Trustee Solutions Ltd and Others v Dubery and Cripps
| Jurisdiction | England & Wales |
| Judge | Sir Peter Gibson,Lord Justice Tuckey,Lord Justice Ward |
| Judgment Date | 26 July 2007 |
| Neutral Citation | [2007] EWCA Civ 771 |
| Date | 26 July 2007 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2006/2092 |
[2007] EWCA Civ 771
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
THE HON MR JUSTICE LEWISON
Royal Courts of Justice
Strand. London. WC2A 2LL
Lord Justice Ward
Lord Justice Tuckey and
Sir Peter Gibson
Case No: A3/2006/2092
Keith Rowley QC (instructed by Eversheds) for the Appellant
Nicolas Stallworthy (instructed by Nabarro) for the 1st, 2nd & 3rd Respondents
Paul Newman (instructed by Lee & Priestley) for the 4th Respondent
Hearing date: 27th June 2007
Introduction
This appeal gives rise to a point of statutory construction which, we are told, is of some importance to the many occupational pension schemes which went into winding up between 6 April 1997, when s 73 of the Pensions Act 1995 (“the 1995 Act”) came into force, and 6 April 2005 when a substantial amendment to s 73, effected by s 270 of the Pensions Act 2004, took effect.
The point arises by reason of the impact of Article 141 (formerly Article 119) of the amended Treaty of Rome, as interpreted by the European Court of Justice (“the ECJ”) in a series of decisions commencing with Barber v Guardian Royal Exchange [1991] 1 QB 344 (“Barber”), on schemes which differentiated between male and female members for the normal retirement date (“NRD”). Until the Barber decision given by the ECJ on 17 May 1990 British schemes usually mirrored the different ages at which State pensions were payable, viz 65 for males and 60 for females. Article 141 requires that male and female workers should receive equal pay for equal work or work of equal value. In Barber the ECJ held that pensions are pay and must be equal for both men and women. Accordingly, schemes which provide for unequal retirement ages as between men and women are unlawful
In further decisions, most notably Coloroll Pensions Trustees Ltd v Russell [1995] ICR 179 (“ Coloroll”), the ECJ decided further points arising out of Barber and in particular that:
(1) for pensionable service prior to 17 May 1990 it was not unlawful for pension benefits to be provided at different NRDs for men and women;
(2) a scheme could be amended so as to equalise benefits up or down, for example to make the NRD for both men and women at age 60 or 65; and
(3) for pensionable service between 17 May and the date of any such amendment (a period known in the pensions industry as the Barber window or corridor) men were entitled to be treated as if their NRD was the same as the NRD for women.
Thus in the usual form of scheme men were to be treated as having their NRD at age 60, but only in respect of benefits accruing from pensionable service in the Barber window.
Until recent years another usual feature of British schemes was that they provided pension benefits for a member of the scheme by reference to the member's final salary. Many such schemes fell into deficit, the schemes' liabilities to their members and other beneficiaries exceeding the assets of the schemes, and went into winding up. In December 2002 it was reported to Parliament that the number of schemes which went into winding up between 1 April 1997 and 31 March 2002 exceeded 29,000 and that the members of those schemes totalled nearly 1.6 million.
Schemes usually provide by their rules for the order in which, on a winding up, the liabilities of the scheme are to be met out of the assets of the scheme. However, since 1975 such provisions have been made subject to statutorily imposed priorities. S 73 of the 1995 Act prescribes, for schemes to which it applies, the order of priority as between liabilities of the scheme for the application of the available assets. Inherent in such prescription is the consequence that, where the assets are insufficient, those scheme members to whom liabilities in a lower category are owed may receive less than those to whom liabilities in a higher category are owed and they may receive nothing at all. Whilst provision has been made out of other funds to assist members of some insolvent schemes, members of many schemes do not qualify, and politically it remains a contentious topic whether such provision should be extended to such schemes.
The Facts
This appeal relates to The Colour Processing Laboratories Pension Scheme (“the Scheme”). It is a final salary scheme contracted out of the State Earnings Related Pension Scheme. It was established by a deed dated 3 October 1960 and is governed by a set of rules. Those applicable are the third edition (“the Rules”). They were introduced by a resolution dated 10 November 1986 of the trustees of the Scheme, to which the Scheme's sponsoring employer, then called Colour Processing Laboratories Ltd (“the Principal Employer”), gave its consent.. The Rules were expressed to be applicable from 6 April 1978.
The Rules provide for the NRD of a male member to be at age 65 and for a female member at age 60. The pensionable service of a member is limited to service in the period between the member becoming a member and the NRD of that member. The Rules require contributions to be made weekly or monthly or at such other interval as the employers might determine by each member in pensionable service and periodically by the employers. By Rule 12(A) a member in service on his or her NRD is entitled to a pension commencing the next day and unless the member exercises an option to postpone retirement and the commencement of the pension, which the member could do for up to 5 years beyond the NRD, the member is treated as having retired on the NRD. The quantum of the pension is calculated by reference to the member's years of service and final salary. By Rule 12(B) provision is made for withdrawal by the member from service before the NRD with the consent of the employers and for entitlement to a deferred pension commencing the day after the NRD, with an option available to the member with the consent of the Scheme's trustees to take a reduced pension commencing on or after the member attains the age of 50. Rule 12(C) provides for an immediate pension on a member's early retirement (not earlier than on the attainment by the member of the age of 50) with the employers' consent or on account of incapacity. Rule 38 contains a power to amend the Rules. Rule 40(A) provides for the winding up of the Scheme on specified contingencies. By Rule 40(B) the priorities in which the assets of the Scheme are to be applied to meet liabilities are laid down.
In 1992 the Principal Employer and the Scheme's trustees sought to close the Barber window by an appropriate amendment to the Rules. They attempted to level down the Scheme by increasing the NRD of female members to 65 with effect from 1 October 1991. From that date the Scheme was administered on the basis that benefits had been equalised.
On 1 November 2001 the Principal Employer went into creditors' voluntary liquidation. There is unlikely to be any dividend for unsecured creditors, of which the Scheme is one. The Scheme went into winding up on 15 February 2002 heavily in deficit. As at 1 November 2004 the Scheme's liabilities were £17.824 million as against assets of £6.5 million. As at September 2003 the Scheme had 230 deferred members and 63 pensioners.
The Claimants, Trustee Solutions Ltd, Mr Comar and Mr Edwards, are the trustees of the Scheme. They decided to seek the directions of the court on three issues. The first related to whether the power of amendment had been validly exercised. The second related to whether an estoppel arose with the result that the Barber window must be treated as having been closed. The third concerned the application of s 73. It is not in dispute that s 73 does apply to the Scheme. What is in dispute is how it applies and that turns on a question of construction
To assist the court in the determination of those issues representative Defendants were joined. The First Defendant, Leslie Dubery, was appointed to represent (a) all members of the Scheme in whose interests it was to argue that there had been no valid exercise of the power of amendment and that no estoppel had arisen and (b) all beneficiaries under the Scheme by reason of the pensionable service of those members. He was employed by the Principal Employer and was a contributing member of the Scheme between 1992 and 2000. He was aged 64 when the winding up commenced. The Second Defendant, Julia Cripps, was born on 11 October 1952 and so was 49 when the winding up commenced. She too was employed by the Principal Employer and was a contributing member of the Scheme between 1975 and 1988 when her service terminated and she became a deferred member of the Scheme. She was appointed to represent all other beneficiaries under the Scheme. I shall come to the respective positions of Mr Dubery and Mrs Cripps in relation to the third issue later.
The proceedings were heard by Lewison J. He held that on the first issue the power of amendment had not been validly exercised and on the second issue that no estoppel had arisen. It is unnecessary to say anything more about those issues as there is no appeal from the judge's decision on either of them. It is sufficient to note that the result of the judge's decision on those issues is that the Barber window was never closed.
I must now explain the third issue and the judge's decision on that. S 73 requires the assets of a salary related occupational pension scheme which is being wound up to be applied in satisfying the liabilities of the scheme in...
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