Konica Minolta Business Solutions (UK) Ltd v Applegate [Ch D]
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Asplin |
| Judgment Date | 21 December 2012 |
| Neutral Citation | [2012] EWHC 3741 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC11C02515 |
| Date | 21 December 2012 |
[2012] EWHC 3741 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Case No: HC11C02515
Fenner Moeran (instructed by Shoosmiths LLP) for the Claimant
Jennifer Seaman (instructed by Eversheds LLP) for the Trustees (D1-D7)
Emily Campbell (instructed by DLA Piper UK LLP) for the Eighth Defendant
Hearing dates: 27 – 28 November 2012
HTML VERSION OF JUDGMENT
Introduction
This case is concerned with an occupational pension scheme called the Konica Minolta Business Solutions (UK) Pension Plan ("the Scheme"). It was formerly called the Konica Minolta Business Solutions (UK) Pension & Life Assurance Scheme and I gave permission at the outset of the hearing to amend the Claim Form in order to update the title of the proceedings. The Scheme is a defined benefit, Revenue registered (formerly Inland Revenue exempt approved) occupational pension scheme. It also provides defined contribution benefits, but those are not relevant to the issues in this case.
The Claimant Konica Minolta Business Solutions (UK) Limited, ("Konica") is the sponsoring employer of the Scheme. The 1st to 7th Defendants are the current trustees ("the Trustees") and the 8th Defendant, Mr Hughes is a member of the Scheme. In fact, Mr Hughes is a "Category B Member" as defined in the Definitive Deed and Rules of the Scheme dated 23 January 2006 (the "2006 Deed and Rules") to which I shall refer.
Konica has commenced these proceedings seeking rectification of the 2006 Deed and Rules. It is intended that Mr Hughes be appointed as a representative defendant to argue against the rectification, albeit no doubt by way of an issue based order. In preparation for his role or indeed as part of it, he has raised the issue that were the proposed application for rectification, successful, the Scheme would not be compliant with statutory preservation requirements for occupational pension schemes, contained in the Pension Schemes Act 1993 and the relevant regulations, ("the Preservation Requirements")
Following a Case Management Conference before Master Bowles on 25 April 2012, it was ordered by consent that there be a trial of the questions raised by the Preservation Requirements as a preliminary issue.
This is therefore the trial of the agreed preliminary issues concerning the Preservation Requirements and their application to the Scheme. I should add that since the preliminary issues were determined in accordance with Master Bowles' order, the Trustees have requested that a further issue be added by consent. I gave permission for the addition of the further issue by amendment.
Factual Background to the Scheme
The Scheme
In 1987, Konica acquired the share capital of Peter Llewellyn (Photocopying) Limited, which had its own defined benefits scheme for its employees, originally known as the Peter Llewellyn (Photocopying) Limited Retirement Benefits Scheme No.2, later known as the Konica Peter Llewellyn Retirement Benefits Scheme, (the "KPL Scheme").
The rules applicable to the KPL Scheme are contained in a Deed of Amendment of the Peter Llewellyn (Photocopying) Limited Retirement Benefits Scheme dated 18 October 1982 (the "KPL 1982 Deed and Rules"). For these purposes, nothing turns upon the fact that the KPL 1982 Deed and Rules was a deed of amendment.
In 2002, the KPL Scheme was merged into the Scheme by bulk transfer, recorded in a Transfer Deed dated 10 January 2002 "(the 2002 Transfer Deed"). Clause of 3.2, the 2002 Transfer Deed provided that the Scheme would provide the former KPL Scheme members with " the Benefits", which were defined at clause 1.1 as:
" the same benefits and entitlements (subject to the same terms and conditions) as those being or to be provided to and/or in respect of the Transferring Members under the provisions of the [KPL Scheme] in force on [11th January 2002] immediately prior to the Transfer…"
Following the transfer of the KPL Scheme, a new definitive deed and rules of the Scheme were drawn up for the purpose of incorporating the appropriate rules for former KPL Scheme members and generally updating the rules of the Scheme. That new definitive deed and rules is the 2006 Deed and Rules.
Konica's contention in these proceedings is that the 2006 Deed was intended to replicate the provisions in place immediately prior to its execution. In particular, it is Konica's contention that it was intended to replicate the KPL Scheme's provisions for former KPL Scheme members. In so far as those provisions were not replicated, Konica says that the 2006 Deed and Rules should be rectified.
Under the 2006 Deed and Rules, a member who was previously a member of the KPL Scheme and transferred into the Scheme is termed a "Category B Member". The definition of a "Category B Member" in the 2006 Deed and Rules is:—
" A Member [active, pensioner or deferred] who is entitled to benefits under the Scheme determined on the basis of the benefit structure that was in place under the KPLRBS [Konica Peter Llewellyn Retirement Benefits Scheme] (the KPL Scheme) before its merger with the Scheme on 11 January 2002."
As I have already mentioned, Mr Hughes is a Category B Member.
It is not disputed that following the merger of another scheme, the 'Minolta Pension Plan', into the Scheme on around 1 November 2007, former members of the defined benefit sections of the Scheme (which includes Category B Members) and the Minolta Pension Plan were offered a "Fair Value Service Credit" ("FVSC") in respect of their benefits accrued up to 30 November 2007. The members who accepted their FVSC continued to accrue benefits on a defined benefit basis for service from 1 December 2007. The members who did not accept FVSC elected either to accrue future benefits on a money purchase basis under the Scheme for service on or after 1 December 2007 or to leave active membership of the Scheme and to become deferred members. Whether as a result of this exercise or otherwise, there are no longer any active Category B Members of the Scheme.
The KPL 1982 Deed and Rules
The definitions for the purposes of the KPL 1982 Deed and Rules are contained in Rule 1. I was referred in particular to the definition of Normal Retirement Date ("NRD") which is expressed to be the 65th birthday for male members, and 60th birthday for female members. In fact, there were only ever male members of the KPL Scheme. The definitions of 'Service' and 'Future Service' are also relevant and are set out in Rule 1 in the following form:
"'Service' means permanent employment with any Participating Employer."
"'Future Service' means the period of continuous Service from the first day of the month in which a Member becomes a Member until the last day of the month in which he ceases to be in Service or reaches [NRD] (whichever is earlier)…"
Rule 4 is headed "Retirement Pension" and Rule 4(a) is headed "On retirement at Normal Retirement Date". It states to the extent that it is relevant in this case:
" (1) A Member who retires from Service at [NRD] shall be entitled to a pension of such an amount as is necessary to provide an Aggregate Pension of two-thirds of his Final Scheme Salary provided that he has completed at least ten years' Service. A Member who has completed less than ten years' Service when he retires from Service at [NRD] shall be entitled to a pension of such an amount as is necessary to provide an Aggregate Pension in accordance with the following table.
"(2) … . .
"(3) Provided that the Aggregate Pension shall not exceed two-thirds of Final Remuneration or such lesser amount as may be necessary in order not to prejudice Approval of the Scheme."
| Years of Service to Normal Retirement Date | Aggregate Pension expressed as a fraction of Final Scheme Salary |
| 1–5 | 1/60 for each year |
| 6 | 8/60 |
| 7 | 16/60 |
| 8 | 24/60 |
| 9 | 32/60 |
Rule 4(b) is headed "On retirement before Normal Retirement Date" and sub—rules (1) and (2) are in the following form:
" (1) A Member who retires from Service with the Principal Employer's consent at any time before [NRD] owing to Incapacity shall be entitled to an immediate pension calculated in accordance with section (a) of this Rule as if he were retiring at [NRD], but reduced in the ratio of his completed Future Service to his potential Future Service to [NRD]. Provided that the Aggregate Pension shall not exceed two-thirds of Final Remuneration or such lesser amount as may be necessary in order not to prejudice Approval of the Scheme.
(2) A Member who retires from Service with the Principal Employer's consent on or after his 50th birthday other than owing to Incapacity shall be entitled to an immediate pension equal to the pension to which he would be entitled if he were retiring owing to Incapacity, reduced by one-half per cent for each month by which the first payment of pension precedes the date on which the first payment would be made if he retired on Normal Retirement Date. Provided that the Aggregate Pension shall not exceed one-sixtieth of Final Remuneration for each year of Service (with a maximum of 40 years) or such larger amount as will not prejudice Approval of the Scheme."
Rule 13 is headed "Withdrawal from Service." It is Rule 13(4) which is directly relevant to the Preliminary Issues. It is in the following form:
"If a Member leaves Service, otherwise than by retirement or death, and the provisions of the previous paragraph...
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