Smithson and Others v Hamilton

JurisdictionEngland & Wales
CourtChancery Division
JudgeSir Andrew Park
Judgment Date10 December 2007
Neutral Citation[2007] EWHC 2900 (Ch)
Docket NumberCase No: CH/2007/APP/360

[2007] EWHC 2900 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Sir andrew Park

Case No: CH/2007/APP/360

Between
(1) David Smithson
Claimants
(2) Ranjit Ramnani
(3) Martin Stevenson
(4) Miles Barnard
(5) Jane Williams
(6) Siemens Building Technologies Limited
(7) Siemens Building Technologies Fe Limited
(8) Siemens Plc
and
David Hamilton
Defendant

Paul Newman (instructed by Wragge & Co) for the Claimants

Nicolas Stallworthy (instructed by Field Fisher Waterhouse) for the Defendant

Hearing dates: 22nd – 26th October 2007 and 1st -2nd November 2007

Judgment Approved by the court

for handing down

Sir Andrew Park

Abbreviations, glossary, dramatis personae, etc

1

These are as follows.

Introduction and Overview

Allen, Ms

Gill Allen; personnel manager of PFPL at the time when the PFP scheme was established; also a trustee of the scheme at the earlier times relevant to this case.

Aon

Aon Consulting Ltd, the name by which the company formerly known as Godwins (see below) is now known.

Barber

The case of Barber v Guardian Royal Exchange Assurance Group decided by the ECJ on 17 May 1990; reported at (among other places) [1991] 1 QB 344.

Barber window

See the explanation in paragraph 21 of this judgment.

Darbon, Mr

Bernard Darbon; one of the original trustees of the PFPL pension scheme; a witness.

Definitive Deed

The deed dated 1 June 1992 which superseded the Interim Deed (see below) and brought into effect the attached Rules of the PFP scheme.

ECJ, the

The Court of Justice of the European Community

Evans, Mr

Mr J T Evans, employed in the consultancy division of Godwins (later Aon); a witness.

Godwins

Godwins Ltd, a company carrying on business as, among other things, pension consultants; later renamed Aon Consulting Ltd.

Hamilton, Mr

David Hamilton; the representative defendant; a deferred member of the PFP scheme; a witness.

Hastings-Bass

Sometimes a reference to the case of re Hastings-Bass decd; sometimes a reference to the rule (or the principle) in Hastings-Bass, the scope and application of which is a major issue in this case.

Holmes, Mr

Michael John Holmes, managing director of PFPL in the first part of the 1990s; a trustee of the PFP scheme; a witness.

Interim Deed, the

A deed dated 30 March 1990 which established the PFP scheme and provided for it to be regulated on an interim basis until it was superseded by the Definitive Deed.

Kelly, Glenys

Former secretary of Mr Holmes; a trustee of the PFP scheme at relevant times; has made a witness statement to the effect that she remembers little or nothing about the subject matter of this case.

Kidde

Walter Kidde plc; a company which sold part of its business to PFPL in November 1989.

KPMG

Successor to Godwins as administrator of the PFP scheme.

Main, Mr

Actuary to the PFP scheme in the early 1990s; a witness.

Newman, Mr

Paul Newman; counsel for the claimants.

Perrett, Mr

Finance director of PFPL and a trustee of the PFP scheme at relevant times; a witness.

PFPL

The seventh claimant; a company originally called Preussag Fire Protection Ltd; purchased part of the business of Kidde in November 1989; 'the Principal Employer' under the PFP scheme; now called Siemens Building Technologies FE Ltd.

PFP scheme, the

The pension scheme some aspects of which are the subject matter of this case; stated in the Definitive Deed to be known as the Preussag Fire Protection Pension Scheme.

Rule 3.5.2.1

Rule or sub-rule contained in the Rules of the PFP scheme; at the centre of the issues raised by the claim.

Shurville, Mr

Stephen Shurville; at relevant times Assistant Director in the legal and documentation division of Godwins; the principal draftsman of the Definitive Deed and Rules of the PFP scheme; a witness.

Sieff v Fox

Case decided by Lloyd LJ (having been heard by him before he became elevated to the Court of Appeal); neutral citation [2005] EWHC 1312 (Ch); reported at (among other places) [2005] 1 WLR 3811. Lloyd LJ's judgment contains a detailed analysis of the rule (or principle) in Hastings-Bass.

Stallworthy, Mr

Nicolas Stallworthy, counsel for Mr Hamilton, the representative defendant.

Whiting, Mr

David Whiting; one of the original trustees of the PFPL pension scheme; a witness.

2

This is a case about a company pension scheme. The scheme is now known as the Siemens Fire Safety and Security (PFP) Pension Scheme, but at the times which were mainly relevant to the case it was known as the Preussag Fire Protection Pension Scheme. In general in this judgment I shall simply refer to it as the scheme, but occasionally, if it might not be clear whether I am referring to this particular scheme or not, I shall use the expression 'the PFP scheme'. The first to fifth claimants are the current trustees of the scheme.

3

Typically a pension scheme is established by an employer company, and there are one or more participating employers during its existence. This scheme was established by a company which at the time was called Preussag Fire Protection Ltd and (having been acquired by the Siemens group in 2001) now is called Siemens Building Technologies FE Ltd. Since most of the events relevant to this case occurred before 2001 I will refer to it in this judgment as PFPL. That company is the seventh claimant, and it is still a participating employer under the scheme. I think I am right that originally it was the only participating employer. There are now two more, and they are the sixth and eighth claimants.

4

Another typical, though not inevitable, feature of a company pension scheme is that it has trustees. In broad terms the responsibility of the trustees is to administer the scheme and, in the course of doing so, to ensure that the pension benefits for which the scheme provides are duly paid. The first to fifth claimants are the present trustees of the scheme.

5

The case involves a claim and a counterclaim. The claim is brought by the participating companies and the trustees of the scheme. The defendant, Mr David Hamilton, is sued as a representative deferred member of the scheme. (The expression 'deferred member' will be familiar to many – I suspect most – readers of this judgment. For readers to whom it is not familiar I give a brief explanation later: see paragraph 13(iii) below.) At the heart of the claim is an assertion by the claimants that something went wrong in the drafting of the scheme, and that one of the provisions in the Rules governing the scheme confers an unintentionally over-generous benefit on a particular kind of deferred member. The claimants say that the provision was a mistake, and they wish to have it removed.

6

Initially the claimants relied exclusively on the principle, developed in a series of relatively recent cases, which has come to be known as the principle (or the rule) in Hastings-Bass. (The name is derived from the case of re Hastings-Bass decd, [1975] Ch 25.) For the reasons which I will explain in this judgment I consider that that argument on the part of the claimants cannot succeed. In the course of the trial Mr Newman, counsel for the claimants, indicated that, while the foremost basis of his submissions remains the Hastings-Bass principle, he wished additionally or alternatively to seek relief in equity from the consequences of a mistake. In this respect he prays in aid a principle which has been applied in several cases, a well-known one being Gibbon v Mitchell [1990] 1 WLR 1304, a decision of Millett J. I gave permission for the particulars of claim to be amended, but I am unable to accept this argument either. For the reasons which I will explain as this judgment progresses, I conclude that the claim advanced by the participating companies and the trustees fails.

7

The counterclaim was introduced not long before the case was due to come to trial. It raises issues which in some respects are more far-reaching than the comparatively narrow (but difficult and, for PFPL, potentially costly) issue raised by the claim. The claim is a challenge to a single provision of the Rules which govern the scheme. The counterclaim is a challenge to far more than that.

8

There are two elements of the counterclaim. One is a challenge to the adoption by the Rules of a normal retirement age of 65 for the purpose of determining the rate at which prospective pension benefits accrue. On behalf of the representative defendant it is argued that the use by the Rules of that age should be set aside by virtue of the rule in Hastings-Bass. The argument, if correct, would have a radical impact on the benefits provided by the scheme and on the cost to PFPL and the other participating employers of putting the trustees in funds to provide them. The second element in the counterclaim goes yet further, and asserts that the Rules adopted for the scheme by a Definitive Deed made by PFPL and the trustees in 1992 are void in their entirety. The effect if the argument was correct would be that the scheme would continue to be governed in part by an Interim Deed (of which more later) which the Definitive Deed and Rules of 1992 were intended to supersede, and in part by a decision of the ECJ given in 1990.

9

For the reasons which I will explain as this judgment progresses I do not accept either element of the counterclaim, which therefore fails.

10

In the regrettably long judgment which follows I first make some general points and then I give an account of the relevant facts. I shall then consider the arguments which arise from the claim and explain my reasons for not accepting it. Finally I shall deal with the counterclaim and explain my reasons for not accepting that either.

11

I record that Mr Paul Newman appeared for the claimants, and that Mr Nicolas Stallworthy appeared for the...

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