MR ASHU PRABHU

MR RICHARD LOCK

MS LINDA ROBERTS

DR RICHARD LAMB Defendants

The Claimants (“the Companies”) are the sponsoring employers of the Pell Frischmann Retirement Benefits Scheme (“the Scheme”) of which the First to Third Defendants (“the Trustees”) are the present trustees. The Fourth Defendant (“Dr. Lamb”) was an employee of one or other of the Companies from 1987 to December 2011 when he retired. He was a director of Pell Frischmann Civil and Structural Engineering Limited (“Engineers”) from 3 May 1990 to 15 October 2003.

This is an application brought byDr. Lamb to strike out the Companies’ claim on the grounds of abuse of process or in the alternative for a prospective costs order against either the Scheme or against the Companies.

The Scheme is a registered balance of cost final salary defined benefits scheme which closed to future accrual in June 2010 and Dr. Lamb became a member of that Scheme in 1988. The dispute between Dr. Lamb and the Companies and Trustees is a simple one. He claims to be entitled to an enhanced pension from the Scheme of two-thirds of his final salary rather than the one-third everyone accepts he is entitled to.

These proceedings are at an early stage in that Dr. Lamb has not yet served his defence. There is a defence from the Trustees but the application is made at a time when the issues between the parties are not clear. I have therefore proceeded on the basis of the issues as presently pleaded and indeed the application was argued before me on that basis.

It is accepted by all parties that there is power under Clause 8 of the Trust Deed dated 28 May 1991 (“the Trust Deed”) which governs the Scheme to augment benefits. It may be that there are other powers which are relevant but they are not currently in play. Clause 8 reads as follows:-

Therefore the Trustees have to agree to exercise their power under clause 8, and under the Trust Deed they may do so by majority; the Employer has to consent to their doing so and the exercise is subject to any additional contributions being made by the Employer as the Trustees on the advice of the Actuary may consider appropriate. There has been some question raised as to whether the Trustees are obliged to seek actuarial advice as a matter of construction of the clause but my understanding is that this is no longer a live issue in this claim. The Companies are prepared to accept for the purpose of this claim that the Trustees were not obliged to seek actuarial advice before

On 28 June 1991 a letter was written to Dr. Lamb by one of the then trustees of the Scheme, Mr. Jeffery Goodwin. I will quote it in full as it is the central plank of Dr. Lamb’s claim:-

Dr. Lamb was employed by Engineers at this time and indeed was a director of that company. The Companies say that Dr. Lamb is not entitled to an enhanced pension

The Companies have brought a claim seeking a declaration that Dr. Lamb is only entitled to his basic pension and not an enhanced pension, that the Clause 8 power has not been exercised in his favour and/or that the 1991 letter has no legal effect. In that claim the Trustees are neutral. They simply wish the matter to be decided one way or another so that they can pay out whatever pension is due. As explained below they have played an

On 12 January 2012 Linda Roberts (“Ms. Roberts”) one of the present trustees and the Third Defendant to this claim wrote to Dr. Lamb indicating that apart from the 1991 Letter there was no record of any decision being made by the then trustees in respect of

She then asked for a response by the end of the week. The letter does not strike me as unreasonable, particularly in light of the words quoted above although the request for a

In fact Dr. Lamb responded by e-mail the following day saying that he did not have any records and asked Ms. Roberts to forward minutes and correspondence to him. On 1 February 2012 it seems that in response to a request from Dr Frischmann who is a director of the Companies, and a letter from Olephants Solicitors for the Companies, Mr. Goodwin by then nearly 87 e-mailed to say the 1991 Letter was genuine, that he would not have written it if the employer had not asked him to do so and perhaps Dr. Lamb could tell the Trustees with whom he had agreed the enhancement.

This was sent to Dr. Lamb on 2 February 2012 with a request for more information particularly about any discussions Dr. Lamb had had at the relevant time with the directors of Engineers. On 5 February Dr. Lamb responded that he had had no such discussions with Dr. Prabhu and Dr. Frischmann the then controlling directors of

On 16 February Olephant Solicitors wrote a long letter to Dr. Lamb. That letter which is the subject of criticism by Dr. Lamb does not identify itself as a letter of claim but sets out a number of allegations against Dr. Lamb; not only that he is not entitled to the enhanced pension but also that he was in breach of his fiduciary duties to Engineers with regard to agreeing the enhanced pension. None of these additional allegations has found its way

On 7 March 2012 Dr. Lamb invoked the Internal Dispute Resolution Procedure (“IDRP”) set up in respect of the Scheme. Section 50 of the Pensions Act 1995 requires trustees of schemes to set up dispute resolution arrangements. The IDRP set up for the Scheme provides for the matter to be considered as a two-stage process: first, by a specified person, in this case Ms. Roberts and then if the member is dissatisfied by her decision by the Trustees. Decisions must be taken within a reasonable period and the IDRP in this case specified 4 months. Ms. Roberts was obliged to notify the member if a decision within that time was not possible. Section 50 (3)(c) provides that the IDRP does not apply to an exempted dispute which is defined as a dispute where proceedings have been commenced in any court or tribunal or the Pensions Ombudsman has commenced

Ms. Roberts acknowledged Dr. Lamb’s complaint on 9 March 2012 referring to the “investigations” which were underway into the circumstances in which the enhanced pension was claimed. On 3 April Ms. Roberts wrote to Dr. Lamb stating that she

Dr. Lamb asked for time to respond and said he would be replying shortly after 6 June. In fact Dr. Lamb instructed Shoosmiths who wrote to Olephant Solicitors in response to their letter of 16 February. On 26 June Ms. Roberts chased Dr. Lamb for the information she had sought at the beginning of April. He provided an interim response on 3 July 2012 where he referred to his e-mail of 5 February (in which he said he had not discussed the enhanced pension with Dr. Frischmann and Dr. Prabhu) but said he was taking advice on the relevance of some of the questions from the Pensions Advisory Service. (“TPAS”). TPAS in fact wrote on 6 July 2012 although the letter did not really progress matters. Ms. Roberts wrote on 11 July expressing her disappointment that the questions raised in her April letter had not been addressed.

Dr. Lamb’s response on 13 July was to the effect that he considered that the advice from

On 20 July the Companies issued these proceedings. Ms. Roberts informed Dr. Lamb of that on 25 July and said that the Trustees were taking advice and then on 5 September informed him that on the basis of legal advice the Trustees had received, the issue of proceedings suspended the IDRP.

Dr. Lamb’s primary case argued for by Mr. Grant was that the claim should be struck out as an abuse of the process of the Court. CPR rule 3.4(2) provides:-

that the statement of case discloses no reasonable grounds for bringing or defending the claim;

that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the

that there has been a failure to comply with a rule, practice direction or court order.

Mr. Grant relies on (b) and (c) and in particular relies on the breach by the Companies of the Practice Direction Pre-Action Conduct Protocol (“the Protocol”). He has set out in his skeleton argument a number of grounds for asserting that the Court ought to strike

However first I should say something about a point which pervaded a good deal of Mr. Grant’s argument to the effect that the actions of the Companies in bringing proceedings had the effect that Dr. Lamb could no longer complain to the Pensions Ombudsman. The Pensions Ombudsman is a creature of statute. Section 146 of the Pension Schemes Act 1993 provides that the Pensions Ombudsman may investigate and determine certain

a person responsible for the management of the scheme, and

an actual or potential beneficiary.

A person responsible for the management of the scheme includes the employer (subsection 146(3)). The Pensions Ombudsman cannot investigate a complaint under subsection 146(1)(c) unless it is referred to him by or on behalf of the actual or potential beneficiary who is a party to the dispute (sub-section 146(1A)(a)). There was a dispute between Mr. Grant for Dr. Lamb and Mr. Levy QC for the Companies as to whether employers could ever bring a complaint to the Pensions Ombudsman. I do not intend to express a view on that as it is unnecessary to do so to decide this application. However Mr. Grant’s position was that the employer could never make a complaint.

Section 146(6) provides:-

proceedings in respect of the matters which would be the subject of the investigation have been begun in any court or employment tribunal, and

those proceedings are proceedings which have not been discontinued or which have been discontinued on the basis of a settlement or compromise binding all the persons by or on whose behalf the complaint or reference is made;

Section 148 goes on to provide what should happen in the event that proceedings are commenced when a complaint is already being investigated by the Pensions Ombudsman. The Court in those circumstances can stay the proceedings in order to allow the Pensions Ombudsman to go ahead (subsections 148 (2) and (4)) and all parties before me accepted

One of Mr. Grant’s central complaints about the issue by the Companies of the

There is also an allegation contained in the witness statement of Paul Milford on behalf of Dr. Lamb that the Companies in concert with the Trustees ensured that the IDRP ran past the 4 month deadline without resolution and at the end of the deadline the Companies issued proceedings. I will say at once that having read the correspondence the overriding impression I derive is that Ms. Roberts was trying to push the matter on but Dr. Lamb was not prepared to provide her with the information she requested from him and any delay was really caused by him. Apart from the fact that I think it is unfortunate that Ms. Roberts referred to Olephant Solicitors’ letter when seeking information from Dr. Lamb, I do not consider that Mr. Milford’s allegation can be sustained. This was one point on which Mr. Short QC on behalf of the Trustees entered the fray and I accept his submissions on this issue.

I have also been referred by Mr. Short QC to Regulation 3 of the Personal and Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996 which

The reason why Dr. Lamb wishes to bring his complaint before the Pensions Ombudsman is because costs cannot be awarded against him and neither will he be liable to pay the Companies’ costs if his claim fails. The Companies on the other hand have very frankly said that they wish the matter to be dealt with by the Court because they do want the opportunity to seek costs against Dr. Lamb if his claim fails (although they

There has also been some debate before me about the relative speed at which the Court and the Pensions Ombudsman operate. I cannot see how I can make any findings about

I turn now to the grounds upon which Mr. Grant invites me to strike out the claim as

I was helpfully referred by Mr. Levy QC to a number of cases on abuse of process and in particular cases referring to the use of proceedings for an improper or collateral purpose. Before turning to them I should say that Mr. Grant expressly stated that he was not relying on the principles set out in those cases but a wider jurisdiction of the Court. However, it is instructive to give a brief summary of the principles which emerge from

It is clear that if a party has a genuine grievance for which he is entitled to seek redress, the use of all remedies available to him by the law cannot be an abuse of process (Goldsmith v Sperrings Ltd [1977] 1 WLR 498)

Motive and intention are irrelevant except where malice is in issue. The fact that a party who asserted a legal right was activated by feelings of personal animosity, vindictiveness or general antagonism was irrelevant. (Broxton v McClelland [1995] EMLR 485)

An action was only an abuse if the Court’s processes were being misused to obtain something not properly available to the claimant in the course of properly conducted proceedings either by achieving a collateral purpose beyond the proper scope of the proceedings themselves or the conduct of the proceedings so as to cause the defendant problems of expense, harassment, commercial prejudice or the like beyond those normally encountered in the course of properly conducted litigation (Broxton)

A purpose will not be regarded as illegitimate if it is no more than the natural consequence of the action succeeding and if the claim is commenced with a legitimate and an illegitimate purpose the fact that there one purpose is legitimate justifies the claim continuing. (JSC BTA Bank v Ablyazov (No. 6) [2011] 1 WLR 2966)

Only in the clearest and most obvious case will the Court strike out the claim as an

As I have said Mr. Grant did not put his case on the basis of these authorities. However, they are instructive in demonstrating that the Court should not strike out save in the most clear and obvious cases and the fact that the issue of proceedings might have been

Mr. Grant’s first point is that no explanation has been given for issuing the proceedings before the conclusion of the IDRP and for the lack of compliance with the Protocol . I am not convinced that supports these proceedings being struck out. Mr. Levy QC has made the point that the IDRP does not bind the Companies and whatever its outcome they would have been able to bring a claim in respect of the enhanced pension. There is therefore no reason why the Companies should wait until the IDRP is complete. While it might be considered sensible for the Companies to see what the outcome of the IDRP is

Mr. Grant’s real complaint about the timing of the proceedings is of course that it is designed to prevent his client being able to make a complaint to the Pensions Ombudsman. Mr. Grant’s position during the course of argument was that the Companies have no right to make a complaint to the Pensions Ombudsman. While Mr.

Mr. Grant has submitted that there is a statutory preference for complaints to go to the Pensions Ombudsman rather than be dealt with by the Court. Certainly if a complaint is ongoing as set out above, the statutory provisions are weighted in favour of court proceedings being stayed. However, if there is no complaint in play the statute seems clear that the Pensions Ombudsman is prevented from entertaining a complaint. In light of the clear terms of section 146, I find it difficult to discern any statutory preference for the Ombudsman.

The Companies are quite open about the fact that their motive for issuing the proceedings from the point of view of timing is to ensure the claim is dealt with by the Court rather than by the Pensions Ombudsman. They wish to be in a jurisdiction where costs can be awarded against the losing party. They also wish the evidence as to what occurred in 1991 to be tested by cross examination: something they would be entitled to before the Court

While stating that he does not rely on the improper purpose cases, it seems to me that is what Mr. Grant’s case on this issue amounts to. His argument is that the Companies have only issued proceedings with the improper motive of preventing his client from complaining to the Pensions Ombudsman. However as set out above, it is not an abuse of

The Companies clearly do have such a right. Mr. Grant has pointed to the odd nature of the proceedings in the sense of seeking a negative declaration but the Companies are

Mr. Grant also relies on the fact that the claim was issued for “purposes antithetical to the overriding objective” in that it was issued to take advantage of the parties’ inequality of power and resources and prevent access to the Pensions Ombudsman which was created as a proportionate procedure (CPR rule 1.1(2)(a); in order to increase expense (contrary to CPR rule 1.1(2)(b)) and forcing Dr. Lamb to incur costs disproportionate to his financial

The overriding objective commences with the words: “These Rules are a new procedural code

Indeed that last point also deals with a further submission by Mr. Grant that Dr. Lamb finds himself in an invidious position in that he cannot afford properly to defend the claim but cannot afford not to argue for the enhanced pension which he thought he would receive. That is simply an assertion made in Mr. Grant’s skeleton argument unsupported by any evidence from Dr. Lamb and I cannot see how I can place any

Mr. Grant also relied on a passage from the judgment of Lord Woolf in Clark v University of Lincolnshire and Humberside [2000] 1 WLR 1988 where he said:-

This passage has to be read in the context of the case Lord Woolf was deciding which involved a claim against a new university which arguably ought more properly have been brought as a claim in judicial review (with the strict 3 month time limits) rather than the breach of contract claim which had been issued. I do not see that it lends support to the argument that the Court should strike out if there an alternative procedure available outside court proceedings. Notwithstanding the point made in the passage the Court did

Mr. Grant also relies on a passage of Knox J in Hillsdown Holdings Plc v The Pensions Ombudsman [1996] Pens LR 427 where Knox J considered the interaction of the shared jurisdiction of the Courts on the one hand and the Ombudsman on the other. He said (at para 120)

That passage merely makes the point that as the Court and the Pensions Ombudsman

Mr. Grant also submits that if the Companies’ actions were to escape censure that would emasculate the role of the Pensions Ombudsman. I do not consider that argument has any merit. Section 146 of the Pension Schemes Act 1993 clearly envisages that the Court and the Ombudsman will share jurisdiction. If the ombudsman was intended to take precedence in given circumstances the Act would have said so.

Paragraph 6 of the Protocol provides that unless the circumstances make it inappropriate,

exchange sufficient information about the matter to allow them to understand each other's position and make informed decisions about settlement and how to proceed;

make appropriate attempts to resolve the matter without starting proceedings, and in particular consider the use of an appropriate form of ADR in order to do so.

Paragraph 7.1 provides that:-

the claimant should set out the details of the matter in writing by sending a letter before claim to the defendant. This letter before claim is not the start of proceedings; and

the defendant should give a full written response within a reasonable period, preceded, if

Mr. Levy QC argues the Letter of 16 February 2012 from Olephant Solicitors in effect

While I think technically the 16 February letter did set out the issues between the parties, in fact identifying rather more than eventually included the claim, it did not identify itself as a letter of claim nor indicate that proceedings would be brought imminently; simply that investigations were under way. Bearing in mind that the Companies were aware that the IDRP was in progress when they issued proceedings, to do so without any further

However, it is also clear to me that by the time proceedings were issued, each party knew what the issues between them were in essence although I appreciate because I have not seen Dr. Lamb’s defence I cannot judge that fully. In any event I do not consider that a breach of the Protocol would justify striking out the claim. Paragraph 4.6 of the Protocol

staying (that is suspending) the proceedings until steps which ought to have been taken have been taken;

an order that the party at fault pays the costs, or part of the costs, of the other party or parties (this may include an order under rule 27.14(2)(g) in cases allocated to the small claims track);

an order that the party at fault pays those costs on an indemnity basis (rule 44.4(3) sets out the definition of the assessment of costs on an indemnity basis);

if the party at fault is the claimant in whose favour an order for the payment of a sum of money is subsequently made, an order that the claimant is deprived of interest on all or part of that sum, and/or that interest is awarded at a lower rate than would otherwise have been awarded;

if the party at fault is a defendant, and an order for the payment of a sum of money is subsequently made in favour of the claimant, an order that the defendant pay interest on all or part of that sum at a higher rate, not exceeding 10% above base rate, than would otherwise have

Therefore the sanctions do not include striking out. Even if they did, I am not convinced that there has been a clear breach of the Protocol in this case which would go anywhere

Although not set out in the Companies’ skeleton Mr. Levy QC gave notice that he

However, in this case, Mr. Grant accepts that the Court has jurisdiction to entertain the proceedings brought by the Companies. His case is that the claim should be struck out as an abuse because the dispute ought to be dealt with by the Pensions Ombudsman. His argument is more akin to a forum non conveniens argument rather than the Court not

As an alternative to his strike out application Dr. Lamb seeks a prospective costs order against either the fund held by the Trustees or against the Companies. In practice this would be an order against the Companies as they are obliged to contribute the funds. However, I have heard from Mr. Short QC on this issue. Dr. Lamb’s case is put on

That the claim comes within category 2 of Re Buckton [1907] 2 Ch. 406.

By extension of the Buckton categories

On the basis that having regard to the Claimants’ conduct or otherwise the likely

Pursuant to the discretion of the court under CPR rule 44.2(4) having regard to

In Re Buckton Kekewich J set out three categories of claims. The first category was a claim by Trustees to have an instrument construed or a question determined in relation to the fund. In those cases the costs would come out of the fund. Kekewich J then identified a second class of case into which Mr. Grant says Dr. Lamb falls as follows:-

In such cases the Court will order the beneficiary’s costs to come out of the fund in the same way that the trustees’ costs would be paid in a category 1 case. I do not consider that Dr. Lamb’s claim can on any basis be regarded as a category 2 claim. There are no construction points between the parties bearing in mind the concession by the Companies and I am told by Mr. Short QC for the Trustees that there is no general benefit to the

Dr. Lamb’s claim is a personal claim brought by him for his benefit for an enhanced pension. I do accept the general proposition put forward by Mr. Grant that the categories of case set out in Re Buckton are not exhaustive. That was made clear by the Court of Appeal in Singapore Airlines v Buck [2012] Pens LR1. In that case a third party had brought a claim for construction which benefitted it but also was of benefit to the beneficiaries whom it was appointed to represent . The Judge at first instance had ordered all the costs to be paid out of the fund but on appeal Arden LJ giving a judgment with which the rest of the Court agreed allowed only one half of the costs to come out of the fund on the basis that the third party had brought the claim in a dual capacity. However,

Mr. Grant also relies on McDonald v Horn [1994] ICR 685. That was a case brought by members of a pension scheme making serious allegations against their employers and the pension fund trustees in relation to the administration of the scheme. Hoffman LJ

He then went on to say at p. 697:-

Therefore the test to be applied is whether the trial Judge can only exercise his discretion in favour of Dr. Lamb’s costs coming out of the fund. It is not the test which Mr. Grant has posited in his argument:: that it is likely that a Judge at trial would make a costs order in his client’s favour. For this proposition he relies on HR Trustees Ltd v German & Anor (2) [2010] Pens LR 131. However Arnold J in that case considered a number of first instance decisions since McDonald v Horn and reaffirmed that the test was as set out by Hoffman LJ in respect of Buckton type prospective costs orders: namely whether the trial Judge could only exercise his discretion one way in respect of costs. . It was only if the case fell within the second type of case referred to in McDonald v Horn namely a case akin to a derivative action that the Court had a broader discretion and could look at whether it was likely that the trial Judge would make a costs order in the applicant’s

Mr. Grant has also sought to draw an analogy between costs in this case and the way in which costs are approached in probate cases relying on Kostic v Chaplin [2008] WTLR 655 which considered the older authorities of Spiers v. English [1907] P 122 and Mitchell v Gard (1863) 3 SW & Tr 275. The principles from these cases can be summarised as follows. The Court will depart from the usual costs orders:-

If the testator has been the cause of the litigation, then the costs might come out of the estate;

If there have been reasonable grounds on which to investigate the validity of the will, then the costs lie where they fall.

Mr. Grant referred me to Re Lehman Brothers International (Europe)(Costs) [2010] EWHC 3044 where Briggs J (as he then was) extended the probate case principles to insolvency proceedings. I am not entirely sure how, on the facts of this case the probate cases, even if it were right to extend their ambit, might assist Dr. Lamb but in any event I consider that there is a very short answer to the point. It seems to me that while these arguments can be brought to bear after a trial has been fought, the Court would not make prospective costs order in a probate case based on the above

Finally Mr. Grant asks me to make a prospective costs order on the basis of the misconduct of the Companies in the way in which they have brought this claim. As pointed out by Mr. Grant the Court must have regard to all the circumstances including the conduct of the parries (CPR rule 44.2). Mr. Grant also referred me to paragraph 4.6 of the Protocol which I have set out above which clearly provides for a