Ian Shannan v Viavi Solutions UK Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lord Justice David Richards,Lord Justice Gross |
| Judgment Date | 28 March 2018 |
| Neutral Citation | [2018] EWCA Civ 681 |
| Date | 28 March 2018 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Appeal No: A3/2016/3050 |
[2018] EWCA Civ 681
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Timothy Fancourt QC, as Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Gross
Lord Justice David Richards
and
Lady Justice Asplin DBE
Appeal No: A3/2016/3050
Claim No. HC-2015-002634
( Paul NewmanQC andBobby Friedman instructed by Boyes Turner LLP) for the Defendant/Appellant
( Nicolas StallworthyandSimon Oakes instructed by Stephenson Harwood LLP) for the 2 nd Defendant/ Respondent
( James McCreath instructed by TLT Solicitors LLP) for the 1 st, 2 nd and 3 rd Claimants/ Respondents
Hearing dates: 27 th and 28 th February and 1 st March 2018
This is an appeal by Viavi Solutions UK Limited (“Viavi”) against paragraph 2(a) of the Schedule to the Order dated 8 July 2016 of Mr Timothy Fancourt QC (then sitting as a Deputy High Court Judge in the Chancery Division) following his judgment dated 27 June 2016. The central issue with which the appeal is concerned is whether the definitive deed and rules of the Wandel and Goltermann Retirement Benefits Scheme (the “Scheme”), dated 15 September 1999 (the “1999 Deed”), was validly executed so as to amend the governing provisions of the Scheme. The dispute centres around whether Wandel and Goltermann Management Limited (“Management”) was the appropriate company to execute the 1999 Deed.
The parties to the 1999 Deed were Management, purportedly in the capacity of Principal Employer in respect of the Scheme and the then Trustees of the Scheme, Mr Robert Shaw, Ms Frances Ball, Mr Richard Taylor, Mrs Margaret Street, Mr Timothy East and Ms Jennifer Bennett (the “then Trustees”). Management had become the parent company of Viavi following a corporate reorganisation in September 1994. It is accepted, however, that Viavi was the Principal Employer until at least 1997. The 1999 Deed can only have been validly executed if Management replaced Viavi as Principal Employer of the Scheme as a result of the exercise of the relevant substitution power, either before or by means of the execution of the 1999 Deed itself. If the 1999 Deed is invalid, various increases in pension benefits effected by it would be of no effect because the power to amend the Scheme was vested in the Principal Employer and the then Trustees.
The Judge decided that the requirements for substituting the Principal Employer of the Scheme were met by the execution of the 1999 Deed and, therefore, Management became the Principal Employer as a result, and accordingly, the 1999 Deed was effective. He rejected the argument that the requisite agreements and consent necessary for a valid exercise of the substitution power had been concluded and given in mid 1999, before the execution of the 1999 Deed.
Whilst accepting that Viavi was the Principal Employer in respect of the Scheme from 1983 to 1997 and after 2003, Mr Newman QC on Viavi's behalf contends that the 1999 Deed is invalid because all the relevant parties were under the misapprehension that Management had been Principal Employer of the Scheme since 1994. Therefore, it is said that the execution of the 1999 Deed itself could not have constituted or evidenced the requisite agreements and consent necessary for the substitution of Management for Viavi as Principal Employer, nor could those agreements and consents have been arrived at in the summer of 1999, before the 1999 Deed was executed.
Mr Stallworthy QC on behalf of Mr Malcolm Froude, submits that the Judge was right to conclude as he did and, if not, the requisite agreements and/or consent were arrived at and given in the summer of 1999 before the 1999 Deed was executed. Accordingly, he submits that the 1999 Deed and the amendments to benefits that it purported to effect are valid.
Mr Froude is the Second Defendant Respondent to this appeal. He is a member of the Scheme, was a trustee of the Scheme from 27 June 2003 until 15 May 2013 and was a director of Viavi from 5 May 1995 until 31 March 2003. The Judge made a representation order pursuant to CPR Part 19 rule 7 under which Mr Froude was appointed to represent all those employers, members and other beneficiaries of the Scheme whose interests coincide with the position which he has taken in these proceedings which is opposed to that of Viavi. Viavi was also the subject of a representation order under which it was appointed to represent all those employers, members and other beneficiaries of the Scheme whose interests coincide with its own.
Mr Ian Shannan, Mr Eric Roger Hall and Mr William Kim Quillin were until very recently the present trustees of Scheme. Since the proceedings were commenced Mr Quillin has been replaced as a trustee by Fan Zou, who together with Messrs Shannan and Hall will be referred to as “the Present Trustees”. They were represented before us by Mr McCreath. They were Claimants in the proceedings before the Judge, having brought the matter before the Court in order to obtain directions in relation to the uncertainties that had arisen in the administration of the Scheme. They are the First, Second and Third Respondents to this appeal, in which they take a neutral stance, as they did below.
Bond Pearce, Bond Pearce LLP and Aon Consulting Limited were the third to fifth Defendants in the proceedings below and are also Respondents to this appeal. Bond Pearce provided legal services to the Trustees of the Scheme and Bond Pearce LLP is the successor to the business previously carried on by Bond Pearce. I shall refer to both Bond Pearce and Bond Pearce LLP together as “Bond Pearce”. Aon Consulting Limited (“Aon”) is the provider of administrative and actuarial services to the Scheme and has been since 1997. Both Bond Pearce and Aon were joined to the proceedings in order that they would be bound by the outcome. They were not represented in the proceedings below and were not represented in the appeal before us.
Relevant background
The Scheme was established in 1967 and closed to further pension accrual in 2003. Viavi was admitted to participation in the Scheme in 1978 and in 1983 it became the Principal Employer pursuant to a Deed dated 7 January 1983 which purportedly backdated the appointment to 1981. Viavi was called W&G Instruments Limited at that stage. Management was incorporated on 27 July 1994, having been acquired “off the shelf”. It became the holding company of Viavi on 30 September 1994. It had no employees.
By a deed dated 7 November 1995 (the “1995 Deed”) made between Viavi, as Principal Employer, and the then Trustees, the rules of the Scheme were replaced. It is common ground that Viavi was the Principal Employer when the 1995 Deed was executed, and accordingly, that that deed and the changes to benefits effected by it were valid. The provision in relation to the substitution of the Principal Employer was contained in Rule 10.10 of the 1995 Rules. It is in the following form:
“The Trustees may agree with an employer or holding company that it may become the Principal Employer unless this would prejudice Approval. The consent of the existing Principal Employer shall be necessary unless it has been dissolved.”
(‘Rule 10.10”)
It is accepted that Rule 10.10 was the relevant provision in relation to any change in Principal Employer at the relevant time or times in 1999. The Judge decided that for the purposes of Rule 10.10 no formality was necessary; either for the purposes of an agreement between the Trustees and an employer or holding company, or for the giving of consent by the existing Principal Employer. However, he concluded that save possibly where the Principal Employer had been dissolved, a substitution of Principal Employer under Rule 10.10 could not take effect retrospectively. Neither of these conclusions are the subject of an appeal.
The 1999 Deed was dated 15 September 1999 but was executed by the then Trustees on 12 January 2000 and by Management, purportedly as Principal Employer on 3 February 2000. Viavi was not a party to it. Furthermore, there is no written record of Viavi having consented to Management becoming the Principal Employer in its place. Although Management is named as the Principal Employer in the 1999 Deed, the Deed also contains seemingly inconsistent provisions to which I will turn in detail below.
Aon subsequently sought to obtain a contracting-out certificate from the National Insurance Contributions Office in the name of Management. The Inland Revenue requested copies of the document by which the Principal Employer had been substituted and were not satisfied by a copy of the 1999 Deed. Thereafter, a Deed of Novation was executed on 13 March 2002 by Viavi, Management and the then Trustees of the Scheme (the “Deed of Novation”). In summary, it declared that since 30 September 1994, Management had assumed the duties and obligations of the Principal Employer under the Scheme in place of Viavi and that as a consequence, with effect from that date, Management was the Principal Employer in respect of the Scheme. It was further declared that the parties ratified all actions and decisions made by Management between 30 September 1994 and the date of the Deed of Novation. There was a dispute before the Judge about the true effect of the Deed of Novation and whether it could have retrospective effect. However, having found that the 1999 Deed was effective, the Judge did not need to determine those points. If this appeal is allowed they will need to be remitted to the Judge.
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