England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		15/05/2015

Mr Justice Warren :

Introduction

1. This judgment follows on from my judgment dated 23 May 2012 ("the Judgment"). I will use the same definitions in this judgment as in the Judgment. One of the issues raised before me at the original hearing, Issue 3, was as follows:

Was the BBC's conduct in seeking to impose a 1% cap on increases to pensionable salary through the mechanism of Mr Bradbury's pay award a breach of the Implied Duties arising from Mr Bradbury's contract of employment?

I will refer to that cap as "the Cap".

2. I took the view that it was not open on the appeal before me for Mr Bradbury to take the point. However, I concluded (see [107] of the Judgment) that Mr Bradbury was not altogether precluded from raising the question of breach of the Implied Duties. At a subsequent hearing, I decided that the way forward was not to dismiss Mr Bradbury's appeal, leaving him to make a new complaint alleging breach of the Implied Duties; instead, I directed that the matter should be remitted to the PO for him to make the necessary further findings of fact and a further determination on this issue.
3. The matter then came before the PO. His determination ("the Further Determination") was released on 23 December 2013. As can be seen from the front page, the subject of the complaint as he identified it was virtually identical to Issue 3 above. His determination was that "the complaint should not be upheld against the BBC as it did not act in breach of the Implied Duties".

The Determination

4. As part of his submissions, Mr Stafford relies on the following statement in the Determination (which took the form of a letter to Mr Bradbury):

"I do not know whether you are bound by a collective bargaining agreement – I see you are a member of the Musicians' Union, so it seems probable – or whether you could attempt to individually negotiate some other salary increase. Either way, I accept that in effect you do not have a real alternative to accepting the salary increase on the terms offered."

5. I do not attach any weight to the last sentence. It is, I consider, a misreading to interpret it as a finding of fact that there was some sort of coercion on the part of the BBC. Rather, it is no more than a reflection of the obvious truth that sometimes difficult choices have to be made. In any case, it is worth observing (i) that it is wrong because Mr Bradbury did not in fact accept the salary increase on those terms, and (ii) that choices were open to him other than to accept a salary increase subject to the 1% cap on its pensionability, namely to join CAB 2011 (the career average benefits section of the Scheme) or to join the BBC LifePlan (a separate defined contribution arrangement) under which benefits and contributions respectively were based on the full amount of salary.

The Further Determination

6. It is helpful to describe the structure of the Further Determination. After an introduction, reference to the Judgment and a description of some provisions of the Scheme, the PO deals with the relevant facts at [10] to [42] to which I will refer as necessary. A summary of Mr Bradbury's submissions appears at [43] to [84] and a summary of the BBC's submissions appears at [85] to [118]. These are, as I have said, summaries of submissions and do not contain findings of fact. It is important to note [80] which accurately identifies the thrust of Mr Bradbury's case which is that the BBC's conduct overall must be looked at:

"80. His complaint has always been about the mechanism used by the BBC and not about the offer of a pay increase or the exercise of a discretion which was the issue in the Prudential case. He is concerned with the wider question (i.e. was the BBC's conduct calculated or likely to destroy or seriously damage the bond of mutual trust and confidence?) taken as a whole, viewed objectively and accepting that the test is severe."

7. Mr Stafford emphasises that the question is to be addressed in the round and not by a sequential salami-slicing approach to the individual elements of the BBC's conduct. He submits that the PO has failed to engage in an exercise of overall assessment.
8. From [119] to the end of the Further Determination at [150], under the heading "Conclusions", the PO discusses the rival arguments presented to him. He identifies at [119] the pointers which I had indicated in the Judgment as to the findings of fact which it would be necessary for him to make and also the factors in deciding whether the legal test had been met. At [120], he observed that the parties had relied on different aspects of the Implied Duties as expressed in the case-law:

i) Mr Bradbury submitted (as Mr Stafford continues to submit on his behalf) that the duty is to act in a manner that is not likely to undermine trust and confidence and that this includes the duty not to act capriciously or inequitably. He does not accept that it is only arbitrary, capricious or inequitable conduct which will breach the Implied Duties.

ii) The BBC submitted (as Mr Furness continues to submit on its behalf) that the test is whether the decision to impose the Cap was irrational or perverse, that is to say, one which no rational employer in its position could have decided on. It is submitted that the test to apply is the same as that applicable to the exercise of a discretion vested in the employer because, in effect, the decision to impose the Cap was the exercise of a discretion concerning pay increases.

9. At [121], the PO states that he proposes to consider both approaches bearing in mind what I had said in [18] of my judgment concerning rectification of the IBM pension scheme (IBM UK Pension Trust Ltd v IBM United Kingdom Holdings Ltd [2012] EWHC 3540 (Ch) observations which I have since repeated in my judgment concerning breaches of duty by IBM (see IBM United Kingdom Holdings Ltd v Dalgleish [2014] EWCH 980 (Ch) ("IBM")). It is important to remember that the PO was to consider both approaches since one ground of appeal is that the PO applied a different and incorrect test, to which I will come.
10. At [124] of the Further Determination, the PO commences his consideration of the question set out in the heading which precedes it: "Was the BBC justified in seeking to impose the Cap?". Mr Stafford says that this recategorisation of the issue loses the essence of the real question which is whether there has been a breach of the Implied Duties; it does not necessarily follow, he says, from the fact, assuming it is established, that the BBC was justified in seeking to impose the Cap, that there was no breach of the Implied Duties. Whether that is correct or not depends on the sense in which the PO is using the word "justified". If he means no more than that the BBC was acting reasonably, I would agree with Mr Stafford's submission as a matter or principle. But if he was using it as shorthand for there being a reasonable and proper cause as that phrase is to be understood in the articulation of the Implied Duties (as to which see paragraph 13 below), then ex hypothesi the question is the correct one, although it must be answered in the context of the BBC's actions as a whole.
11. After that section of the Further Determination there were further sections:

i) [135] to [139] addressing the question "Was Mr Bradbury subject to improper coercion?

ii) [140] to [143] addressing the question "Did the BBC act appropriately with regard to the members, the Trustees and the unions?

iii) [144] to [147] addressing "The alleged collateral purpose".

iv) [148] addressing the "The allegation of age discrimination".

v) [149] and [150] expressing the overall conclusion that the BBC did not breach its Implied Duties and dismissing Mr Bradbury's complaint.

12. Mr Stafford complains about the salami-slicing inherent in this manner of addressing the issues and submits that the PO has not addressed the question whether the BBC's conduct, taken as a whole, gave rise to a breach of the Implied Duties. I will, of course, consider whether he is guilty of that failure. I am bound to say, however, that the PO was almost bound to consider separately the various aspects of the case dealt with in those successive sections of the Further Determination just as I addressed separately the various elements of the alleged breaches of duty in IBM. It is only through that process that it is possible to put all of the matters together to assess whether the BBC's conduct as a whole gave rise to a breach of the Implied Duties.

The law

13. The Implied Duties are well established. Central to the present case is the contractual term implied into contracts of employment that employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. Closely connected is the similar duty, which I referred to in IBM as the Imperial duty, in relation to the exercise by employers of the powers and discretions conferred on them by the rules of a pension scheme. In relation to the latter, I decided that the appropriate test for assessing whether there is a breach of the Imperial duty is whether the employer has acted irrationally or perversely which, in this context, is equivalent to acting in a way which no reasonable employer would act in the circumstances in question. I considered some of the employment law cases at [402] to [409] of my judgment in IBM and do not repeat what I said there.
14. I do, however, emphasise the conclusion of Burton J in Clark v Nomura International plc [2000] IRLR 766 that, in relation to the discretionary power to award bonuses, the test in the contractual employment law context is one of irrationality or perversity in the sense which I have just described. In Horkulak v Cantor Fitzgerald International [2005] ICR 402, Potter LJ said this:

"While, in any such situation, the parties are likely to have conflicting interests and the provisions of the contract effectively place the resolution of that conflict in the hands of the party exercising the discretion, it is presumed to be the reasonable expectation and therefore the common intention of the parties that there should be a genuine and rational, as opposed to an empty or irrational, exercise of discretion."

Those words fit well with the way it was put by Burton J when he described as irrational and perverse a decision which no reasonable employer would make.

15. Absent some special factor, the exercise of a discretion in a way which was neither irrational nor perverse in that sense would not give rise to a breach of the implied duty of trust and confidence; there would be no conduct which would on an objective assessment be likely to destroy or undermine the relationship of trust and confidence. If there are special factors (as there were in IBM) then the exercise of the discretion in a particular way may give rise to a breach of duty. It does not matter much whether the analysis, where there is a breach, is that the special factors lead to the exercise of the discretion being irrational and/or perverse; or whether the conduct in question becomes such as to destroy or undermine the relationship of trust and confidence without reasonable and proper cause.
16. Not all conduct leading to a breach of the Implied Duties necessarily involves the exercise of a discretion or the making of the sort of decision which should be treated in the same way as the exercise of a discretion. The enquiry, in such a case, is whether the employer has acted, without reasonable and proper cause, in a manner, calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. At [375] to [387] of my judgment in IBM, I discussed the question whether the Implied Duties gave rise to a two-pronged test (namely that the employer shall not (i) conduct itself in the proscribed manner and (ii) do so without reasonable and proper cause) or a single test. For the reasons given, which I do not repeat, I concluded that it was not right as a general rule to adopt a two-pronged approach and to divide the matter into two separate components: see in particular [379].
17. But as I pointed out in [380], that is not to say that the two-pronged approach is not of assistance at all. Thus in a case such as Gogay v Hertfordshire CC [2000] IRLR 703, the allegations (in that case of sexual abuse) were fairly extreme and likely to undermine the relationship of trust and confidence in both directions. As I said, if the allegation turns out to be true, the relationship of trust and confidence is likely, nonetheless, to have been seriously undermined if not altogether destroyed. But there will have been no breach of the implied duty of good faith on the part of the employer because his conduct (the making of the accusation) would have been with proper cause (unless, for instance, made unnecessarily public until proven). I went on to say, in [381], that where the conduct is not of that nature but is such that a careful enquiry is needed to weigh the conduct in the balance against for example, as in IBM, established Reasonable Expectations, the two-pronged approach appeared to me to be a less than helpful approach. The same applies in the present case where the facts are not extreme in the way in which they were in Gogay. The BBC's conduct needs to be examined in the context of the financial circumstances in which it found itself, taking into account the way in which it could have proceeded (or, as Mr Stafford would say, the way in which it should have proceeded) and the options open to it.
18. There is one other aspect of the test to be adopted which I wish to address at this stage. I have been referred by Mr Stafford to the decision of the Court of Appeal in Bournemouth University Higher Education Corpn v Buckland [2010] EWCA (Civ) 121, [2011] QB 323 ("Bournemouth UHEC"). The facts can be taken from the headnote:

"The claimant, a university professor and course unit leader, failed a high number of students in the end of year examinations. The papers were re-marked by the programme leader who criticised the original marking. They were then marked again by a different member of the academic staff with improved results, which the chairman of the board of examiners confirmed without consulting the claimant. The claimant complained to the university authorities, and an inquiry chaired by a senior academic criticised the university and acknowledged that the third marking should have been undertaken in consultation with the claimant. The claimant nevertheless considered that he had not been exonerated and resigned with effect from the end of the academic year. An employment tribunal upheld his claim that he had been constructively dismissed and that that dismissal was unfair, under section 98(4) of the Employment Rights Act 1996, holding that confirming marks given by a different member of the academic staff without consulting the claimant amounted to a fundamental breach of the implied term of trust and confidence in his employment contract and that the claimant had not affirmed the breach by waiting for the result of the inquiry before resigning since he had not felt exonerated by the inquiry.……"

19. In making the finding that there had been a fundamental breach of the implied term, the Employment Appeal Tribunal ("EAT") expressly rejected the argument that the employer had reasonable and proper cause for the actions of the chair of the board of examiners: they said that justice to the students could have been effected without the damage to the trust and confidence which they found. This was recorded by the Employment Appeals Tribunal at [50] of the judgment of Judge Peter Clark reported at [2009] ICR 1042.
20. One of the issues on the appeal to the Court of Appeal in Bournemouth UHEC was, as Sedley LJ put it at [1] of his judgment "whether the conduct of an employer who is said to have committed a fundamental breach of the contract of employment is to be judged by a unitary test or a 'range of reasonable responses' test". The employer argued that an employee can only show a fundamental breach of the implied duty of trust and confidence where the employer's conduct is so unreasonable as to fall outside the "range of reasonable responses". What it had actually done was, it said, to have been within the range of reasonable responses to the situation with which it was faced: in other words, it was a reasonable response for the chairman of the board of examiners to have confirmed the markings of the third marker without consulting the claimant. That was an argument the University sought to run had it been successful in its cross-appeal and established that the "reasonable range or responses" was the correct test.
21. Sedley LJ (with whom Carnwath and Jacob LJJ agreed) rejected the "range of reasonable responses test". He endorsed the reasoning of the EAT in particular the conclusion that "in determining whether or not the employer is in fundamental breach of the implied term of trust and confidence, the unvarnished Mahmud test should be applied". As to that test, Sedley LJ said this:

"In Mahmud v Bank of Credit and Commerce International SA [1998] AC 20, 35 Lord Nicholls of Birkenhead reiterated that the test of breach of a fundamental term of a contract of employment was objective: "A breach occurs when the proscribed conduct takes place." Lord Steyn, at p 47, said much the same."

22. The question is therefore whether, objectively, there has been a breach of the implied term. In my view, that objective assessment must be carried out in relation to the implied term read as a whole thus encompassing both elements of that term. Accordingly, the conduct must be such as, objectively, is calculated or likely to undermine the duty of trust and confidence and must be conduct for which there is, objectively, no reasonable and proper cause. Reasonableness, objectively judged, necessarily comes into establishing whether or not there has been a breach of the implied term. But this is not to apply, by the back door as it were, the "range of reasonable responses" test. It is not a question of establishing whether a particular course of action is within the range of reasonable responses to the particular state of affairs and the situation in which the employer finds itself; rather, the question is whether the particular course of action is a reasonable and proper response to that state of affairs and situation in the context of the implied term so as to prevent what would otherwise be a breach of duty from being one.
23. Nonetheless, as Sedley LJ recognised at [28] of his judgment in Bournemouth UHEC, reasonableness (here he was, in my view, clearly looking at reasonableness within a range of reasonable responses) is one of the tools in the employment tribunal's factual analysis kit for deciding whether there has been a fundamental breach. There are cases where it is useful. It seems to me that it is more likely to be useful in a case which involves a decision-making process than one which does not. Thus in a case of the exercise of a true discretion such as was found in Clark v Nomura, the test of irrationality or perversity came down to the question whether any reasonable employer could have acted in the way in which the employer did act, a question which, it seems to me, is precisely whether the discretion was exercised within the reasonable range of responses to the matter in hand (namely whether to award a bonus in that case). But in a case such as Mahmud an enquiry into reasonableness is inapposite – there could be no objective justification for carrying on business in a fraudulent way and, in any case, the conduct which amounted to a fundamental breach of the employment contract was not a response to any situation which was faced by the employer which it needed to address.
24. As I have said, the question whether the conduct of an employer which might otherwise give rise to a breach of the implied term is without reasonable and proper cause must take account of the particular state of affairs and the situation in which the employer finds itself; the conduct must be a response to that state of affairs and situation. It must be a response which resolves the tension, so far as is possible, between, on the one hand, the courses of conduct open to the employer to meet the situation which it faces and, on the other hand, acting in a way which does not cause undue detriment to the employee. Thus, in Bournemouth UHEC, the employer was faced with a situation in which it had to do something to address the concerns about the high failure rate on the first marking. It could and should have consulted the claimant and in failing to do so was in fundamental breach of the implied term. Had he in fact been consulted, the claimant might still have felt aggrieved that his marking was being questioned although he would, I think, have got short shrift from the tribunal if he had complained on that basis.
25. I have used the word "undue" in the previous paragraph deliberately. To have used the word "unnecessary" would have arrogated to the Court the role of ultimate arbiter of what was necessary. In effect, the Court would be making business decisions which are for the employer's management to take. That management must, of course, take into account the implied term; but even paying due deference to that term, there will be a range of decisions which it could take and which would not give rise to breach of that implied term. In Bournemouth UHEC there was a uniquely sensible course which could have been taken, namely to consult the claimant. But in other situations, there may be no such unique course. It is not necessarily incumbent on the employer to take the course most favourable to the members and, indeed, not all members might favour the same course. It must then, save perhaps in exceptional cases, be for the employer to choose which course to take.

Criticisms of the PO

26. Mr Stafford submits that the PO was in error in a number of ways. His overarching submission is that the PO failed to engage with the main argument put against the BBC namely that, taken overall, the conduct of the BBC was in breach of the Implied Duties in particular because of the mechanism and methodology which it used to achieve what it did and its alleged failure to consult. I will, in the course of this decision, address that overarching submission. It remains necessary, however, to examine the individual components (which the PO did address) of that overall conduct and in relation to which it is said the PO was in error.
27. It is all very well for Mr Stafford to submit, as he does, that the complaint is about process and not about decision or discretion. But what ultimately matters is whether the result which the BBC achieved – or on one view, imposed – was somehow wrong and carries a consequence, in Mr Bradbury's case perhaps his reinstatement in the Scheme on the basis that his salary increases are fully pensionable or possibly damages or perhaps both. If the only complaint is process or methodology but the result would have been the same, the most that Mr Bradbury may be able to hope for would be some small measure of compensation for being deprived of the appropriate process.
28. The issue actually before the PO was, as set out above, whether the BBC's conduct in seeking to impose a 1% cap on increases to pensionable salary through the mechanism of Mr Bradbury's pay award was a breach of the Implied Duties arising from Mr Bradbury's contract of employment. There are it seems to me at least two limbs (I shall refer to them in this judgment as "the first limb" and "the second limb") to that issue which do relate to methodology and process although they have not been identified in quite this way in submissions:

i) The first limb raises the issue whether, as a matter of principle, the BBC was in breach of its Implied Duties in seeking to impose the Cap. Thus even if Mr Bradbury has no grounds for his specific criticisms (namely (i) an alleged improper collateral purpose, (ii) alleged age discrimination, and (iii) inadequate consultation (part of which includes the BBC maintaining its stance on the meaning of Basic Salary), it is said that the very structure of the BBC's proposals gave rise to improper coercion on Mr Bradbury to force him to accept the Cap (although he never did so: he actually joined CAB 2011). It is argued that the only proper way for the BBC to proceed in seeking to achieve the Cap was by amendment to the Scheme with the consent of the Trustees and it was simply not open to the BBC to do so by way of a contractual arrangement.

ii) The second limb raises the issue whether, assuming that as a matter of principle, what the BBC wished to achieve was achievable through that mechanism, the actual process was defective because of the three criticisms just listed and if so whether the defects were sufficiently serious to give rise to a breach of the Implied Duties.

29. In answer to the issue raised by those two limbs, it is necessary to address a number of wide-ranging and general arguments relating to the Implied Duties. I now turn to those.

The wrong test applied

30. It is said that the PO applied the wrong test when considering whether there was a breach of the Implied Duties. It is said that he applied the "reasonable range of responses" test which had been rejected in Bournemouth UHEC. Instead he should have applied a test which requires an employer to treat his employees fairly in the conduct of his business, a form of words no doubt taken from the speech of Lord Nichols in Eastwood v Magnox Electric plc [2004] UKHL 35, [2005] 1 AC 503. This complaint goes, as I see it, to the first limb: in other words, to whether it was possible to address the problem faced by the BBC by way of a cap on pensionable pay at all, rather than to the second limb that is to say whether the way in which that was in fact done involved a breach of duty.
31. As to the "reasonable range of responses" test, I do not consider that the PO applied this test at all. The relevant paragraph of the Further Determination is [132]. I set it out in full:

"If the imposition of the Cap had been calculated to destroy the BBC's relationship of trust and confidence with employees who were members of the Scheme, then it would be unjustifiable on any grounds. But the fact that it was a less dramatic solution than other possibilities (and therefore in a reasonable range of responses) and that it was introduced alongside other measures makes it clear that the BBC's attention was focussed on resolving the problems with the Scheme and that it was not so calculated. This also means that the BBC's actions were not likely seriously to damage the relationship of trust and confidence in terms of the legal test which is "severe", (that is, requires a very serious level of conduct) and is to be judged objectively. "

32. It is perhaps unfortunate that he used the words "reasonable range of responses" in this paragraph since it leaves the way open for Mr Stafford to make the submission which he does. However, it is clear, reading the Further Determination in its entirety, that the PO did not decide the case on the basis of the "reasonable range of responses" test. Instead, he considered the case on the competing approaches of the parties (as recorded at paragraph 8 above), concluding that there was not a breach on either approach. Whether he was right so to conclude is another matter. He did, it is true, consider whether the BBC's approach was a reasonable approach (within the "reasonable range or responses" to use his words). In my view, it was correct and appropriate for him to do so; not only was he entitled to do so in accordance with what Sedley LJ said in Bournemouth UHEC (see paragraph 23) but also, in my view, he needed to be sure that the solution adopted by the BBC was at least one which should not be rejected out of hand.
33. As to the alternative test put forward by Mr Stafford, I do not find pithy words of that sort (an employer must treat his employees fairly in the conduct of his business), taken out of the context of the judgments in which they were written, to be particularly helpful. If the test of perversity and/or irrationality is to be rejected, I prefer to rest with the "unvarnished Mahmud test" articulated by Sedley J.

Reasonable expectations

34. In their skeleton argument on behalf of Mr Bradbury, Mr Stafford and Mr Randall seek to raise a case based on disappointment of Reasonable Expectations (capital "R" and capital "E") as I defined them in my judgment in IBM, These expectations are (a) that the Scheme Rules would be complied with, (b) that the definitions of Pensionable Salary and Basic Salary in the Rules would be honoured, and (c) that if the BBC wished to amend the Rules, it would do so by following the procedure set out in the Rules. These include a Reasonable Expectation that variations to the accrual rate would be addressed by means of an amendment to the trust deed, which would be a matter requiring collective consent of the members, and not by means of a one at a time offer which might be a no-brainer individually; in other words, the scheme mechanisms would be utilised to achieve the Cap. They also include the expectation that the way in which the trust deed was operated would honour the basic meanings such as Basic Salary within it.
35. The PO made no findings about what expectations, reasonable or otherwise, Mr Bradbury or members generally held. He did identify, at [81] of the Further Determination, Mr Bradbury's submission that the action taken by the BBC had a substantial impact on members' expectations and that it was not a sufficient answer to say that the BBC was not obliged to offer a pay increase in the first place. I do not understand, however, Mr Bradbury to have provided evidence about the expectations which he held. More importantly, he did not run an argument that such expectations as he did hold were engendered by the BBC. He has certainly not established any Reasonable Expectation, that is to say an expectation as to what will happen in the future engendered by the employer's own actions (and in relation to matters over which the employer has some control), which gives employees a positive reason to believe that things will take a certain course.
36. I accept that there may have been mere expectations (that is to say ones not engendered by the BBC) held by Mr Bradbury and others, but disappointment of such expectations is a weak basis, and in my judgment an inadequate basis, on which to assert a breach of the Implied Duties. I also accept that Mr Bradbury, like all members, was entitled to expect that any amendment to the provisions of the Scheme would be implemented properly according to the Rules of the Scheme. Mr Bradbury's complaint, however, does not relate to an allegedly improper amendment of the Rules; instead the complaint is that the BBC has sought to achieve without amendment something which it could only properly achieve by amendment.
37. There are two answers to Mr Bradbury's argument about Reasonable Expectations. The first is that it is too late to take the point. It was not run before the PO which no doubt accounts for the fact that he did not, as I have said, make any findings about what expectations Mr Bradbury held or whether they had been engendered by the BBC.
38. The second is that, even if the point could be taken, the evidence which was before the PO, insofar as I have been referred to it, does not establish any Reasonable Expectation although, as I have just said Mr Bradbury was entitled to hold the expectations that amendments to the Scheme would be implemented properly according to the Rules. He does not, however, need to rely on any expectation to vindicate his rights in that regard since, if a purported amendment has not been validly effected, it will be at least voidable if not void. Taking the alleged Reasonable Expectations in turn:

i) The Scheme Rules would be complied with. The Rules have, so far as I can see, been complied with. There has been no relevant attempt to amend the Rules. Mr Bradbury's pension will be calculated in accordance with the Rules. If he has a complaint about the failure to award him a pay increase because he refused to agree to the Cap, that is not a complaint that the Rules have not been, or will not be, complied with.

ii) The definitions of Pensionable Salary and Basic Salary in the Rules would be honoured. I am not clear what this submission really comes down to. If by honoured Mr Stafford means observed, the Rules have been and will be observed. Again, Mr Bradbury's complaint is about the failure to award him a pay increase, not a complaint that the Rules have not been observed. If by honoured Mr Stafford means that the spirit of the Rules will be observed, one moves into nebulous territory where there is little more, in my assessment, than an assertion in different words of the conclusion which he wishes me to reach.

It may be correct that the BBC presented its proposals to members in the consultation on the footing that it was able to impose the Cap by determining what part of a member's pay was Basic Salary and Pensionable Pay. In the Judgment, I have expressed the view that that is incorrect. It does not follow that the BBC has failed to honour the spirit of the Rules by doing what it did. It did not, in fact, direct that only part of remuneration would count as Basic Pay and Pensionable Pay. Instead, it required an agreement to the Cap as a condition of a pay increase. That may or may not give rise to a breach of the Implied Duties, but if it does so it is not because of a failure to honour the definitions.

iii) If the BBC wished to amend the Rules, it would do so by following the procedure set out in the Rules. As I have said, it is correct that Mr Bradbury was entitled to expect that an amendment to the Rules would follow the procedure set out in the Rules. Amendment was not, however, the route which the BBC took so that this particular expectation was not disappointed. Perhaps what is being suggested is that any change to benefits would be effected only through an amendment to the Rules. Indeed, in his oral submissions, Mr Stafford suggested that there was a Reasonable Expectation that variations to the accrual rate would be addressed by means of an amendment to the trust deed, which would be a matter requiring collective consent of the members, and not by means of a one at a time offer which might be a no-brainer individually; in other words, the scheme mechanisms would be utilised to achieve the Cap.

39. Dealing with that last point, there is no evidence of which I know to suggest that the BBC had engendered any expectation that it would not take any particular steps in relation to pension provision which it would otherwise be able to take. In particular, there is nothing to support the conclusion that there was a Reasonable Expectation that the BBC could not seek to obtain the agreement of members to the imposition of a cap on the part of any pay increase which would count for pension purposes. If the imposition of the Cap (other than by way of amendment to the Rules) gave rise to a breach of the Implied Duties it is not because the BBC would thereby be disappointing some Reasonable Expectation but would be for some other reason.
40. Mr Stafford makes one other submission in relation to Reasonable Expectations. He says that the PO made a clear finding of fact at [138] of the Further Determination that Mr Bradbury had a Reasonable Expectation regarding salary increases. I disagree. What the PO said was this:

"Although Mr Bradbury might have had a reasonable expectation that he would receive salary increases in the future and that these would be treated as fully pensionable he did not have a right to either."

I find it impossible to read that as a clear finding that Mr Bradbury actually did have that expectation although I fully accept that he might have (and may well have) hoped that salary increases would be granted (although at what level it is impossible to say). But even if he did have that hope, call it expectation if you will, there is nothing to support the conclusion that it was a Reasonable Expectation, that is to say an expectation engendered by the BBC either at all or in a way which would enable Mr Bradbury to assert a breach of the Implied Duties if, in any given year, the BBC decided to make no pay award. And the PO certainly did not say that Mr Bradbury held such an expectation.

41. Mr Stafford suggests that the PO was in error in [143] of the Further Determination. It is said that the PO's answer to the proposition that the disappointment of Reasonable Expectations which I have addressed above (although not addressed by the PO as expectations engendered by the BBC) gave rise to a breach of the Implied Duties was that the BBC was negligent; but this is no answer since mere negligence can result in a breach of the Implied Duties. I do not think that this is a fair criticism of the PO. First of all, an argument based on Reasonable Expectations was not run before him; he can hardly be taken to be answering an argument which was not put. Secondly, the PO did not find that the BBC was negligent in acting in the way which it did. The fact that I reached a different conclusion on the meaning of Basic Salary from that which the BBC relied on, does not mean that it was in any way negligent; and in any case the PO was addressing, in [143], a different matter, namely the suggestion that the consultation was flawed (indeed, even a sham) because the BBC had a closed mind for a number of reasons including maintaining its interpretation of Basic Salary.
42. I therefore reject Mr Bradbury's arguments in reliance on disappointment of Reasonable Expectations. First, the argument is not open to him. Secondly, even if it were, it is not established on the facts. It follows from these conclusions not only that disappointment of Reasonable Expectations is not, of itself, established as giving rise to a breach of the Implied Duties but also that disappointment of Reasonable Expectations cannot be relied on as an element of the BBC's conduct overall which has to be brought into account in assessing whether there has been a breach of the Implied Duties.

Alleged improper coercion

43. I have referred to improper coercion when introducing the first limb at paragraph 28 above. In [135] to [139] of the Further Determination, the PO dealt with the allegation that Mr Bradbury had been subjected to improper coercion. The PO regarded as improper coercion (leading to a breach of the Implied Duties) a number of matters, in particular if the BBC had a collateral purpose in imposing the Cap and if Mr Bradbury had been forced to make a particular decision as a result of economic duress amounting to illegitimate pressure applied by the BBC. Leaving aside the collateral purpose (which the PO dealt with in [144] and to which I will come, noting here that it really falls under the second limb rather than the first limb), he noted that Mr Bradbury had options, albeit limited. He appreciated Mr Bradbury's unhappiness at having in practical terms no alternative but to leave the New Section and join CAB 2011 (although I repeat that he did not do so immediately but waited a year) and that he felt pressurised to make the decision. However "..that does not mean that in requiring him to make choices, the BBC was applying 'improper coercion' and that it was acting improperly". Mr Stafford submits that the PO was wrong to reach that conclusion. However, absent any Reasonable Expectation regarding salary increases, I agree with the PO's conclusion, that presenting Mr Bradbury with hard choices did not of itself amount to improper coercion.
44. Mr Stafford says that the PO did not give adequate reasons for reaching this conclusion (and will doubtless say the same to the Court of Appeal about me if this case ever gets that far). But that is not, again, a fair criticism of the PO (or I hope of me). Part of the starting position is that a contractual agreement accepting a pay increase on the basis that part of it would not be pensionable would be valid. As I held in the Judgment, the BBC's conduct was not contrary to the terms of the 2011 Deed and Rules in the sense that an agreement to impose the 1% cap by agreement would be effective notwithstanding the provisions of the 2011 Deed and Rules. Another part of the starting position is that the BBC was not obliged to grant any salary increase at all. There was no Reasonable Expectation that it would do so nor was there a wider proposal (in contrast with the position in IBM) which gave rise to a Reasonable Expectation in the context of which a non-pensionability agreement such as an agreement to the Cap would be open to challenge. It is for Mr Bradbury to show some factor which displaces the starting position. He has failed to do so insofar as reliance is placed on coercion alone. It may be true that, had the BBC decided that it would make no pay award to anyone for one or two, or even more, years, there would have been huge dissatisfaction and, one can imagine, industrial action. But that is not to say that there would have been any breach of the Implied Duties. If management had taken the view that pay increases simply could not be afforded at all (for instance because of the need to plug the pension deficit) or should not be granted for some other commercial reason, it could not sensibly be suggested, in the absence of some other factor (such as a clear but not contractually binding undertaking to make some minimum award), that there was a breach of the Implied Duties. That would be, in effect, to say that it was an implied term of the contracts of employment that pay increases would be awarded in each year.
45. I therefore reject Mr Stafford's criticism of the PO on this aspect of the case. The PO's conclusion that Mr Bradbury was not subject to improper coercion was one which he was entitled to reach and, for what it is worth, is a conclusion with which I agree.
46. It follows in relation to the first limb that it cannot be said that, as a matter of principle, the BBC was in breach of its Implied Duties in seeking to impose the Cap. It was a course which was open to the BBC provided that it was done properly. In other words, the structure of the BBC's proposals did not give rise to improper coercion on Mr Bradbury to force him to accept the Cap.
47. The matters to which I now turn concern the second limb. In effect, the question is whether the way in which the Cap was introduced (together with the other options made available to members) gave rise to a breach of the Implied Duties. It is helpful first to look at each component of the overall conduct which is said to give rise to a breach.

Alleged collateral purpose

48. The first aspect is the allegation that the BBC had a collateral purpose in its solution to the pension funding problem. It is related to coercion in the sense that it was the collateral purpose which, on Mr Bradbury's case, led to the adoption by the BBC of the particular options which it was prepared to offer to Mr Bradbury and other members, but is not part of any coercion. All of these options were, it is said, designed to achieve a more "agile" workforce by making the Scheme less attractive to long-serving and under-performing staff thus encouraging them to leave the BBC altogether. Mr Bradbury's case depends on the evidence of Mr Myers, a former employee of the BBC in its HR department, latterly Head of Human Resources. The PO sets out a summary of Mr Myers' evidence (and that of other witnesses in support of Mr Bradbury's position) in Appendix 1 of the Further Determination. I set out the following passages from that summary:

"2… he had a one to one meeting with the Director of Human Resources when she explained that staff turnover was low. She said people just hung around because they were incentivised to do so to a great extent due to the final salary pension which in any event was turning out to be unsustainable. She saw the Cap as a vital part of the strategy to change the staff profile because it would lever members out of the Scheme which was inhibiting them from leaving the BBC altogether. She said that the BBC's Executive wanted at all costs to avoid working with the Trustees to devise way of controlling the costs of the Scheme because they could not be relied on to deliver what the BBC wanted.

3. The detailed proposals for changes to terms and conditions of employment, and the purpose of those changes are spelled out in the BBC's "People Strategy". This document was supplemented by an interlocking strategy document prepared by Mr Myers' own department which explained in more detail how changing the Scheme and the redundancy arrangements would lead to a more "agile" workforce, meaning that these changes would encourage long-serving and underperforming staff to leave.

4. The BBC did not think it could simply close the Scheme because that would provoke a heated fight with staff and members. It would also require the co-operation of the Trustees, which the BBC Executive was not prepared to countenance. Instead it sought to achieve the same end by using the Cap to coerce members out of the Scheme."

49. Mr Myers' evidence was submitted after the BBC had made its reply submissions and so, as Mr Furness says, very late in the day. He says, and I accept, that the BBC does not accept that evidence and that it did not have time to respond to it. Objection was made to the PO receiving it. It does not appear that the PO made a decision whether or not to accept it, although it is clear that he did read it, but perhaps this was only de bene esse (even though I may not be allowed to say so in Latin). The PO's actual response is perhaps slightly curious. At [145] he records that the BBC "roundly denied any such intention" (ie to achieve the collateral purpose I have identified) and had asked him "to make no finding of fact in relation to" Mr Myers' statement. In fact, the BBC had, as I understand it, asked him not to admit it at all. The way in which the PO then dealt with it was to say, in [146] that he did not propose to make any finding of fact in relation to the truth of Mr Myers' evidence concerning the alleged collateral purpose nor whether the BBC might have hoped to achieve such a purpose. He said that he did not propose to do so for a number of reasons which he turned to in the remainder of [146] and in [147]. In [146] he quoted, from the judgment of Sir Nicolas Browne-Wilkinson V-C in Imperial Tobacco, the well-known passage where the Judge stated (i) that the relevant question was not whether the employer is acting reasonably, and (ii) that the employer is entitled to take into account its own financial interests and then going on as follows:

"However, in my judgement the obligation of good faith does require that the Company should exercise its rights (a) with a view to the efficient running of the scheme …and (b) not for the collateral purpose of forcing the members to give up their accrued rights in the existing fund subject to this scheme…As to (b) above, …If there are financial and other considerations which require the fund to be determined so be it. But if the sole purpose of refusing to consent to an amendment increasing benefits is the collateral purpose of putting pressure on members to abandon their existing rights, including the right to the surplus on determination, in my judgment the Company would not be acting in good faith"

50. As to that, the PO said this at [147]:

"Apart from the fact that Warren J observed that the circumstances of Imperial Tobacco were far removed from this case, Mr Bradbury does not allege that the BBC's collateral purpose in introducing the Cap was its only/sole purpose and having acknowledged that the deficit needed to be addressed this would, in any case be inconsistent. Nor (following the decision of Warren J) did he have an accrued right to remain in the Scheme without the imposition of the Cap. Whether or not Mr Bradbury agrees with the way the BBC chose to address the deficit he cannot deny that this was its principal purpose in imposing the Cap. The extensive involvement of external advisers, internal specialists of various levels of management and other professionals are testimony to the fact that the financial position and the alternatives were very seriously investigated and considered. To suggest that despite all of this its sole purpose in imposing of the Cap was to drive out longer serving members is not credible particularly as such a tactic would be unlikely to succeed as the very people the BBC did not wish to lose would be those who would be able to obtain better conditions elsewhere and would therefore be the ones to move. "

51. Mr Stafford's argument is that the evidence was before the PO and the significance of the evidence to the issue of breach of the implied term of trust and confidence was laid fairly and squarely before him in the further written submissions on behalf of Mr Bradbury. It is worth recording how it was put in those submissions:

"The Complainant submits that the instructions sent to KPMG, their initial report and subsequent amendments and addenda to it are also strong evidence of what the BBC sought to achieve by making its pension proposals and what alternatives were considered. They are also strong evidence of what attention the BBC paid to the Implied Duties when designing and implementing its proposals."

52. Mr Stafford says that, in the light of that submission, the PO was wrong not to make any findings as to the truth or otherwise of Mr Myers' evidence. He says the evidence went to the heart of the case that had been correctly summarised at [80] of the Further Determination which was whether the BBC's conduct, taken as a whole, viewed objectively and against the severe test, was conduct calculated or likely to destroy or seriously damage the bond of mutual trust and confidence. He submits that this was a significant flaw in the way in which the PO went about his task.
53. However, it has not been, and could not in the light of the PO's findings, possibly be suggested that the collateral purpose was the sole purpose of the BBC's decision to impose the Cap. It is clear, in my view, from those findings that what the BBC did was clearly, as Mr Furness puts it, a response, and primarily a response, to the deficit. That, he submits, is sufficient to dispose of any allegation of breach of the Implied Duties even if, which is strongly denied by the BBC, there was some underhand agenda on its part to get rid of people. Even if it was perceived by the BBC, as a collateral benefit from adopting this approach, that under-performing employees might be encouraged to leave, that would not itself, in Mr Furness' submission, render this a strategy which breached the duty of trust and confidence.
54. He accepts that if the BBC had had a strategy of, for instance, ridding itself of older employees, and attempted to use the deficit as a cover for achieving that purpose, then, as he put it "that's the sort of allegation that would gain some traction, clearly, because the BBC would be essentially not being straight with its members". It would be deceiving the members: its real purpose would be to get rid of older members but its pretence would be that the purpose was to address the deficit.
55. Such an allegation might have traction, but what is clear to my mind is that Mr Myers' evidence is wholly insufficient to provide a foundation for such an allegation and the PO's findings are inconsistent with such an allegation. Thus, although the PO declined to make any findings in relation to Mr Myers' evidence, he did make other findings which demonstrate that he himself would have rejected any such argument based on that evidence. This, it seems to me is what the PO is saying in [146] and [147]. As he put it in [147]:

"Whether or not Mr Bradbury agrees with the way the BBC chose to address the deficit he cannot deny that this was its principal purpose in imposing the Cap."

56. In other words, the deficit was not simply being used as an excuse by the BBC to pursue some agenda other than the need to address it. Once the ulterior motive is disposed of, as I consider it has been effectively disposed of by the PO, the collateral purpose argument, assuming contrary to the BBC's position that Mr Myers' evidence is correct, turns essentially on the answer to this question: Was the BBC entitled to rely on the deficit which, on any view, had to be addressed as an opportunity to achieve some other objective? In other words, was there anything to prevent the BBC from adopting the course which it actually adopted rather than adopting some other course, for instance the course suggested on behalf of Mr Bradbury of a smaller pay rise all of which would be pensionable and having a cost for the BBC equivalent to the cost of the course actually adopted?
57. Although he did not say so in so many words, the PO's answer to that question was that there was nothing to prevent the BBC taking the course which it did. His reasoning was that, whatever else, it was not the sole purpose of the BBC to drive out members from the Scheme. And so, relying on Imperial Tobacco, he seems to have considered that it would only be where the collateral purpose was the sole purpose that the BBC would not be acting in accordance with the Implied Duties. That approach may, however, be pitching matters too high; there may be cases where a collateral purpose leads to a breach of the implied term of trust and confidence even where that purpose is not the sole purpose.
58. If he was right in that approach, then clearly his conclusion to reject the argument based on collateral purpose (and thus the need to address Mr Myers' evidence) was correct. But if he was wrong in that, and was pitching matters too high, it is open to me, I consider, to reach further conclusions as a matter of law, applied to the facts which the PO actually did find and assuming the correctness of Mr Myers' evidence insofar as consistent with the PO's actual findings.
59. As to that, in my judgment, the BBC was entitled to choose the course which it did rather than the alternative course suggested by Mr Bradbury (or, indeed, any other course). It cannot be said that the mere fact of presenting the options which it did (that is to say the options of remaining in the Scheme subject to the Cap, joining CAB 2011 or joining the BBC LifePlan) gave rise to a breach of the Implied Duties. Whether it did so in the context of the BBC's conduct as a whole is a matter I will come to. But absent any ulterior motive as I have discussed above, the fact that the BBC chose the course which it did rather than the course which Mr Bradbury has suggested would not, by itself give rise to any breach of the Implied Duties. And this is so, I consider, whether one adopts Mr Bradbury's test or the BBC's test as set out in paragraph 8 above. Again, whether, in the context of the BBC's conduct as a whole, the collateral purpose argument might have some weight is a matter to which I will come.
60. Before I leave collateral purpose, I should address the status of Mr Myers' evidence, having thus far simply assumed that it is validly before me. Not only did the PO not decide whether Mr Myers' evidence was correct, he did not decide – at least there is no express ruling – that it should be admitted. The BBC had objected to its late admission, but the PO made no ruling on that. He may have thought that he did not need to do so in the light of his decision that the evidence was not necessary to answer the question whether the collateral purpose of itself led to a breach of the Implied Duties. Mr Furness submits that the PO did not admit the evidence so that it is not before me and I should not take account of it. And so, absent the evidence, the collateral purpose argument cannot be relied on in relation to the allegation of a breach of the Implied Duties as a result of the BBC's overall conduct.
61. Mr Stafford says that since the evidence was referred to in the Further Determination and summarised in Appendix 1, it is clear that it was admitted. If that is correct, however, then the BBC should have been given an opportunity to respond to it. Perhaps the PO thought that this, too, was unnecessary as he was not making any findings on the basis of it. This is not a satisfactory position. As will be seen, however, it is possible to resolve the appeal before me on the material actually before the PO and notwithstanding the absence of any decision by him in relation to the admissibility of this evidence.

Age discrimination

62. The allegation here is that the course adopted by the PO resulted in unlawful age discrimination. It is said that the Cap discriminates indirectly against younger members. Mr Bradbury, it is common ground, is not in the disadvantaged class. The PO took the view that it was not his function to consider the overall discriminatory impact of the changes introduced by the BBC but to consider whether by its action the BBC had acted in breach of its legal obligations towards Mr Bradbury. Noting that Mr Bradbury did not allege that the effect of the Cap discriminated against him, whether directly or indirectly, on the grounds of age, the PO made no further comment on this claim.
63. Mr Stafford submits that this cannot be right since it would mean that the BBC's conduct would be a breach of the Implied Duties for some but not all employees. There is nothing, in my view, illogical in that conclusion: the claim which an individual member has is for breach of his own contract of employment, terms of which include the Implied Duties. Age discrimination against Mr A might be a factor in undermining his trust and confidence in the BBC, but it does not necessarily follow that age discrimination against Mr A will undermine the trust and confidence of Mrs B in the BBC. It would be an extreme case where the age discrimination against one person or group of persons would entitle another person or a person not in that group to allege a breach of the implied obligations in his own contract. I suppose that, in an extreme case, it could be argued that conducting business in a way involving serious age discrimination might give rise to a breach of the employer's implied obligation of trust and confidence in the same way as conducting the business dishonestly in Mahmud gave rise to a breach. Even so, it is not easy to see how any reasonable Pensions Ombudsman could reach the conclusion that, by itself, the suggested age discrimination on the part of the BBC in the present case could amount to conduct which passed the severe test required to establish a breach of the implied obligation.
64. In my view, it is a hopeless suggestion that, by virtue of the alleged age discrimination alone, the BBC was in breach of the Implied Duties owed to Mr Bradbury. I consider that this is a conclusion which I am entitled to reach in the context of the present appeal. Whether the facts give rise to unlawful age discrimination against any members other than Mr Bradbury and if so whether that discrimination is such as to give rise to a breach of the Implied Duties owed to Mr Bradbury, are matters of law. My conclusion, as matter of law, is that the fact of that discrimination, even if established, did not give rise to a breach of the Implied Duties owed to Mr Bradbury.

Consultation

65. The PO dealt with consultation at [140] to [143] of the Further Determination. He saw Mr Bradbury's submission as being, in effect, that the actual consultation was a sham, the BBC having entered into the consultation with a closed mind and having already decided on its proposed course of action. The Trustee, the unions and the members were presented with no real choice as the BBC was not prepared to engage in discussions in order to explore alternatives. As Mr Stafford puts it, the Cap was set in stone. However, as the PO noted, given the deficit, something radical needed to be done. The only sure way of avoiding some immediate adverse reaction from the workforce was to do nothing which was not a sensible or realistic option.
66. As part of his case that the consultation was flawed, Mr Bradbury relied on the fact that the BBC was maintaining its interpretation of "Basic Salary" which, in the Judgment, I considered to be wrong. There are two points relating to this which I would make:

i) The first is that the interpretation was a matter of law; the Trustees and the unions, with their legal advisers, were able to take advice about the meaning of the provision and to challenge the BBC's interpretation. The members could have done the same although I accept that it might not be seen as reasonable to have expected any individual member to do so. It is not recorded in the PO's determinations whether anyone did challenge the BBC's interpretation until after Mr Bradbury's complaint to the PO had been made.

ii) The second is that the BBC did not, in the event, seek to implement any change in what was included in Basic Salary pursuant to its interpretation. Instead, it imposed the Cap contractually: a member who remained in the Scheme (rather than moving to CAB 2011 otr the BBC LifePlan) was offered a pay rise only if he agreed to the Cap; if he did not agree, he did not get a pay rise. It is not easy to see how the BBC's interpretation of Basic Salary had any impact on this result or on the BBC's course of conduct. In any case, if its interpretation had been right, it could have achieved the same result for all members, not just for those who agreed, by changing the content of Basic Salary; but then it would surely have met precisely the same challenges as it is facing from Mr Bradbury having adopted the course which it did.

67. It is fair to say that this section of the PO's reasoning rather leaves the question which he asked himself unanswered. The question is in the heading "Did the BBC act appropriately with regard to the member, the Trustees and the unions?" Having concluded in [142] that something fairly radical had to be done and that inaction was not an option, he went on in [143] to consider Mr Bradbury's suggestion that the consultation was flawed "as the BBC had a closed mind, failed to consider other alternatives and throughout maintained that its interpretation of the meaning of 'Basic Salary' under the rules was the correct one". He then referred to my view that the BBC's interpretation was incorrect and to my observation that there was nothing to suggest that the BBC was acting other than in the belief that it had adopted the correct definition in formulating its pay offer and that its interpretation was not clearly wrong. He agreed with my observations adding that he saw "no reason to attribute bad faith to the BBC for its position on this point so as to render the consultation process void. Mr Bradbury's other criticisms of the consultation exercise also do not nullify the process". He does not, here at least, answer the question he had posed in the heading of this section of the Further Determination.
68. Mr Stafford says that the point is not, in any case, whether the process was void or nullified. The point is that the way in which the BBC conducted the consultation was part and parcel of the overall conduct which gave rise to a breach of the Implied Duties. He says, perfectly correctly, that there does not have to be bad faith or dishonesty for there to be a breach of the Implied Duties. He adds that negligence would suffice in the appropriate case: I am not sure that that is right and do not need to decide the point. Mr Stafford further criticises the PO, saying that he has discounted to zero the conduct said to give rise to a breach of the Implied Duties because it did not amount to bad faith. It was not allowed to feature in the overall picture which was the way in which the case was put by Mr Bradbury. In other words, the PO has ignored all the important evidence and simply jumped to a conclusion.
69. In summary, Mr Stafford's submission is that the question is not whether the consultation was null and void but whether it was a process and part of a mechanism that conformed to the obligation of trust and confidence. In this important area, the PO has failed to make findings. In some areas, it is said that he could only have made findings which were adverse to the BBC.
70. Thus it is said to be clear that there was never any proper consultation with the Trustees. All that was being said was as Mr Stafford puts it "We found a way that we didn't have to speak to the Trustees". But that way was built on a foundation of sand, as he would have it, namely the erroneous understanding of the meaning of "Basic Salary".
71. For my part, I am not that critical of the PO's reasoning. He was addressing the question which he asked himself in isolation. He addressed the elements which, on Mr Bradbury's case, resulted in a flawed consultation. In saying that maintaining its stance on the meaning of Basic Salary, the BBC did not render the consultation void, the PO was surely saying no more or less than it was a valid consultation and that the consultation was therefore not, by reason of that stance, flawed. I disagree, in any case, that the erroneous understanding of the meaning of "Basic Salary" was a foundation for the BBC's view, if it was its view, that it did not need to speak to the Trustees before formulating its proposals. It had an alternative foundation, the one on which it in fact built, which was the contractual route, an agreement on a member by member basis to the Cap if a salary increase were granted.
72. That approach to what the PO meant is supported by his use of the word "nullify" in relation to the effect (or rather absence of effect) of the other matter complained of. If the consultation was not void or nullified, it must follow that it could be relied on. It was not, for instance, the case that the consultation was carried out in relation to different proposals from the proposal in fact implemented, in which case it might be said that the consultation was no consultation at all. As to the actual consultation, he recorded what had taken place in the section dealing with the facts starting at [10] of the Further Determination: particularly relevant are the paragraphs from [25] to [34]. It is important to note that the consultation process resulted in the BBC developing a further option which eventually resulted in CAB 2011 at some additional cost to the BBC.
73. The PO was well aware of the alleged lack of consultation with the Trustees. Mr Stafford is very critical of the BBC's failure to consult with the Trustees, a failure which forms a significant part of the overall conduct leading to the suggested breach of the Implied Duties. But in that context, the PO was also well aware that the BBC needed to put changes in place as a matter of urgency. If there had been any delay, the scheme valuation would have resulted in a significant, or significantly larger, deficit contribution which the BBC reasonably wished to avoid. He also know that the BBC considered that the Trustees would oppose making amendments to achieve anything like that which it wished to see put in place and that nothing would, in any case, be agreed with the necessary urgency; and that accordingly, it did not consult the Trustees in the development of its proposals. It was, however, open to the Trustees to make representations during the consultation period.
74. In my judgment, the PO was entitled to reach the conclusion that the consultation as carried out did not, of itself, give rise to a breach of the Implied Duties albeit that his reasoning is sparse. He did not need to make further findings of fact in order to reach that conclusion. In particular, he was entitled to conclude (and it is necessarily implicit in what he said that he did so conclude) that the BBC did not need to consult with the Trustees before formulating its proposals. Whether it would have been improper for the BBC to exclude the Trustees from making representations in the subsequent consultation on the actual proposals was not necessary for the PO to decide, for the simple reason that they were not excluded in that way.

The PO's overall conclusion

75. The position thus far in my analysis is therefore that the PO has reached conclusions which he was entitled to reach on each of the four factors relied on by Mr Stafford in support of his contention that there has been a breach of the Implied Duties, viewing each of those factors separately. Those factors, to recap, are:

i) improper coercion based on the way in which the BBC sought to achieve the Cap by way of contract rather than by way of Scheme amendment;

ii) collateral purpose, namely to produce a more "agile" workforce (ie to produce a greater turnover among older staff);

iii) age discrimination; and

iv) lack of proper consultation, part of this allegation being the BBC's insistence of its interpretation of "Basic Salary".

76. The fact that none of those factors taken separately does not give rise to a breach of the Implied Duties does not, however, necessarily mean taken together they do not give rise to a breach of the Implied Duties. The answer to that issue must, of course, be assessed in the context of the situation in which the parties found themselves. On the one hand, the BBC was faced with a difficult problem which it needed to solve urgently. On the other hand, the members were presented with difficult choices and were deserving of proper consideration by the BBC, although, as I have held, it was in principle possible for the BBC to proceed as it did (ie the answer to the first limb), the stark choice between accepting the Cap (or joining CAB 2011 or the BBC LifePlan) and receiving no pay increase is a factor to be borne in mind. Further, there is the unresolved evidence of Mr Myers, although I am bound to say that even taken at its highest, it could do no more than establish that one purpose of the BBC in adopting the course it did, rather than any other course, was to assist in achieving a higher turnover of older staff: but that purpose, even if it could be established, was very much a secondary purpose and represented simply one way in which the primary purpose (ie to address the deficit and ongoing pension cost) could be addressed.
77. As I said in IBM, agreeing with the submission of Mr Stallworthy, an employer's duty of trust and confidence can be breached by its actions cumulatively (even where the "last straw" on its own is not unreasonable or blameworthy): see eg Waltham Forest LBC v Omilaju [2004] EWCA Civ 1493, [2005] ICR 481 at [20]. But in a case such as that, whilst the separate elements concerned do not give rise to a separate breach of duty, each of them must, I consider, be of a character which is potentially capable of giving rise to a breach. Thus, although a minor act of harassment of an employee by an employer may not give rise to a breach of duty, a consistent pattern of harassment will do so; but each act of harassment is of a type which could give rise to a breach. I find it hard, however, to envisage a case where a breach of duty could arise out of an accumulation of acts where it was necessary to rely on an act which was not of a type which could in principle give rise to a breach by itself.
78. In the present case, the alleged coercion relied on by Mr Bradbury (the first factor mentioned in paragraph 75 above) was not improper coercion. It was perfectly proper for the BBC to proceed by way of contractual agreement with the members provided that the way in which it achieved agreement did not give rise to any breach of the Implied Duties. That would be subject to any contrary Reasonable Expectation (ie to the effect that any change to the accrual rate would be effected only through the mechanism of a rule amendment) but on the facts Mr Bradbury has failed to establish any such Reasonable Expectation. In my judgment, therefore, improper coercion is not a factor which falls to be taken into account in any overall assessment of the BBC's conduct since there was no coercion other than in the (unobjectionable) sense that Mr Bradbury was faced with unpalatable choices.
79. Although the PO did not expressly express the view that the other three factors mentioned in paragraph 75 above did not give rise to a breach of the Implied Duties, it is, I think implicit in [149] of the Further Determination that that was his view. It is a short paragraph, under the heading "Overall conclusion", reading as follows:

"In the light of the scheme deficit, its potential future liability, its resources and its overall obligations and the steps taken by it to address the problems it faced in relation to the Scheme, I find that the BBC did not breach its Implied Duties towards Mr Bradbury in seeking to impose the Cap."

80. Having addressed each of Mr Bradbury's complaints separately, this overall conclusion is to be read, in my view, as the PO's conclusion viewing the matter in the round. It is clear from [80] of the Further Determination that the PO was well aware of the nature of Mr Bradbury's complaint namely a complaint about the mechanism used by the BBC and not about the offer of a pay increase or the exercise of a discretion. He found that there was no improper coercion (a conclusion with which I agree for the reasons given). He addressed the separate complaints made (ie the other factors mentioned in paragraph 75 above) and, having rejected the conclusion that any of those factors gave rise to breach of the Implied Duties, he expressed the overall conclusion that there was no breach. It is not easy to see what more he could have said other than to add, in [149], words to the effect that his overall conclusion took account of the cumulative effect of all the matters complained of.
81. However, even if it is wrong to read [149] in that way, the only overall conclusion which the PO could have reached in the light of his conclusions in relation to each of the factors which he addressed separately would, in my view, have been to hold that there was no breach of the Implied Duties. The three factors relied on are disparate: there is no obvious connection between the alleged collateral purpose, the allegedly inadequate consultation and age discrimination. It is not possible to select one of those factors and to argue that its presence somehow makes either of the other factors more objectionable than would otherwise be the case; this is unlike the case of a series of acts of harassment where it is possible to view the consequences of the series as a whole and to conclude that the employer has been guilty of such a degree of harassment as gives rise to a breach of duty.
82. It seems to me that it would require a very strong case indeed for a number of disparate objections (even though they arise out of the same conduct) to give rise when taken together to a breach of the Implied Duties when none of the objections by itself gives rise to such a breach. On the facts of the present case, had the PO concluded that, notwithstanding his conclusions in relation to each separate complaint, the BBC's overall conduct gave rise to a breach of the Implied Duties, that would have been, to my mind, a very surprising conclusion. In my judgment such a conclusion would have been not only surprising but would have been one which no reasonable Pension Ombudsman could have reached. Whatever the PO did or did not say in [149] of the Further Determination, he certainly did not reach that conclusion. It is therefore open to me to decide, as a matter or law and on the facts as found, that the overall conduct of the BBC did not give rise to a breach of the Implied Duties. That is the conclusion which I reach.
83. This is not a conclusion which I reach with any reluctance:

i) I asked Mr Stafford whether, had the BBC acted in what he suggests was the correct way and had it then been faced with the inability to achieve a negotiated settlement with the Trustees and the unions, it could then have implemented the proposals which it did implement without any breach of the Implied Duties. His response was that the complaint related to the mechanism and the method by which the BBC implemented what it did; it was a process complaint, not a decision or discretion case. He said that his case did not mean that the changes were inevitably unobtainable. Handled with the appropriate mechanism and processes it may well be that the result which the BBC wished to achieve could have been achieved in that way but that is not what has happened in this case.

ii) As to that approach, it seems to me to ignore the realties. In particular, it ignores the fact that the BBC needed to implement a solution in time for it to be reflected in the imminent actuarial valuation. It is, to put it at it lowest, unlikely that an agreement of any sort with the Trustees could have been reached and been implemented within that time-scale. The BBC had to find another route.

iii) But even if the time constraint had not been so acute, it also seems to me highly unlikely that the BBC would have reached an agreement which was an improvement on its eventual position providing for the three options under which members would agree to the Cap, join CAB 2011 or join the BBC LifePlan. Once it became clear that the Trustees would not agree to amendments to introduce the Cap (whether because such an amendment would not be within the scope of the amendment power or because the Trustees viewed such an amendment unfavourably), the BBC would inevitably have had to adopt the contractual route and the result would have been no different from that which was eventually arrived at.

84. I make the observation in the immediately preceding paragraph because it shows, in my view, that the result for Mr Bradbury is not unjust, although that view has not in any way influenced my conclusions on the arguments presented on his behalf.
85. There is one other "merits" point which ought to be made if only to show that I have not overlooked what Mr Bradbury said in his complaint and which, again, has not influenced my conclusions. He argued that he was severely prejudiced because the Cap would bite not only in relation to his future service accrual but also in relation to his past service. In other words, the final salary link would be broken in relation to his benefits accrued up to the date of implementation of the BBC's proposals. That is true. But the result is not as grim as Mr Bradbury suggests. If he had left the Scheme and joined CAB 2011, as he in fact did a year later, his accrued benefits would have attracted statutory revaluation. In an era of severe wage restraint, such a rate of revaluation might be seen as not so bad after all.

Disposition

86. Mr Furness argues that this appeal has been brought out of time although he did not push the point very hard.  In the light of how this case was dealt with me at the hearing following hand-down of the Judgement, I doubt very much that there is anything in Mr Furness' argument.  In case there is anything in the point, I give permission to make a late application for permission to appeal.  Quite apart from the time-limit point, Mr Furness submits that I should not grant Mr Bradbury permission to appeal from the PO's decision in the Further Determination.  Although I have rejected Mr Bradbury's arguments, they were not without merit. His appeal had a real prospect of success. Accordingly, this is a case where, contrary to Mr Furness' submission, it is appropriate to grant permission to appeal and I do so. The appeal itself is, however, dismissed.