Special Case Between Bett Homes Limited And Raymond Wood And Others, As Trustees Of The Bett Limited Superannuation And Life Assurance Scheme
| Jurisdiction | Scotland |
| Judge | Lady Paton,Lady Clark Of Calton,Lord Menzies |
| Neutral Citation | [2016] CSIH 26 |
| Docket Number | XA51/15 |
| Published date | 15 April 2016 |
| Court | Court of Session |
| Date | 15 April 2016 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 26
XA51/15
Lady Paton
Lord Menzies
Lady Clark of Calton
OPINION OF THE COURT
delivered by LADY CLARK OF CALTON
in the
special case
between
BETT HOMES LIMITED
Party of the first part;
and
RAYMOND WOOD AND OTHERS, AS TRUSTEES OF THE BETT LIMITED SUPERANNUATION AND LIFE ASSURANCE SCHEME
Parties of the second part:
Act: McNeill, QC; Brodies LLP
Alt: Martin, QC; Shepherd & Wedderburn LLP
15 April 2016
Introduction
[1] Bett Homes Limited (“the Company”) is the principal employer in terms of a deed of trust and rules dating from 4 March 1959, as amended. This deed established a Scheme, now called the Bett Limited Superannuation and Life Assurance Scheme (“the Scheme”). Raymond Wood, Stephen Hirst and the Scottish Pension Trustees Limited presently hold office as Trustees of the Scheme (“the Trustees”).
[2] The Company and Trustees were agreed about the terms of the Scheme; the rules thereunder; and that the Scheme has been administered by the Trustees as if changes in respect of escalation of benefits had taken place with effect from 28 October 1992 and as if changes in respect of equalisation of a common pension age for male and female Members of the Scheme had taken place with effect from 1 January 1993.
[3] Difficulties in the administration of the Scheme have arisen. Despite extensive searches, parties were unable to discover sufficient evidence from company records or from other documentation to demonstrate that in 1992, decisions in respect of change to escalation of benefits and equalisation of pension date were made and recorded, in accordance with the requirements of clause eighteenth. Said clause makes provision for amendment of the rules of the Scheme. The parties agreed that they could not prove that the changes were made by amendment procedure in terms of clause eighteenth. The only other clause identified by the parties as a potential foundation for the changes is clause nineteenth (d).
[4] On the basis of the totality of the documentary material identified, the parties invited the court to consider and decide whether it can be inferred that in 1992 the Trustees exercised powers under clause nineteenth (d) to apply special terms, both in respect of escalation of benefits and equalisation of pension age, that the Company as principal employer consented thereto and intimation thereof was made to Members in accordance with said clause. The position adopted by the Company was that clause nineteenth (d) can be relied upon and the changes are therefore legally effective. The Trustees, on legal advice, were unable to make that concession. The Trustees were concerned as to whether the Scheme has been administered lawfully since 1992 by giving effect to the changes and wished guidance from the court about the administration of the Scheme. If the position adopted by the Company is wrong, the Company would be obliged to make a substantial further contribution into the funds of the Scheme and Members or certain Members would become entitled to additional benefits.
[5] In these circumstances the parties agreed to proceed by way of special case to try to resolve their difficulties and focussed the disputed issues in their questions for the court.
Questions in the special case
[6] There are two questions:
“1. On a proper construction of the documentary evidence, should the Scheme have been administered, and should it continue to be administered, on the basis that from 28 October 1992 benefits accruing in respect of service on or after that date were to increase at the rate of 5% per annum, or the increase in the retail price index if less, on the excess of the pension over the Guaranteed Minimum Pension?
2. On a proper construction of the documentary evidence, should the Scheme have been administered, and should it continue to be administered, on the basis that in respect of service on or after 1 January 1993 a common normal Pension Date of 65 years falls to be applied to all Members of the Scheme?”
Submissions by counsel for the Company
[7] Counsel adopted his written submission which he expanded in oral submission. In considering the two questions, the court should accept that there was a power available to the Trustees, under clause nineteenth (d). The court should consider the documentary evidence available and decide whether it can be inferred, from the documents and actings of the Trustees, that the Trustees did exercise the power to apply special terms with the consent of the Company both in respect of escalation of benefits and equalisation of pension age, as provided for in clause nineteenth (d). Counsel asked the court to adopt the approach approved by Lord Drummond Young in Low & Bonar Plc v Mercer Limited [2010] CSOH 47 and relied in particular on his observations in paragraphs 24 to 27. This was the foundation of the submission on behalf of the Company and led counsel in conclusion to identify a number of principles drawn from the decision in Low & Bonar Plc. He submitted that where a Scheme provides two separate routes to achieve some alteration in the Scheme, reliance on either may be possible (paragraphs 12 and 24). In considering an individual rule of a Scheme, regard must be paid to the specific requirements of said rule and the rule should not be construed with undue technicality (paragraph 9). The obverse is that the formal requirements required by one rule should not be read across to other rules where there is no such specification (paragraph 24). He accepted that even if the less formal requirements of a rule are complied with, it may be appropriate to consider whether any safeguards embedded in the formal rules are preserved (paragraph 26). It was on this basis that counsel conceded in the present case that rule nineteenth (d) could not be used to avoid the safeguards embedded in clause eighteenth which prevented prejudice to accrued rights or interests. He presented his submission on the basis that there was no such prejudice created by the two changes.
[8] Counsel set out the current terms of the Scheme. He explained that the original Scheme was set up under a deed of trust dated 4 March 1959 and appended rules. This deed cannot be traced but was amended by deletion and substitution of a supplemental deed and rules on 14 February 1980. A further deed which narrated that it was signed on 9 August 1982 was produced to the court as a certified copy. Said deed changed the name of the Scheme to Bett Brothers Plc Superannuation and Life Assurance Scheme and introduced clause nineteenth (d).
[9] In considering the terms of clause eighteenth and nineteenth (d), counsel noted and contrasted the essential provisions of said clauses. He submitted that clause nineteenth (d), unlike clause eighteenth, did not result in amendment to the Scheme or the rules but resulted in the creation of special terms. The administration of the Scheme required to be done in accordance with the rules and taking into account any special terms which applied to individuals affected by the special terms. Both clauses eighteenth and nineteenth required notification in writing to each Member affected but clause eighteenth, unlike clause nineteenth (d), required specified formalities to be completed to amend the Trust Deed or the rules. No formalities were specified in clause nineteenth (d). To exercise the supplementary power, all that was required was that:
“The Trustees may with the consent of the principal employer determine in relation to any Member that his Membership shall be on such special terms as are intimated to him provided ...”
The proviso to clause nineteenth (d) was not relevant as it related to taxation matters which are not in dispute.
[10] The approach approved in Low & Bonar Plc paragraphs 25 to 27 was similar to that adopted by Lord President Hope in Trustees of the J & A Ferguson Limited Pension Fund v Readman (Minuter) 31 December 1992 (GWD 1993 4‑275). Counsel prayed in aid the proper test identified by the Lord President at page 16:
“The proper test of whether the previous documentation had been superseded by the new draft documentation is whether the inferences can be drawn from the actings of the Trustees, known to and not objected to by the Participating Companies, that all these parties were agreed that the Trustee should operate the Scheme in all respects as if the Deed of Variation and the New Rules had been formally executed…”
In support of a general approach to the interpretation of pension schemes which is not unduly restrictive or technical, counsel relied on Scottish Solicitors Staff Pension Fund v Pattison & Sim & others [2014] CSOH 119 at paragraph 29 and on appeal [2015] CSIH 96, paragraph 18. Counsel also made reference to Vaitkus and Others v Dresser-Rand UK Limited and another 2014 Pens LR 153. He accepted that he could not draw much assistance from Vaitkus and Others but pointed out that there was no criticism made in that case of the approach adopted in Low & Bonar Plc.
[11] Counsel invited the court to consider the terms of clause nineteenth (d), identify the essential requirements and apply the Low & Bonar Plc approach to such evidence as is available. Having considered the only documentary material which the parties agreed was available, counsel accepted that there were deficiencies in the material. He submitted, nevertheless, that in respect of both escalation of benefits and equalisation of pension age, “there is just enough” to entitle the court to conclude that the requirements of clause nineteenth (d) were satisfied. The two questions in the special case therefore should be answered in the affirmative.
Submissions by counsel for the Trustees
[12] Counsel adopted his written submission. In oral submission, counsel explained that the Trustees were concerned to ensure that the Scheme should be administered lawfully in the interest of its Members. He noted that the Members of...
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