PNPF Trust Company Ltd v Taylor & Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren |
| Judgment Date | 28 June 2010 |
| Neutral Citation | [2010] EWHC 1573 (Ch) |
| Docket Number | Case No: HC08C02054 |
| Court | Chancery Division |
| Date | 28 June 2010 |
[2010] EWHC 1573 (Ch)
Before: Mr Justice Warren
Case No: HC08C02054
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Michael Tennet QC and Mr Jonathan Hilliard (instructed by Hogan Lovells International LLP) for the Claimant (as Trustee of the Pilots'National Pension Fund)
Mr Christopher Nugee QC and Mr Jonathan Evans (instructed by Linklaters LLP) for the 1st Defendant
Mr Andrew Spink QC and Mr Nicolas Stallworthy (instructed by CMS Cameron McKenna LLP) for the 2 nd Defendant
Mr Paul Newman QC and Mr James Walmsley ( instructed by Morgan Cole LLP) for the 3 rd Defendant
Mr Brian Green QC and Mr Andrew Mold (instructed by Sacker and Partners LLP) for the 4 th Defendant
Mr Robert Ham QC and Mr Richard Hitchcock (instructed by Nabarro LLP) for the 5 th Defendant
Miss Sarah Asplin QC and Mr Fenner Moeran (instructed by Eversheds LLP) for the 6 th Defendant
Mr Michael Furness QC and Miss Emily McKechnie (instructed by Lawrence Graham LLP) for the 7 th Defendant
Mr John Martin QC and Mr John Stephens (instructed by Dickinson Dees LLP) for the 8 th Defendant
Hearing dates: 20th, 21st, 22nd, 25th, 26th, 27th, 28th, 29th of January 2010 and 1st, 2nd, 3rd, 4th, 5th, 8th, February 2010
Contents table for Pilots Judgment
| Heading | Paragraph |
| Introduction | 1 to 5 |
| An outline of the Scheme | 6 to 8 |
| The categories of persons involved in the PNPF | 9 to 17 |
| The questions on the claim form, the Issues for determination and representation | 18 to 19 |
| Representation | 20 to 25 |
| The History of Pilotage and the PNPF | 26 to 28 |
| Pilotage prior to the Pilotage Act 1987 (the “1987 Act”) | 29 to 32 |
| The Pilotage Act 1913 (“the 1913 Act”) | 29 to 32 |
| 33 to 34 | |
| The Pilotage Act 1983 (“the 1983 Act”) | 35 to 36 |
| Pilots' pension arrangements prior to the 1987 Act |
|
| (i) Regional pilots' benefit funds | 37 to 39 |
| (ii) The establishment of a national pension scheme | 40 |
| (iii) The governing provisions of the national scheme | 41 to 42 |
| (iv) The management of the national scheme | 43 to 45 |
| (v) Participation of pilotage authorities in the national scheme | 46 to 49 |
| (vi) Benefits under the new national scheme | 50 |
| (vii) Contribution obligations under the national scheme | 51 to 52 |
| (viii) Amending the contribution provisions | 53 to 54 |
| (ix) Cessation of participation | 55 |
| (x) Provisions of the Pilotage Act 1983 relating to the national Scheme | 56 |
| (xi) New Byelaws—September 1983 | 57 |
| The background to the Pilotage Act 1987 | 58 to 61 |
| (i) The Samuel Montagu report on Early Retirement | 62 to 64 |
| (ii) The British Ports Association's Commitment | 65 to 68 |
| (iii) Legislative proposals | 69 to 71 |
| The impact of the Pilotage Act 1987 on the provision of pilotage services | 72 to 75 |
| (i) The transfer of assets and liabilities from Pilotage Authorities to CHAs | 76 |
| (ii) The employment of pilots | 77 |
| (iii) The early retirement scheme under the 1987 Act | 78 |
| The impact of the Pilotage Act 1987 on the Scheme |
|
| (i) Provisions of the 1987 Act relating to the Scheme | 79 to 82 |
| (ii) The 1987 Order | 83 |
| The introduction of the 1988 Rules of the Scheme | 84 to 85 |
| (i) The role of the Trustee under the 1988 Rules | 86 |
| (ii) CHAs as Participating Bodies | 87 to 88 |
| (iii) The power of amendment under the 1988 Rules | 89 to 90 |
| (iv) Ceasing to be a member of the Scheme | 91 |
| (v) Contribution rules | 92 to 97 |
| (vi) Benefits | 98 |
| (vii) Transfers in | 99 |
| (viii) Cessation of participation | 100 |
| (ix) Participating Bodies' Influence in decision making | 101 to 107 |
| (x) The Deeds of Accession | 108 to 112 |
| Changes to the Scheme's governing provisions since 1989 |
|
| (i) Amendments to the contribution obligations of CHAs | 113 to 115 |
| (ii) The removal of Article 72 | 116 to 117 |
| (iii) Other amendments | 118 to 120 |
| Scheme's funding position and contribution levels over time | 121 to 124 |
| QUESTION 1 | 125 to 126 |
| The Law |
|
| A. Construction | 127 to 129 |
| B. Implication | 130 to 135 |
| C. Hole v Garnsey | 136 to 145 |
| A general point on interpretation of the Scheme | 146 to 147 |
| The Deeds of Accession | 148 to 202 |
| Discussion | 203 to 234 |
| Rule 9(1)(a) | 235 to 273 |
| Active ECHAs |
|
| Issue 1 | 274 to 277 |
| Issue 2 | 278 to 280 |
| Issue 3 and 4 | 281 to 287 |
| Formerly Active ECHAs |
|
| Issue 5 | 288 to 291 |
| Issues 6, 7 and 8 | 292 |
| Active SCHAs | 293 to 295 |
| Issue 9 | 296 to 302 |
| Issues 10, 11 and 12 | 303 |
| Issue 13 | 304 |
| Issues 14, 15 and 16 | 305 |
| Formerly Active SCHAs |
|
| Issues 17 and 18 | 306 |
| Issues 19 and 20 | 307 |
| QUESTIONS 2, 3 AND 3A |
|
| QUESTION 2 | 308 to 310 |
| QUESTIONS 3 AND 3A | 311 to 312 |
| Issue 20A | 313 to 318 |
| Issue 21 | 319 to 320 |
| QUESTIONS 6 AND 7 | 321 to 423 |
| QUESTION 5 | 424 to 435 |
| QUESTION 4 | 436 to 476 |
| The Explanatory Note | 477 to 482 |
| The wording | 483 to 485 |
| Practical and purposive construction | 486 to 492 |
| An unfunded gap between SSF and ECE | 493 to 496 |
| The legislative origins of the key phrase | 497 to 519 |
| Guidance of tPR | 520 to 565 |
| QUESTION 4A | 566 to 568 |
| 569 to 604 | |
| QUESTION 8 | 605 to 628 |
| QUESTION 9 | 629 to 635 |
| British Vita | 636 |
| The MFR regime | 637 to 641 |
| The SSF regime | 642 to 649 |
| Valuations under the SSF regime | 650 |
| Schedule of contributions and recovery plans | 651 to 662 |
| Regulation 16 Scheme Funding Regulations | 663 to 729 |
| QUESTION 10 | 730 to 764 |
| ANNEX |
|
Mr Justice Warren :
Introduction
The Claimant, the PNPF Trust Company Limited (the “ Trustee”), is the trustee of a pension scheme, the Pilots' National Pension Fund (the “ PNPF” or the “ Scheme”), with a substantial funding deficit. The latest figures (as at 31 March 2009) show a deficit on the buy-out basis (ie on the basis that the Scheme's liabilities are discharged by purchase of annuities) of just over £285m. By the Part 8 claim form, the Trustee seeks the guidance of the Court on the questions set out in paragraphs 1 to 10 of the claim form. The Claim Form has recently been amended to add a new question 4A as an 11 th question. Each question has been, in turn, subdivided into issues. There are a total of 39 issues on which a decision is requested.
With answers to those questions and resolution of the issues, the Trustee will be, it is hoped, in a position - it will certainly be in a better position than at present – to know how, if at all, it can go about repairing the deficit. In particular, it will be known what entities can be made liable to contribute to the Scheme to meet the benefits to which Members are entitled under the Rules.
There are two potential ways of redressing the deficit:
a) amending the Scheme to seek deficit repair contributions from those who have adhered to the Scheme. This raises issues as to the scope of the power of amendment; and
b) applying the statutory provisions designed to remedy deficits in occupational pension schemes, namely Section 75 (“ Section 75”) of the Pensions Act 1995 (“ PA 1995”) (which provides for lump sum payments from “employers” in certain events) and, on an ongoing basis, the scheme specific funding (“ SSF”) regime found in Part 3 of the Pensions Act 2004 (“ PA 2004”).
Unfortunately the scope of the Trustee's options under both the Scheme rules and legislation is unclear. This is due to a combination of:
a) the unusual nature of the Scheme;
b) the terms of the standard form deeds of accession executed by the entities participating in the Scheme; and
c) the complex history of the Scheme.
There is, in theory, a third way of addressing the deficit, namely the use of the existing contribution rules to require further contributions from active members and, in the case of members currently employed by a participating entity, their employers. However, the deficit is significantly greater than anything that might be expected to be addressed by ordinary ongoing contributions under the current contribution rule. As at 28 May 2009, there were only 197 active members but the deficit is the large figure which I have just mentioned.
An outline of the Scheme
The PNPF is the industry-wide scheme for UK marine pilots established on 1 April 1971. All members of the PNPF, save for a few persons providing administration services to the Trustee, or with ex-spouse pension credits in the Scheme, are marine pilots.
The primary responsibility of pilots is to ensure the safe navigation of vessels in their approach to, and departure from, ports. This requires expertise in ship-handling generally and particularly in manoeuvring vessels within ports.
While it has statutory origins and a lengthy history (which I will touch on later in this judgment), the Scheme is currently governed by deed and rules adopted on 25 May 1989 with effect from 1 October 1988 (the “ 1988 Rules”), as amended from time to time.
The categories of person involved in the PNPF
The persons involved in the PNPF are:
a) the entities described in Rule 10 of the 1988 Rules as “Participating Bodies”. These are the Competent Harbour Authorities (“ CHAs”) for an Area in which Pilots are...
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