ICM Computer Group Ltd & Ors v Colin Stribley & Ors

This is an application by the Claimants for summary judgment in respect of a claim for a declaration as to the true construction of an amendment to the governing provisions of an occupational pension scheme known as the ICM Computer Group Pension and Life Assurance Scheme (“the Scheme”). The First Claimant is the Principal Employer of the scheme and the other Claimants are participating employers. The first three Defendants are the current trustees of the scheme and the fourth Defendant is a member who has been joined to represent all the members and beneficiaries of the scheme, in whose interest it would be to oppose the claim and a representation order is sought in that regard. I am very happy to make that order.

The issue concerns an amendment to the rules of the Scheme made in February 1997 which the Claimants claim operated to raise the normal retirement date (“NRD”) of female members of the Scheme from 60 to 65 so as to align the NRDs of male and female members in accordance with requirements of European law. Prior to the amendment, and if the amendment cannot be construed in the way which the Claimants contend, the effect of European law would be to entitle male members to an NRD of 60 in respect of pensionable service after 17^th May 1990.

The Claimants make this application on the basis that in their submission there is no realistic prospect of successfully defending the claim and there is no other reason why the claim should proceed to trial so that the requirements of CPR Rule 24.2 are satisfied. The Fourth Defendant, in whose interest it is to oppose the application, has taken specialist advice and does not oppose the Claimants’ application, and his counsel, Mr Jonathan Evans, has provided a detailed and very helpful opinion to the Court in that regard.

The Trustees maintain a neutral stance as to the application, having set out the issues helpfully in Mr Short’s skeleton.

As a declaration is sought I nevertheless heard full argument. ICM’s claim is for a declaration that the rules of the Scheme were validly and effectively amended by a letter dated 20.02.97 (the “February Authority Letter”) with effect from 01.03.97, such that the Normal Retirement Age (“NRA”) for female members of the Scheme was altered from 60 to 65 for service after that date to make it the same as the NRA of male members under the rules of the Scheme).

The Scheme was established by a declaration of trust dated 17^th April 1986 and was originally administered by the Legal and General Insurance Society Limited. The Scheme is currently governed by an initial definitive trust deed dated 26^th July 1994 to which a set of rules was annexed. By the appendix of the 1994 rules, NRD (normal retirement date) was defined as the 65^th birthday of a male member and the 60^th birthday of a female member. The power to amend the governing provisions of the Scheme was set out in clause 16 of the 1994 deed in the following terms so far as they are material:

“The principal employer may from time to time, without the concurrence of Members, authorise the Trustees in writing to alter or add the terms to the conditions of the Rules and/or the trusts powers and provisions of this Deed and any such alteration or addition may have retrospective effect, but so that no alteration may be made by the Trustees alone without the consent of the Principal Employer. The Trustees shall forthwith declare any such alteration or addition to the Rules in writing under their hands and any such alteration or addition to this Deed by deed... This Deed and/or the Rules shall stand amended accordingly with effect from the date of such declaration or from such other date, whether future or past, as is stated in such declarations. In the event of the Trustees making any such alteration or addition to the Rules the Trustees shall forthwith notify or arrange for the notification of each Member affected thereby individually in writing of the effect thereof.”

I should mention that there is no dispute in this case as to the validity of the amendment itself. The question is what it means. As I have already mentioned, what was then Article 119 of the Treaty of Rome required EU member states to maintain the application of the principle that men and women should receive equal pay for equal work. In Barber v. Guardian Royal Exchange [1991] 1QB 344, the European Court of Justice held that Article 119 applied to benefits under occupational pension schemes and that it was unlawful to discriminate between men and women by, for example, providing for pension benefits to be paid on retirement at different ages. Following subsequent cases, in particular Coloroll Pension Trustees Limited v. Russell [1994] OPLR 179, the requirements of equal treatment of male and female pension scheme benefits were confirmed as follows: (1) for a pensionable service prior to 17^th May 1990 it was not unlawful for a male and female pension benefits to be provided at different retirement dates; (2) a scheme could be amended so as to equalise benefits up or down, for example, to make both male and female NRD at 60 or at 65; (3) however, for pension service between 17^th May 1990 and the date of any such amendment, known colloquially as the “Barber window,” the disadvantaged member was to be treated in the same way as the advantaged member. For example, if male members’ NRD was 65 and female members was 60, male members would be treated as if their NRD was at age 60 during the

According to the minutes of a meeting the Trustees held on 29^th November 1996, at which Mr Wainwright of the Company was present representing the Principal Employer, the Trustees made the following decision:

“The trustees considered the Barber judgment and its ramifications and resolved that normal retirement dates should be set at 65 years for all scheme members. The authorised signatory was instructed to liaise with the scheme administrators to prepare the paperwork with the intention of equalising the scheme as at 1^st January 1997.”

Thereafter the authorised signatory, Mr Wainwright, liaised with a Mr Morrow of Legal and General and by a letter dated 7^th February 1997, Mr Morrow, having referred to the recent meeting of the trustees and in particular to the subject of equalisation of NRDs and having made specific reference to the extension of cover to age 65 for life assurance Long Term Disability Income Benefit and the additional widower’s benefit, which required the satisfaction of the term “Actively at Work,” concluded by requesting acceptance of the terms as to the continued insurance and the benefits, together with a copy of the announcement as issued to members and a Scheme Amendment Authority duly signed by the Trustees.

It was in accordance with that final request that Mr Morrow was sent a letter dated 20^th February 1997, signed by each of the Trustees and on behalf of the Company, which has become known as the “February Authority” and which is the document which is to be construed. It provided as follows:

“The Trustees of the Scheme have resolved, with the agreement of the Principal Employer, to make the following alterations to the Scheme and Legal and General is hereby authorised to implement the alterations with effect from 1^st March 1997.”

Nothing turns, at least for the purposes of this hearing, on the difference between 1^st March 1997 referred to there and the date of 1^st January 1997, which was in the resolution of the Trustees themselves, which was dated 29^th November 1996.

But to return to the February Authority: having set out that preamble, the first numbered paragraph is in the following form:

“1.

Normal retirement age (“NRA”) for all existing Scheme Members, both male and female, would be deemed to be 60 in respect of pension attributable to the following periods of Pensionable Service:

(a)

For existing female members all Pensionable Service up to and including 28^th February 1997 and;

(b)

For existing male members all Pensionable Service between 17^th May 1990 and 28^th February 1997.”

The remainder of the paragraphs are in the following form:

“2.

The widower’s pension is to be calculated on the same basis as that upon which the widows’ pension is currently calculated. This means that on death in service, the widower’s pension will be calculated using potential service from the date on which the deceased joined the scheme to age 65.

3.

The upper eligibility is revised so that females in an eligibility category may join, so long as they are under 60.

4.

A new cash factor for males and females is introduced and will be 9:8:1 at 65^th birthday, a sliding scale of 0.02 applies on a member retiring before or after their 65^th birthday.

5.

Contribution rates will continue.”

Paragraph 5 is not relevant for this purpose. Paragraph 6 is in the following form:

“6.

The benefit termination date under the LTDI, which was the Long Term Disability Insurance, will be 65 for all members.”

The equalisation of NRDs was notified to Scheme Members by way of an announcement issued on behalf of the Scheme on 21^st February 1997. By a Deed of Variation dated 24^th January 2005, the 1994 Rules were revoked and replaced with the Rules annexed to that Deed, which were expressed to apply with effect from 6^th April 1997. By Appendix A to the 2005 rules, NRD was defined as 65^th birthday of a Member.

In December 2010 the Trustees raised with the Company the issue of whether the equalisation had been properly implemented in 1997 and as a result these proceedings were commenced.

The legal principles applicable to the construction of pension scheme documents, and documents in general, are not in dispute in this matter. A very helpful summary was set out by Mr Evans in his opinion, which I adopt for the most part. The Court should avoid a narrow and literal, or only technical approach, and should instead adopt an approach which produces a reasonable and practical result. Although the Court should not be predisposed to arriving at any particular result, its approach should be influenced by the practical consequences of the possible rival interpretations and in that regard the reference is to Entrust Pension Trustees Limited v. Prospect Hospice Limited [2012] EWHC 1666 Ch paragraph 44 and Cherry Tree Investments Limited v. Landmain Limited [2012] EWCA Civ 736.

These principles were helpfully summarised, as I say, by Mr Evans in the following way: (1) the words of the document must have been interpreted in the light of the admissible factual background at the time it was created. (2) The interpretation must be one that is practical and purposive rather than detached or literal. If a detailed semantic and syntactical analysis of words in the document leads to a conclusion that flouts business commonsense, then the meaning must be made to yield to business commonsense. (3) If more than one interpretation is possible and whether or not the document is ambiguous on its face, the correct choice of meaning may depend upon the practical consequences of rival interpretations. (4) If one would conclude from the context that something must have gone wrong with the language of the document, the Court is not required to attribute to the parties an intention they plainly did not have. (5) The question is ultimately what meaning would be conveyed to a reasonable reader of a document who had all the background knowledge which would have been reasonably available to the parties in the situation they were in at the date of the document. Further, once it has been determined that something has gone wrong with the language of the document and it is clear from the admissible background evidence what the intended meaning of the document is, there is no conceptual limit to the correction that can be made as part of the process of construction. In that regard, I was referred to particularly paragraph 25 of the speech of Hoffmann LJ in Chartbrook Limited v. Persimmon Homes Limited [2009] 1 AC 1101.

Therefore, if there is a mistake and it is clear how the reasonable reader with the relevant knowledge would read it the Court can construe the document accordingly. As Mr Evans puts it, the key question in this case is how far this latter principle extends. In other words, quite how much can one legitimately read into a document once it appears that something is missing and has gone wrong?

In the Cherry Tree case, the Court of Appeal by a majority, Lady Justice Arden dissenting, refused to interpret a legal charge so as to include an enlarged power of sale for the mortgagee, which had not been expressly set out in the legal charge itself. They refused to do so by reference to the terms of a related facility agreement. Lewison LJ emphasised the difference between the remedy of rectification and the process of interpretation. Rectification is the jurisdiction that enables the Court in an appropriate case to cure a mistake in a document by rewriting the document so that it accurately reflects the parties’ intentions. By contrast the process of interpretation is more limited. It is confined to ascertaining the meaning of the document. Lewison LJ cited Lord Hoffman and said at paragraphs 98 to 99 of the Cherry Tree Investments case:

“98.

I begin by delimiting the scope of the exercise that the court undertakes which it interprets an instrument. As Lord Hoffmann explained in Attorney General of Belize v Belize Telecom Ltd[2009] UKPC 10[2009] 1 WLR 1988:

“The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed.”

99.

The question, then, is what does the registered charge mean? Whatever it means, it has always meant what it means. A contract cannot mean one thing when it is made and another thing following court proceedings. Nor, in my judgment, can it mean one thing to some people (e.g. the parties to it) and another thing to others who might be affected by it. As Arden LJ herself has said a contract has only one meaning: Egan v Static Control Components (Europe) Ltd[2004] 2 Lloyd's Rep 429. Thus I do not consider that the question is as posed by Arden LJ at [63]. We are not, in my judgment, seeking to ascertain ‘what the parties intended to agree’ but what the instrument means.”

In the Cherry Tree case a clause therefore, had been omitted altogether and the charge as it stood made perfect sense. At paragraph 131 of his judgment Lewison LJ made clear that as far as he could see nothing had gone wrong with the language itself in the document as it stood. Also, it is important to note that in that case the document in question was a public document to be entered on a public register and upon which third parties were intended to be able to rely. The purpose of that document was to state comprehensively all the terms of the charge. The majority of the members of the Court of Appeal held that a reasonable person would expect the parties to include all the agreed terms of the charge in the document and not to leave certain key terms expressed only in other related documents: in that case the facility agreement. In that context the omission of an entire provision, being a power of sale in terms different from the statutory power, was fatal.

In my judgment, the February Authority is different. First it is clear, in my judgment, that there is an attempt within the four corners of the February Authority itself to deal with the issue of NRD altogether, both in the past and for the future. It is clear on its face also that something has gone wrong. If one looks first at the first paragraph, it refers expressly to NRD up to 28^th February 1997 and otherwise only records what would be the status quo as a result of the decision in Barber and Coloroll. There would be no need to include the reference to 28^th February 1997 if it were not intended that a different state of affairs should take effect thereafter.

Also, in the first paragraph of the February Authority, the circumstances recorded are expressed to be those which are deemed to have effect. The use of “deemed” in itself, in my judgment, would have no meaning and there would be no sense in it unless in fact, it was intended rather than to record the position as a result of European law, to differentiate between what was intended to be the effect of the document as a whole otherwise and going forwards. All of the other provisions of the February Authority are consistent with there being an NRD at 65 for post 1^st March 1997 service and in that context they are entirely supportive of the conclusion that paragraph 1, and the February Authority as a whole was intended to have that effect.

In addition the February Authority itself makes reference to the decision of the Trustees, which had already been made in November the previous year in which there was an express reference to an intention for future service to equalise NRDs for both males and females at 65.

The document itself also was necessarily referential as all deeds of amendment in relation to pension scheme rules are. It is, in my judgment, therefore, a long way away from a free-standing document such as the charge in the Cherry Tree case, which was intended to be self contained and go on the register and be a formal document which would have effect for third parties in relation to transactions. Here therefore, I consider that the circumstances and the document are entirely different from that which were under consideration by the Court of Appeal in the Cherry Tree case.

Furthermore, it is clear to me, when reading the February Authority that something had clearly gone wrong with the language and that is what a reasonable reader of that document would have concluded. Furthermore, the reasonable reader looking at the February Authority and with the background knowledge of the Barber judgment and the Coloroll decision would be able to see, it seems to me, what the words of the February Authority meant. Therefore, it seems to me this is a matter of construction and as a result it is possible to add necessary words in order to give the February Authority the meaning, which such a reasonable reader with all the appropriate and relevant information would conclude that it meant.

This is not, therefore, a case in which the line is crossed from construction into rectification, because in rectification one is changing the meaning of a document in order to align it with the intended meaning. Nor is the situation here like that which was under consideration by Morgan J in Industrywide Coal Staff Superannuation Scheme Coordination Limited v. Industrywide Coal Staff Superannuation Scheme Trustees Limited and Ors [2012] EWHC 3712 Ch. In that case Morgan J was considering a statutory instrument, which had, it was said, an omission from it of a pro-rating provision. Morgan J held that in fact it was not clear to him at all that the omission had been as a result of a mistake, whereas in this case, as I have already said, I consider that it is quite clear that a mistake there was. That also, of course, is another reason for distinguishing these circumstances from those which were under consideration in the Cherry Tree case where Lewison J made clear and expressly stated that he could not see that there was a mistake on the face of the language of the charge as drafted.

If it were necessary to go beyond the February Authority in the context of the Barber and Coloroll decisions, I would also take account of extrinsic evidence in the form of the resolution of the trustees of November the previous year. I would do so on the basis that it is referred to expressly within the four corners of the February Authority. I also conclude that it is not something which is antecedent negotiation, but was the actual decision and the February Authority was the outworking of that decision. Therefore, I consider that it is a relevant document to take into consideration and it is absolutely clear on the face of that document that the decision which was made was to equalise NRD for male and females going forwards at 65. In fact, it seems to me that the position is very similar to that which was under consideration by the Court of Appeal in the Relicpride Building Company Limited v. Cordara [2013] EWCA Civ 158: in that case the main judgment was given by Kitchen LJ. The case concerned an agreement and particularly the terms for the retentions from a sale price. The payment over of those retention monies was expressly stated to be triggered in certain circumstances, but there was nothing in the agreement which dealt with the situation in relation to those monies if the circumstances which were expressly set out did not arise. At paragraph 40 of his judgment in that case, Kitchen LJ said as follows:

“Accordingly, what did the parties intend by clause 3.1.3 or, perhaps more accurately, clause 3.1 as a whole? I believe that intention is clear, though not fully stated. The purpose of the retention was to act as security by ensuring that the Cordaras had a sum available in this jurisdiction from which to indemnify themselves in respect of any loss or damage they might suffer through a failure by Faddian or Relicpride to address the various outstanding items referred to in the Supplemental Agreement. The Cordaras were obliged to give Faddian a reasonable opportunity to fulfil its outstanding obligations and ensure the various events set out in clause 3.1.3 occurred. If Faddian failed to do so, the Cordaras were entitled to an indemnity in respect of any loss or damage they suffered as a result. But the balance, if any, of the retention would then be payable to Faddian as the outstanding part of the purchase price. This is not expressly stated but is what any reasonable person would understand the agreement, read as a whole against the relevant background, to mean. It is necessary to give effect to the reasonable expectation of the parties.”

In my judgment the situation is the same here. The provision in relation to the NRD for males and females for the future, post 1^st March 1997, was not expressly set out, but nevertheless a reasonable person would understand it to have been 65 for both male and female when they read the document as a whole against the relevant background to which I have referred.

I also should mention that I see no difficulty in the issue of whether one’s reading in of such a provision would come up against the difficulty that the amendment power itself requires amendments to be made in writing under the hands of the Trustees. In my judgment the February Authority, of course, is in writing and in construing it by the addition of certain words, one is not going outside the four corners of the February Authority itself. Therefore, the fact that the document is in writing is sufficient to satisfy the amendment power both as to its express terms and to the way in which is now being construed.

Lastly, I should mention that Mr Evans handed up a letter of 29^th May 2013 from a Ms Roberts, who, on the face of it, is a member of the class whom the Fourth Defendant, has been appointed to represent. In that letter Ms Roberts raises various matters, which she says she would be grateful if the Court were to take into consideration. She nevertheless did not think fit to come before the Court. The issues, which I am not going to enumerate, which are in that letter are ones which could be raised by her on another occasion whether or not a declaration is made in the form in which the Claimants have sought it. Accordingly, I can see no reason why she should not be bound by the decisions which I have made, which is that there should be a declaration in the form which is sought by the Claimants. In addition, as I have already said, I am happy to make the representation order in the form which is sought.