Scully and Richardson v Coley et Al
| Jurisdiction | UK Non-devolved |
| Judge | Lord Collins of Mapesbury |
| Judgment Date | 08 July 2009 |
| Neutral Citation | [2009] UKPC 29 |
| Docket Number | Appeal No 51 of 2008 |
| Court | Privy Council |
| Date | 08 July 2009 |
[2009] UKPC 29
Privy Council
Present at the hearing:-
Lord Hope of Craighead
Lord Neuberger of Abbotsbury
Lord Collins of Mapesbury
Sir Paul Kennedy
Sir Christopher Rose
[Delivered by Lord Collins of Mapesbury]
Introduction
In 1994 Gillette Caribbean Ltd ("Gillette") restructured its operations in Jamaica, with a significant reduction in its workforce. At the end of December 1996 its operations were virtually shut down. Only Mr Vivion Scully and Mr Morven Richardson ("the appellants") were left as employees. Mr Gerald Coley and Mr Franklyn Brown ("the respondents") had also been employees of Gillette, but they (like the 18 other ex-employees whom they represent) had left Gillette earlier.
The appellants continued to make contributions to the Pension Plan for the Employees of Gillette and Jamaica Razor Blade Co Ltd ("the Plan"). The respondents had elected to take repayment of contributions (and interest) when they left Gillette. This appeal concerns the proper distribution of the funds left in the Plan following its discontinuance as from the end of 2000, which amount to some $42 million (or the equivalent of about £356,000 in 2004). The trustees brought an originating application to seek the guidance of the court as to the proper distribution of the assets of the Plan.
The appellants claimed that they were the only active Members of the scheme at the date of discontinuance, and that they were therefore entitled to have the funds paid to them, and to a small number of other former employees who opted to leave their contributions on deposit when their employment ended. The respondents claimed that the remaining funds should be distributed to all former employees of Gillette (which the respondents say are about 300) in proportion to the contributions which they made to the Plan during their employment. Brooks J agreed with the appellants, but his decision was reversed by the Court of Appeal in Jamaica by its judgment of October 19, 2007, from which the appellants now appeal.
Although the appeal turns primarily on a question of construction of the pension scheme documents, their Lordships were informed that it is of some general importance in Jamaica because the form of Trust Deed and Rules has been in common use for companies operating in Jamaica.
Discontinuance of the Plan
In January 2001, Gillette gave notice to the administrator of the Plan, Life of Jamaica Ltd ("the Administrator"), and the second respondents, who were the trustees of the Plan ("the trustees") that it would cease making contributions to the Plan with effect from March 4, 2001. The Plan was discontinued from December 31, 2000 when contributions effectively ceased.
When the operations of Gillette were shut down, only the appellants were left as employees and contributors to the Plan. Mr Scully was employed by Gillette from 1992 to 2001. Mr Richardson was employed from a date unknown to September 2000. The respondents were employed by Gillette for various periods before 1996. Mr Coley, for example, was employed from March 14, 1983 to June 1994, when he resigned and received a payment of $110,000 from the Plan, representing his contributions plus credited interest.
At the time of the discontinuance of the pension scheme of the Fund there was no statutory regulation of pension funds in Jamaica, apart from a requirement in the Income Tax Act for the Commissioner of Taxpayer Audit and Assessment to approve superannuation funds for the purposes of that Act. In 2005 the Pensions (Superannuation Funds and Retirement Schemes) Act made provision for the Financial Services Commission to approve pension schemes. In the case of a winding up, the Act provides that any surplus must be verified by an approved actuary, and a scheme of distribution must be submitted by the trustees for the Commission's approval. The Commission is to have regard to the payment of assets to (in order of priority) the current pensioners and their beneficiaries; to remaining Members and their beneficiaries by way of additional benefits; and to the sponsor of the scheme. The Gillette scheme, having been discontinued at the end of 2000, was not covered by this legislation.
The Trust Deed and the Rules
The Plan was established as a defined benefits plan by a Trust Deed dated May 1, 1976 in accordance with the Rules set out in a Schedule to the Trust Deed. In Recital (A) of the Trust Deed it was recited that "the Employer has determined to establish a superannuation fund (hereinafter referred to as the 'Fund') upon irrevocable trust for the purposes of securing pensions on retirement for their present and future employees as shall be eligible to participate in same (hereinafter referred to as the 'Members') and other benefits for such Members and after their death for their widows and/or designated beneficiaries."
In Recital (B) it was recited that "the Fund shall be held in trust by the Trustees for the exclusive benefit of Members, retired Members, their widows and/or designated beneficiaries in accordance with the rules set forth in the Schedule attached hereto (hereinafter called the 'Rules') and the Trustees, at the request of the Employer, have consented to act as Trustees hereof."
Clause 7 of the Trust Deed was a "Royal Lives" clause providing that except as provided under the Rules the trust would continue until a date twenty-one years after the death of the last survivor of the issue then living of his late Majesty King George VI. The clause further provided that upon determination of the trust after payment of costs, charges and benefits, "the balance of the Fund, if any, shall be disbursed in accordance with the Rules."
By Rule 1(d) of the Rules "Member" is defined as "an employee who is eligible under the Plan and who has signed the application form provided."
Rule 2 deals with eligibility. An employee becomes eligible to join the Plan if he is a permanent employee (Rule 2(a)). By Rule 2(e) "if a Member's employment is terminated and is thereafter re-employed, he shall, upon such re-employment, be considered as a new employee for all purposes of the Plan."
Rule 5 deals with contributions. The Employer is obliged to pay only the balance of the cost necessary to purchase the pension guaranteed by formula. Members make contributions by payroll deductions of 5% of earnings, and may make additional optional contributions up to an aggregate of 10% of annual earnings.
Rule 6 is one of the two crucial Rules for the determination of this appeal. It provides:
"TERMINATION BENEFITS
If for any reason, other than death or early retirement, a Member should cease to be employed by the Employer before his Normal Retirement Date, he shall have the following options:
(a) The Member may leave his contributions on deposit to accumulate at Credited Interest thereon to provide a pension commencing at his Normal Retirement Date.
(b) The Member may elect a cash return of his own contributions together with Credited Interest to his date of termination.
The Member who has chosen option (a) above and who has attained age 45 and completed at least 15 years of Pensionable Service will be entitled instead to the pension benefit earned up to the date of termination and payable at normal retirement date, provided that the termination is not due to misconduct or fraud. No Member shall withdraw from the Plan while still employed to the Employer nor may he be permitted to withdraw his contributions during periods of suspension, lay off, temporary leave of absence without pay or temporary interruptions in his service, nor shall he be permitted to contribute during such periods."
"Credited Interest" was defined by Rule 1(f) to mean "interest at an annual rate determined from time to time.." (with the rate at inception being 6%).
By Rule 10(b) (headed "No Rights Or Claims Except As Provided By The Plan"):
"Participation in the Plan will not give any Member the right to be retained in the service of the Employer, or any right or claim to benefits unless the right to such benefits has specifically accrued under the terms of the Plan."
By Rule 11(b) "The Company [i.e. Life of Jamaica Ltd, the Administrator] shall pay the Trustees in trust for the Member or his beneficiary any amounts payable in accordance with the terms of the Plan."
By Rule 12:
"CHANGE OR DISCONTINUANCE OF THE PLAN
(a) The Employer hopes and expects to continue the Plan indefinitely but reserves the right to change, modify or discontinue the Plan at any time. Any change, or modification in the Plan shall not affect the amount of pension benefits being paid to the retired Members and shall not result in a diminution or reduction of benefits already earned by Members up to the date of change.
(b) If the Plan is discontinued, no further contributions shall be required. No part of the assets of the Plan shall revert to the Employer until the Plan has made full provision for the payment of pension benefits, other benefits and rights of refund in respect of the service of the Members up to the date of discontinuance.
(c) In respect of the benefits accrued and funds accumulated, the total of such funds existing at the date of discontinuance of the Plan under the funding contract issued by the Company to the Employer, shall be allocated by the Company, subject to the approval of the Employer, among the then Members of the Plan in the following manner, in order, to the extent of the sufficiency of such assets:
(i) First, in the event of the Members having contributed to the Plan,...
To continue reading
Request your trial
-
Indpendent Trustee Services Ltd v Hope and Others
...PLR 427 at paragraphs 73 to 76 (Knox J); Re Courage Group's Pension Scheme [1987] 1 WLR 495 at 511–2 (Millett J); and Scully v Coley [2009] UKPC 29 at paragraphs 47 to 49 (Lord Collins of Mapesbury, delivering the advice of the Privy 75 In all these cases, the approach of the court is to ......
-
UC Rusal Alumina Jamaica Ltd and Others v Wynette Miller and Others
...decisions of the Court of Appeal of England and Wales in Stevens v Bell and of the Privy Council on appeal from this court in Scully and Richardson v Coley et al [2009] UKPC 29. 45 In Stevens v Bell, Arden LJ observed (at para. 26) that, with regard to the interpretation provisions of pens......
-
George v Ford et Al
...resulting trust is created in favour of the Second defendant as it was the sole contributor to the fund. 73 The case of Scully v. Coley [2009] UKPC 29, cited by the Appellant is equally inapplicable to the present circumstances. That case involved a pension scheme in which the members were......
-
Scully et al. v. Coley et al., [2009] N.R. Uned. 252 (PC)
...Coley, [2009] N.R. Uned. 252 (PC) MLB unedited judgment Vivion Scully and Morven Richardson (appellants) v. Gerald Coley and Franklyn Brown (1st respondents); Maria Teresa Perea, Roberto Tellechea and Gerald Gomez (the Trustees) (2nd respondents) and Gillette Caribbean Limited (3rd responde......