IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors

This judgment is written to deal with a disagreement between the parties, principally the RBs and the Trustee, about who should have conduct of the various matters on which permission to appeal or cross-appeal is sought. The applications for permission to appeal are to be dealt with at a further rehearing listed for 8 June 2015 (“the PTA hearing”).

To recap on the roles played by the parties so far:

Since the last directions hearing, some clarity has been achieved about what issues are sought to be appealed. IBM has drafted Grounds of Appeal for which it will seek permission at the PTA hearing. I do not need to go into the Grounds of Appeal in relation to the Breach Judgment at this stage, except to say that a significant number of my decisions on several issues are said to be wrong. In relation to the Remedies Judgment, the Grounds of Appeal are fairly restricted. IBM wishes to challenge some of my decisions in relation to the NPAs and the Separation Programmes.

Issues in relation to the Separation Programmes did not arise at the Breach Hearing or feature in the Breach Judgment. The Separation Programmes featured only as an aspect of the remedies to be given in respect of the breaches established. The arguments were run by the Trustee not by the RBs. In relation to the NPAs, the RBs dealt with breach (at both the Breach Hearing and the Remedies Hearing) but the Trustee dealt with all the remedy issues.

The parties’ positions on future representation are as follows:

At the recent hearing, one of the points raised related to the need for a decision and a notice before any new ER Policy can be implemented. Depending on my decision on that (which I have yet to give), there will be potential for an appeal or cross-appeal.

The Trustee considers that it would be sensible and cost-efficient for it to retain conduct of the remedies issues. Mr Spink points to the considerable amount of work which will be needed in responding to IBM’s appeal on the remedies issues relating to the NPAs and Separation Programmes. The Trustee’s team has already fully dealt with these issues at the Remedies Hearing and is ready to deal with them on appeal.

The most sensible course, he submits, is for the people who argued the points before me to argue them on appeal. He suggests that this is a sensible division of labour since it will not overload those representing the Trustee or the RBs. This is giant litigation requiring considerable counsel resource whether or not those counsel represent the Trustee or the RBs. As to overlap between the breach and remedies issue in relation to the NPAs, he suggests that this can easily be accommodated by discussion between the two teams. If the entirety of the NPA issues were allocated to the RBs, Mr Spink says that it is inconceivable that the there would not be close liaison between the Trustee’s team and the RBs’ team, the former having argued the matter in front of me; it is not reasonable to think that the Trustee should play no part in the appeal and be restricted simply to a watching role with a junior note-taker.

Mr Spink has focused on what he describes as the massive scale of the appeal and cross-appeal. Although a number of barristers are involved, he says that the work has been entirely compartmentalised with different individuals dealing with different aspects. No doubt that relieves the pressure from a single advocate, but I am bound to say that it would be surprising if each of them did not have an understanding, and have to spend some time in arriving at that understanding, of many aspects of the case going beyond a single compartment, not least in order to avoid the various arguments by different advocates cutting across each other.

As to the Consultation Breach, IBM is not proposing to appeal. I do not know if anyone is proposing to appeal my decision on the Overarching Point; and I have, in any case, left undecided what remedies might be available in relation to the Consultation Breach if I am wrong in relation to other breach issues. Mr Spink’s position is that the Trustee should run any arguments in relation to consultation since what is left relates only to remedies.

The RBs’ position is that the Trustee, given the history of this matter, would be in a better position than the RBs to resist any appeal and to conduct any cross-appeal in relation to the Separation Programmes and exemplary damages. The RBs were not heavily involved in those issues and would need to spend considerably more time and effort, thus incurring additional cost, in getting up to speed on those issues than the team which was fully involved previously. As Mr Tennet says, it does not automatically follow simply because there are fewer counsel before the Court of Appeal that the costs will be less.

But in relation to the NPA issues, the RBs’ team consider, after careful thought, that they will be better placed than the Trustee to conduct all aspects of the appeal, relating to both breach and remedies, and consider that it will in fact save costs if they do so. Mr Tennet makes these points:

As to the consultation issues, the RBs’ position is that they are willing and able to take on this part of the appeal albeit that the Trustee took the lead at the Remedies Hearing.

IBM’s position is that it sees merit in the RBs having conduct of all aspects of the appeal. IBM perceives that as the best way of keeping costs from spiralling out of control. Since it is IBM which will, ultimately, pick up the entirety of the costs bill for all parties, IBM’s position rather takes the wind out of the submissions made to the effect that the preferred courses of the Trustee and the RBs respectively would save costs: if IBM suggests a course which it considers will cost less but which in the event turns out to cost more, it will have only itself to blame. The wind is not quite out of the sails, however because IBM does not accept that the Trustee should be entitled to attend the appeal other than by a junior note-taker, an aspect to which I will return in a moment.

Although IBM sees merit in that approach, it is not its positive position that this is the result which I should impose. IBM does not mind whether its opponents in the Court of Appeal in relation to remedies are the RBs or the Trustee although I anticipate that, whichever it is, IBM will have something to say about the number of different counsel who should be instructed at IBM’s ultimate expense. That is not for decision on this occasion.

IBM has a concern about over-representation by counsel. As Mr Simmonds correctly points out, there will be large number of areas to cover. The Court of Appeal is a busy court and the time allocated to any appeal will, to put it mildly, result in any extremely tight timetable. With the best will in the world, more counsel means more time spent. IBM also has a concern that, in effect, each team wants to conduct certain aspects of the appeal but wants the other team to have some sort of monitoring or watching role in relation to those same aspects.

Mr Simmonds has referred to the decision of the Court of Appeal in BNY Corporate Trustee Service Ltd v Eurosail-UK 2001-3BL plc [2011] EWCA Civ 227, [2011] 1 WLR 2524. Although the substantive subject matter of that case has no relevance to the present case, Lord Neuberger had something to say about the role of trustees on appeals. He stated that the rule is that a trustee should not normally need to make representations or be represented at a hearing (although a note-taker could be instructed) where its stance is neutral. But that was subject to the possibility that a trustee’s actions might be subject to criticism or that there might be some other special reason.

In my view, that statement does not provide assistance in the present case about the role of the Trustee. The trustees of a pension scheme have very different roles to perform from those of a trustee of the sort found in Eurosail or of the trustee of a private settlement. This is of particular importance in the present case where the remedies (if any) to which the members are eventually found to be entitled will have a significant impact on how the Plans are to be administered. It is appropriate, I consider, for the Trustee to be represented at the hearing of the appeal in order to ensure that the Court of Appeal is properly, and neutrally, informed about the consequences of the remedies which it is considering granting. This is particularly important if there is a choice of remedies when the choice must surely take account of the practical implications.

In my judgment, a division of representation between the NPA breach and the NPA remedies issue is undesirable. I am persuaded by Mr Tennet that the better approach is for the RBs to have conduct of all aspects of the NPA issues. It is an approach which IBM is content with. That leaves for potential allocation the following issues:

It should not be overlooked that, in relation to the Separation Programmes, the argument was presented to me by Mr Short not by Mr Spink. I might assume that there was liaison between the two of them and perhaps with other members of the team. But the lead role was clearly that of Mr Short. Quite rightly, he did not attend the whole hearing but only that part which concerned him. If the Trustee were to retain conduct of the Separation Programmes issues, Mr Short would attend the appeal (and in practice he might need to be there for the duration of it) to deal with the Separation Programmes. He is not the person best placed to fulfil the role of the Trustee’s representative not having the same overarching involvement as Mr Spink or Mr Evans, but if he has to be there, there would be sparse justification for the attendance of any other counsel, in the light of my next conclusion which concerns exemplary damages.

As to the exemplary damages issue, it is the case that Mr Spink and Mr Evans presented the arguments to me. I am not prepared, in deciding the appropriate representation to allow at this stage, to assume that permission to appeal in relation to my decision will be granted either by me or the Court of Appeal. But even if permission to appeal were granted, that would be an appeal from my decision not to deal with the matter. It seems to me that it would be highly undesirable for the parties to prepare substantive arguments about exemplary damages (remembering the length of the arguments before me) before the Court of Appeal has overturned (if it does) my refusal to deal with the issue. It seems to me that, if permission to appeal is granted, directions should be sought from the Court of Appeal to ensure that any substantive argument on the issue is postponed. In these circumstances (doubt whether permission will be granted and doubt that, even if it is, a substantive appeal will be heard), I do not consider that the possibility of an appeal in relation to exemplary damages should influence the appropriate ongoing representation. I would only add that the Trustee and the RBs need to give serious thought to which of them should decide whether permission to appeal should be sought in the first place.

The RBs are willing and able to take on conduct of any aspect of the Consultation Breach which needs to be considered by the Court of Appeal. Mr Spink says that they may be willing and able, but that they are not suggesting positively that they should actually do so.

In my judgment, taking into account all of the competing factors, I consider that the RBs should have conduct of the entire appeal and of any cross-appeal. This is not what the Trustee seeks (since it wants conduct of the NPA remedies issue and the Separation Programmes issue) nor what the RBs seek (since they consider that the Trustee should retain conduct of the Separation Programmes issue). But in my view, it reflects a principled result and reflects the ability of the RBs – who ought in principle to be conducting the opposition to the appeal – to conduct it efficiently. Although they will have work to do, the RBs’ team ― perhaps expanded ― do not suggest that they could not handle the Separation Programmes issue.

That leaves two matters open. The first is the role of the Trustee in the appeal. For reasons already given, I consider that the Trustee is entitled to proper representation on the appeal and should not be restricted to instructing a note-taker. If I understand correctly, applications will be made for prospective costs orders by the RBs. It would be appropriate at the hearing of that application to deal also with the appropriate level of representation for the Trustee. I invite the Trustee and IBM to discuss that question in the hope that agreement can be reached.

The second matter, which is for the prospective costs application, relates to the number of lawyers – counsel in particular – who may be instructed by the RBs. Mr Tennet has already indicated the intention that both he and Mr Stallworthy are to be instructed and each will deal with the matter he dealt with before me (with the NPA remedies issues being assigned to one of them). One extra burden my decision casts on the RBs is conduct of the Separation Programmes issue. It may be that the RBs will consider it necessary to instruct a barrister having the same field of expertise as Mr Short. I would invite the Trustee and the RBs to consider whether it might be possible for the RBs to instruct Mr Short for to do so would have obvious advantages. They, and he, might feel that his previous involvement did not preclude a change of client in this way.

I add one observation. It has not been suggested to me that there are aspects of either the Breach Judgment or the Remedies Judgment which the Trustee, but not the RBs, might wish to appeal. Nothing I have said is intended to suggest that the Trustee cannot bring such an appeal (although it might wish to obtain Beddoe relief before doing so, assuming that IBM declined to provide any comfort in relation to costs) but I do not suggest, either, that it would necessarily be proper or appropriate for it to do.