Punter Southall Governance Services Ltd (as Trustee of the Axminster Carpets Group Retirement Benefits Plan) v Jonathan Hazlett (as a representative defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 17 June 2021 |
| Neutral Citation | [2021] EWHC 1652 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: PE-2018-000023 |
| Date | 17 June 2021 |
[2021] EWHC 1652 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST: PENSIONS (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Justice Morgan
Case No: PE-2018-000023
In the Matter of the Axminster Carpets Group Retirement Benefits Plan
Henry Legge QC and Thomas Robinson (instructed by Gowling WLG (UK) LLP) for the Claimant
Andrew Short QC and Stephen Butler (instructed by Osborne Clarke LLP) for the Defendant
Hearing dates: 16–19, 22–23 March 2021
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.
| Heading | Paragraph number |
| Introduction | 1 |
| The compromise of the pension increase issues | 16 |
| The compromise of the non-increase issues | 27 |
| The further issues | 54 |
| Issue 1: section 21 of the 1980 Act | 56 |
| — the legislative history and the case-law | 75 |
| — discussion and conclusions | 110 |
| Issue 2: section 32 of the 1980 Act | 161 |
| Issue 3: clause 25 of the 1992 DDR and rule 36 of the 2001 DDR | 166 |
| — clause 25 of the 1992 DDR | 168 |
| — rule 36 of the 2001 DDR | 178 |
| Issue 4: clause 4 of the 1992 DDR | 215 |
| Issue 5: the application of monies pursuant to rule 36 | 222 |
| — reducing the Employer's contributions under rule 10 | 224 |
| — expenses of management and administration under rule 41 | 244 |
| Issues 6 and 7: relevant factors for rule 36 | 254 |
| — general remarks | 257 |
| — the events of 2000 | 267 |
| — other matters | 281 |
| — the sub-issues | 285 |
| Issue 8: rule 36 and perversity | 299 |
| Issue 9: limitation and duty/discretion | 302 |
| Issue 10: interest on pension increase arrears | 312 |
| — can the court award interest? | 314 |
| — interest on what arrears? | 327 |
| — the rate of interest | 331 |
| Issues 11 and 12: GMP arrears and NPD arrears | 344 |
Introduction
These proceedings raise a number of issues in relation to the Axminster Carpets Group Retirement Benefits Plan (“the Plan”). The Plan is an occupational pension scheme which provides defined benefits to, or in respect of, former employees of the participating employers in the Plan, namely, Axminster Carpets Ltd and Buckfast Spinning Co Ltd. The Plan is registered under section 153 of the Finance Act 2004. It was closed to new entrants in 2000, save in relation to exceptional cases.
The Plan was established by an interim trust deed with effect from 5 September 1961. Thereafter, it was the subject of further deeds made in 1963, 1969 and 1978. Relevantly to some of the issues raised in these proceedings, the Plan was then governed by definitive trust deeds and rules made in 1983, 1992 and 2001. I will refer to these as the 1983 DDR, the 1992 DDR and the 2001 DDR, respectively.
In the course of this judgment, I will refer to various statutes dealing with pensions, including the Pension Schemes Act 1993 (“PSA 1993”), the Pensions Act 1995 (“PA 1995”) and the Pensions Act 2004 (“PA 2004”). In the case of the 2001 DDR, there was a certificate that the alterations made thereby complied with section 67 PA 1995. However, there was no confirmation under section 37 PSA 1993 in relation to the 2001 DDR and the absence of such confirmation has given rise to some of the issues raised in these proceedings.
The Plan referred to a Principal Employer and to other Employers. The Principal Employer was Axminster Carpets Ltd and there was one other Employer, namely, Buckfast Spinning Company Ltd.
Axminster Carpets Ltd entered administration on 18 February 2013 and later went into voluntary liquidation. It is now known as ACL 123 Ltd and is insolvent. The claims against it under the Plan and section 75 PA 1995 represent nearly all of the unsecured claims against it. Its section 75 debt is estimated to be £69 million. Buckfast Spinning Co Ltd is also in voluntary liquidation and is insolvent. Its section 75 debt is estimated to be £18.3 million.
Axminster Carpets Ltd and Buckfast Spinning Co Ltd are not parties to these proceedings but they have been given notice of them under CPR r. 19.8A.
The current trustee is the Claimant, Punter Southall Governance Services Ltd, which was appointed on 5 March 2013. When I wish to refer to the current trustee specifically, I will refer to it as “PSGS”. I will also use the term “Trustee” or “Trustees” to refer to the trustee or trustees for the time being in relation to the Plan.
In accordance with the provisions of PA 2004, the Plan is in an assessment period where the assessment date is 5 March 2013. It is expected that in due course the Plan will transfer to the Pension Protection Fund (“the PPF”) pursuant to section 161 PA 2004. The PPF is not a party to these proceedings and has stated that it does not wish to be joined as a party. The PPF is aware of these proceedings and it has been consulted on certain matters arising in them from time to time.
The Defendant is an experienced pensions solicitor. At the hearing, I stated that I would appoint the Defendant to be a representative Defendant in relation to certain issues. I will also appoint PSGS to be a representative party effectively to argue the opposite case to that argued by the Defendant. I will refer to the terms of the appropriate representation orders later in this judgment.
When the proceedings were issued, the issues raised by them principally concerned the validity and effect of certain deeds and other documents which purported to fix the rates of increases for pensions under the Plan. These issues have been referred to as “pension increase issues”. When the proceedings were issued, PSGS was concerned about the possible consequences of the absence of confirmation under section 37 PSA 1993 for the validity of certain provisions of the 2001 DDR. Those concerns led PSGS to raise further issues in relation to the 2001 DDR which did not concern pension increases. These further issues have been referred to as “the non-increase issues”.
Before the hearing, the parties had reached agreement which was acceptable to them to compromise the pension increase issues and the non-increase issues. Accordingly, in relation to the pension increase issues, the court is not asked to determine those issues but instead is asked to give its approval to the compromise of those issues. In relation to the non-increase issues, the court is asked to give declaratory relief (which is not opposed) and to give relief under the jurisdiction recognised in re Benjamin [1902] 1 Ch 723 and also, so far as is necessary, to give its approval to the compromise of those issues.
The result of the compromises, if approved by the court, will be that difficult questions as to the effect of non-compliance with section 37 PSA 1993 no longer arise in these proceedings.
The compromise of the pension increase issues is on the basis that different categories of members of the Plan were entitled to various specified increases in their pension benefits in previous years. The sums which have been paid to members in the past did not satisfy their entitlement in full (in accordance with the compromise) so that the members are now owed arrears of payments. This fact has given rise to further issues between the parties which have been introduced by amendments to the claim form. The further issues include questions as to limitation, forfeiture of unpaid pensions and interest. The same or similar questions as to limitation, forfeiture and interest arise in relation to two other categories of arrears of benefits.
There are therefore now three categories in relation to arrears of benefits. The first category has been called “pension increase arrears” and that is the category which I have earlier described. The total pension increase arrears are estimated to be about £2.0 million, not including any interest. If the pension increase arrears were restricted to those arising in the period of six years before the issue of these proceedings on 12 November 2018, the pension increase arrears would be reduced to about £1.0 million, not including any interest. The second category of arrears arises because the benefits under the Plan were not equalised to take account of the differences between men and women in relation to guaranteed minimum pensions (“GMPs”), in accordance with the decision in Lloyds Banking Group Pension Trustees Ltd v Lloyds Bank plc [2019] Pens LR 5 (“ Lloyds No. 1”); this category has been called “GMP arrears”. The total of the GMP arrears is somewhere between £1.0 million and £2.0 million. The third category of arrears arises because male and female Normal Pension Dates for members who had joined the Plan before 1 October 1992, in respect of pensionable service on and from 17 May 1990, were not equalised at age 65 until 17 November 1994; this category has been called “NPD arrears”. The NPD arrears are thought to be about £100,000.
The result of the above is that I am now asked to approve the compromise of the pension increase issues, to grant relief of various kinds in relation to the non-increase issues and to decide the further issues as to limitation, forfeiture and interest.
The compromise of the pension increase issues
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