BT Pension Scheme Trustees Ltd v British Telecommunications Plc & Anor

On 21^st October 2010 I delivered judgment on four issues which were said to arise between the parties to this litigation. The neutral citation of that judgment is [2010] EWHC 2642 (Ch). Reference should be made to that judgment for the background to the case and for the actual issues that I decided.

The issues which I decided were the first four of a list of agreed issues which were before me when the trial started. I determined that I would in fact consider the first four on that list and then in due course hear such other of the remaining issues as needed separate decision and as might be appropriate to decide. When the matter was restored to me for further directions as to the disposal of those other matters it became apparent that the Secretary of State wished to raise another issue which was not on that list. The other parties contended that it was not open to the Secretary of State to raise that issue because it had been the subject of a concession by the Secretary of State which he was not entitled to resile from. Alternatively they claimed that the matter was res judicata or was something that it would be an abuse to raise under the rule in Henderson v Henderson (1843) 3 Hare 100. The issue is potentially a very significant one in money terms and I determined that it needed to be dealt with at a separate hearing when it was properly articulated via statements of case. I gave appropriate directions and it is that matter which has now been restored before me and which I address in this judgment. As well as having the benefit of statements of case, I also have witness statements from deponents for BT and the Scheme Trustee, though not from the Secretary of State.

My previous judgment sets out the background to the issues which I have to decide. For present purposes the important background is the 1983 deed and its accompanying rules and the merger of the BTNPS referred to in paragraph 17. In 1993 the Trustees decided that the BTSSS and the BTNPS should be merged. The BTNPS had benefits which were less favourable to employees than those under the BTSSS (they were more akin to private schemes than Civil Service schemes), so the two schemes could not simply be merged without more if that distinction was to be maintained. In order to reflect the separate entitlement of the BTNPS members a new section (Section C) was formed and the BTNPS members were put into that. As paragraph 17 reflects, the funds of the two schemes are not segregated; the various sections merely reflected different measures of entitlement.

Thus the BTNPS members became members of the BTSSS. In the jargon of this case they became “post-transfer date joiners”.

This litigation, and the issues which it raises, were the subject of extended dealings between the parties in order to sort out what questions arose and what questions needed answering. Drafts of various documents containing potential issues were prepared and passed between the parties, and in the course of negotiation the formulation of the issues was refined. The final formulation of issues was that which was placed before me. One of the issues was Issue 3 that I decided in paragraphs 50-102 of my earlier judgment. It concerned the liability of the Secretary of State to make contributions under the statutory guarantee in respect of liabilities relating to post-transfer date joiners. The terms of my judgment in paragraph 102 indicate that I decided that the guarantee was capable of covering such liabilities, and was not limited merely to liabilities relating to pre-transfer date joiners. It is the case of BT and the trustee that my decision amounts to a binding determination that, save for any exceptions determined as a result of determining the answers to 8 more formulated questions, I had decided that post-transfer date joiners’ liabilities were all covered by the Crown guarantee. That included those joining through the 1993 merger. The Secretary of State disputes that and says that all I decided was that post-transfer date joiners liabilities were not automatically excluded by virtue of the date at which they joined, and all sorts of other arguments were still open to it in relation the coverage of the guarantee in respect of liabilities to that class. This turned into a debate about res judicata at the present hearing in front of me.

All the members of the BTNPS were, in chronological terms, post-transfer date joiners. The liabilities associated with that class were the subject of dealings between the parties before this action started and the subject of the concession made in this case. The actual concession is recorded in the document containing the issues in the form of an expression of the Secretary of State’s position in relation to one of the issues in the agreed list of issues before me, namely issue 12. That issue, and the parties’ express positions, were expressed as follows:

“12.

Irrespective of the answer to the other issues (including Issue 3), to the extent, if any, that:

(i)

bulk transfers into or out of the Scheme; or

(ii)

apportionment of Section 75 debts away from the other Participating Companies to the Company; or

(iii)

any Post-Transfer Date Event that does not fall within (i) or (ii)

increase the size of

(a)

the Buy-Out Lump Sum (if any); and/or

(b)

any Deficiency Contributions that fall due on or after the Company’s entry into winding-up or fall due before that date but are unpaid at such date, and this extra quantum is not excluded from the scope of the Guarantee by the answers to the other issues, does this extra quantum of Company Contributions fall outside the scope of the guarantee?

[(1) HMG has put forward the argument that this quantum of the Company’s Contributions falls outside the scope of the Guarantee.

(2)

The Trustee’s position is that this quantum of the Company’s Contributions is covered by the Guarantee.

(3)

HMG’s position is as follows:

(a)

HMG accepts that a bulk transfer out, on a share of fund basis, causes no extra quantum.

(b)

HMG also accepts that a bulk transfer in on a past service reserve basis does not in itself cause any extra quantum, provided that the past service reserve is calculated in accordance with the actuarial assumptions used by the BTPS, as the receiving scheme. If, on the other hand, the reserve was calculated by reference to the actuarial assumptions used by the transferring scheme and the reserve would have been higher if calculated on the actuarial assumptions used by the BTPS, then the difference would be extra quantum.

(c)

HMG emphasises the words “in itself”. It is HMG’s case that the Guarantee cannot extend to any BT liability for contributions other than in respect of pensionable service of BT employees. Hence, if on bulk transfer in, the transferring members are granted past service credits in respect of service with an employer other than BT, the Guarantee does not extend to any BT liability to contribute in respect of such past service credits. Equally, if, after transfer in, the transferring members are employed by a participating employer other than BT, any resulting liability to contribute in respect of such service is also outside the guarantee.] ”

The relevant concession is in the italicised paragraphs (b) and (c). The italicised text is italicised in the original list agreed between the parties, no doubt to distinguish the parties’ comments from the text of the issues.

The concession was supplemented by a further factual concession made by the Secretary of State in his skeleton argument at last year’s trial. In Appendix B, headed “Post-Transfer Date Events”, there is a paraphrase of the above concession in the following terms:

“However, if a transfer in is, at the time of the transfer, full-funded [sic] on the above basis, it is accepted that liabilities in respect of the members transferring in are not, under the ambit of this Appendix excluded from the guarantee. …

NB It is accepted that the transfer on the merger by BTNPS was fully funded on the above basis [and there is a footnoted cross-reference to evidential material]”

There was no particular question addressed to the extent to which liabilities arising out of bulk transfers arising from an amendment would or might be covered by the Crown guarantee. Were it not for the dispute which has now arisen, the next step in the action would be to move on to Issues 5 to 12. However, having obtained my decision on Issues 1 to 4, the Secretary or State now wishes to raise the following issue in place of the old Issue 12:

“12.

Does the Crown Guarantee exclude an increase in the Company’s liability to pay contributions (whether Buy-Out Lump Sum or Deficiency Contributions) which results from:

(a)

an amendment of the rules made after the Transfer Date (that does not fall within any of the other issues)?

Trustee’s position: No

BT’s position: No

HMG’s position: Yes.

(b)

(as a particular actual example of (a)), the merger of the BTNPS with the Scheme in 1993?

Trustee’s position: Issue already determined, alternatively No

BT’s position: Issue already determined under Issue 3 and/or HMG’s concession on this point cannot now be withdrawn, alternatively No

HMG’s position: Yes. The increased liabilities resulting from the BTNPS merger in 1993 arise as a result of a post-Transfer Date rule amendment and therefore fall outside the scope of the Crown Guarantee.

(c)

(as a further potential example of (a)), any bulk transfer made into the Scheme in the future, pursuant to a specifically introduced transfer-in rule

Trustee’s position: Issue already determined under Issue 3, alternatively No.

BT’s position: Issue already determined under Issue 3 and/or HMG’s concession on this point cannot now be withdrawn, alternatively No

HMG’s position: Yes. Increased liabilities resulting from such a future bulk transfer would be pursuant to a post-Transfer Date rule change and therefore would fall outside the scope of the Crown Guarantee.

[It is common ground that other than the amendment falling into 12(b), there have been no amendments to date that fall within 12(a)]”

The critical point for the purposes of the present hearing is the response to (b) and (c). The Secretary of State would wish to answer Yes to the issue. Each of BT and the trustee would wish to say No, if they had to argue the point, but crucially, for the purposes of this hearing, they say that the position is governed by the above concession which cannot now been withdrawn. They say that the Secretary of State has conceded that if the transfers in were fully funded (and the Secretary of State has accepted that the 1993 transfer was, and has not sought to withdraw that acceptance) then the liabilities in respect of the members who joined under that bulk transfer are covered by the Crown guarantee, and that that concession cannot be withdrawn.

The question for me, therefore, is whether I should allow the point to be raised by the proposed new issue, or whether it should not be raised because:

The actual financial consequences of the point going against the Secretary of State would, of course, depend on the circumstances (if any) in which the Crown Guarantee was called on, and the significance of the point in the eyes of the regulators (see my previous judgment as to why decisions are called for on these points now), but its potential significance can be judged from the following facts. The number of members joining in the 1993 bulk transfer was 61,600 odd, which is about two-thirds of the total class of post-transfer date joiners. The total liabilities attributable to them is £9.5bn in the last actuarial valuation. The amount of assets transferred in respect of them was £342m (which actually included an actuarial surplus). These are significant numbers.

There are in my view three relevant questions in relation to the concession, which I take from a slightly modified form of the submissions of Mr Andrew Simmonds QC, who appeared for BT:

This is not, unfortunately, a case in which the court has to consider an entitlement to withdraw a concession whose effect is plain. There was a serious dispute as to what was really conceded in the main concession, though the width of that dispute narrowed significantly during the Secretary of State’s submissions.

The Secretary of State wishes to take the point that, since the 1993 bulk transfer took place pursuant to a post-transfer date amendment (which it did) then it was outside the scope of the Crown guarantee because of the reasoning in my judgment which is said to rule out any liabilities created by amendments after the transfer date. The trustee and BT take the point that the Secretary of State’s concession prevents that point being taken, because actually the concession involves conceding that the fact that a bulk transfer derived from a post-transfer date amendment does not take its liabilities outside the guarantee. The written submissions of Mr Evans (who appeared for the Secretary of State) insisted that the concession did not concede that; it conceded something else. The Secretary of State had taken the stance in the negotiations leading up to the final formulation of the list of issues that liabilities arising from a voluntary decision of BT to expose itself to that liability fell outside the guarantee because of that voluntary exposure, but if the result of that voluntary act was not such as to increase the apparent quantum of the liability then the liability itself could be within the guarantee. Since a fully funded bulk transfer in did not actually increase the liability on BT (because the members came fully funded) then the liabilities arising from that bulk transfer were within the guarantee. That was, Mr Evans said, the effect of the concession. It did not amount to a concession about post-transfer date amendments; it was not a concession in which the Secretary of State was saying that where you have a bulk transfer effected by an amendment to the Scheme, he (the Secretary of State) would not take the point that it was amendment-based. In other words, the Secretary of State was not saying that amendments in this context were irrelevant; he could still rely on the fact of the amendment to say that the liabilities were thereby not covered by the guarantee.

In my view Mr Evans’ analysis does not survive a proper analysis of the background to the concession and the concession itself.

The background is contained in the circumstances and documentation leading up to the concession. The proceedings were issued on 14^th July 2009. The claim form raised some of the points that ultimately found their way into the agreed list of issues, but not all of them, and not in the same form. The parties then spent a year trying to agree the actual issues which were to go before the court. Various emails and letters passed between representatives, including counsel who were tasked with negotiating and agreeing matters. The intention was, as Mr Evans accepted, that there should be an exhaustive list of issues which dealt with all relevant questions, though he said that the Secretary of State was not giving up the right to advance arguments not yet formulated. I am not sure what is meant by that qualification, but in the circumstances it is not going to matter. The important point for present purposes is to note the intention to create an exhaustive list.

The correspondence passing in the period following the issue of proceedings shows that the Secretary of State was provided with a quantity of information about the state of the Scheme and (inter alia) the 1993 bulk transfer. As a result of this information the Secretary of State, like the other parties, knew about the 1993 bulk transfer, knew its scope in terms of numbers of members and values, and knew that it had arisen as a result of a variation of the original Scheme. The negotiation thereafter took place against that important section of shared knowledge.

One of the points that the Secretary of State took in the course of the discussion, and which he advanced as a basis on which it would be said that various things were not covered by the Crown guarantee, was that liabilities arising as a result of voluntary acts of BT would not be covered. This is apparent from the stance taken in relation to various of the issues, but particularly from an email from the Secretary of State’s counsel to other counsel dated 11^th June 2010. This letter at various points makes the general stance of the Secretary of State clear. It is referred to at various points, and one convenient summary is in section 2, headed “Post-transfer Date Events”, where he sets out the general proposition:

“The Crown Guarantee only extends to liabilities that vested in BT under s.60 at the transfer date. Accordingly it is our case that the only scheme liabilities so vesting were liabilities arising under the provisions of the scheme as it then stood – by reference to its then current membership, its then current rules and benefit structure, and with one sponsoring employer and no other participating employers ...

“… as a general proposition it is our case that scheme liabilities of BT that do not represent the liabilities inherited by BT under s 60 fall outside the guarantee. This applies, inter alia, to liabilities that BT has voluntarily undertaken, or arising from corporate transactions that BT has entered into, such as takeovers and related bulk transfer in. Examples of these are:

…”

(iv)

Any liabilities arising from additional funding strain as a result of bulk transfer in (or bulk transfers out). I explain this below.”

He went on to deal with bulk transfers in particular:

“As a practical matter, bulk transfers represent a difficult area. With the assistance of GAD’s advice, we have tried to adopt an approach which is broadly consistent with our overall position but also offers a workable, pragmatic solution.

Hence, we accept that a bulk transfer in, that is fully funded on the then actuarial assumptions of this scheme (not the transferring scheme) does not itself place any additional strain on the scheme funding. In this instance, and where the transfer was fully funded at the time, we do not seek to exclude from the guarantee liabilities in respect of transferred members by reason only of the bulk transfer.

But those liabilities may well be excluded for other reasons e.g. that they relate to post-transfer date joiners or that they relate to service with an employer other than BT.

As mentioned above, our stance on fully-funded bulk transfers is, however, an ad hoc solution to a specific problem. We do not accept that it is definitive of HMG’s case on the principles relating to PTDEs or extends by analogy to other PTDEs. Our general position remains as set out in bold above.”

The actual emboldening in that quotation is in the original. The reference to the “bold above” is a reference to the first emboldened passage which I have set out above.

His position is made clearer by the preceding part of that note, which accepts that the then existing list of issues “sets out the relevant issues and accurately reflects HMG's stance.” This is a reference to a preceding list which contained the equivalent of the present issue 12 and the express statement of concession that I have identified above as being the concession. The note then goes on to deal with a particular point, namely a general power of augmentation of benefits, which had been added to the Scheme through a post-transfer amendment – a clear example of the sort of Post-Transfer Date Event which the Secretary of State said gave rise to liabilities which fell outside the guarantee. This was pointed out in the note, which read:

“1.

General power

As you point out, the general power of augmentation did not exist in the 1983 Deed and formed no part of the benefit structure at that time

Consistently with HMG's overall approach, it is our case that the Crown Guarantee does not extend to BT's liabilities, at wind up, to fund any benefits granted in exercise of this power.”

He rejected analogies with bulk transfers into the scheme in the following terms:

“We do not accept that there is an effective analogy with bulk transfers into the scheme. The original scheme contemplated transfers in: it did not contemplate augmentation in exercise of a general power. See also my comments on bulk transfers under 2 below.”

One can see from this that the effect of post-transfer amendments was firmly in the minds of the parties, and in particular of the Secretary of State, and that that effect was advanced as a reason for rejecting liabilities arising from those events falling within the guarantee.

The position was therefore as follows:

This assists in ascertaining how far the concession should be taken as going. It clearly reserved the Secretary of State’s position in some respects, because it expressly did so – see paragraph (c). However, there is no reservation of position for bulk transfers proceeding from some amendment. He clearly was taking the general position that amendments which increased the liabilities would create liabilities not covered by the guarantee, but this point was apparently not being taken in respect of fully funded transfers in. Had it been taken it would have been taken in respect of the 1993 bulk transfer, because the Secretary of State knew that to have been done pursuant to an amendment.

It is therefore apparent that the concession as it stood was meant to incorporate a concession that amendments were irrelevant to bulk transfer liabilities. This becomes even clearer from a study of how the Secretary of State put his arguments in his skeleton at the hearing last year when Issues 1 to 4 were determined. The section starting at paragraph 25 introduced the list of issues, which was said to “contain a brief statement of the Secretary of State’s position on those issues which are, or may be, in dispute”. It went on:

“These detailed issues include the practical application, and consequences, of the main issues of principle that the Court is asked to decide.

26, Those main issues are as follows:

… (C) Liabilities arising by reason of transactions and amendments occurring post-Transfer date

In any event, are the liabilities falling within the guarantee:

(i)

limited to the comparable liabilities in respect of benefits that would have arisen in accordance with the provisions and structure of the scheme at the Transfer Date? or

(ii)

not so limited, and extend to liabilities that have arisen or (to the extent of the increase) have been increased by reason of transactions, and scheme amendments, occurring after the Transfer Date.”

Thus the potential exclusionary effects of amendments were clearly in mind. The exclusion of newly created liabilities was again averred in paragraph 84, and that was said to be the reason why the guarantee did not extend to liabilities in respect of post-transfer date joiners. Paragraph 88 read:

“By parity of reasoning the guarantee does not extend to

(i)

Liabilities in respect of increases in benefits voluntarily granted by BT after the Transfer Date (see Appendix A); and

(ii)

Other changes to BT’s liabilities to the scheme, resulting from changes to the scheme or affecting the scheme, procured by BT or to which BT agreed (see Appendix B).

The latter are referred to in the agreed list of issues by the phrase ‘Post Transfer Date Events’, though it would be more accurate to describe them as ‘Transactions’, rather than events.”

Appendix B is headed “Post-Transfer Date Events”, and cross-referenced to paragraphs 82 to 90. It starts by saying what it is about:

“This Appendix relates to ‘Post-Transfer Date Events’ as defined in the list of issues. Without prejudice to that definition, the expressions can be explained and clarified as relating to transactions made or procured to be made by BT, after the Transfer Date, that increase, or might increase, the liabilities of BT to the scheme, in a manner not permitted by the provisions of the scheme as it stood at the Transfer Date (i.e. under the 1983 Deed). It is not intended to relate to events entirely outside BT’s control, such as higher scheme liability arising from increased longevity of member, post transfer Date.

The transfers listed below indicate the transactions or type of transactions, falling within the description of Post-Transfer Date Events, that have or might have occurred since the Transfer Date or might occur in the future.

….

(i)

Underfunded scheme mergers and bulk transfers in

If a bulk transfer is made from another scheme into this scheme, and if the transfer is not fully funded … the transfer weakens the funding position of the scheme as a whole. It thereby increases the liability of BT in respect of the other members of the scheme, who were members prior to the transfer.

Such increased liability would not fall within the guarantee.

However, if a transfer in is, at the time of a transfer, full-funded [sic] on the above basis, it is accepted that liabilities in respect of the members transferring in are not, under the ambit of this Appendix, excluded from the guarantee. But they are likely to be excluded on some other footing, e.g. (a) that they relate to Post-Transfer Date Joiners, and/or (b) that they relate to pensionable service of members as employees of some company other than BT, and/or (c) that the liabilities are properly liabilities of some Participating Employer other than BT.

NB. It is accepted that the transfer in on merger by the BTNPS was fully funded on the above basis.”

The italicisation is in the original. The Appendix in question

Part 2 of the Appendix gives examples of Post-Transfer Date Events. The first is the admission of other participating employers. It is pointed out that the original scheme rules did not permit that, and an amendment was necessary to permit it. So liabilities from such an event are said to be excluded. Example B is the effect of scheme merger and bulk transfer in. The position of the 1993 merger is expressly referred to. It points out yet again that the transfer was fully funded, and implicitly states that liabilities from this are within the guarantee because it was fully funded, while pointing out in future that this might not be the case, in which event:

“BT’s liabilities would accordingly be increased by those transactions, in a manner wholly outside the contemplation of section 68.”

Nothing in this skeleton was resiled from at the hearing last year. The net effect is to underline the extent and effect of the basis on which the Secretary of State was inviting the court and the other parties to approach the matter. The Secretary of State took the point that liabilities resulting from amendments were outside the guarantee, but that liabilities arising from fully funded bulk transfers in, and in particular (and as an example of that) the liabilities arising from the 1993 bulk transfer, were within it (subject to the specified possible exceptions). There was no exception from those arising from amendments, and the Secretary of State was well aware that in fact the 1993 transfer was achieved through an amendment (an amendment was necessary to create Section C). In my view the Secretary of State was thereby plainly indicating (conceding) that he did not take any point based on that amendment.

I have dealt with the history and development of the concession because the original stance of the Secretary of State was that there was no concession that the 1993 Bulk Transfer fell within the scope of the guarantee even though it resulted from a post-transfer date amendment. I find that is wrong. Although that concession was not made in terms, it is plain enough what the Secretary of State’s conceded position was in relation to amendments and bulk transfers. He was in effect indicating that bulk transfer liabilities were not taken out of the guarantee by virtue of their having taken place through amendments. The amendment point was taken in relation to other areas of liabilities, but not bulk transfers. Nothing else makes sense.

In oral argument Mr Evans accepted that the Secretary of State was seeking to change tack, but did not seem to go so far as to accept that he was seeking to resile from a concession. I do not think that his position can be sustained. In the pre-trial negotiations the parties were clearly (as he admits) seeking to settle an exhaustive list of issues; they were also stating their respective positions in relation to those issues; they were doing so in a manner which was intended to shape the proceedings and the course of argument; the Secretary of State set out his position on post-transfer voluntary acts amendment; but he also set out his position on bulk transfers which indicated that, in respect of such transfers, an amendment point was not taken; and the other parties were entitled to treat that as his position thereafter in the proceedings. It is true that the Secretary of State’s position was to seek to argue various points against the inclusion of bulk transfer liabilities within the guarantee even for fully funded transfers (for example, the mere fact that the transferees were post-transfer joiners), but among the points thus reserved was not the ability to rely on the fact that an amendment underpinned the transfer. If labels matter, what the Secretary of State is seeking to do is to depart from (resile from) a concession.

Mr Simmonds and Mr Hilliard submitted that, in the circumstances of this case, the position was analogous to that which obtains where a party seeks to change position between a first hearing and an appeal. There is guidance from the authorities in that latter situation, which they submitted I should follow. Mr Evans disputed that analysis. He submitted that this was a trial in two parts, which was the same for these purposes as a trial in one part, and the appeal cases did not apply. If positions and arguments adopted in the early part turned out to be wrong then they could and should be reformulated.

I think that Mr Simmonds’ and Mr Hilliard’s analogy is the better one. Where there is a trial, and then an appeal, with an attempt to change a conceded position in between, there is the serious risk that an actual final decision has been taken in reliance on the original position. That is the purpose of trials – to arrive at a final decision. That does not arise in the same way where there is an attempt to withdraw a concession at a trial – no final position has yet been determined. In the present case the purpose of having the trial in two parts was to decide some things finally in part 1 so that that decision could then be applied, as appropriate, in part 2. There was no question of the parties being able to adjust their part 1 positions when it came to part 2. That would be contrary to the intended final nature of the list of issues, and to the objective of deciding the part 1 issues. The appeal analogy is therefore apt.

In Pittalis v Grant [1989] 1 QB 605 the Court of Appeal considered whether to allow an appellant to withdraw a concession which was a concession on a point of law (as to whether premises were “premises” within the Rent Acts). At page 611 Nourse LJ stated the principles applicable as follows:

“The stance which an appellate court should take towards a point not raised at the trial is in general well settled … It is perhaps best stated in Ex parte Firth, In re Cowburn (1882) 19 Ch D 419, 429 …

“the rule is that, if a point is not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence.”

Even if the point is a pure point of law, the appellate court retains a discretion to exclude it. But where we can be confident, first, that the other party has had opportunity enough to meet it, secondly, that he has not acted to his detriment on the faith of the earlier omission to raise it and, thirdly, that he can be adequately protected in costs, our usual practice is to allow a pure point of law not raised below to be taken in this court. Otherwise, in the name of doing justice to the other party, we might, through visiting the sins of the adviser on the client, do an injustice to the party who seeks to raise it.”

Mr Simmonds and Mr Hilliard invited me to adopt this as a starting point. They draw attention to the word “any” in the citation from Firth and the reference to detriment, and for reasons which appear below say that those factors operate in the present case to prevent the Secretary of State from raising the conceded point.

The fact of a positive concession, as opposed to merely not taking a point, was said to create a stronger presumption against allowing it to be revived. In Crane v Sky-In-Home Ltd [2008] EWCA Civ 978 an appellant wished to amend an appellant’s notice to raise a new case not raised below. At paragraph 28 Arden LJ drew the distinction just referred to:

“ Mr Dhillon [for the respondent] submits that there was a concession by Mr Crane that his case was limited to the way it was put at trial. Mr Dhillon’s point is that SHS were successful in getting Mr Crane to limit his case; he thus conceded any wider one. But in all the examples we have been given Mr Crane’s case was simply clarified. What was outside his case so clarified was abandoned. In my judgment, the word concession adds nothing here and should be reserved for the situation where a party has expressly conceded the position … for example the legal consequence of a particular transaction. There is no statement that Mr Crane was giving up some point that he considered he had. A concession in that sense would be a strong indication that permission to raise a new point should not be given since a party cannot blow hot and cold and be enabled to act in a manner inconsistent with his express act.”

BT and the trustee rely on the last sentence, and say that that describes what the Secretary of State is trying to do, and what the answer to it should be.

The court in that case also considered other authorities about raising new cases and stressed the importance of the risk of prejudice to the one party if the other sought to raise a new case. Thus they cited from Paramount Export Ltd v New Zealand Meat Board [2004] UKPC 45 where their Lordships cited a prior case:

“Only rarely and with extreme caution will the House permit counsel to withdraw from a concession which has formed the basis of argument and judgment in the Court of Appeal”

And went on:

“47…. That is a sound policy and in deciding to allow the concession to be withdrawn, their Lordships hope they have displayed the same caution as the House did in the Grobbelaars case. If there were any possibility that the outcome could have been affected if the point had been taken earlier, that would of course have been an entirely different matter.”

This is a recurring theme in the case. The court cited Jones v MBA (CA unreported, 30^th June 2000):

“38.

It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives form seeing and hearing the witnesses.”

The emphasis there is on the unfairness of allowing a new point if the other side might have adduced new evidence if it had been in play at the trial, but it is clear that that is not the only reason for refusing to allow a concession to be departed from. The starting point was that departure would not be allowed, and the case against allowing it is weightier if the point would have affected the evidence below. And it is not just evidential matters that would strengthen the case against allowing the point in. The point might affect the case in other ways. This appears from paragraph 21 of Arden LJ’s judgment:

“Likewise, in this case, in my judgment the court has to be satisfied that SHS will not be at risk of prejudice if the new point is allowed because it might have adduced other evidence at trial, or otherwise conduct[ed] the case differently.” (my emphasis)

She also refers to the risk of prejudice there, and in paragraph 25:

“25.

… But it would not be right to allow even important points of law to be litigated if there is a risk of prejudice to SHS in allowing them to be raised at all.”

It is apparent from this that clear, actual prejudice need not be demonstrated. A risk of prejudice is sufficient.

The Court of Appeal again considered whether a concession should be withdrawn in Slack & Partners Ltd v Slack [2010] EWCA Civ 204. It is apparent from paragraphs 31 and 37 that the conceding party has the burden of showing that the case would not have been conducted differently if the concession had not been made below, or of establishing that there is no risk of a difference giving rise to prejudice. The conceded against party should have the benefit of the doubt.

Thus far, so far as appeals are concerned, one can therefore extract the following propositions:

Those are the general principles. In paragraph 22 of her judgment Arden LJ gave some instances of the sort of specific factors which the court might take into account in allowing a conceded point to be taken, the last of which is:

“Likewise, in the Paramount case cited by Mr Macpherson, one of the factors which influenced the Privy Council was the fact that it was in the public interest to allow a public body, which would otherwise end up liable to pay large sums, to raise on appeal a point of construction involving no new evidence.”

Although Mr Evans did not rely on that particular sentence, I have borne it in mind in this case.

Although the present circumstances do not amount to an appeal, in my judgment similar factors apply. The parties approached this case on the footing of carefully constructed questions, negotiated over time and intended to be exhaustive. The formulation of various of those questions would be capable of affecting the wording of other questions, and doubtless did. In negotiating those questions the parties (and in the present case the Secretary of State) indicated what questions they did not want or need to have answered, and the basis on which they were approaching various of the questions. In doing so they were not merely indicating something that they were prepared to accept as an entirely severable matter (with no impact on other matters). They were helping to mould the other questions and any given stance would be likely to affect the way in which the other parties approached those other questions, and the litigation thereafter. Once the parties have embarked on dealing with the formulated questions, and once the court has started ruling on them, the parties, and the court, have started to erect the edifice on agreed foundations. Those foundations and the new building are analogous to a first instance decision, making it appropriate to apply the appeal decisions – later stages proceed on the standing of the earlier ones. The conceding party cannot lightly decide, after the agreed building has started, that he does not like the design or position after all, and would like the building moved over to the left, or constructed according to a different design.

Accordingly I think that in this case I should apply the Court of Appeal principles, and I do so. I accept that it will not necessarily be appropriate in all cases where issues are decided in a phased way that parties will have difficulty in going back on their previous stances. If, for example, the parties have merely done their best to anticipate later issues, rather than actually agree on what they should be and make concessions in order to achieve that, then the analogy would not necessarily be appropriate. But that is not this case. In this case the parties actually agreed what they should be, and, more importantly, agreed to some extent what they should not be (which is the effect of the concession), and they thereby agreed an inter-relation which makes the appeal analogy appropriate.

I therefore apply those principles.

The most important factor is the risk of prejudice. Mr Simmonds and Mr Hilliard said there was a real risk of prejudice. The 1993 bulk transfer was a big point for them, and the extent to which it might or might not give rise to guarantee liabilities was very important. The concession left various potential points in play in relation to it, but one of the points that was not in play was the post-transfer date amendment point. Had they been aware it was then they would have put in more evidence about the 1993 events. They would also have sought to tailor their arguments so as to avoid the determination that I ultimately made about post-transfer amendments and would have introduced some refinement into the debate so as to avoid the consequence that my findings in that respect have an automatic application in relation to the 1993 bulk transfer. BT did not even argue any points on post-transfer date joiners (in the course of which the amendment point first arose). Had the concession not been made it would have done so in order to counter the amendment-based analysis that that gave rise to. As it is, if the Secretary of State were now to be allowed to take the point that the 1993 bulk transfer arose from an amendment and was therefore outside the scope of the guarantee, the other parties would effectively be stuck with my determinations in my first judgment without the ability to argue against them, or refine the debate, in a way in which they would have done had the concession not been made and had the post-transfer date amendment point been in play in relation to the 1993 bulk transfer. They lost the chance to influence the debate in a key area. One of the points they would have prayed in aid in any analysis is that it would be absurd and unfair to use amendment as a touchstone for the relevant question, because they could have achieved the merger without an amendment. BT and the trustees could simply have brought all the new members into the existing Section B which, paradoxically, would have had the effect of increasing the potential liability under the guarantee over the liability in respect of Section C, because if they had been in Section B the rights of the members would have been more valuable. They also say that they would have put in some more evidence about what happened in 1993, and they have been deprived of the chance of putting in evidence.

I do not think that BT and the trustee have much of a point on the evidence. There does not seem to me to be much prejudice in not having put in evidence of the 1993 events last time round (or more evidence of it) because the evidence would be relatively short and, as far as I can see, uncontroversial. That evidence could be deployed now, if necessary. However, the legal arguments are different. Neither BT nor the trustee actually articulated with any degree of specificity the legal arguments that they would have deployed, but I do not think that they have to. The whole legal landscape would have been different, and they would have been starting from a different point in argument. The questions might even have been ordered differently, and that too would have affected the argument. It is not possible to conclude that the non-Secretary of State parties would not have been able to do anything materially different, or to affect the debate on post-transfer date amendments generally. If I were to allow the Secretary of State to adopt his new position and resile from his concession the other parties might be starting the debate from now on in a different position to that which they would have been in had there been no concession in the first place. There is therefore a risk of prejudice, and it is significantly over the threshold which the above cases seem to set.

That is a very significant factor which tells against permitting the Secretary of State to advance a case inconsistently with the concession, but there are other pointers that way too:

As referred to above, I have borne in mind the need to take into account the fact that the concession involves substantial amounts of public money (potentially, though there is no question of any actual anticipated call on the guarantee at the moment). However, the Secretary of State is ultimately the guardian of public funds in this respect, and if there is in due course a call to which the concession is relevant then he must be taken to have been aware of its consequences on the public purse because he had all the facts. In those circumstances it becomes hard for the Secretary of State to invoke the need to protect the public purse. Mr Evans said to me that the Secretary of State was really “bound” to take the point he now seeks to take, but did not really elaborate why that was.

I therefore hold that the Secretary of State is not entitled to resile from his concession and take the point that he now seeks to take in parts (b) and (c) of his proposed new Issue 12.

That deals with procedural aspects of the point for the purposes of these proceedings, but the trustee and BT go further and say that the Secretary of State is legally prevented from taking the point by virtue of the doctrine of res judicata. This may not be a pointless step in the reasoning once they have won on the concession point, because it might be thought that something more than the concession is necessary to fix the position for the future.

By way of analysis those parties say that under Issue 3 I decided that all post-transfer date joiner liabilities were within the guarantee, except for any that were taken out under the specific questions raised in Issues 5 to 12. None of those issues excluded post-transfer joiners who joined pursuant to an amendment. Therefore my decision gives rise to res judicata on the question that the Secretary of State now seeks to raise. I think that their point can be put this way. The bulk transferees were post-transfer date joiners; my previous decision decided that post-transfer joiner liabilities were within the guarantee subject to their being excluded for one of the reasons in the later questions; the later questions do not seek to exclude post-transfer date joiners purely on the basis that they joined under an amendment; there is therefore no escape mechanism based on amendment that is available to the Secretary of State; therefore the status of the bulk transferee liabilities is (subject to the specific questions reserved by the original Issue 12 and any of the other issues) res judicata.

The Secretary of State’s argument relies mainly on the last paragraph of the section of my judgment dealing with Issue 3, namely paragraph 102. That conclusion is not couched in terms of Issue 3. It merely describes post-transfer date joiners as being a class who are not excluded merely because they are post-transfer date, as opposed to pre-transfer date, joiners – see the word “capable”. Mr Evans says I was dealing with an essentially chronological point. He says I was certainly not determining that all post-transfer date joiners were in unless excluded by one of the specified exceptions. Nothing in my decision prevents a qualification to the position of post-transfer date joiners arising as a result of a decision on Issues 4 to 12.

Both sides indulged in a textual analysis of my judgment (to some extent) in order to work out what I decided. However, I think there is a short answer to the res judicata point at this stage. It is that there cannot be any res judicata (it is the issue estoppel type that is probably relevant) until an order is drawn which embodies the decision as a matter of record. Technically speaking I could recall my judgment, or parts of it, before the order is drawn, though the circumstances in which that can be done are limited. Furthermore, the parties may be at liberty to argue about the wording of any order which follows from my judgment as it stands. If it matters, it should be noted that my judgment did not answer Issue 3 in terms of the question. In saying that I am not making a coded statement about what the order should or should not say; I am merely making a factual observation. It would, or might, be possible and appropriate to word the order in relation to Issue 3 in terms which push the debate one way or another. Whether or not that is right depends on a combination of what my judgment actually says, whether it would be right to allow the Secretary of State to resile from the concession, whether it would be right to amend the thrust of my judgment, and the appropriateness of the whole exercise when done in relation to Issue 3 alone. Until that is done there is no sufficiently final decision to amount to res judicata. Of course, the decisions made on this occasion may generate a decision and situation in which there is, finally, res judicata, but that point has not, in my view, arrived.

I would, however, add that if res judicata on the point depended on what I said, I doubt if it would be established purely on that basis. The relevant part of my judgment says nothing about whether bulk transfer joiners are within or without the guarantee; a fortiori it says nothing about the situation where the joining was effected via an amendment. It does, however, deal with those two elements separately – it says that post-transfer date joiners are in, subject to points arising out of the later issues, and that liabilities increased via an amendment are out. There is therefore a prima facie conflict on the point. That conflict is resolved by going back into the recesses of the history of the concession and looking at how the case was run. It then becomes apparent that a logical effect of my decision, taking the concession into account, is that bulk transfers via an amendment are in, but one only gets there through a process of deduction and elimination looking at quite a lot of background material and by reference to the concession. So it seems to me that the crucial point is not actually the subject of my decision, but is a combination of my decision and a specific concession. It does not seem to me that of itself that amounts to res judicata (quite).

If the trustee and BT cannot rely on res judicata, they nonetheless say that they can rely on Henderson v Henderson abuse of process principles in resisting the attempt of the Secretary of State to raise the issue that he now seeks to raise. They say that the Secretary of State could and should have advanced the amendment point that he now wishes to raise at the first tranche of this trial, and it would be an abuse of process to allow the point to be raised now.

The Secretary of State argues that there would be no abuse because the point is not a wholly new point (the amendment point had already been raised) and there was no reason why it should have been raised before even if it could have been raised before. Mr Evans pointed out passages in Johnson v Gore-Wood [2001] AC 1 which stated that this abuse doctrine arose because of the interest in finality of litigation and not vexing litigants twice when they should only have been vexed once.

I consider that this doctrine will indeed operate to bar the Secretary of State from taking the conceded point in relation to the guarantee. The doctrine is generally applied in a second case in relation to what ought to have gone in prior litigation, but I do not see why the principle should not be held to apply, if appropriate, to a case where an action is heard in more than one phase, though it will generally be unnecessary to do so because other considerations (such as the state of the pleadings) will usually deal with any problems. The reasoning is closely allied to the reasoning which prevents him resiling from the concession. If he is not allowed to resile from the concession then this litigation will be pursued in such a way as to prevent him raising the point. At some point the litigation will be finalised without the point having been raised and on the footing of the operation of the concession. In Henderson v Henderson terms, it is obvious that the Secretary of State could have raised the point in these proceedings and the contrary was not, and could not reasonably be, contended. The question is whether the Secretary of State should have raised the point before or at the first hearing if it was to be taken. In my view the answer is Yes, for all the reasons appearing in my consideration of the concession. The amendment point was contemplated, and was clearly not sought to be invoked in relation to post-transfer date bulk transfers. That was a conscious decision on which the other parties were entitled to, and did, rely, to their prejudice in the manner referred to above. If the point was going to be taken it ought to have been taken at that point. All parties intended that the list of issues should be conclusive. That means that matters which must have been known to the parties as potential issues, but which were not to be litigated because a position was conceded, should be taken conclusively not to be issues. Once the litigation, based on that position, has started, and a decision issued which depends on it, it becomes too late to raise the point thereafter – it should have been raised before.

Accordingly it seems to me that it can be determined now, so far as necessary, that for the Secretary of State to seek to raise the amendment/bulk transfer point appearing in his revised Issue 12 would be an abuse of process. It should not be permitted.

Consideration will have to be given as to how to reflect this in an order. The abuse of process point by itself may be an irrelevance so far as these actual proceedings are concerned. Where it may be relevant is for the future. It will doubtless be useful to record the position in my order in due course. On one view the order thus created may then give rise to res judicata; alternatively it may merely record the current abuse of process position. What effect the latter form of order would have in the future may be open for debate. The parties are going to have to consider this point when they have considered this judgment, but I am anxious not to give rise to another substantial branching of this litigation away from the issues that have to be decided. This court has spent almost as much time deciding issues about issues in this case as it has hitherto spent in deciding the real issues themselves. It would be nice to get back to what this litigation is really meant for.