is the percentage increase in the Central Statistical OfficesOffice for National Statistics retail prices index over the Reference Period subject to a maximum of 5 per cent (prior to 6 April 2005) and 2.5% (after 5 April 2005) for any Reference Period. A Reference Period is determined by comparing the level of the retail prices index for the month of February immediately preceding the 1st April on which the increase is made with its level for the month of February of the previous year.
22.3 23(3) The rate of increase attributable to a pension or part of it to which this sub-ruleRule 22.3 applies is 3 per cent. on the whole pension including any amount relating to the Member's guaranteed minimum pension."
Apart from renumbering, there are three differences between Rule 23 of the Original Rules and Rule 22 of the Consolidated Rules:
i) the second unnumbered...
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