Merchant Navy Ratings Pension and Another v Stena Line Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Asplin |
| Judgment Date | 25 February 2015 |
| Neutral Citation | [2015] EWHC 448 (Ch) |
| Docket Number | Case No: HC13F04138 |
| Court | Chancery Division |
| Date | 25 February 2015 |
[2015] EWHC 448 (Ch)
Mrs Justice Asplin DBE
Case No: HC13F04138
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF THE MERCHANT NAVY RATINGS PENSION FUND
Royal Courts of Justice
Rolls Building, Fetter Lane
London EC4A 1NL
Michael Tennet QC, Edward Sawyer and James Walmsley (instructed by Mayer Brown International LLP) for the Claimant
Brian Green QC and Jonathan Hilliard (instructed by Travers Smith LLP) for the First Defendant
Andrew Spink QC and Richard Hitchcock QC (instructed by CMS Cameron McKenna LLP) for the Second Defendant
Jonathan Evans QC (instructed by Watson Farley &Williams LLP) for the Third Defendant
Andrew Simmonds QC and Joseph Goldsmith (instructed by Hogan Lovells International LLP) for the Fourth Defendant
Paul Newman QC and Emily Campbell (instructed by Burges Salmon LLP) for the Fifth Defendant
Hearing dates: 10, 11, 12, 13, 17, 18, 19, 20, 24, 25, 26, 27 and 28 November and, 1, 2, 3, 8 and 9 December 2014
Introduction
This is a Part 8 claim concerning the Merchant Navy Ratings Pension Fund ("the Scheme") established with effect from 6th April 1978. The Scheme is a non-sectionalised industry-wide defined benefit occupational pension scheme, established for the benefit of British Merchant Navy ratings and their dependants. Merchant Navy Ratings Pension Fund Trustees Limited, ("the Trustee") is the sole trustee of the Scheme and seeks the Court's approval to proceed with a proposed amendment to the Rules of the Scheme in order to introduce a complex new contribution regime (the "New Regime") under which all Employers which have adhered to the Scheme (the "Participating Employers") may be made liable to make contributions to repair the current deficit. The proposed amendments give rise to issues as to whether their introduction would be a proper exercise of the Trustee's powers and whether in fact, they are within the scope of those powers. These have come to be known as the "Propriety Issues."
In addition, the Court is asked to determine a number of questions which arise as to the status of the Scheme principally under section 75 Pensions Act 1995 and the Regulations made under that Act. The provisions in question govern the statutory liability of Employers to make deficit contributions in particular circumstances. The issues affect the terms upon which certain Employers allege that they are entitled to cease to participate in the Scheme, leaving the liabilities attributable to their former employees behind. These have come to be known as the "Open /Frozen Issues".
Parties
The Trustee acts by a Board of up to twelve directors of whom half are appointed by the Chamber of Shipping (the trade association for the British shipping industry) and half are appointed by the National Union of Rail Maritime and Transport Workers. In addition there is one non-voting independent trustee director. The two groups of directors are referred to respectively as "Participating Employers' representatives" and "Members' representatives" in the Trust Deed and Rules. The Trustee Board is subject to a "dual majority principle" as a result of which all resolutions must be passed by majorities of both groups of directors, and any exercise of the Scheme's power of amendment must be approved by majorities of both groups.
The First Defendant, Stena Line Limited ("Stena Line") is a Current Employer as defined in Rule 3 of the Trust Deed and Rules of the Scheme dated 1 August 2007 ("the Current Trust Deed and Rules"). The Stena Line group bears the largest funding burden amongst the Current Employers under the 2001 Regime to which I shall refer. Under that regime, it is liable to meet 60% of the deficit repair contributions in relation to the entire deficit.
P&O Ferries Limited, the Second Defendant ("P&O Ferries") is a Voluntary Employer, that is to say that it is a "Historic Employer" by which or on behalf of which ex gratia contributions were paid to the Scheme in respect of the deficit following the introduction of the 2001 Regime. The term "Historic Employer" has been adopted as shorthand for an Employer which became an "Employer" or "Participating Employer" within the definition of that expression in the then current Rules of the Scheme but which is not and has never been a Current Employer. A significant proportion of the voluntary contributions were paid on behalf of the P&O group of companies. However, as with most of the other Voluntary Employers, P&O Ferries ceased to pay voluntary contributions in 2006 and has not contributed to the deficit in the Scheme since that time.
The Third Defendant, Sealion Shipping Limited, ("Sealion") is also a Historic Employer but not a Voluntary Employer. It ceased to have active members in the Scheme in 1994 and paid no deficit contributions under the 2001 Regime whether voluntarily or otherwise.
International Marine Transportation Limited, ("International Marine") the Fourth Defendant, (formerly Mobil Shipping Company Limited) is a Current Employer from the ExxonMobil group of companies. It is part of a large and financially strong corporate group. As a result it is in a position to present the views of Participating Employers with stronger covenants in relation to the Propriety Issues. International Marine is also what has come to be termed a "C2 Employer." That is an Employer which is a Current Employer as defined under the Current Trust Deed and Rules but which on or after 31 May 2001 ceased to employ anyone who was or who was eligible to be an "Active Member" or "Employee Member" of the Scheme as defined in Rule 4 of the 2001 Rules and Rule 4 of the Current Trust Deed and Rules.
The Fifth Defendant, Mr Terence Brown, ("Mr Brown") is a Member of the Scheme. He was an active Member from 1978 – 1996 and has recently become a pensioner.
Representation Orders
It is proposed that issue based representation orders are made in order to deal efficiently and proportionately with the questions before the Court. I am happy to make such orders. In relation to the Propriety Issues in general terms, it is intended that the Trustee be appointed to advance arguments in favour of the propriety of the New Regime. In particular, it is proposed that the Trustee be appointed to represent all Employers interested in contending for an affirmative answer to Issues 1, 2 and 4 and that P&O be appointed to represent all those Employers interested in arguing for a negative answer to the questions posed under those issues. Issue 1 is whether it would be proper for the Trustee to amend the Scheme to enable contributions to be demanded from all Participating Employers whether Current, Historic or Voluntary, ("Full Augmentation"). If the answer to Issue 1 is "yes", Issue 2 arises. It is whether it would be proper for each Participating Employer's liability to be calculated by reference to the percentage of the liabilities of the Scheme that is attributable to the pensionable service of Members whilst employed by that Participating Employer. Issue 4 is whether it would be proper for the New Regime to give credit for deficit contributions paid by Current Employers under the 2001 Regime and ex gratia contributions made by Voluntary Employers and for payment of section 75 debts ("Re-Apportionment").
In the same way it is intended that the Trustee represent those Employers interested in arguing for an affirmative answer to Issues 3 and 5 and that Sealion be appointed to represent those interested in a negative answer. Those issues are whether it would be proper to calculate each Participating Employer's Percentage as at 31 March 2011 using what became known as Method C and if the answer to Issue 4 is "yes" whether it would be proper for credit to be given under the New Regime for all such deficit contributions paid from 31 May 2001 onwards (and in the case of section 75 payments, paid at any time).
In addition, it is intended that the Trustee be appointed to represent those Employers interested in an affirmative answer in relation to Issues 6–12 and that P&O Ferries represent those interested in a negative answer in each case. Issues 6–12 are concerned with ancillary matters to which I shall refer below.
Each of the proposed representation orders is subject to the fact that if and to the extent that an issue gives rise to the question of whether the Trustee should amend the Scheme or administer it in a way which would impose more onerous obligations on Employers with stronger covenants relative to that of other Employers, International Marine be appointed to represent all Employers which would or might be adversely affected by such a step.
Subject to the particular issues to which I have already referred, it is intended that Stena Line represent the Current Employers and all persons with the same interest as the Current Employers and P&O Ferries represent the Voluntary Employers and all persons with the same interest including so far as their interests coincide, other Historic Employers. To the extent that their interests diverge from the Voluntary Employers, Sealion is intended to represent the Historic Employers. Mr Brown is intended to represent all Members of the Scheme and those claiming through them.
I will set out the representation regime in relation to the Open/Frozen issues when I come to deal with them below.
A. PROPRIETY ISSUES
Approval by the Court
Although the Trustee seeks the Court's approval before amending the Current Trust Deed and Rules to reflect its decision to put the New Regime into effect, it must be borne in mind that Court approval is not required...
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