Britvic Plc v Britvic Pensions Ltd
| Jurisdiction | England & Wales |
| Judge | Hodge QC |
| Judgment Date | 17 January 2020 |
| Neutral Citation | [2020] EWHC 118 (Ch) |
| Date | 17 January 2020 |
| Docket Number | Ref. PE-2019-000013 |
| Court | Chancery Division |
[2020] EWHC 118 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD) — PENSIONS
7 Rolls Building
Fetter Lane
London
HIS HONOUR JUDGE Hodge QC
Sitting as a Judge of the High Court
Ref. PE-2019-000013
In the Matter of the Britvic Pension Plan
Mr Andrew Short QC appeared on behalf of the Claimant
Mr Jonathan Chew appeared on behalf of the First Defendant
Mr Keith Bryant QC and Mr Philip Stear appeared on behalf of the Second Defendant
Hearing dates: 15 th and 17 th January 2020
APPROVED JUDGMENT
This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.
This is the court's extemporary judgment on the substantive hearing of a Part 8 claim issued by Britvic Plc, as the sponsoring and principal employer of the Britvic Pension Plan, on 25 July 2019. This judgment is divided into eight sections as follows: (1) Introduction. (2) Background. (3) The relevant history. (4) The legal framework. (5) The employer's submissions. (6) The trustees' position. (7) The representative beneficiary's submissions. (8) Conclusions. However, such division is for ease of understanding and exposition only, and each section of this judgment has informed the others.
Introduction
This case concerns the proper construction of certain provisions dealing with increases to defined benefit pensions in payment in excess of the guaranteed minimum pension and the revaluation of deferred benefits under the Britvic Pension Plan (as later amended). As later amended, these provisions provide as follows:
“The rate of increase is the percentage increase in the retail prices index during the year ending the previous 31 May but subject to a maximum of five per cent in relation to Pensionable Employment up to and including 30 June 2008 and a maximum of 2.5 per cent in relation to Pensionable Employment on and from 1 July 2008 (or any other rate decided by the Principal Employer)”.
The focus of this case is upon the phrase in parenthesis at the end of that provision: “(or any other rate decided by the Principal Employer)”. The central question is whether the alteration power “(or any other rate decided by the Principal Employer)” allows the principal employer to substitute a rate that is higher or lower than would otherwise apply (as the employer contends) or whether it only allows the principal employer to substitute a higher rate (as the representative beneficiary contends). The claimant has referred to this power as the “Increase Alteration Power”, but this description is contentious because it rather begs the question to be determined in these proceedings. Mr Short might have said, but elected not to, that the description “Increase Alteration Power” rather gives the game away.
A subsidiary question is whether the principal employer may set a different rate for the purposes of the revaluation of deferred pensions under rule C2(2) than for the purposes of increasing pensions in payment under rule C10(2).
The background
The Britvic Pension Plan is an occupational pension scheme established by a trust deed and rules, dated 31 January 2003, with a commencement date of 1 April 2003. The Plan is currently governed by the Trust Deed and Rules dated 12 December 2007 (as amended). The Plan has a general rules section, a defined benefits staff section, a defined benefits executive section and a defined contribution section. The Britvic Pension Plan was set up as a result of a corporate demerger of Six Continents Plc (formerly Bass Plc), when the soft drinks business was split off from the hotel and retail businesses. The defined benefits sections were set up to receive active and most deferred members and pensioners from either the Six Continents Pension Plan (formerly the Bass Pension Plan and since renamed the Mitchells and Butlers Pension Plan) or the Six Continents Executive Pension Plan (formerly the Bass Executive Pension Plan and since renamed the Mitchells and Butlers Executive Pension Plan) who were or had been employed in the soft drinks businesses before the demerger. Both of the defined benefits sections were closed to new members from the start of the Britvic Pension Plan. The only members were those who elected to transfer in, or those who were automatically transferred in, to the Britvic Pension Plan. Both of the defined benefit sections closed to further defined benefit accrual on 10 April 2011.
The claimant, Britvic Plc, has been the principal employer of the Britvic Pension Plan since it replaced Britannia Soft Drinks Limited in that role on 2 March 2006. There are two witness statements from Mr Dominic Whyley. Mr Whyley is the company's Director of Tax and Treasury and was the Chair of its Pensions Committee. Mr Whyley's first statement, dated 25 July 2019, sets out the events leading to the creation of the Britvic Pension Plan, the adoption of the relevant rules and the reasons for this application. It also outlines other proceedings issued on 26 February 2018, under case number PE-2018-00003, in relation to the Mitchells and Butlers Pension Plan. These form part of the background to the instant proceedings and they are due for a trial extending, I am told, over some three weeks later this year. Mr Whyley's second witness statement, dated 15 August 2019, was provided for an interlocutory application, details of which will emerge shortly. The claimant is represented by Mr Andrew Short QC.
The first defendant, Britvic Pensions Limited, is the sole trustee of the Britvic Pension Plan. It is represented by Mr Jonathan Chew (of counsel). The trustee takes a neutral role in these proceedings, although the current chair of the trustee, Ms Alison Bostock, has provided three witness statements dated 7 August, 16 August and 24 December 2019, addressing various matters.
The second defendant, Mr Simon Richard Mohun, is a member of the Britvic Pension Plan. He has provided two witness statements dated 8 and 15 August 2019. He is represented by Mr Keith Bryant QC, leading Mr Philip Stear (also of counsel). Mr Mohun was employed in the soft drinks business of Bass Plc, and then Six Continents, before the demerger and he was a member of their respective pension plans. His employment was transferred to the company's group, and he transferred his accrued benefits into the Britvic Pension Plan. He was an active member of that plan from April 2003 until it closed to future defined benefits accrual on 10 April 2011. His benefits would be more valuable if the principal employer is only able to substitute a higher rate of increases under the relevant provision. Mr Mohun is willing to be appointed, pursuant to CPR 19.7, as a representative of those in whose interests it would be to oppose the principal employer's interpretation of the relevant rules. There is also a statement, dated 3 January 2020, from Ms Kate Payne, a solicitor and partner with ARC Pensions Law LLP, who are the solicitors acting for the representative beneficiary. She exhibits, as exhibit KP1, some correspondence received from members of the Plan.
The claim form was issued under part 8 of the CPR on 25 July 2019. It raises a series of questions as to the proper construction of rule C10(2) of the 2007 Trust Deed and Rules as amended (in the case of the Staff Rules) by clause 1.4 and (in the case of the Executive Rules) by clause 1.11 of a Deed of Alteration dated 30 June 2008. In summary, rule C10 deals with increases to pensions in payment, or what may be termed “escalation”. The claim form also raises a subsidiary question as to rule C2(2), which deals with the revaluation of deferred pensions before they are put into payment.
An amended claim form was issued on 9 January 2020 making two amendments to the original claim, with the agreement of the defendants. One clarifies that the questions posed in the original claim form are asked in relation to the 2007 Trust Deed and Rules as they were amended by the 2008 Deed of Alteration. The other amends the proceedings so that they expressly address the equivalent rules in the 2003 Trust Deed and Rules. As it is necessary to identify, at least to some extent, the true construction of the rules in the 2003 Trust Deed and Rules in order to construe the same rules in the later 2007 Trust Deed and Rules, as amended, it is sensible for that issue to be addressed in these proceedings. As Mr Bryant points out, any member of the Pension Plan with active service under the 2003 Rules who ceased pensionable service before 12 December 2007 is not subject to the 2007 Rules. Unless construction of the 2003 Rules is added to the current claim, such members would not be bound by any declarations or other rulings made by the court. Unless amended, the representation order proposed for the second defendant would not cover such members at all. Mr Bryant understands there to be no suggestion from any of the parties that the proper construction of either rule C10 or rule C2 should be different as between different sections of the Pension Plan or as between different iterations of its rules.
The court was invited to note that other issues may arise in due course, either as a result of the extant Mitchells and Butlers proceedings referred to by Mr Whyley and Ms Bostock in their respective witness statements, or separately in relation to the far fewer members of the executive section of the Pension Plan. However, these issues are not to be addressed in these proceedings,...
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