Safeway Ltd v Andrew Newton and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren |
| Judgment Date | 29 February 2016 |
| Neutral Citation | [2016] EWHC 377 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 2015 000392 |
| Date | 29 February 2016 |
[2016] EWHC 377 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Warren
Case No: HC 2015 000392
Brian Green QC and Sebastian Allen (instructed by DWF LLP) for the Claimant
Andrew Short QC and Michael Uberoi (instructed by Burges Salmon LLP) for the First Defendant
David E Grant (instructed by Eversheds LLP) for the Second Defendant
Hearing dates: 3 rd, 4 th and 7 th December 2015
Introduction
This is another case concerning the equalisation of pension benefits for men and women. It relates to the Safeway Pension Scheme (" the Scheme") of which the Second Defendant (" SPTL") is the sole trustee. The question before me is whether the normal pension age (" NPA") of men and women was equalised at age 65 with effect from 1 December 1991 or only from 2 May 1996. A very large sum of money turns on the answer to that question. The Claimant (" Safeway") is a subsidiary of WM Morrison Supermarkets plc and the principal sponsoring employer with an interest in arguing that the NPA for men and women was equalised with effect from 1 December 199The First Defendant (" Mr Newton") is an active member of the Scheme who is acting in a representative capacity for all those with an interest in arguing that NPAs were not equalised until 2 May 1996.
The issues arise as the result of a written announcement to members dated 1 September 1991 (" the 1991 Announcement"), its content being repeated in a letter dated 1 December 1991 (" the 1991 Letter") (together " the 1991 Notices"). The 1991 Announcement and the 1991 Letter announced the introduction of an equal NPA of 65 for men and women with effect from 1 December 1991. Formal recognition in the Scheme documentation of the common NPA is to be found in the subsequent definitive trust deed (consolidating amendments since the previous definitive trust deed) dated 2 May 1996 (" the 1996 Deed").
The issue is whether the 1991 Announcement and the 1991 Letter were effective to introduce a common NPA of 65 so as to satisfy the requirements of EU law in respect of service from 1 December 1991. Safeway contends that it was effective to do so with the result that the NPA for men and women in respect of all of their service from that date was equalised at age 65. Mr Newton contends that the 1991 Announcement and the 1991 Letter were not effective for that purpose with the result that NPA for men and women in relation to service between 1 December 1991 and 2 May 1996 was age 60, the benefit of the disadvantaged class (men) for that period being increased to that of the advantaged class (women) for that period.
There are two main issues:
i) The first is an issue of construction concerning the amendment power found in the Scheme. Safeway's contention is that the result of Clause 19 of the 1984 Deed (" Clause 19")was that the 1991 Announcement and the 1991 Letter were effective to bring about an alteration to the benefits to which a member was entitled so that equalisation was effected as of 1 December 1991. Mr Newton's contention is that since an exercise of that power requires a deed, an effective alteration was only made by the 1996 Deed.
ii) The second is whether the amendment power (which expressly permits retrospective amendments as a matter of domestic law) could be used to bring about equal NPAs for men and women with effect from 1 December 1991 as a matter of EU law (or Community law as it then was). This gives rise to a question concerning the extent and possibly correctness of my decision in Harland & Wolff Pension Trustees Limited v Aon Consulting Financial Services Ltd [2007] ICR 429 (" Harland & Wolff"). Safeway contends that Harland & Wolff is wrong in its conclusion but only as a result of arguments which were not presented to me but which Mr Green now presents; or, if that is not a correct interpretation of Harland v Wolff, then it should not be followed. Mr Newton contends that Harland & Wolff is correct and is indistinguishable; even if there is doubt in my mind about its correctness, it is said that I should follow it (although I should add that if I am in doubt, there is lurking a question of EU law which may require a reference).
The Scheme
The Scheme is a conventional balance of cost scheme providing final salary benefits. The Third Schedule to the Definitive Trust Deed and Rules dated 1 April 1984 (" the 1984 Deed") contained the Rules of the Scheme. Rule 2 contained a number of definitions including a definition of "Normal Pension Age" which for women was age 60 and for men was age 65.
Rule 23 gave the Principal Company power by written notice to the Trustees to augment the benefits conferred by the Rules either in respect of all beneficiaries or in respect of any beneficiary or class of beneficiaries.
By a deed of amendment dated 23 March 1987, a new Rule 35 was inserted. This required the Trustees from time to time and at least once every three years to carry out a review of pensions in payment (or contingently payable to spouses and dependants). They then had a discretion, after consulting the Scheme actuary and with the consent of the Principal Employer, to increase such pensions.
The Scheme contained a power of amendment. It was to be found in Clause 19. At all material times, it provided as follows:
" The Principal Company may at any time and from time to time with the consent of the Trustees by Supplemental Deed executed by the Principal Company and the Trustees alter or add to any of the trusts powers and provisions of the Scheme including this Trust Deed and the Rules and all Deeds and other instruments in writing supplemental to this Trust Deed and the Deeds specified in the Second Schedule hereto and may exercise such powers so as to take effect from a date specified in the Supplemental Deed which may be the date of such Deed or the date of any prior written announcement to Members of the alteration or addition or a date occurring at any reasonable time previous or subsequent to the date of such Deed so as to give the amendment or addition retrospective or future effect as the case may be."
The 1996 Deed was a consolidating and amending deed wholly superseding the previous Definitive Trust Deed and Rules. It took effect from 26 April 1988, defined as the Revision Date. It is unnecessary to comment on its detail. I need only note that it contains a definition of "Normal Pension Age" which included the following:
"(1) as regards all Members except a 1973 Plan Member from the Revision Date until 30 th November 1991, the last day of the month on which the Member attains the age of 65 years if male or 60 years if female and,
(2) as regards all Members from 1st December 1991 except a 1973 Plan Member or those who are already Pensioners, Deferred Pensioners or Postponed Pensioners at that date, the date on which the Member attains the age of 65 years;"
Nothing turns, for present purposes, on the exceptions referred to in ( 1) or (2). However, EU law required benefits in respect of service from 17 May 1990 until 30 November 1991 to be equal so that NPA for men in respect of service during that period was, notwithstanding (1), 60 not 65. One reading of (2) is that an NPA of 65 was adopted in relation to all service where the Member remained in service after 1 December 1991. In practice, however, the Scheme is administered on the basis that an NPA of age 60 applies to benefits accrued between 17 May 1990 and 1 December 1991.
The facts
The catalyst for the change in NPA was, of course, the decision of the ECJ (now the CJEU: I will refer to it in this judgment as the ECJ) in Barber v Guardian Royal Exchange Assurance Group ( Case C-262/88) [1991] 1 QB 344 [1990] ICR 616 (" Barber").
The response of Safeway and SPTL to Barber is described in the witness statement of John Kinch. He was, throughout the relevant period, (i) the Company Secretary of Safeway (previously called Safeway plc and before that Argyll Group plc) (ii) a director and Company Secretary of the company now known as Safeway Stores Ltd which was and is the principal operating company in the group and (iii) a director and the secretary of SPTL. The key events which he identifies, and about which there is no dispute, are these:
i) 7 March 1991: a meeting of the board of SPTL when it was resolved to adopt a common NPA of 65 but on the basis that active members would be permitted to retire from age 60 onwards on an unreduced pension subject to Safeway's consent and subject to 3 months' notice being given.
ii) 29 July 1991: a meeting of the board of SPTL at which discussions were held concerning the giving of notice to employees and the timetable for implementation of the changes. A draft of the announcement to members was approved.
iii) 1–31 August 1991: consultation process conducted with Trade Unions.
iv) 1 September 1991: the 1991 Announcement. This went out under Mr Kinch's name to all full time employees to be received by them on 2 September 1991. There followed a consultation period leading to a formal announcement.
v) 1 September onwards: communication and consultation with members.
vi) 1 December 1991: the 1991 Letter announcing that the changes described in the 1991 Announcement had been made with effect from 1 December 1991.
The 1991 Announcement
The 1991 Announcement was headed "Change to your Scheme Benefits". It explained immediately after that heading that the announcement:
"brings you advance news of two significant changes to [the Scheme]...
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