Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank Plc

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Morgan
Judgment Date20 November 2020
Neutral Citation[2020] EWHC 3135 (Ch)
Date20 November 2020
Docket NumberCase No: HC-2017-001399

[2020] EWHC 3135 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD)

Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4A 1NL

Before:

Mr Justice Morgan

Case No: HC-2017-001399

Between:
Lloyds Banking Group Pensions Trustees Limited
Claimant
and
(1) Lloyds Bank Plc
(2) HBOS Plc
(6) Secretary of State for Work and Pensions
(8) Ivan Walker
Defendants

Edward Sawyer (instructed by Allen & Overy LLP) for the Claimant

Keith Rowley QC and Andrew Mold QC (instructed by Herbert Smith Freehills LLP) for the First and Second Defendants

Patrick Halliday (instructed by Government Legal Department) for the Sixth Defendant

Andrew Short QC and Nicholas Hill (instructed by Walkers Solicitors) for the Eighth Defendant

Hearing dates: 4–7, 11–13 May and 29–30 October 2020

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.

Mr Justice Morgan

Heading

Paragraph

PART I: INTRODUCTORY MATTERS

Introduction

1

The order of 3 December 2018

4

The outstanding issues

6

The List of Issues

9

The parties and the representation order

15

The order in which I will take matters

19

The relevant legislation

25

PART II: THE CASH EQUIVALENT LEGISLATION

The cash equivalent legislation

26

The period from 1990 to 1997

36

The operation of the cash equivalent legislation in the period 1990 to 1997

52

Does regulation 4(4) of the 1985 Regulations apply?

63

Was the Trustee discharged under section 99 of the PSA 1993, as enacted?

79

Conclusion in relation to the cash equivalent legislation in the period 1990 to 1997

97

The period from 1997 to 2008

99

The operation of the cash equivalent legislation in the period 1997 to 2008

121

Does regulation 10 of the 1996 Regulations apply?

151

Was the Trustee discharged pursuant to section 99 of the PSA 1993 in relation to transfers in the period 1997 to 2008?

154

Conclusion in relation to the cash equivalent legislation in the period 1997 to 2008

157

The period from 2008 onwards

159

PART III: THE PRESERVATION OF BENEFIT LEGISLATION

The preservation of benefit legislation

170

PART IV: THE RULES OF THE SCHEMES

Introduction to the Rules

183

The No 1 Scheme Rules with effect from 1 May 2012

184

The No 1 Scheme Rules with effect from 1 July 1989

198

The No 2 Scheme Rules

206

The HBOS Scheme Rules

215

Other arguments as to the Rules

220

PART V: THE ISSUES CONSIDERED

Issues 4 (a), (b), (c) and (d)

224

The special cases referred to in Issue 4

230

Issue 4(e)

252

Issue 4(f)

264

Issue 4(g)

278

Issue 5

281

Issue 6

285

Issue 7(a)

291

Issue 7(b)

294

Issue 7(c)

296

— The first form

301

— The second form

310

— The third form

316

— The fourth form

319

— The fifth form

322

— Other arguments as to the forms

325

Issue 8

— The application of the Rules

328

— Rule 1

347

— Rule 2

353

— Rule 3

354

— Rule 4

355

— Rule 5

357

— A claim

358

— The Limitation Act 1980

360

Issues 1 to 3

384

PART VI: THE OVERALL RESULT

The overall result

408

PART I: INTRODUCTORY MATTERS

Introduction

1

On 26 October 2018, I gave a judgment in these proceedings. The neutral citation of that judgment is [2018] EWHC 2839 (Ch) and it is reported at [2019] Pens LR 5. On 6 December 2018, I gave a short supplemental judgment dealing with a point which had been raised as to the form of the order to be made to give effect to the earlier judgment. The neutral citation of the supplemental judgment is [2018] EWHC 3343 (Ch) and it is reported at [2019] Pens LR 6. I will refer to both judgments together as “the 2018 judgment”.

2

The 2018 judgment dealt with a large number of issues but, for present purposes, it is not necessary to restate the conclusions which I then reached. It suffices to say that the main topic considered in that judgment was whether there was an obligation on the trustee of various defined benefit occupational pension schemes to equalise benefits in relation to male and female members of the schemes. I held that there was such an obligation which arose under EU law. In those circumstances, it was not necessary to consider separately the position under the domestic equality legislation. At [254] of the 2018 judgment, I left open the possibility that the domestic equality legislation might go further than Article 157. However, it was not argued that the domestic legislation was narrower in its scope than Article 157: see the submission for the Banks recorded at paragraph [230] of the 2018 judgment. I also dealt with the arguments arising as to the methods which could be used to achieve the required equalisation of benefits. I then dealt with some of the consequences of the fact that the trustee of the schemes had not performed its obligation to equalise at an earlier point in time, when it ought to have done. One such consequence was that it was obliged to pay arrears of pension to certain pensioner members.

3

The 2018 judgment also explained that the parties had agreed what should happen in relation to those cases where members of other pension schemes had transferred into the schemes with which I was concerned. In those cases, the schemes with which I was concerned had received transfer payments and had taken on the transferring-in members as members of the schemes. In some cases, the transfer payments were inadequate in the sense that they did not reflect the rights which the transferring-in members had to equalisation of the benefits they had accrued in their earlier pension schemes. Nonetheless, the parties to these proceedings agreed that, as a result of the decision of the European Court of Justice in Coloroll Pension Trustees Ltd v Russell [1995] ICR 179 (“ Coloroll”), the receiving schemes were liable to equalise benefits in relation to transferring-in members, even in relation to benefits which accrued in the period before the transfer.

The order of 3 December 2018

4

On 3 December 2018, I made an order to give effect to the 2018 judgment. The order contained a number of definitions, including the following:

i) “ Barber window” means the period from 17 May 1990 to 5 April 1997 (both inclusive);

ii) “GMP” means guaranteed minimum pension earned by a member pursuant to Part III of the PSA 1993 (and predecessor legislation) in respect of service from 6 April 1978 to 5 April 1997 (both inclusive);

iii) “Schemes” means the Lloyds Bank Pension Scheme No 1, the Lloyds Bank Pension Scheme No 2 and the HBOS Final Salary Pension Scheme (each a “Scheme”);

iv) “Trustee” means the Claimant as trustee of each of the Schemes and any successor trustee(s).

5

The Order determined and declared, in particular:

“2. Where male and female Scheme members with equivalent age, service and earnings histories would have accrued unequal GMP in respect of service in the Barber window, the Trustee is obliged to adjust benefits payable under each of the Schemes in excess of the GMP in order that the total benefits received by male and female members with equivalent age, service and earnings histories are equal;

5. In relation to the Trustee paying arrears of equalised benefits to beneficiaries of each Scheme:

5.1. Subject to 5.2 below, beneficiaries are entitled to receive arrears of payments due to them;

5.2. The period for which beneficiaries are entitled to receive arrears of payments is governed by the rules of the Schemes which deal with the period of time more than six years before a claim for payment of arrears;

8. In principle, the Trustee's obligation to equalise benefits for the effect of unequal GMP applies to benefits accrued on a contracted-out salary-related basis in other schemes during the Barber window which have been transferred into any of the Schemes;

…”

The outstanding issues

6

In the remainder of this judgment, I will use the definitions which have been referred to above and, in particular, I will refer to the Trustee and to the Schemes in accordance with the definitions of those terms.

7

The 2018 judgment and the order of 3 December 2018 did not deal with another issue, or set of issues, which had been identified prior to the 2018 judgment. Those issues concerned the position of the Trustee of the Schemes in relation to cases where a member of the Scheme had transferred out of the Scheme and the Trustee of the Scheme had made a transfer payment to a receiving scheme. In those cases, because the Trustee had not equalised benefits in relation to male and female members, there will have been some cases where the transfer payment was less than it ought to have been if the Trustee had taken into account its obligation to equalise benefits. The issues essentially related to whether the Trustee remained under an obligation to anyone, and if so to whom, and if so in what way, to do anything about the fact that the transfer payments it had made had been inadequate.

8

Following the order of 3 December 2018, the parties formulated the issues which they would wish the court to decide in relation to inadequate transfer payments made by the Trustee of the Schemes. There would potentially be issues as to whether the Trustee owed an obligation to a transferring member and/or whether it owed an obligation to the receiving scheme. In the event, the issues as formulated by...

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