Sarah Margaret Ballard v Mr Jonathan Buzzard (sued as a Representative Beneficiary of any Scheme Members in whose interests it would be for the Claimants not to obtain the relief that they seek)

Hearing dates: 8–9 October 2024

APPROVED JUDGMENT

Remote hand-down: this Judgment was handed down remotely at 10.30 am on 4 November 2024 by circulation to the parties or their representatives by email and by release to The National Archives

INTRODUCTION

The Radley College Pension and Assurance Scheme (the “Scheme”) is a defined benefit occupational pension scheme established in 1962 to provide pensions for non-teaching operational staff of St Peter's College, Radley (now Radley College) (the “ College”). As the Principal Employer under the Scheme, the College had responsibilities, including making contributions alongside those made by the members of the scheme and for dealing with any shortfall in funding that may arise from time to time.

The Scheme takes the form of a trust and, at the time under consideration in this judgment there were five trustees of the trust (the “ Trustees”).

The Claimants are the current trustees of the Trust as well as the College in its role as Principal Employer. During the course of the hearing, in response to an unopposed informal application, I agreed to remove two of the original Claimants, Mr Durie and Ms Pluck, as claimants on the grounds that they were no longer trustees of the Scheme.

The Defendant is a Representative Beneficiary. He is an active member of the Scheme who commenced pensionable service in 1987. He is directly affected by the validity of the SAAs (as defined below) and by the terms of the 2006 Deed (as is also defined below). He was originally appointed pursuant to CPR rule 19.9 to act as a representative of all members.

Again in response to an informal application, this time made on behalf of both the Defendant and the Claimants, I agreed to clarify his role as being a representative on behalf of any member of the Scheme in whose interests it would be for the Claimants not to obtain the relief that they seek. This was to acknowledge that not all members may have the same interests in relation to the claim. Some may wish to oppose it. Others, having regard to the financial effect that a failure of the claim may have on the College, may wish to support it in order to ensure that the College does not become motivated to close the Scheme to future accruals, or to take other action that would affect them. The interests of those members is best protected by the Claimants and I have agreed that the Seventh Claimant should be appointed to represent the interests of any members in whose interests it would be for the Claimants to obtain the relief that they seek.

The Claim concerns the validity of amendments purportedly made to the Scheme's provisions regarding pension increases. There are three main concerns.

First, there are questions concerning a Scheme Amendment Authority (“ SAA”) made or purportedly made by the Trustees from on or around 18 January 2001 to take effect from 2 February 2001 (the “ 2001 SAA”). In summary, and as discussed further below, the issue arises because there was a requirement for this document to be signed by all five of the Trustees, and although all five did sign, one of them purported to sign on behalf of the College, leading to a degree of doubt whether this requirement was met.

Secondly, the same issue arises in relation to two SAAs dated 8 June 2005 (the first of which was said to take effect from 6 April 2005 the “ 2005 Pension Increase SAA”). The question over the validity of the 2005 Pension Increase SAA was not referred to in the Claim Form but was identified by the Defendant after the claim was served on him, and both sides agree that this is an issue that should be dealt with by the court.

A further SAA (the “ 2005 Pensionable Earnings SAA”) was executed on the same day, in the same form and signed in precisely the same way. This was intended to effect an amendment to the definition of “Final Pensionable Earnings” with effect from 1st September 2005. As it became apparent during the course of the trial that the signatures upon this document were affected by the same issues as those on the 2005 Pension Increase SAA, the Claimants made a late informal application for the court to consider rectification of this instrument alongside rectification of the 2005 Pension Increase SAA. This application was supported by the Defendant, and I consider it to be in the interests of the overriding objective for me to grant it so.

I will refer to these three documents together as the “ SAAs” and to the two SAAs signed in 2005 as (the “ 2005 SAAs”).

The third issue is that when new Rules were adopted for the purposes of the Scheme on 1 December 2006 (the “ 2006 Deed”) to consolidate earlier rule changes and to reflect changes in the law, that document failed, erroneously, in the Claimants' submission, to reflect the intention of the College and Trustees, in that it fails to reflect the changes to the pension increase provisions adopted through the 2005 Pension Increase SAA.

THE ISSUES CONCERNING THE SAAS

The reasons for the SAAs

From 1 April 1994, the Scheme had provided increases to pensions in payment at a flat 5%. At that stage, there was no general requirement on occupational pension schemes to provide protection against inflation increases, but from 1997 onwards, successive statutory provisions were introduced to make increases mandatory and to set out a basis for a minimum level of increase.

First, for pension accrued from 6 April 1997, the Pensions Act 1995 introduced a minimum requirement for an annual increase of 5%, or the rise in retail prices, whichever was lower. This is referred to as “ 5% LPI”.

Subsequently, reflecting lower rates of inflation, the minimum statutory requirement changed to a requirement for an annual increase of 2.5%, or the rise in retail prices, whichever was lower. This is referred to as “ 2.5%LPI”. This minimum statutory requirement applied to pension benefits accruing from 6 April 2005.

In 2001 the Scheme was substantially in deficit. Its funding position deteriorated as that decade went on. This difficult financial position was thought to threaten the viability of the Scheme and left the College and the Trustees with difficult choices to make. The 2001 SAA and the 2005 SAAs were each entered into in response to a growing deficit in the funding of the Scheme.

The 2001 SAA was intended to have the effect that in respect of pensionable service on or after 1 February 2001, pensions were increased annually at 5%LPI rather than a flat 5%. It was also intended to reflect a change to the contribution rate and made changes to the arrangements relating to early retirement.

This was not enough to stem the continuing increases in the deficit and, as a result, the 2005 SAAs were later introduced. The 2005 Pension Increase SAA was introduced with the intent of reducing the annual increase in pension to 2.5% LPI with effect from 8 June 2005. The same instrument was also intended to effect a closure of the scheme to new entrants; and a change in the level of employees' contributions to the Scheme. The 2005 Pensionable Earnings SAA was introduced with the intent of changing the definition in the rules of the Scheme of the term “Final Pensionable Earnings” with effect from 1 September 2005.

In each case these measures were being adopted on the basis of actuarial advice and following a close consultation between the College and the Trustees. Having reviewed the evidence available, including minutes of College and of Trustee meetings and contemporaneous correspondence, as well as the witness statements of surviving Trustees, there is no doubt in my mind that it was the common intention of the College and of the Trustees (both as a body and individually) to adopt these changes.

However, whether the documentation that they entered into, on its face, had that effect has been open to doubt.

The requirements for amendments

For amendments to the Scheme Rules to be validly made, they had to conform with the Scheme's governing documentation. At the time the governing documentation was a Replacement Definitive Trust Deed and Rules dated 1 March 1996 (“ the 1996 Deed”). The Scheme's power of amendment was set out in Clause 16 of the 1996 Deed (“ Clause 16”). The relevant parts of Clause 16 are as follows:

“THE Principal Employer may from time to time without the concurrence of the Members authorise the Trustees in writing to alter or add to the terms and provisions of the Rules and/or the trusts, powers and provisions of this Deed and any such alteration or addition may have retrospective effect. The Trustees shall forthwith declare any such alteration or addition to the Rules in writing under their hands and any such alteration or addition to this Deed by deed except that any alteration or addition to this Deed which is solely for the purpose of...