England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice The Strand London WCA 2LL Tuesday, 10th April, 2001

MR. JUSTICE NEUBERGER: The issues in this case concern the normal retirement date ("NRD") for the purpose of determining the pension rights of men and women under a pension scheme. The Claimants, Bestrustees plc, are the trustees of the BAI Run-Off Pension and Life Assurance Scheme ("the Scheme"). They seek directions of the Court as to the NRD under the Scheme for men and for women in relation to four periods: first, up to 17^th May 1990; secondly, from 17^th May 1990 to 25^th April 1994; thirdly, from 26^th April 1994 to 22^nd May 1996; and, fourthly, from 23^rd May 1996 to date.

The significance of the dates I have mentioned is as follows. On 17^th May 1990 the European Court of Justice ("ECJ") delivered judgment in Barber v Guardian Exchange Insurance Group (1991) 1QB 340 ("Barber"). On 26^th April 1994 the then trustee and principal employer made an announcement ("the Announcement") which was circulated to all members of the Scheme. On 23^rd May 1996 a new set of Rules ("the 1996 Rules") took effect in relation to the Scheme.

The background facts

On 1^st September 1997 the Scheme was set up pursuant to a first definitive deed, which was executed purportedly between "Builders Accident Insurance Ltd … hereinafter called the Principal Employer … and the said Builders Accident Insurance Ltd, hereinafter called the Present Trustees". Under clause 11(1) of the first definitive deed the trustees were given various powers and various abilities to delegate, including the power to employ agents. Clause 16 of the first definitive deed included the following:

"The principal employer may from time to time, without the concurrence of the members, authorise the trustees in writing to alter or add to the terms and provisions of the rules in the trust, powers and provisions of this deed, and any such alteration or addition may have retrospective effect. The trustee shall forthwith declare any such alteration or addition to the rules in writing under their hands, or any such alteration or additions to this deed in writing under their hands and seal … This deed and/or the rules, shall stand amended accordingly with effect from the effect of such declaration, or from such other date, whether future or past, as is stated in such declaration. In the event of the trustee making any such alteration or addition to the rules, the trustee shall forthwith notify each member affected thereby individually in writing of the effect thereof, provided always that no such alteration or addition shall (1) operate so as to affect in any way prejudicially (a) any pension already being paid in accordance with the rules or this deed at the date such alteration or addition takes effect, or (b) any rights or interests which shall have accrued to each prospective beneficiary in respect of pension benefits secured under the Scheme up to the date on which such alteration or addition takes effect, unless such operation, whether retrospective or otherwise, is necessary in order to enable the Scheme to satisfy any provisions of relevant legislation…"

The definitive rules of the Scheme were adopted in April 1982. They provided that each member of the Scheme would have a target pension effectively equal to "one-sixtieth of his final pensionable salary for each complete year of pensionable service, with a proportionate amount for each additional complete month for pensionable service." The definitive rules provided for an NRD on his 65^th birthday for each male employee, and on her 60^th birthday for each female employee. Clause 6 of the definitive rules provided as follows:

"A member who on leaving service becomes entitled to a pension … may at his option, but with the consent of the trustees, commence to draw such pension at any time on or after his 50^th birthday, or earlier if he is retiring because of incapacity, but for such smaller amount as shall be determined by the trustees, having regard to his age at the time."

On 13^th June 1994, four individuals were appointed as trustees of the Scheme in place of the principal employer, Builders Accident Insurance Ltd ("the Company"). The Company was a specialist insurance company, as its name suggests, which went into run-off in June 1995, and liquidators were appointed on 30^th July 1998 when the last member ceased employment with the Company. The Scheme was put into winding up on 24^th June 1999. On 5^th April 2000 it had 24 pensioners and 23 deferred pensioners. The Scheme assets were valued on that date at just under £4 million, and it is likely to be in deficit. As I have mentioned, the present trustees are the Claimant, Bestrustees plc, and they were appointed following the winding-up of the Scheme.

The Barber judgment.

On 17^th May, 1990, as I have mentioned, the European Court of Justice gave judgment in Barber. That case was concerned with the argument that differential retirement ages, indeed differential treatment of men and women for the purpose of a pension scheme, involved a breach of what was then Article 119 of the EC Treaty, which effectively requires equal pay for equal work and no discrimination in that connection between men and women. The effect of the decision in Barber can, I think, be taken by reference to four paragraphs in the judgment of the ECJ. First, paragraph 28 at (1991) 1QB 401D:

"Unlike the benefits awarded by national statutory Social Security schemes, a pension paid under a contracted-out scheme constitutes consideration paid by the employer to the worker in respect of his employment, and consequently falls within the scope of Article 119 of the Treaty."

Secondly, paragraph 35 at (1991) 1QB 402 D-E:

"It is contrary to Article 119 of the Treaty for a man made compulsorily redundant to be entitled to claim only a deferred pension payable at the normal pensionable age when a woman in the same position is entitled to an immediate retirement pension as a result of the application of an age condition that varies according to sex, in the same way as it is provided for by the national statutory pension scheme. The application of the principle of equal pay must be ensured in respect of each element of remuneration, and not only on the basis of the comprehensive assessment of the consideration paid to workers."

Thirdly, paragraph 39 at (1991) 1QB 403B:

"Article 119 of the Treaty may be relied upon before the national courts, and it is for those courts to safeguard the rights which that provision confers on individuals, and in particular where a contracted-out pension scheme does not pay to a man on redundancy an immediate pension such as would be granted in a similar case to a woman."

Finally, paragraph 45 at (1991) 1QB 404 C-D:

"The direct effect of Article 119 of the Treaty may not be relied upon in order to claim entitlement to a pension with effect from the date prior to that of this judgment, except in the case of workers, or those claiming under them, who have before that date initiated legal proceedings or raised an equivalent claim under the applicable national law."

The effect of Barber was considered in a number of subsequent cases before the ECJ. In Coloroll Pension Trustees v. Russell (1994) PLR 211 the ECJ said this at paragraphs 32 to 34 (1994) PLR 220 to 221:

"32: Once the Court has found that discrimination in relation to pay exists, and so long as measures for bringing about equal treatment have not been adopted by the Scheme, the only proper way of complying with Article 119 is to grant to the person in the disadvantaged class the same advantages as those enjoyed by the persons in the favoured class.

33: The situation is different as regards periods of service completed after the entry into force of rules to eliminate discrimination, since Article 119 does not then preclude measures to achieve equal treatment by reducing the advantages of the persons previously favoured. Article 119 merely requires that men and women should receive the same pay for the same work without imposing any specific level of pay.

34: Finally, as regards periods of service prior to 17^th May 1990, the date of the Barber judgment, it is sufficient here to say … that the Barber judgment excluded application of Article 119 to pension benefits payable in respect of those periods, so that employers and trustees are not required to ensure equal treatment so far as those benefits are concerned."

That reasoning was then expanded a little in paragraphs 35 and 36. To much the same effect are observations in Vander Acker v. (inaudible) Pension Fund (1994) PLR 211 at paragraph 128 at 1994 PLR 232, and Snell v. Abdel Systems Ltd (1994) PLR 211 at paragraphs 17, 22 and 27, as set out at pages 241 and 242.

Events following the Barber Judgment

I turn now to the steps taken, so far as the evidence reveals them, in relation to the Scheme following Barber.

In 1990 the Company discussed the effect of Barber with Legal and General Assurance Company Ltd ("L & G"), the benefits consultants and actuarial advisers to the Scheme. It was apparently decided that matters would be left while the effect of the Barber decision was worked out. From time to time thereafter the matter was brought up. Once the Advocate General's decision in Coloroll had been made available on or about 4^th November 1993, more active consideration was given to the matter. In December 1993 a document recording a meeting of the Company's Board records this:

"The Company Secretary reported that a recent meeting had been held with the Legal and General. It was recommended that the Company should implement a policy of equal retirement ages. Four options were presented: equalisation at 60, 63, 65 and a flexible retirement age."

The financial consequences were then briefly described.

"After further discussion, it was unanimously decided that a flexible retirement age would be introduced next year."

During 1994, active steps were being taken to consider amendment of the Scheme in light of Barber. The documents reveal that on 15^th April 1994 L & G wrote to Mr. Hartwell, the Secretary of the Company, enclosing a "revised draft announcement and Scheme amendment authority, which reflects the decision taken at your meeting that all members current and future would benefit from 'flexible retirement.' Please feel free to alter the content of the announcement. Once the contents of the announcement have been agreed, it should be copied onto the Company's letterhead, and distributed to all members. I will be grateful for a copy of the version which is finally issued for our records."

Four days later a Scheme Amendment Authority was prepared by L & G and was signed by Mr. Hartwell "for and on behalf of the Principal Employer" recording this:

"The trustees of the Scheme have resolved with the agreement of the principal employer to make the following alterations to the Scheme, and the Legal and General is hereby authorised to implement the alterations with effect from 6^th April 1994."

The authority then set out the actual amendments.

"Normal retirement ages for male and female members will be equalised at 65. The upper eligibility ages are equalised at 64. Cover for the death in service benefits and long-term disability income will continue until the age of 65 or earlier retirement or withdrawal."

It then went on to deal with active members of the Scheme as at 5^th April 1994, and also deals with early retirement at the age of 60.

The document apparently foreshadowed in the two documents I have referred to is the announcement, as I have called it. It was dated 26^th April 1994. It was written on the Company's writing paper, and is said to be "from the trustees of the Builders Accident Insurance Ltd Pension and Assurance Scheme", and it read, so far as relevant, as follows:

"Dear Member, Equalisation of benefits. The … Scheme, like most other U.K. company schemes, currently fixes the normal retirement ages at the date the State pension becomes payable, 65 for men and 60 for women. It is now clear that this difference is in breach of European law … that company pension schemes must provide equal benefits for men and women. The Company is therefore required to make certain changes to the Scheme, and these are set out below. The formal Scheme rules are being amended with effect from 6^th April 1994 to give effect to the changes. Although this requirement is restricted to benefits earned in respect of pensionable service after 17^th May 1990, the Company have decided not to split your benefits approved before and after 17^th May 1990. The changes mean that in certain circumstances the provision of death in service benefits may be subject to evidence of your insurability. He will then be notified if such evidence is required."

It then dealt with specific examples: "(1) Joining the Scheme; (2) When You Retire." Under the latter heading was this:

"Until now the normal retiring age is 65 for men and 60 for women. In future, it will be age 65 for all members. All members, both present and future, will have the benefit of flexible retirement. This means that if you are permitted to take your early retirement at any time between your 60^th and 65^th birthdays your benefits will not be reduced by the usual retirement reduction. You should remember that to take early retirement will continue to require the Company's consent. If you take early retirement before your 60^th birthday, then the usual retirement reduction will apply in respect of the period between your date of early retirement and your 60^th birthday."

The announcement then went on to explain how the benefits have been "improved" for men and women – perhaps a somewhat euphemistic suggestion. It was signed by Mr. Hartwell "for and on behalf of the trustees" of the Scheme, and it said in a postscript that the letter should be "kept in a safe place, preferably with your Scheme booklet".

This was of course at a time before the Company had been replaced as trustee by the individuals; they replaced the Company some six weeks later.

As I have mentioned, on 23^rd May 1996 a new set of rules ("the 1996 Rules") replacing the definitive rules came into force. They purported to apply from 6^th April 1994 in substitution for the definitive rules, save in relation to people who had retired from employment with the Company before 6^th April 1998. The NRD under the 1996 Rules is 65 for men and for women. Rule 9 deals with commencement of a member's pension. Rule 9(a) provides for a pension for "a member who reaches the normal retiring age and who was a participating member immediately before that date". Rule 9(b) reads:

"A member who on leaving service before normal retirement date becomes entitled to a pension under rule 13, may, at his option, with the consent of the employer and the trustees, commence to draw such pension at any time on or after his 50^th birthday, or earlier if he is retiring because of incapacity. The pension shall be subject to reduction calculated on such basis as may have been certified by an actuary as reasonable or agreed for this purpose by the trustees with the Occupational Pensions Board, and having regard to the period between its commencement and normal retiring date, provided that (1)… (2)…

(3) The consent of the trustees shall not be required if the date of commencement of the pension is on or after the State pension age, as defined in the overriding appendix (4) In respect of a member who retires in the period between the ages of 60 and 65 and aforesaid reduction shall not be made for that period."

"State pension age" is defined in the overriding appendix as meaning "a man's 65^th birthday and a woman's 60^th birthday."

These proceedings

So far as these proceedings are concerned, apart from the Claimant, the Trustee represented by Miss Sarah Asplin, there are three other parties. The First Defendant is Mr. Ian Stewart and the Second Defendant is Mr. Martin Raines. The Third Defendant is the Company, which has been added as a party pursuant to its own request, but in fact does not appear before me. I have made representation orders, which have been sensibly agreed between the parties.

Mr. Stewart, who appears through Miss Sarah Lacey, is appointed to represent all those persons, a majority of whose pensionable service accrued after 25^th April 1994 or 22^nd May 1996, and all others to the advantage of whom it would be to argue in respect of any of the four periods of service which I have mentioned, the announcement and Rule 9(b) were ineffective. Mr. Raines, who appears by Miss Barbara Rich, is appointed to represent all those persons who left pensionable service on or before 24^th April 1994 or 22^nd May 1996, and all others, to the advantage of whom it would be to argue in respect of any of the four periods of service, save for those set out in the third part of the order I am making, the announcement and/or Rule 9(b) of the 1996 Rules were effective.

The Trustee is appointed to represent all those persons to the advantage of whom it would be to argue in respect of the first two periods that the announcement and/or the rule change were effective. It could be argued that there are more than three different interests, bearing in mind that it may be in some people's interests to argue that the announcement is effective and the rule change in 1996 ineffective, and vice versa. However, it seems to me that one has to invoke a degree of practicality and commonsense in a case such as this. The amount in the fund, as I have mentioned, is not enormous. It is under £4 million. It is almost certainly in deficit, possibly significantly so. The number of potential beneficiaries is less than 100. In these circumstances, to require every conceivable different interest to be represented by separate solicitors and counsel would, to my mind, be quite inappropriate, and the arrangement the parties have come to is one which seems to me eminently sensible. All the possibilities have been very fully and fairly canvassed before me, and I am quite satisfied that, although limiting the parties to three could in a perfect world be said to be over-simplifying, to take it beyond three would have been quite inappropriate.

The first period: up to 17^th May 1990.

The definitive rules provided for an NRD for men of 65 and an NRD for women of 60. It seems to me quite clear that the effect of Barber is not retrospective to the period beyond 17^th May 1990. That is clear from paragraph 45 of Barber and paragraphs 34 and 35 of Coloroll. Therefore, unless a retrospective amendment, retrospective to a period earlier than 17^th May 1990, was made in any of the documents I have referred to, the NRD for men and women for the first period was 65 and 60 respectively.

If the announcement was effective, although there is what on any view is a curious passage in it, namely the reference to benefits earned in respect of pensionable service after 17^th May 1990, I am satisfied that it is clear from the way in which the announcement is worded that it was not intended to alter the position with effect from a date earlier than 17^th May 1990. It seems to me that the same conclusion is appropriate in relation to the 1996 Rules. Accordingly, my conclusion in relation to the first period is the NRD for men for the first period was 65 and the NRD for women for the first period was 60.

The second period: 17^th May 1990 to 26^th April 1994

At least until April 1994 the definitive rules were not changed or purportedly changed. Therefore, given that the NRD for women and the NRD for men under the definitive rules were different, the principle contained and summarised in paragraph 32 of Coloroll applies. To use a colourful expression put forward by counsel during the argument, the men can piggy-back on the women. In other words, the NRD for men is the same as that for women; it is 60. Again, despite the slightly curious sentence it contained, it seems to me there is nothing in it to suggest that there was any intention to go back beyond at any rate 6^th April 1994 in the announcement. Similarly, in relation to the Rules, there is no suggestion that that was intended to go back beyond 6^th April 1994. Accordingly, subject to the possibility that one might end the second period on 6^th rather than 25^th April 1994, I see nothing to alter the view that for the second period the NRD for men and for women would be 60.

The third period: 26^th April 1994 to 22^nd May 1996

The question here is whether the documentation executed in 1994, and in particular the announcement, was sufficient and effective to vary the definitive rules to the extent that they apparently purported to do.

It appears to me that in order to be valid, a variation to the definitive rules has to comply with clause 16 of the definitive deed. In her skeleton argument Miss Rich identifies six features of clause 16, and I gratefully adopt them. They are as follows: (1) the power is vested in the principal employer to authorise the trustees in writing to alter or add to terms and provisions of the definitive deed and/or rules; (2) subject to the proviso, such alterations or additions may have retrospective effect; (3) on such authorisation the trustees must "forthwith declare" any such alteration or addition, such declaration to be "in writing under their hands" in the case of the Rules, and under seal in the case of the definitive deed; (4) the trustees' declaration is to have the effect of amending the definitive deed and/or the rules, with effect from the date of such declaration or from such other date, future or past, as is stated in the declaration; (5) any member affected by an alteration must be notified individually forthwith in writing of its effect; (6) exercise of the power is subject to the proviso in clause 16(1)(b), so that no amendment can operate so as to affect in any way prejudicially the accrued rights in respect of pension benefits accrued to any prospective beneficiary, subject to the exception of an amendment giving effect to legislation.

So far as the first requirement, the principal employer authorising the trustee, is concerned, it seems to me that it has an air of unreality about it where, as here, the principal employer and the trustees are identical, namely, the Company. As Miss Rich says, one can scarcely authorise oneself to do something as a matter of normal language. One simply does it. That accords with common sense. Nonetheless, it does seem to me that there must be some document recording the fact that the principal employer, in this case the Company, considered the proposed amendments and in some way authorised them, in its capacity as principal employer. The mere fact that the trustees and principal employer were the same person as at April 1994 does not alter the fact that there should be some document recording the approval or authority of the Company as principal employer.

In this connection, I bear in mind that a pension scheme is likely to continue for a substantial period of time and that those most affected by them and entitled to protection from the trustees, the employer and indeed the Court, will be people who are comparatively poor, who will not have easy access to expert legal advice, and who will not know what has been going on in relation to the management of the Scheme. In those circumstances, it seems to me that protection of the beneficiaries requires the Court to be very careful before it permits a departure from the plain wording and plain requirements of the trust deed. Further, it is not as if this was a case where at the date of the trust deed there was a difference of identity between the trustees and the employer: they were the same person even then. Accordingly, I think the Court should be particularly careful before effectively overriding the requirement that there is some sort of written record which can be said to amount to an authority within the meaning of clause 16 of the definitive deed.

Having said that, it appears to me that the document of 19^th April does satisfy the requirement. It was signed by the Company Secretary expressly for and on behalf of the principal employer, and it referred to the fact that the trustees have resolved to make the alterations "with the agreement of the principal employer". Although it is true that that record post-dated the apparent resolution referred to, it appears to me to have preceded the actual implementation of the decision, if there was such an implementation. The fact that it referred to the "agreement", rather than the "authorisation", of the principal employer seems to me to be playing with words rather than going to the substance of the matter. Accordingly, I consider that the first requirement identified by Miss Rich is satisfied.

So far as potential retrospectivity is concerned, the announcement is a little unclear whether it is intended to take effect from the date of the announcement or from 6^th April. To my mind, the third paragraph of the announcement made it clear that it was intended to take effect from 6^th April.

I turn then to the third requirement, namely the trustees "forthwith declaring". There are two documents that could be identified as being such a declaration. The first is that of 19^th April, and the second is the announcement of 26^th April. Quite rightly, to my mind, Miss Rich rests her case on the announcement more than on the 19^th April document. It seems clear on the face of it that the 19^th April document is a document from the Company as "principal employer", not as trustees. Mr. Hartwell's signature is not stated to be for and on behalf of the trustees. It is true that there is somewhere for the trustees to sign, but it merely bears the stamp of Builders Accident Insurance Ltd, and there is nothing to record that this was a document intended to come from the trustees or purporting to bind the trustees.

The question as to whether the announcement is a sufficient declaration and amounts to a document under which the trustees "forthwith declare" any alteration "in writing under their hands" raises greater difficulty. It seems to me important to bear in mind, when considering this issue, that the announcement was sent to members of the Scheme, some of whom were receiving pensions, and most of whom were deferred members of the Scheme. They were individuals who were not legally qualified, and it is through their eyes, to my mind, that the document should be read. Although I do not find the point easy, I have come to the conclusion that Miss Lacey is right when she contends that such a person reading the announcement would not have thought it was a declaration as contemplated by clause 16 of the definitive deed. In the end, it seems to me that the argument centres around the sentence, "The formal Scheme rules are being amended with effect from 6^th April 1994 to give effect to the changes". As a matter of narrow syntax, the use of the present tense could be said to be consistent with the view that the Scheme rules are being amended by this very document. Indeed, to a foreigner unfamiliar with the different nuances of the present tense in the English language, that could well be how it might read. But it seems to me that a normal person with English as his first language, even a lawyer, reading the announcement, would have thought that it meant that, around the time this letter was being sent, the trustees were taking steps to amend the rules under a separate document. To a lawyer as well as to a normal lay person, I think that, rather than "the formal Scheme rules are being amended", one would expect phraseology such as "the formal scheme rules are hereby amended", if the announcement was intended to be the declaration itself.

Furthermore, if one looks at the features of clause 16 helpfully identified by Miss Rich, it appears to me that her case that the announcement was effective involves the announcement doing two things. That is not impossible, but it would be slightly surprising in the light of the way in which clause 16 and the definitive deed are drafted. Clause 16 envisages the alteration to the Scheme being made, and the members then being informed. Therefore, it seems to me as a matter of ordinary language, bearing in mind (a) the scheme of clause 16 and (b) how a normal recipient of the announcement would have read it, the announcement itself will not do as the declaration.

However, Miss Rich argues, one should not be too strict about a further requirement of a separate declaration, because the terms of clause 16 effectively requires the trustees to make the amendment and forthwith to declare it, if and when they are so authorised by the principal employer. It appears to me that it cannot have been intended that the trustees would have no power to refuse to do what the principal employer required, even if they thought it was unlawful or inappropriate. However, even assuming Miss Rich's argument is correct, the mere fact that they were obliged to put into effect what the principal employer authorised them to do does not alter the fact that they still have to make the appropriate declaration before the alteration can be effective.

I refer back to the point to which I have already made reference, namely, that bearing in mind that this is a trust, and bearing in mind the likely long life of this trust and the ignorance as to what has been going on on the part of the beneficiaries, it seems to me that the Court should not be too ready to waive a requirement of written documentation when the Scheme, and the trust deed under which it is set up, specifically require it. Of course, in this sort of case one often finds oneself treading the somewhat blurred line between requiring the terms of a particular deed to be complied with, while not being too pedantic and exacting in one's requirements. Miss Rich has put up a powerful argument as to why my analysis is too pedantic, but to my mind, as there is no document which can fairly be called a declaration satisfying the provisions of clause 16 of the definitive deed, I think that the announcement was ineffective because no declaration was made. It is, of course, possible that if individual pensioners altered their position in reliance on the announcement, they may have some sort of case in estoppel, but that, I think it is accepted, is a different matter. It does not go to the issue of whether or not the rules were amended.

In this connection, if (which I doubt) one can cast one's eyes forward from 1994 to 1996, it seems to me that the conclusion is rather reinforced. The 1996 Rules purport to take effect from April 1994 and, therefore, if any document exists implementing the decision in 1994, that is it. The announcement should not have been sent until the implementation was effected, but there are problems with the view that the 1996 Rules implement what was stated in the announcement. Without going into much detail, Miss Lacey has identified various differences between the contents of the announcement and the contents of the new Rules change, which make it difficult to my mind to conclude that the rule change in 1996 reflected the decision as announced in 1994.

Some reference was made to the proposition that the Court should assume that that which had been reported as being done should be treated as having been done. However, in my view, that principle does not assist in this case any more than it assisted in Rimer J's view in Harwood Smart v. Cors (2000) Pen LR 101.

So far as the fifth requirement is concerned, clearly if there was an alteration, then the beneficiaries were notified of it. That was the effect of the announcement.

As to the sixth requirement, there is a problem in the sense that the alteration was said to take effect from 6^th April 1994, whereas, if made, it was only made on 26^th April 1994. To a very small extent, a retrospective increase in the NRD for women from 60 to 65 would have affected those who clocked up a month of service between 6^th and 26^th April 1994. To that extent, therefore, it could be said that even if the announcement was effective to implement an alteration, it fell foul of the proviso to clause 16. If that were the only problem for the announcement being an effective alteration, I would have held that it did not prevent the announcement taking effect as an alteration, albeit only prospectively from 26^th April.

In Thomas on Powers at page 434 there is this passage, which to my mind represents the law:

"In each case … the effect of an excessive execution of a power is either that such execution is good in part and bad in part, or, alternatively, it does not amount to an execution at all."

The author then quotes from Farwell on Powers:

"Where there is a complete execution of a power and something added which is improper, the execution is good and the excess void. But where there is not a complete execution and where the boundaries between the excess and the execution are not distinguishable, the whole appointment fails."

Thomas goes on:

"In order for the appointment to be valid, it must be distinct and absolute, and not so tied up with the whole series of limitations as to form one system of (inaudible) trusts."

To my mind, the correct approach is not one of language – it is one of concept. One is, after all, here concerned with equity. I consider, therefore, that one looks to see what is the valid exercise of the power and what is the invalid exercise. The valid exercise, if there was an exercise of the power, was to effect a variation with effect from 26^th April prospectively. The invalid attempted exercise was to effect a variation retrospectively to 6^th April 1994. To my mind, conceptually those two components of the single exercise are easily separable one from the other. It seems to me, however, that one must not only ask oneself whether they are easily severable conceptually, but also whether there is anything in the exercise of the power which leads one to believe that, had the trustees been told that they were not entitled to exercise the power retrospectively, they would not have exercised the power as they purported to do prospectively at all, or, in the alternative, in the way that they did. In that connection, it seems to me that that approach is consistent with the approach of the Court of Appeal in Re Hastings Bass (1975) Ch25, to which I shall refer in a little more detail shortly.

In my judgment, both conceptually and as a matter of common sense, the invalid exercise of the power in 1974, if the power was exercised then, would and should be severable from the valid exercise of the power. Therefore, I would not have held that this particular aspect of the exercise of the power, if there had been an exercise, would have rendered it invalid.

In the event, however, I conclude that because there was no declaration of the trustees as required by the first definitive deed, there was no effective amendment to the definitive rules in 1994.

The fourth period: 23^rd May 1996 onwards

The issue here relates to the effectiveness of the 1996 Rules. Two points are taken by Miss Lacey in relation to the 1996 Rules. First, that they purport to be retrospective to 1994 and, therefore, fall foul of the proviso to clause 16 of the definitive rules, essentially for the same reason as the announcement, if it had been valid, would have fallen foul of the rules in so far as it was back-dated to 6^th April 1994. Secondly, but more centrally, that the 1996 Rules failed to comply with Barber, because of proviso 3 to clause 9(b), which effectively gives a penalty-free opportunity for retirement for women with the consent of the principal employer only before the NRD between 60 and 65, while denying that opportunity to men, who will need the consent of the trustee as well as that of the principal employer.

So far as the first point is concerned, I think it is perfectly fair in that the 1996 Rules should not have been retrospective to 1994, because that would have connoted an amendment disadvantageous to women retrospectively in a way that conflicted with the proviso to clause 16 of the definitive deed. However, it seems to me that my reasoning as to why the announcement, if it had amounted to an alteration, would have been valid, and could have been severed so far as it purported to be retrospective, also applies here. It is true that the retrospectivity was for a much more substantial period, significantly over two years, whereas in relation to the announcement it would have been some three weeks. However, I see no reason why conceptually and practically I should not permit a severance of the exercise of the power in this case. The invalid part of the Rule is excisable, and I am satisfied that it should be excised.

As to the second point, Miss Lacey's point seems quite right in that the 1996 Rules, although they represent an improvement on the definitive rules so far as compliance with Barber is concerned, do not fully comply with the requirement of Barber. Miss Lacey's contention is that, in those circumstances, the principle in Barber and Coloroll requires one simply to assume that the position continues, as it did from 17^th May 1990, i.e. in respect of the second and third periods, because there had been non-compliance, as it was with Article 119. The position of men piggy-backing on the women's rights as they were as at 17^th May 1990 continues, runs the argument, and in effect one ignores the changes effected by the 1996 Rules.

I am not convinced that that is the right analysis. My analysis is as follows. The 1996 Rules represent an attempt to comply with the ruling in Barber, but the attempt did not quite achieve its end. The effect of the reasoning of the ECJ in Barber and Coloroll is not, in my judgment, that one proceeds as if that change in the Rules had never occurred. In my view, one gives as much effect as one can to the change, subject to the reasoning in Barber and Coloroll. In other words, I think that one treats the 1996 Rules as being effective, save to the extent that they unlawfully distinguish between men and women, and in so far as they do so distinguish, then one applies Coloroll, and the only proper way of complying with what was Article 119 is to grant to the persons in the disadvantaged class the same advantages as those enjoyed by persons in the favoured class. In other words, I think that the 1996 Rules are effective, save that proviso (3) to rule 9(b) applies as if the incorporated reference to the 65^th birthday for men was a reference to the 60^th birthday for men.

It is true that a completely literal reading of what the ECJ said in paragraph 36 of Coloroll can be said to point the other way. That paragraph is in these terms:

"As regards periods of service … before the entry into force of the measures designed to eliminate it, correct implementation of the principle of equal pay requires that the disadvantaged employees should be granted the same advantages as those previously enjoyed by the other employees."

However, it seems to me that the essence of the reasoning of Barber and Coloroll is as follows: (a) There must be no discrimination on grounds of sex so far as pay is concerned; (b) Pay includes pensions received from or paid for by an employer; (c) Differential NRD on grounds of sex falls foul of this principle; (d) From May 1990, where there is such differential, it is unlawful and ineffective; (e) The unlawful aspects are disposed of by equating the right of the disadvantaged class with those of the advantaged class. In other words, in this case, neither men nor women employees need the consent of the trustee to retire after attaining the age of 60. In paragraph 36 of the judgment in Coloroll, the ECJ was not directing its mind to a variation in pension fund rules subsequent to Barber, which failed to give effect fully to that decision.

Accordingly, I think that, where there is a variation in the terms of the Scheme which do not quite achieve compliance with Barber but which potentially achieve it, both common sense and principle suggest that one should give as full effect to the variation as permitted by Barber, and to the extent that it is not permissible, the disadvantaged class should be accorded the same rights as the advantaged class. First of all, that conclusion appears to me sensible in that it gives as much effect as possible to changes which were carefully considered and implemented by the principal employer and the trustees. Secondly, I think that the result is more consistent with the approach of the ECJ in Barber and Coloroll. Thirdly, it would be a little odd if the ECJ's ruling required different results where a change was effected after publication of the Advocate General's decision in Barber, and where the change was made after publication of the decision of the ECJ itself. Fourthly, it appears to me that if my analysis is correct, there would be less uncertainty for members who have been informed of the amendments. Naturally, in so far as those amendments do not comply with law, the courts must step in, but it seems to me that minimum interference by the courts is desirable, because the expectations and understanding of the members who have been told of the changes should require minimum interference with what they have been told.

I should mention that it was argued on behalf of the Second Defendant Mr. Raines that the 1996 deed was ineffective, in so far as it required men to obtain the consent of the trustee for retirement between 60 and 65, by virtue of the principle laid down in Hastings Bass. That decision was most recently considered by Lawrence Collins J. in AMP U.K. plc v. Barker (2001) Pen LR 727, where he summarised the principle in paragraph 85, based on the decision of Warner J. in another pensions case Mettoy Pensions Trustees v. Evans (1990) 1WLR 1587 at 1624 in these terms:

"Where a trustee acts under a discretion given to him by the terms of the trust, the court will interfere with this action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account."

Subject to the point that, for the reasons given in the next four paragraphs, Lawrence Collins J. thought that the word "would" should be replaced by "might", he considered that statement represented the law.

In the present case it seems to me that if my reasoning is correct the Hastings Bass principle has no application. On the other hand, if the 1996 deed would otherwise be ineffective, then I reach the same result on the basis of the reasoning in Hastings Bass.

Conclusion

In those circumstances, I reach the conclusion that the NRD for men and for women for the four periods under consideration is as follows:

(a) Up to 17^th May 1990: 65 for men, 60 for women.

(b) 17^th May 1990 to 25^th April 1994: 60 for both men and women.

(c) 26^th April 1994 to 22^nd May 1996: 60 for both men and women.

(d) From 23^rd May 1996: 65 for both men and women, or after 60, subject to the consent of the principal employer (but not of the trustees).

I am grateful to the parties for the written and oral arguments before, during and after the hearing of the case.

MISS ASPLIN: Excuse me for interrupting, but I am a little concerned about the point about the final period. It is in relation to that little provision (iii).

MR. JUSTICE NEUBERGER: I appreciate that.

MISS ASPLIN: It may be that I have misunderstood, and, if so, knock me down. It is not my understanding that it is the case that women or men over 60 can go at 60 under these Rules, because although (iii) says that the consent of the trustees will not be required, in fact under rule 9(d) it is both the consent of the employer and the trustees.

MR. JUSTICE NEUBERGER: You are quite right. I have overlooked that. It is in fact 65 for both, is it not?

MISS ASPLIN: The difference between men and women is that men would require the consent of the trustees, and ---

MR. JUSTICE NEUBERGER: I am sorry. It was my fault for not exploring it during argument as fully as I should have done. The point is this: they both only need the consent of the Company.

MISS ASPLIN: That is the difference, if you like, between Miss Rich and myself, in the sense that I would say that because in the documentation there is a difference between men and women, the impact of Barber and Coloroll and the Vander Acker and Snell v. Abdel cases is that if you do not equalise properly you have not equalised at all, and, therefore, there is a discrimination. Therefore, I would say there has been no equalisation, whereas Miss Rich would say it is effective, rather in the way my Lord ---

MR. JUSTICE NEUBERGER: In that case I am wrong, I suppose. The answer to the fourth period is: NRD of 65, save that it can be reduced to 60 in either case with the agreement of the Company alone.

MISS ASPLIN: Indeed, if you are against me on that point, my Lord, yes.

MR. JUSTICE NEUBERGER: Is that right, or have I got it wrong?

MISS RICH: My Lord, that is right. I just wanted to add that my argument in relation to Hastings Bass and (inaudible) was not that the entirety of the 1996 deed was ineffective, because that would be quite contrary to the main position I have to adopt, that simply that the ruling in Hastings Bass could be resorted to to excise the offending part ---

MR. JUSTICE NEUBERGER: I am sorry. You are quite right. I put it slightly wrong. I realised that when I got to the end, because I was saying it was not necessary to look at that because of the conclusion I had come to. You are quite right. I will tidy that up. I am sorry about that. I think the problem was that I should have canvassed in a little more detail what the consequences were. I think what I am saying, therefore, is that the 1996 deed is effective, save that, in effect I suppose, I am really varying --- I suppose the easiest thing to do is to say I am varying the State pension age. So it means a man's 60^th birthday ---

MISS RICH: No, my Lord. I think perhaps the best way to do it would be to simply to say that in (iii) to remove the reference to State pension age altogether, which I suspect is there for other reasons to do with guaranteed minimum pension, and simply to say in that paragraph that neither men nor women above 60 require the consent of the trustees. That is all it is.

MR. JUSTICE NEUBERGER: Yes, I think that is a more elegant way of dealing with it. I think my amendment requires a minimum variation.

MISS RICH: I am not sure, without going through the (.inaudible.) rules, that if you change the State pension that may have all sorts of effects on the valuation.

MR. JUSTICE NEUBERGER: You are quite right. My (.inaudible) too short a short-cut. Date of commencement of the pension is on or after the member's 60^th birthday. Will that do? I am looking at (iii).

MISS RICH: I can send something to you later today.

MR. JUSTICE NEUBERGER: It looks to me as if what I am saying is that the consent of the trustees is not required. Miss Asplin is not happy with that.

MISS ASPLIN: My Lord, may we perhaps come back to you about the precise way in which (iii) is to be changed.

MR. JUSTICE NEUBERGER: If you are agreed, I do not want you to incur further costs and expense in coming back to me.

MISS ASPLIN: I will send you something in relation to that. My Lord, may we confirm that we are, if I might say, my Lord, including you, ad idem, in suggesting that what it is you are saying in relation to (iii) is that to the extent that there has been a change under the 1996 Rules, it is effective. To the extent that there is something which is still some grit in the oyster, that if one has not managed to equalise Coloroll and Barber, then to that extent, that one is still out of kilter, then there is a piggy-backing, and we will confirm precisely how (iii) should work.

MR. JUSTICE NEUBERGER: When I get the judgment to approve, I will put in that way of putting it.

MISS ASPLIN: If we could send that back to you as soon as possible, I would be grateful.

MR. JUSTICE NEUBERGER: I like the "grit in the oyster".

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