Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd and Another

JurisdictionEngland & Wales
JudgeMR JUSTICE BRIGGS,Mr Justice Briggs
Judgment Date27 July 2010
Neutral Citation[2010] EWHC 1805 (Ch)
CourtChancery Division
Docket NumberCase No: HC09C02339
Date27 July 2010
Stena Line Limited
(1) Merchant Navy Ratings Pension Fund Trustees Limited
(2) P&O Ferries Limited

[2010] EWHC 1805 (Ch)

Before: Mr Justice Briggs

Case No: HC09C02339



Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Brian Green QC and Mr Jonathan Hilliard (instructed by Travers Smith LLP, 10 Snow Hill, London EC1A 2AL) for the Claimant

Mr Christopher Nugee QC and Mr Edward Sawyer (instructed by Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF) for the First Defendant

Mr Andrew Spink QC and Mr Richard Hitchcock (instructed by CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD) for the Second Defendant


Hearing dates: 5 th – 8 th July 2010


Approved Judgment


I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


Mr Justice Briggs:




1. This Part 8 claim concerns the Merchant Navy Ratings Pension Fund (“the Scheme”) established with effect from 6 th April 1978. The Scheme is a non-sectionalised industry-wide defined benefit occupational pension scheme, established for the benefit of ratings of the British Merchant Navy. During its existence, some 240 employers of ratings have adhered to the Scheme under standard form accession documentation (“the Accession Agreement”) and thereby become what are defined under the Scheme's Trust Deed and Rules as Participating Employers.


2. The Scheme is, and has since the late 1990s been, in serious deficit. Its most recent actuarial valuation, conducted as at 31 st March 2008, revealed that the Scheme had an on-going deficit of £175 million (representing 78% funding) and a buy-out deficit of £370 million (representing 63% funding).


3. Pursuant to a proposal designed to repair the then deficit (“the 2000 Proposal”) and with the approval of the Court on behalf of the Scheme's members, a new deed and rules were executed on 31st May 2001 (“the 2001 Deed and Rules”). They introduced a regime (“the 2001 Regime”) pursuant to which the whole of the legal liability for repair of the deficit was thrown upon those 40 Participating Employers which, as at 31 st October 1999, employed active members of the Scheme, or persons eligible to join it (“the Current Employers”). The 2001 Regime also involved the closure of the Scheme to new members with effect from 31 st May 2001. From the same date continued employment as a rating ceased to constitute a basis for the accrual of additional years’ pensionable service under the Scheme.


4. The 2001 Regime was introduced pursuant to a power of amendment conferred upon the Trustee by clause 30 of the then applicable trust deed dated 3 rd October 1994 (“the 1994 Deed”). Together with its accompanying rules (“the 1994 Rules”) it was one of a series of successive amendments which occurred during the life of the Scheme, in each case by a complete replacement and restatement of the relevant deed and rules. The complete list of such replacements is as follows: July 1985, August 1990, October 1994, May 2001 and August 2007. Other significant amendments occurred without the need for a comprehensive replacement of the deed and rules, in particular in July 1986, when functions, including the amendment power, were transferred from a Committee of Management to the Trustee. Further amendments were made in June 2000 and in February 2001 about which I shall have more to say in due course.


5. An issue has arisen between the 40 Current Employers and those remaining Participating Employers of the other 200 or so employers which adhered to the Scheme (to which I shall refer, adopting the definition used in the Claim Form, as “the Specified Employers”), due to the fact that some 75% of the present deficit for which, under the 2001 Regime, the Current Employers have the entire repair liability is attributable to the pensionable service under the Scheme of ratings whilst in the employment of the Specified Employers. From 2001 to 2006 the apparently disproportionate effect of the 2001 Regime in throwing the whole of the responsibility to repair a deficit upon employers whose ratings have been a cause of only a minority of it was largely mitigated by voluntary, ex gratia, payments made by or on behalf of a small group of Specified Employers. During that period those voluntary payments amounted to approximately half the annual deficit repair payments required under the 2001 Regime. When, in 2006 most, but not all, of those voluntary payments were discontinued, the financial burden on the Current Employers in terms of annual deficit repair payments increased by some 80–85%, with effect from March 2007.


6. The issue between the Current and Specified Employers is whether it is now competent for the Trustee, by exercise of its power of amendment under what is now clause 30 of the 2007 Deed, to alter or replace the 2001 Regime by imposing deficit repair contribution obligations on Specified Employers. The Current Employers, led by Stena Line Limited (“Stena”) (which, under the 2001 Regime, bears approximately 60% of the Scheme's liabilities) contends that the Trustee can do so. The Specified Employers, led by P&O Ferries Limited (“P&O Ferries”) (on whose behalf one of the largest voluntary contributions was made, ceasing in 2006), contend that the Trustee may not do so.


7. For reasons which I shall explain in due course, the Trustee, Merchant Navy Ratings Pension Fund Trustees Limited, was reluctant to assert the disputed right of amendment as claimant. In consequence, Stena has brought this claim, as a representative of the Current Employers, joining both the Trustee and P&O Ferries as the representative of the Specified Employers. It is agreed that I should make representation orders to that effect. The Trustee has adopted a broadly neutral stance in this litigation, but has indicated (without of course fettering its discretion) that if the court concludes that it has the requisite power, it would be minded to exercise it, upon the basis that any broadening of the pool of contributors to the deficit must, prima facie at least, be beneficial to the Scheme's members.


8. During the course of sensible discussion between the parties before trial, it became common ground that, under the 1994 Deed and Rules (in force until replaced in 2001), the power to amend contained in clause 30 would have enabled the Trustee to make the disputed amendment. The case for the Specified Employers is that the Trustee lost that power by reason of the introduction, by amendment, of the 2001 Regime. The case is put first as a matter of interpretation of the 2001 Deed and Rules, considered as a whole (for all relevant purposes replicated in the 2007 Deed and Rules). Alternatively a case is advanced based upon estoppel by convention.


9. The thrust of the Specified Employers’ case, under both those legal headings, is substantially the same. It is that the formulation of the 2001 Regime involved a consensus among all Participating Employers that, once implemented by the 2001 Deed and Rules, the Specified Employers were irrevocably and for all time released from any further legal liabilities to make deficit repair contributions to the Scheme, save only for certain statutory obligations (to which I will refer in due course, and which have in any event been paid).


10. Subject to certain embellishments relied upon in favour of Specified Employers who made voluntary payments, and to a particular factual case supporting Specified Employers in the P&O Group, the common thread which lies at the heart of the Specified Employers’ case is that the 2001 Regime involved them for ever giving up, in favour of the Current Employers, what they allege was a power under Rule 31.0(ii) of the 1994 Rules (“Old Rule 31”) to force the Scheme into a winding up by objecting to deficit repair measures proposed by the Trustee. That removal necessarily involved, so they say, a concurrent narrowing of the Trustee's power of amendment so as to exclude any power thereafter to include them within the class of contributing employers, an amendment which, without Old Rule 31, they would be powerless to prevent.


11. The resolution of this issue has not involved the determination of any disputed issues of fact. It has been acknowledged that the occasional differences of recollection and emphasis revealed by the witness statements do not affect the outcome, so that cross-examination has been unnecessary. The relevant facts consist of the terms of the Deed and Rules, before and after the amendments made in 2001, the matrix of fact against which the amendments made to introduce the 2001 Regime have to be interpreted, and the negotiations between the parties which led to the introduction of the 2001 Regime, from which the convention alleged to found an estoppel is said to have arisen, together with the matters alleged to constitute the requisite detriment. Subject to one small exception, the content of the negotiations relied upon sufficiently appears from copies of relevant correspondence and minutes of meetings.


12. Nor was there any specific dispute between the parties as to the relevant legal principles, although of course the parties placed emphasis on different aspects of them, in particular in relation to questions of interpretation of pension schemes. In the end the lengthy and helpful skeleton arguments, coupled with three and a half days of vigorous debate by way of submissions, concerned the application of well settled legal principles to uncontentious, if complicated, facts.




The 1994 Deed and Rules


13. During the whole of the period of the negotiation and implementation by amendment of the 2001 Regime...

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