Sea Containers Services Ltd ((in Liquidation)), Sea Containers Ltd ((in Liquidation)), 0438490 Travel Ltd ((in Liquidation)), 1882420 Ltd ((in Liquidation)) & S.C. Maritime Ltd ((in Liquidation)) and Another
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Hildyard |
| Judgment Date | 19 September 2012 |
| Neutral Citation | [2012] EWHC 2547 (Ch) |
| Court | Chancery Division |
| Date | 19 September 2012 |
| Docket Number | Case No: 3703/2012 |
[2012] EWHC 2547 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Hildyard
Case No: 3703/2012
Sarah Asplin QC and Fenner Moeran (instructed by Bingham McCutchen LLP) for the Applicants
Andrew Short QC (instructed by Wragge & Co LLP) for the Representative Respondent
Hearing dates: 18, 19 July 2012
MR JUSTICE HILDYARD
Introduction
This is an application for the Court to determine various questions arising in respect of a final salary occupational pension scheme called the Sea Containers 1983 Pension Scheme ("the 1983 Scheme"), and more particularly a stand-alone letter relating to the 1983 Scheme and comprising a promise made to various members of the 1983 Scheme which was intended (and accepted by the parties) to have contractual effect. (The terms of that letter are set out in paragraph 8 below.)
That letter constituted one element of various arrangements and documents put in place with a view to equalising the benefits of male and female members of the 1983 Scheme in accordance with the decision of the European Court of Justice (then "the ECJ") 1 in Barber v Guardian Royal Exchange Assurance Group [1991] 1 QB 344 ("the Barber decision") whilst (so far as possible) avoiding or alleviating possible adverse effects of the required equalisation process.
The Barber decision primarily impacted the 1983 Scheme because, like many pension schemes in the early 1990s, the 1983 Scheme provided different benefits for male and female members. In particular, it provided benefits by reference to a 'Normal Retirement Date' ("NRD") which was stated to be 65 for men and 60 for women. To comply with the Barber decision, as clarified in the further decision of the ECJ in Coloroll Pension Trustees v. Russell [1994] OPLR 179, it was (as in the case of many similar schemes) decided inter alia to 'equalise up': that is to say, to raise the NRD for women from 60 to 65.
This process of equalisation was intended to take place in two stages:
(1) First, all members of the 1983 Scheme who joined after 1 January 1991 2 (generally called 'new joiners') were given an NRD of 65 from the outset of their membership. Those members are irrelevant to this action.
(2) Secondly, in 1994 all pre-existing (i.e. pre-1991) female members were to have their NRDs equalised up to 65 in respect of future service.
In the case of the 1983 Scheme the equalisation process adopted was an uneasy and untidy mixture of formality and informality. This was occasioned at least in part by the initial decision to effect the required changes by way of a public announcement to members ("the 1994 Announcement"), rather than by deed of amendment.
These various arrangements and documents (and similar arrangements and documents relating to another Sea Containers pension scheme, known as the Sea Containers 1990 Pension Scheme) have already occasioned two previous applications to the Court. One was before the Chancellor, Sir Andrew Morritt. The other came before Henderson J. I refer briefly to these later.
The document to be interpreted: the Special Promise letter
As indicated above, the present application concerns the construction of a short letter written on the headed notepaper of Sea Containers Services Limited ("SCSL"), which was the then principal employer in the 1983 Scheme. The letter ("the Special Promise letter") was provided by hand to certain female employees of companies within the Sea Containers group of companies which were also participating employers in the 1983 Scheme.
The Special Promise letter comprised a promise ("the Special Promise") made only to its recipients ("Special Members"). The Special Promise, which (it is common ground) was intended to operate outside the 1983 Scheme with a view to providing enhancements which would not trigger further rights of equal treatment under the 1983 Scheme, was headed "TO WHOM IT MAY CONCERN". It was in these terms:
"My letter to [employee name] of 15 July 1994 advised her of the contractual [sic] requirement to change female retirement age from 60 to 65.
The Company should like to confirm that should [employee name] still elect to retire at her previous retirement age of 60, the Company shall provide a pension at age 60 equivalent to that which would have been available prior to the Pension Scheme changes which were introduced on 1st August 1994."
The applicants and the respondent: the representative parties and their interests
Before returning to explain the various questions that have arisen as to the meaning and effect of the Special Promise it is convenient to identify the parties and their interests, and the background to this application.
The applicants ("the Applicants") are the provisional liquidators of a Bermudian body corporate, Sea Containers Ltd ("SCL") and the liquidators of the remaining above named companies (together "the Sea Containers Companies"), including SCSL.
Apart from SCL, all the Sea Containers Companies are registered in England. SCL is their ultimate parent company, and the direct holding company of SCSL. SCSL was at all material times until its liquidation the Principal Employer under the 1983 Scheme. The remaining Sea Containers Companies were subsidiaries of SCL and participating employers in the 1983 Scheme.
SCSL is in insolvent liquidation, as are the other participating employers. In order to enable the 1983 Scheme to be administered as a closed fund rather than be wound up a new company was constituted as the principal and only participating employer in place of SCSL. The 1983 Scheme was closed to future accrual with effect from 30 th September 2006. It is currently continuing to be administered as a closed fund.
On 15 October 2006, SCL and SCSL filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code. The resulting Chapter 11 Plan ("the Plan") was approved by the US Bankruptcy Court for the district of Delaware and on 11 February 2009, SCL and SCSL emerged from Chapter 11.
Under the Plan, SCL's container business was transferred to a new company (Seaco) in consideration of the entire share capital of Seaco being held by SCL and SCSL for distribution, together with a small amount of cash, to holders of allowed creditor claims under the Plan. In consequence of the Plan, the major creditors of SCL and SCSL (former SCL bondholders and the trustees of the 1983 Scheme and 1990 Scheme) became, and remain, the major shareholders in Seaco.
The arrangements for settlement of pension scheme claims
The Plan included a settlement of claims by the trustees of the 1983 Scheme 3 to make good the substantial deficit which had arisen. This included claims relating to the purported 1994 equalisation (which were ultimately resolved by the decision of the Chancellor referred to below (at paragraphs 21 and 29), and equivalent proceedings for the 1990 Scheme).
The Plan also made provision for the creation of a trust holding various assets ("the EREC Trust") in order to satisfy any equalisation-related employee claims ("EREC Claims") which might be brought against the Sea Containers Companies themselves (i.e. outside the pension schemes). The EREC Claims are those of the Special Members, and possibly the Male Comparators and Piggyback Claimants as defined in paragraph 39 below.
If and to the extent there are valid EREC Claims in the respective liquidations of the Sea Containers Companies, the Applicants (as liquidators) are able in turn to make equivalent claims against the EREC Trust and will receive distributions from the EREC Trust. To the extent that there are funds left over in the EREC Trust after all the valid EREC Claims have been met then the surplus is returned to SCL and/or Seaco.
Representation Orders and the interests of the parties
The Applicants' interest (as liquidators) is simply to establish with certainty the identity of potential EREC claimants, the value of their claims and whether they can be recovered from the EREC Trust. Nevertheless, in order to assist the Court, the Applicants have been appointed as representative parties to argue for the narrowest interpretation of the Special Promise in relation to each of the questions posed.
Against that, it is clearly in the interest of the Special Members to maximise their claims against the Sea Container Companies. To present arguments on their behalf, the Representative Respondent, Ms Victoria Mellor ("Ms Mellor"), has been selected and appointed as a representative party to represent all current and former members of the
1983 Scheme in whose interests it is or may be to argue for a broad interpretation of the Special PromiseMs Mellor is a former employee of one of the Sea Containers Companies, namely Illustrated London News & Sketch Limited. She is a deferred member of the 1983 Scheme. She was a recipient and subscriber of a Special Promise letter. She is a Special Member accordingly.
It will be apparent that the representation orders were issue-based. There is an analysis of the jurisdictional basis for such representation orders in the decision of the Chancellor, Sir Andrew Morritt C., in Capita ATL Pension Trustees Limited v Zurinskas [2010] EWHC 3365 (Ch.). That decision ("the Zurinskas case") also concerned issues as to the interpretation of the 1983 Scheme and contains a summary of the background to it.
The matrix of fact
The documentary background includes most relevantly:
(1) the relevant deed and rules of the 1983 Scheme (see below);
(2) the 1994 Announcement; and
(3)...
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