Harland & Wolff Pension Trustees Ltd v Aon Consulting Financial Services Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE WARREN,Mr Justice Warren |
| Judgment Date | 02 July 2009 |
| Neutral Citation | [2009] EWHC 1557 (Ch),[2006] EWHC 1778 (Ch) |
| Docket Number | Case No: HC04C01475,Case No: CH/2008/APP/0792 |
| Court | Chancery Division |
| Date | 02 July 2009 |
[2006] EWHC 1778 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Warren
Case No: HC04C01475
Mr Paul Newman (instructed by PricewaterhouseCoopers Legal LLP for the Claimant
Mr Nicholas Paines QC and Mr Nicolas Stallworthy (instructed by CMS Cameron McKenna LLP) for the Defendant
Hearing date: 7th July 2006
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.
Introduction
This is the trial of a preliminary issue in a claim by the Claimant ("the Trustee"), as trustee of the Harland and Wolff Pension Scheme ("the Scheme"), against the Defendant, Aon Consulting Financial Services Ltd, ("Aon") the former professional advisers to the Scheme (known at all material times as Goodwins Ltd). The claim is for breach of duty relating to the steps taken by the Trustee, on the advice of Aon, to comply with the European law requirement to remove discrimination between the pension benefits of male and female members of the Scheme. Mr Newman appears on behalf of the Trustee; Mr Paines QC and Mr Stallworthy appear on behalf of Aon.
Agreed Statement of Facts
There is an Agreed Statement of Facts which I set out as follows.
a. The Claimant is the trustee of the Scheme.
b. Prior to 7 September 1993, the Scheme was governed by a trust deed and rules dated 6 September 1988 ("the 1988 Rules").
c. The 1988 Rules provided (so far as material):
i. a definition Part IV of the 1988 Rules, that the Normal Retirement Date ("NRD") for a male member (on and after 6 April 1986) was his 63 rd birthday and for a female member was her 60 th birthday;
ii. by rule 32.1 that "the Principal Company may with the consent of the [Trustee] by deed amend the Definitive Deed or the Rules" and:
iii. by rule 32.1.2 that "Any change will be effective from the date specified in the document making the change and may be made retrospectively"; and
iv. by rule 32.2 that "Amendments shall take effect from the date of the amending deed unless an earlier or later effective date is specified in the deed"; but
v. by rule 32.1.4 that "no change shall be made which would reduce benefits then in payment".
d. Aon was retained by the Trustee to provide actuarial and pension benefit consultancy advice and services to the Scheme, including advice and services relating to the equal treatment requirement under Article 119 (now 141) of the Treaty of Rome. [I shall refer to this as Article 119, adopting the number relevant at the time in question].
e. Between early 1992 and early 1993 there was discussion between Aon, the Trustee and the Scheme's Principal Company about the need to equalise the NRD of male and female members of the Scheme.
f. At a meeting on 25 March 1993 the Trustee resolved to equalise the NRD of male and female members of the Scheme by increasing the NRD for women to age 63, such increase only applying in relation to service on and after 17 May 1990.
g. Pursuant to the power of amendment in rule 32 of the 1988 Rules, on 7 September 1993 the Claimant executed a new deed and rules ("the 1993 Deed & Rules") which provided (so far as material):
i. within the 1993 Deed, that the 1993 Deed & Rules should be applicable with effect from 1 January 1993 and that up to that date the provisions of the 1988 Rules should continue to apply except where contrary provisions in the 1993 Rules were expressed to be effective before that date;
ii. by rule 3.3 of the 1993 Rules, that the pension payable to a female member in respect of service before 17 May 1990 should not be less than a Guaranteed Amount (defined in Part IV of the 1993 Rules), so as to guarantee that pension accrued by a female member prior to 17 May 1990 should not reduced by the 1993 Rules; and
iii. a change in definition of NRD so that that the NRD for both male and female members on and after 17 May 1990 was their 63 rd birthday.[ I add that for female members, NRD, prior to 17 May 1990, is their 60 th birthday].
h. It is common ground between the parties that this retrospective increase in the NRD of female members was lawful and valid under domestic English law.
The Trustee contends that Aon should have advised, but failed to do so, that the period of service for which benefits of male members should be equalised to the level of benefits of female members did not end, according to the Trustee, until the date of the execution of the 1993 Deed and Rules on 7 September 1993 rather than the date on which the 1993 Deed and Rules purported to take effect in respect of the change in NRD, namely 17 May 1990.
The Order directing a preliminary point
The relevant part of the order directing the preliminary point is in the following terms:
"UPON the parties having agreed the Statement of Agreed Facts scheduled to this Order.
AND UPON the Claimant admitting that in 1993, as a matter of domestic English law:
(i) rule 32 of the Scheme's rules gave power to change the Scheme rules retrospectively, subject to not affecting pensions in payment and not increasing contributions without the member's consent; and
(ii) save for any application of Article 119 (now Article 141) of the Treaty of Rome, such a power was lawfully and validly exercised in the circumstances of this case.
AND UPON the Defendant, in consideration of those admissions, consenting to the terms of this Order
BY CONSENT IT IS ORDERED THAT:
1. The following issue be tried by a Judge as a preliminary issue (the "Issue") on the agreed facts as annexed to this order and initialed by the Master
"Whether, on the true construction of Article 141 (formerly Article 119) of the Treaty of Rome and on a proper application of European case law, the requirement for male and female members of an occupational pension scheme to be provided with equal pension benefits for the same period of pensionable service served on or after 17 May 1990 is satisfied where:
(i) an amendment of the Scheme made on 7 September 1993 altered the Normal Retirement Date for female members of the Scheme on and after 17 May 1990 from their 60 th birthday to their 63 rd birthday (the Normal Retirement Date for a male member of the Scheme being his 63 rd birthday);
(ii) in accordance with rule 32 of the Scheme rules the effective date of that amendment is 17 May 1990; and
(iii) the governing provisions of the Scheme and domestic English law otherwise permitted the amendment to be made retrospectively, save to the extent that such amendment operated to reduce benefits then in payment."
Article 119 and Community law
Article 119 requires Member States to ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied. This Article is of direct effect and can be relied on by, for instance, employees against employers to secure equality of pay. In the seminal case of Barber v Guardian Royal Exchange [1991] 1 QB 344, the ECJ stated the application of this provision to pension benefits, in particular deciding that it was unlawful to discriminate between men and women by providing benefits by reference to different ages at which pension becomes payable. It was, as is well known, common for pension schemes to provide different retirement ages for men and women (typically 65 and 60 respectively); the decision in Barber and the requirement to remove this discrimination was a cause of great activity in the period after the judgment of the ECJ (which was delivered on 17 May 1990).
Because of the uncertainty, partly engendered by certain Community instruments and the decision of the ECJ in Newstead v Department of Transport [1988] 1 WLR 612, about whether Article 119 applies to benefits provided by a contracted-out pension scheme (the Scheme in the present case was such a scheme at the time of the amendments in 1993), a temporal limitation was laid down by the ECJ in its decision in Barber: as the court put it, overriding considerations of legal certainty required the effects of the judgment to be limited in time.
Unfortunately, the scope of that temporal limitation was itself a matter of great uncertainty. Many of the uncertainties were resolved in a series of cases: van den Akker v Stichting Shell Pensioenfonds Case C-28/93; Coloroll Pension Trustees Limited v Russell Case C-200/91; Smith v Avdel Systems Limited Case C-408/92. These are conveniently reported together at [1994] PLR 211. The effect of these cases is summarised by Lewison J in Trustee Solutions v Dubery [2006] EWHC 46 (Ch) at paragraph 4:
"Following subsequent cases, particularly Coloroll Pension Trustees Ltd v Russell [1994] OPLR 179 the effects of the Barber judgment on the requirements for equal treatment of men and women were confirmed as follows:
i) For pensionable service prior to 17 May 1990 (the date of the Barber judgment) it was not unlawful for male and female pension benefits to be provided at different retirement ages;
ii) A scheme could be amended so as to equalise benefits for men and women, if the rules of the scheme permitted such amendment. The nature of the amendment could either reduce the normal male retirement age, or increase the normal female retirement age, or both; provided that both sexes were treated equally;
iii) For pensionable service between 17 May 1990 and the operative date of any valid amendment [I will need to look at what is meant by the operative date in more detail later] male members of a pension scheme were entitled to be treated as if their normal retirement age was the same age as that applicable to female members (usually 60). This period is known, in the jargon, as 'the Barber...
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