HR Trustees Ltd v Wembley Plc ((in Liquidation)) and Another

JurisdictionEngland & Wales
CourtChancery Division
JudgeMR JUSTICE VOS
Judgment Date25 October 2011
Neutral Citation[2011] EWHC 2974 (Ch)
Docket NumberClaim No: HC11C00113

[2011] EWHC 2974 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand

London WC2A 2LL

Before:

Mr Justice Vos

Claim No: HC11C00113

Between:
HR Trustees Limited
Claimant
and
(1) Wembley PLC (in Liquidation)
(2) Mr Paul Lorber
Defendant

MR OLIVER HILTON (Instructed by Messrs Clifford Chance) appeared on behalf of the Claimant

MR PAUL NEWMAN QC (Instructed by Messrs Baker & McKenzie LLP) appeared on behalf of the First Defendant

MR FENNER MOERAN (Instructed by Messrs Clifford Chance) appeared on behalf of the Second Defendant

Approved Judgment

Amended under CPR 40.12 on 17 th November 2011

MR JUSTICE VOS

Introduction

1

This is a part 8 application in which the claimant trustee, HR Trustees Limited ("the claimant" or "the trustee"), has sought directions pursuant to CPR 64.2(a)(ii) concerning the validity of a scheme amendment authority ("the amendment") dated 5 July 2000 which purported to amend the rules of the Wembley 1989 Pension Scheme ("the scheme"). The amendment provided in outline that benefits accrued after 6 April 2000 would increase at the Retail Prices Index subject to a maximum of 5 per cent per annum instead of, as previously, at 5 per cent per annum. The amendment was signed by four rather than all five of the trustees. The power contained in the scheme's definitive Trust Deed dated 29 September 1994 ("the definitive deed") provided for the trustees to declare any such alteration "in writing under their hands". One of the main questions before me is whether they have done so.

2

The claimant as trustee of the scheme takes a neutral stance. The first defendant, Wembley Plc ("the employer"), which is the scheme's principal employer and is now in the process of being wound up, is represented by Mr Paul Newman QC. It contends that the amendment was validly made. It also represents the interests of a class of scheme members whose benefits were not to be affected by the amendment, namely those whose benefits ceased accruing before 6 April 2000 and those referred to as the former scheme B members (as to which see below), about whom I shall say a little more in due course.

3

The second defendant, Mr Paul Lorber ("Mr Lorber"), represents all other members of the Scheme including former scheme A members (as to which see below) whose benefits include benefits accrued after 6 April 2000 and who will have been adversely affected by the amendment if it is valid. For that reason Mr Lorber, represented by Mr Fenner Moeran of counsel, contends that the amendment was not validly made. If the amendment was ineffective the liabilities of the scheme will increase considerably and there will be an estimated excess of liabilities over assets of some £3.363 million. The employer has deposited some £4.9 million in an escrow account to cover the possible deficit.

4

The amendment which is in question in this litigation was printed on Legal and General notepaper and was headed "Scheme Amendment Authority". It then provided as follows:

"Wembley plc 1989 Pension Scheme

"Group Policy Number – G 99558

"The Trustees of the Scheme have resolved, with the agreement of the Principal Employer, to make the following alterations to the scheme and the Legal and General is hereby authorised to implement the following action with effect from 6 April 2000.

1) This alteration applies to all members with the exception of those who retained the old Wembley Stadium benefit formulae [former scheme B members]

Pensions in payment in respect of benefits accrued after 6 April 2000 will increase at the Retail Prices Index subject to a maximum of 5 % per annum

2) This alteration applies to all members including those who retained the old Wembley Stadium benefit formulae.

The revaluation to be added to a members (sic) leaving service benefit, on benefits accrued after 6 April, 2000 will be at the Retail Prices Index subject to a maximum of 5 % per annum.

"There are no special terms or conditions."

5

Messrs Potter, Kelly and Dawkins and Ms Harper signed the amendment as trustees, but the fifth trustee as at 5 July 2000, Ms Bromley, did not sign it. Mr McGrath signed the amendment as Assistant Company Secretary of the employer. It is common ground that he was authorised to do so by the employer. Mr Potter, one of the trustees, was also Chief Financial Officer of the employer at the relevant time and later became Chief Executive Officer of the employer. It will be observed from the terms of the amendment that there is a reference to the exclusion of former scheme B members from the decision. There is a question about the order in which the document was signed at a meeting on 5 July 2000, but there is no evidence about that question. Nonetheless I shall return to it.

6

Two points should be noted at the outset. First, the amendment was intended to bring the provisions of the scheme as regards increases in pensions in payment into line with the statutory provisions found in section 51 of the Pensions Act 1995, which at that time required pensions to be increased annually at a rate of the lower of RPI or 5 per cent. Secondly, the second provision of the amendment concerns early leavers and is not relevant to the issue before me. It will be observed, however, that the first provision (which is in issue) excludes former scheme B members from its operation, whilst the second provision (which is not in issue) includes former scheme B members in its operation.

Chronological background

7

On 20 May 1958 the Wembley Plc Pension and Assurance Scheme (the former scheme A) was established. On 31 December 1975 the Wembley Stadium 1976 Pension and Assurance Scheme (the former scheme B) was established. On 30 May 1989 the scheme was established by the employer, which was the former owner of Wembley Stadium and a track based gaming group, as the successor to former scheme A and former scheme B, which were then merged into the scheme on 1 June 1989. An interim Trust Deed took effect on 30 May 1989. The definitive Trust Deed and rules relating to the scheme were executed on 29 September 1994. Those documents included the following provisions. Rule 16(e) as unamended provided for increases in pensions as follows:

"A pension payable under these Rules shall (other than any guaranteed minimum pension described in the Overriding Appendix - GMP Model Rules), subject to Rule 17 and except as provided below, be increased at each anniversary of the date of its institution by 5 per cent. compound in respect of a Former Scheme A Member or any other Member (other than a Former Scheme B Member), and 3 per cent. compound in respect of a Member who is a Former Scheme B Member. For this purpose the date of its institution shall be regarded as the date on which a pension became payable to the Member under the Scheme or the date of the Member's death if earlier."

8

The power of the trustees to amend the rules of the scheme is contained at clause 16 of the definitive deed, dated 29 September 1994, as follows:

"The Principal Employer may from time to time without the concurrence of the Members authorise the Trustees in writing to alter or add to the terms and provisions of the Rules and/or the trusts, powers and provisions of this Deed and any such alteration or addition may have retrospective effect. The Trustees shall forthwith declare any such alteration or addition to the Rules in writing under their hands and any such alteration or addition to this Deed by deed except that any alteration or addition to this Deed which is solely for the purpose of enabling the Scheme to satisfy any requirements of Relevant Legislation (and any variation or termination of such alteration or addition) may be under the Trustees' hands only and shall be as effective in all respects as if it had been by deed. This Deed and/or the Rules shall stand amended accordingly with effect from the date of such declaration or from such other date (whether future or past) as is stated in such declaration. In the event of the Trustees making any such alteration or addition to the Rules the Trustees shall forthwith notify or arrange for the notification of each Member affected thereby individually in writing of the effect thereof.

"Provided always that no such alteration or addition shall (1) operate so as to affect in any way prejudicially (a) any pension already being paid in accordance with the Rules or this Deed at the date such alteration or addition takes effect or (b) any rights or interests which shall have accrued to each prospective beneficiary in respect of pension or other retirement benefits secured under the Scheme up to the date on which such alteration or addition takes effect unless such operation (whether retrospective or otherwise) is necessary in order to enable the Scheme to satisfy any requirements of Relevant Legislation or (2) authorise or permit, or have the effect of authorising or permitting, the payment or transfer (or any increase in the payment or transfer) to any of the Employers of any part of the Scheme Assets except where such payment or transfer (or increase in payment or transfer) would not prevent the continued approval of the Scheme under the 1988 Act or (3) create any surplus of Scheme Assets if such surplus would prevent the continued approval of the Scheme under the 1988 Act or (4) affect in any way the duration of the Trust Period except to extend it to such other period (whether limited or unlimited) as may for the time being be allowed by law."

9

Rule 1(c) provided in relation to amendment as follows:

"Where the Principal Employer wishes to amend these Rules in respect of an...

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