England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER MERCANTILE COURT
HIS HONOUR JUDGE STEPHEN DAVIES

		Royal Courts of Justice Strand, London, WC2A 2LL
		23/03/2016

SIR STANLEY BURNTON:

Introduction

1. This is an appeal by Prometric Ltd, the Defendant in these proceedings, against the order of His Honour Judge Stephen Davies, sitting as a High Court Judge. The Defendant had applied for an order striking out the claim of the Claimant John Cunliffe, or alternatively for summary judgment dismissing the claim, on the ground that the Particulars of Claim disclosed no reasonable ground for bringing the claim, and the claim has no real prospect of success. The Judge dismissed the Defendant's application. In addition to refusing to strike out the claim, the Judge granted the Claimant permission to amend his Particulars of Claim.
2. I shall refer to the Appellant as "Prometric" and to the Respondent as "Mr Cunliffe".

The facts

3. From 1 June 1999 Mr Cunliffe was employed by Prometric's predecessor, Sylvan Prometric Ltd. His letter of appointment dated 7 May 1999 stated that he was to be employed as a Human Resources Manager, and that he would be entitled to join the Sylvan Pension Scheme "The details of this will obviously be finalised once 'the HR team are on board'". However, his written statement of particulars of employment, signed by him and dated 17 September 1999, stated that he was not entitled to membership of any occupational pension scheme. Be that as it may, Mr Cunliffe joined the Sylvan Prometric Personal Pension Scheme on 1 January 2000. This was a defined contribution scheme. Mr Cunliffe signed a consent form dated 3 February 2000 for that pension scheme. He was thereafter employed by Prometric as an executive director of human resources.
4. At the beginning of March 2000 Sylvan Prometric Ltd was taken over by the Thomson Corporation. Mr Cunliffe's employer became Thomson Prometric Ltd. Mr Cunliffe received a letter dated 22 March 2000 concerning the acquisition. Against the heading "Benefit Plans" it stated:

"You will continue on your present corporate and national benefit programs unless otherwise notified. We anticipate reviewing benefits from time to time, in coordination with Thomson, as may be appropriate on a country by country basis."

5. On 1 January 2001 he joined the Thomson Pension Scheme, a defined benefit pension scheme.
6. Paragraph 5 of the Claimant's Particulars of Claim is as follows:

"5.1 It was expressly agreed that the Claimant's contract should provide a defined benefit pension entitlement in accordance with the Thomson Prometric Pension Scheme and that this was further confirmed by custom and practice, and contributions, from 2001 until September 2007.

5.2 For the avoidance of doubt, at the beginning of March 2000 the Claimant spoke with Nigel Brockmann, International HR Director, who told the Claimant that now he was a member of a much larger corporation (The Thomson Corporation), and given his senior position, he, the Claimant, would be entitled to the benefits of The Thomson Corporation and specifically benefits only offered to all directors and senior members of staff. These benefits included the Defined Benefit Pension Scheme which the Claimant joined as particularised under 3.3 above."

These paragraphs are unchanged in the Amended Particulars of Claim.

7. The Thomson Corporation Pension Guide, issued in May 2001, stated that membership of the Scheme was "entirely at the discretion of the Employer". Under the heading "How do I join?" It stated: "By completing an application form and sending it to the person named on the application." Mr Cunliffe's Particulars of Claim do not plead that any such application form was completed by him.
8. Mr Cunliffe sent to himself a letter dated 20 December 2001, presumably a circular letter sent to all employees, headed "2002 Benefits Review". Against the heading "Benefit Plans" it stated:

"You continue to be entitled to membership of the appropriate Prometric bonus plan, Life Assurance, Healthcare and Pension plan according to scheme rules unless otherwise notified. The benefits offered will continue to be reviewed from time to time, in accordance with Thomson policy and we will announce any new options that are introduced throughout the year."

9. In 2007 the Thomson Corporation sold Prometric, at which point Mr Cunliffe ceased to be a member of the Thomson Corporation pension scheme. Other employees were sent a letter dated 19 September 2007 about the change in the ownership of Prometric. Under the heading "Pension Benefits", it stated:

"Under the new Prometric, we are pleased to announce that there is no change to the pension arrangements that you may already have in place with AXA. If you are already a member of the Group Personal Pension Plan, you will remain eligible for membership with no change to the terms and conditions of your membership. In particular, you can still choose to pay contributions of 3%, 4%, or 5% of your salary (or more), and the employer will continue to pay an equal amount of contributions … up to a maximum of 5% of your salary."

The percentage contributions mentioned in this letter differed from those specified in the Thomson Corporation Pension Guide.

10. An internal email dated 24 October 2007 stated:

"John Cunliffe is now the only employee that has not been formally informed about the transfer or consulted with about a move from the Thomson Defined Benefits pension which I believe he was on. Given the sensitivities, I would recommend a legal review with our UK lawyers before piling in with the standard communications.…

Hewitt will need to advise an appropriate contribution level to the GPP pension, assuming that he is still eligible."

There is no evidence that Mr Cunliffe was consulted or informed formally of the move from the Thomson pension scheme.

11. Since 2007 Mr Cunliffe has been provided with benefits under Prometric's defined contribution pension scheme.

The claim

12. The claim is straightforward. The Claimant contends the conversation pleaded in paragraph 5 of his Particulars of Claim was contractual, and was a binding undertaking that he would thenceforward be a member of the Thomson Defined Benefit Pension Scheme; and that in breach of contract since 2007 he has been treated as a member of a defined contribution pension scheme instead of the defined benefit pension scheme referred to in paragraph 5 of his Particulars of Claim, or (as pleaded in his Amended Particulars of Claim) "another benefit pension scheme resulting in the same or similar benefits to that under a Defined Benefit Scheme" and as a result has suffered loss.

The defence

13. Prometric served a Defence, without prejudice to its strike out application. It is a long document, perhaps unnecessarily so. The essential point it makes is that the claim is ultimately based on the oral agreement alleged in paragraph 5.2 of the Particulars of Claim. That agreement is disputed, and it is contended that it is inconceivable that any such agreement was made, and if made would not have been the subject of formal documentation. However, for the purposes of its application and this appeal, it accepts that the conversation alleged in paragraph 5.2 of the Amended Particulars of Claim took place. It submits that such a conversation, which was not confirmed in any documentation, could not have been intended to have contractual effect, and could not have had the meaning and effect for which the Claimant contends.
14. The Claimant contends that the Judge was right to dismiss the Defendant's application. Whether the conversation alleged by the Claimant took place, and if so its meaning and effect, are matters for the trial of his claim, and are not to be resolved on a summary basis without consideration of the oral evidence.

The judgment below

15. Regrettably, there is no transcript of the judgment, but only an agreed note made by the parties' solicitors, and the parties failed to provide the agreed note to the Judge for his consideration. The Judge's conclusions are to be found in the latter part of his judgment:

"31. The Claimant has an arguable case that what is said in paragraph 5.2 of the Particulars of Claim could amount to a contractually binding entitlement; in which Mr Brockmann made a legally enforceable promise that the Claimant was entitled to membership of the Thomson defined benefit scheme.

32. The second question for me is how to analyse the contract in the circumstances in 2007. What would happen if the Defendant was divested by Thomson, since then the Claimant could not continue in the scheme.

33. Clearly, there is no pleaded case that such circumstances were subject to express agreement. For obvious reasons, it is difficult to say there was an objective intention that, in such circumstances, the Claimant would be obliged to provide a comparable benefit. The proposed amendment in paragraph 6 of the Particulars of Claim cannot be right but it could be capable of implication.

34. The court would have to grapple at trial with what can the parties have intended in such circumstances.

35. Mr Sullivan referred to a volume of authority referred to in Lewison on the Interpretation of Contracts which say that the Court cannot implied term which is inconsistent with an express term, and that principle appears to me to be firmly established. However, the Claimant is arguably entitled to say the March 2000 conversation varied clause 4.1 of the statement of particulars of employment.

36. The Court would need to consider the objective construction or implication of paragraph 8.5 of the amended Particulars of Claim that the Claimant would be obliged to be admitted to a comparable defined benefit scheme or defined contribution scheme with comparable benefits.

37. It is not possible for the Court to conclude to the requisite standard that the Claimant's case had no prospect of success.

38. The Court would need to hear all relevant evidence to determine what realistically could have been expected at the time and I cannot conclude the issue is a short point of construction.

39. The Court cannot say that the claim is so bad it should strike it out."

Discussion

16. As I mentioned above, for the purposes of its application, Prometric accepted that Mr Cunliffe may prove at trial that the conversation alleged in paragraph 5.2 of his Particulars of Claim took place. I do not think that on a strike out or summary judgment application the Court is compelled to accept the truth of factual allegations. If an alleged but disputed oral agreement is inconsistent with contemporaneous documents, and wholly improbable, the Court may conclude that there is no real prospect of its being proved at trial. However, Prometric's application and this appeal have been pursued on the basis that the conversation in paragraph 5.2 did take place as pleaded, and I therefore consider this appeal on that basis.
17. Nonetheless, I have reached the clear conclusion that the Claimant's claim cannot succeed. In my judgment it is inconceivable that he would succeed at trial. On subjects as complex as pensions, businessmen do not enter into oral agreements; and if they do, they certainly confirm them in writing. The conversation alleged in this case was between two human resources executives, who must have been well aware of the need to document any agreement on a pension. Mr Cunliffe himself would have expected and wanted documentary confirmation. Yet it is not alleged that any was requested or provided; indeed the conversation was not alleged until some 10 years after it is said to have taken place. A conversation such as that alleged in paragraph 5.2, if objectively intended to have contractual effect, would in my judgment have been reflected in contemporaneous documentation. None of the contemporary documents or other matters relied upon by Mr Cunliffe supports his case. The fact that he was treated as a member of the Thomson pension scheme while Prometric was a Thomson company is not evidence that his membership of that scheme was other than discretionary and is certainly not evidence of an obligation on the part of Prometric to enrol him in a different scheme providing the same or similar benefits when it ceased to be a Thomson company.
18. Moreover, the context of the alleged conversation was Thomson's takeover of Prometric. Both Mr Cunliffe and Mr Brockmann (the other alleged party to the conversation), as HR executives, would have been well aware that Mr Cunliffe's participation in the Thomson pension scheme depended on his employer being a member of the Thomson group of companies. It is not possible to construe the words pleaded in paragraph 5.2 of the Particulars of Claim as entitling Mr Cunliffe to benefits under a different pension scheme after Prometric ceased to be a Thomson company. The Judge so found: see the first sentence of paragraph 33 of the note of his judgment.
19. I do not see it as possible to imply a term into Mr Cunliffe's contract of employment requiring his employer to provide the same benefits under a different scheme in the event that Prometric ceased to be a Thomson company. The Judge said at paragraph 33 of the note of his judgment:

"For obvious reasons, it is difficult to say there was an objective intention that, in such circumstances (i.e., Mr Cunliffe ceasing to be a member of the Thomson pension scheme because his employer was no longer a Thomson company), the Claimant would be obliged to provide a comparable benefit. …"

I agree. But if there was no such objective intention when the conversation took place, to imply a term requiring Prometric to provide a comparable benefit would be to impose a contractual term and to make an agreement that the parties did not themselves make. The search for the implication of a term into a contract does not entitle the Court to make an agreement for the parties that they did not themselves make. But in reality this is what the Judge envisaged.

Conclusion

20. For these reasons, I would allow Prometric's appeal and strike out the claim.
21. I would add that, if my Lords agree with my conclusion, this means that a trial judge will not have to determine precisely what was said between Mr Cunliffe and Mr Brockmann sixteen years ago. It is unreal to suggest that a Court could confidently resolve any dispute as to what was said so long ago, and I am content that no judge will have to try to do so. I am also content that a trial judge will not have to determine what benefits would have been "similar" (as pleaded in the Amended Particulars of Claim, and ex hypothesi not the same benefits) as those provided under the Thomson pension scheme.

Lord Justice Floyd

22. I agree.

Lord Justice Jackson

23. I also agree.