Shaun Patrick O'neill (Claimant/Part 20 Defendant) Industry-Wide Coal Staff Superannuation Scheme Trustees Ltd (Defendant 1/ Part 20 Claimant) Uk Coal Plc (Defendant 2/Second Part 20 Claimant)

JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

Etherton J:

INTRODUCTION

In these proceedings, commenced under Part 8 of the Civil Procedure Rules, the Court is asked to determine the meaning of certain provisions relating to ill-health, early retirement benefits in the Industry-Wide Coal Staff Superannuation Scheme ("the Scheme"), which is an occupational pension scheme for employees in the coal industry.

BACKGROUND TO THE SCHEME

The coal industry was nationalised on 1st January 1947. On the same date the National Coal Board Superannuation Scheme, which was subsequently renamed the British Coal Staff Superannuation Scheme ("BCSSS"), was established for management, clerical staff and supervisory staff employed by the National Coal Board ("NCB"). The establishment of BCSSS was achieved by a resolution of the National Coal Board on 31st December 1946, pursuant to the Coal Industry Nationalisation (Superannuation) Regulations 1946 made under section 37 of the Coal Industry Nationalisation Act 1946.

On 31st December 1994 the core business of British Coal was privatised. Schedule 5 of the Coal Industry Act 1994, made provision for replacement pension schemes for employees transferred to the private sector.

By the Industry-Wide Coal Staff Superannuation Scheme Regulations 1994 ("the IWCSSS Regulations"), made pursuant to Schedule 5 of the 1994 Act, the Secretary of State made provision for the establishment of the Scheme, in which participants in BCSSS could participate. Under paragraph 3(3) of Schedule 5 of the 1994 Act, existing members of BCSSS were required to be given an option to participate in the Scheme; and under paragraph 3(7)(c) of Schedule 5, the Scheme was required to provide benefits no less advantageous than BCSSS.

The Scheme was established on, and with effect from, 29th December 1994, in accordance with the IWCSSS Regulations. The Scheme is not open to persons other than former members of BCSSS. It is, therefore, a closed scheme.

Almost all members of BCSSS, whose employment transferred to employers which became participating employers in the Scheme, became members of the Scheme.

Most, but not all, employees in the privatised coal industry have participated in the Scheme.

The interests and some functions of the employers who participate in the Scheme ("the Employers") are represented and exercised by "the Co-ordinator". The Co-ordinator is Industry-Wide Coal Staff Superannuation Scheme Co-ordinator Limited, a company limited by guarantee, the members of which are drawn from the Employers.

Industry-Wide Coal Staff Superannuation Scheme Trustees Limited is the trustee of the Scheme ("the Trustee"). The Trustee is responsible for the administration and management of the Scheme. It has eight directors. Four are appointed by relevant trade unions, and four are appointed by the Co-ordinator, on behalf of the Employers. The trustee operates through a committee of management, which comprised the eight directors.

As at 31st December 2000, the Scheme had 2,047 contributing (that is to say, active) members, 1,381 deferred members and 297 pensioners. Of the pensioners, 245 were in receipt of ill-health pensions.

THE SCHEME'S PROVISIONS

The Scheme is a contributory, defined-benefit, balance of cost scheme, under which members pay a 5% contribution rate.

The primary benefit under the Scheme is a pension for life at "Normal Retiring Age" (NRA"). NRA is 60. The pension is based on 1/60th of the member's pensionable salary multiplied by the number of years of contributing service, up to a maximum of 40 years. There are provisions under which a member may commute his pension. There are also provisions for payment of an immediate pension, in certain limited circumstances, to a member leaving employment before NRA. These include ill-health, early retirement at 55 or more years of age, with 25 years' service, at the Employer's request, and compulsory early retirement at 50 or more years of age, at the Employer's request in special circumstances. Apart from those circumstances, a member leaving employment before NRA with 2 years' Qualifying Service is entitled to a deferred pension of n/60ths at NRA.

The issues which the Court has to determine in these proceedings arise from Rules 23 and 48 of the Scheme. The relevant parts of the Rules, and related definitions in clause 50 of the Trust Deed of the Scheme, are as follows:

"50. Definitions

(i) In the construction of this Trust Deed and of the Rules, unless the subject, the context or the Contracting-out Appendix otherwise requires, the following words and expressions shall have the meaning hereby respectively assigned to them, that is to say:—

…

"Contributor" means a Member who is for the time being making contributions from his salary to the Scheme in accordance with the Rules or who (having made such contributions for a period of 40 years referred to in Rule 4(3) (a) or having made such contributions and having attained Normal Retirement Age) has continued and for the time being remains in Eligible Employment

…

" Eligible Employment" means service on or after Transfer Day in the employment of an Employer in an activity which immediately before Transfer Day was carried on by an employer which was then participating in BCSSS such employment being :—

(a) Full-Time Service or service as a Permanent Part-Time Employee or pursuant to a fixed term contract of employment in a managerial, technical, administrative, clerical or supervisory industrial grade or as a rescue worker; or

(b) Full-Time service or service as a Permanent Part-Time Employee in such other grades as the Employer may from time to time determine either generally or in relation to one or more employees

and includes employment in a grade eligible for membership of IWS-MPS if on downgrading the Member is allowed to continue as a Contributor and agrees to continue to pay contributions to the Scheme in accordance with the provision of Rule 25(2).

"Employer" means an employer participating in the Scheme and in relation to any Member means that one of the Employers by which he is or was most recently employed (or if applicable of which he is or was most recently a member or a whole-time director).

…

"Member" means any person whether or not in Eligible Employment and whether or not for the time being a Contributor to the Scheme who is entitled to any benefits thereunder.

…

"Scheme's Medical Advisor" means any qualified medical practitioner appointed or approved by the Co-ordinator and the Committee."

…"

"23. To Contributors on Retirement from Eligible Employment Before Normal Retiring Age Through Ill-health…

(1) This Rule shall apply where a Contributor's Retirement takes place before Normal Retirement Age, subject to the following provisions of this Rule.

…

(3) Subject to a Contributor, who has at least 5 years Qualifying Service, producing evidence satisfactory to the Scheme's Medical Advisor that through bodily or mental incapacity or physical infirmity he is unlikely to be able to carry on any duties which his Employer may reasonably assign to him, the same pension computed as under Rule 22 (retirement on or after Normal Retiring Age) but with an additional pension equal to one-half of the pension which would have been payable if the Contributor had become a Member on the date of his retirement and had continued in service until Normal Retiring Age…"

"48. Re-admission of Retired Contributors

(1) If a contributor, who shall have become entitled under Rule 23(3) to a pension on account of ill-health, incapacity or infirming considered to be permanent, shall subsequently, and before he has reached Normal Retiring Age, in the opinion of the Scheme's Medical Advisor be able, owing to the improved condition of his health, to discharge with efficiency the duties of the office or employment held by him on the date of his becoming entitled to such pension or of some other office or employment in Eligible Employment, and his Employer offers in writing to reinstate him in the office or employment which he has ceased to hold or some other office or employment in Eligible Employment, he shall on returning to Eligible Employment or on the expiry of three months from the date of the offer, which ever shall first happen, cease to receive the pension which is being paid to him in respect of his previous service, but without prejudice to his entitlement to Equivalent Pension Benefit and if a Contributor who has become entitled to benefit under Rule 23(3) ceases by virtue of this Rule to receive a pension and does not return to Eligible Employment, his pension will be reinstated on the Member attaining Normal Retiring Age at the rate, including increases under Rule 33, at which it was payable when last paid but subject to any reduction under Rule 50…

…

(5) Any person to whom paragraph (1) or paragraph (3) of this Rule applies shall on re-entering Eligible Employment again become a Contributor liable for the contributions required in respect of his new Salary and eligible for the benefits provided by the Rules in respect thereof, Provided that if the Contributor returns to employment in a grade not eligible for membership of the Scheme, Rule 24 of BCSSS as it had effect immediately before 6th April 1978 shall...