Safeway Ltd v Andrew Newton
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd,Lord Justice Arnold,Lord Justice McCombe |
| Judgment Date | 13 July 2020 |
| Neutral Citation | [2020] EWCA Civ 869 |
| Docket Number | Case No: A3/2016/1518 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 July 2020 |
[2020] EWCA Civ 869
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE WARREN
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice McCombe
Lord Justice Floyd
and
Lord Justice Arnold
Case No: A3/2016/1518
Sebastian Allen (instructed by DWF Law LLP) for the Appellant
Andrew Short QC and Michael Uberoi (instructed by Burges Salmon LLP) for the First Respondent
David E. Grant (instructed by Eversheds Sutherland (International) LLP) for the Second Respondent
Hearing date: July 2 2020
Approved Judgment
This is a further stage in the appeal from the order of Warren J dated 29 February 2016 concerning the date on which the Normal Pension Ages (“NPAs”) applicable under the occupational pension scheme for employees of the Safeway Group, the Safeway Pension Scheme (“the Scheme”), were equalised at 65 years old for both women and men (when previously it had been 60 for women and 65 for men). The issue raised in this stage is concerned with the effect of the coming into force of section 62 of the Pensions Act 1995 on 1 January 1996.
On 5 October 2017 this court (Lord Briggs of Westbourne JSC, and Longmore and Floyd LJJ) handed down a judgment dealing (at least to some extent) with two of the three outstanding issues in the appeal: [2017] EWCA Civ 1482, [2018] PLR 2 (“the first judgment”). It is intended that this judgment should be read in conjunction with the first judgment.
At the stage of the first judgment, the appellant, Safeway Limited, which is the principal employer under the Scheme, contended that the equalisation of NPAs had occurred on 1 December 1991, that being the date notified to Scheme members for that purpose by a written announcement, and the date by reference to which a subsequent formal amendment to the Scheme was effected by a deed (“the 1996 Deed”) which was said to be effective retrospectively. The position of the first respondent, Mr Andrew Newton, who acted and continues to act in a representative capacity for those members of the Scheme with an interest in doing so, was that the judge had been correct to hold that NPA equalisation did not occur until 2 May 1996, the date of the formal amendment to the Scheme by deed. In the meantime, it followed that the NPA for both men and women had to be treated as 60 and not 65.
The first of the three issues was whether the power to amend the terms of the Scheme could be exercised by the principal employer, with the agreement of the Scheme Trustee, otherwise than by deed. Safeway contended that it could be so exercised and, in particular, that it could be exercised by means of a written announcement to members. This court concluded, in agreement with Warren J, that the power could only be exercised by deed, although the deed would have effect retrospectively to the date of the announcement.
The second issue was whether the power to effect amendments to the Scheme retrospectively for the purpose of equalisation of NPAs to the NPA of the previously disadvantaged class was prohibited by the directly applicable EU law principle of equal treatment then enshrined in Article 119 of the Treaty of Rome (“Article 119”, now Article 157 of the Treaty on the Functioning of the European Union). Warren J held that Article 119 did have this prohibitory effect and, moreover, that this was, as a matter of EU law, acte clair. This court differed from the judge on the question of whether the prohibitory effect was acte clair, principally because the rights covered by the retrospective exercise of the power of amendment were defeasible rights. The court considered that it was necessary to refer a question to the CJEU in order to decide the appeal.
On 7 October 2019 the Grand Chamber of the CJEU handed down its judgment: Case C-171/18 Safeway Limited v Andrew Newton and Safeway Pension Trustees Limited [2020] 1 CMLR 1321 (“ Safeway CJEU”). The CJEU held that, in the absence of objective justification, a pension scheme was prohibited from adopting, in order to end discrimination resulting from the fixing of an NPA differentiated by gender, a measure which equalises, with retrospective effect, the NPA of members to that of the previously disadvantaged class for the period between the announcement of that measure and its adoption, even where such a measure is authorised under national law and under the Trust Deed. It is now common ground that the fact that the affected rights were defeasible is irrelevant to that question. Safeway no longer contends that the amendment to the Scheme validly equalised the NPAs to 65 from the date of the announcement in 1991.
The third issue in the appeal concerned the effect of section 62 of the Pensions Act 1995 (“section 62”), which was intended to provide a domestic law framework for Article 119 in relation to pension rights, and which came into force on 1 January 1996. We held over decision on this issue until after the judgment on the reference to the CJEU. It is that issue which comes before us now.
To explain this third issue I need to explain the concept of “the Barber window”, so named after the CJEU case, Barber v Guardian Royal Exchange Assurance Group (Case – C262/88) [1991] 1 QB 344. In the first judgment at 11 we said this:
“On 19 May 1990 the European Court of Justice delivered judgment in Barber v Guardian Royal Exchange Assurance Group (Case – C262/88) [1991] 1 QB 344, holding that the direct effect of Article 119 made it unlawful discrimination within the community for pension schemes to provide for different NPAs for men and for women. But the Court of Justice held that (because of the absence of any sufficiently clear prior jurisprudence) the direct effect of Article 119 could not be relied upon to claim a pension entitlement by reason of that discrimination with effect prior to the publication of that decision on 17 May 1990. Subject to that restraint upon retroactivity, imposed in part because of concerns expressed by the United Kingdom as to the large financial consequences for pension schemes which commonly discriminated between men and women in that way, the Court held that it was for national courts to apply Article 119 so as to safeguard the equal treatment right in relation to pensions thereby conferred.”
17 May 1990 is thus the date from which the Barber principle applies throughout the EU and is generally referred to as the opening of the Barber window. Thereafter there is an obligation on employers, pension trustees and, if necessary, on the courts of member states, to give effect to that principle.
At [38] in the first judgment we explained what may happen thereafter with respect to future pensionable service:
“… employers and pension trustees may take effective measures available to them under domestic law (including the terms and rules of the relevant Scheme) to implement Article 119 by levelling down, that is reducing the rights of the advantaged class to those of the disadvantaged class, with respect to future pensionable service (i.e. service undertaken after the taking of those effective measures). But in relation to the period from the opening of the Barber window until the taking of those effective measures (generally described as the closing of the Barber window) employers and trustees will be required to confer the same rights upon the disadvantaged class as those enjoyed by the advantaged class…”
As in the first judgment, I will use the term “levelling up” to mean improving the rights of the disadvantaged class to those of the advantaged class. In practice this means that to lower the pension age of men from 65 to 60 is levelling up. To raise the pension age of women from 60 to 65 is “levelling down”.
Safeway contends that the coming into force of section 62 on 1 January 1996 closed the Barber window because it was an effective domestic law measure implementing Article 119 with respect to future pensionable service. This is because section 62 introduced into every UK occupational pension scheme an equal treatment rule conferring enforceable rights on members of such schemes to equalised levelled up benefits. Although in relation to the period before 1 January 1996 Article 119 precludes levelling down, from that date forward the level of members benefits is purely a matter of domestic law. As a matter of domestic law, so Safeway contends, the 1996 Deed was effective to level down the NPAs of men and women with effect from 1 December 1991. This domestic law effect of the 1996 Deed was nullified by Art 119 only insofar as it related to the period between 1 December 1991 and 31 December 1995. It remained effective to level down the NPAs with effect from 1 January 1996.
Mr Newton does not accept that the effect of section 62 was to close the Barber window. He contends that the CJEU's jurisprudence on what constitutes an effective measure to implement Article 119 requires that the measure be adopted by the pension scheme itself. He very fairly accepts, however, that if section 62 did close the window, the domestic law effect of the 1996 Deed was to level down the pension rights of both men and women to an NPA of 65.
On the appeal, Mr Sebastian Allen appeared for Safeway and Mr Andrew Short QC and Mr Michael Uberoi for Mr Newton. The second respondent (“the Trustee”) was represented by Mr David E. Grant who supplied a helpful background skeleton argument, but took a neutral position on the outcome of the third issue.
Relevant EU legal principles
At the material times, the principle of equal pay was laid down in Article 119 in the following terms:
“1. Each Member State shall during the first stage ensure and subsequently maintain the application of the...
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...C with their substantive rights under the scheme as modified by operation of law. 83. D The claimants contend that in Safeway v Newton [2020] EWCA Civ 869, the Court Appeal applied this analysis to the comparable equal pay provisions in sections 62 and 65 of the Pensions Act 1995 (now secti......