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Cite as: [2008] CSOH 162, [2008] ScotCS CSOH_162

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OUTER HOUSE, COURT OF SESSION

[2008] CSOH 162

PA89/07

OPINION OF LORD GLENNIE

in the cause

JOHN GRAHAM AITKEN

Pursuer;

against

STANDARD LIFE ASSURANCE LIMITED

Defender:

________________

Pursuer: Beynon; Lefevre Litigation

Defenders: Sellar QC & Cunningham; Balfour + Manson LLP

3 December 2008

Introduction

[1] The pursuer's claim in this action arises out of a pension policy, number H480280042301, taken out by him with the defenders. The policy terms included those set out in booklet MLP305. At the commencement of the policy the pursuer paid in, by way of premium, approximately £115,000 of entitlement under his previous employers' occupational pension scheme.

[2] The pursuer avers that a decision was taken by the defenders in late September or early October 2002 to reduce final bonus values by an average of 10% and, in addition, to introduce an unspecified reduction on early transfer or surrender. In or about early October 2002 the defenders wrote to all policy holders holding pension policies explaining that they had taken that decision. The information was sent in an "Update" for Autumn 2002 (the "Autumn 2002 Update"), to which I shall refer in more detail later. However, the pursuer was not sent a copy of that Update. That is his complaint. He was therefore not directly notified by the defenders of that decision to reduce final bonus values and to introduce reductions on early transfer or surrender. The pursuer avers that, in ignorance of that decision by the defenders, he transferred his policy to another provider in a particular manner, which he would not have done had he been given that information. He says that he could not reasonably have been expected to have become aware of the defenders' decision prior to taking the decisions he took and suffering loss and damage. He contends that the defenders were under an obligation to give him that information at the time they wrote to other policyholders, and that their failure amounts to a breach of that obligation. It is agreed that the failure to include him (and a number of others) in the circulation list was the result of an accidental omission on the part of the defenders, though the pursuer alleges that it resulted from their negligence in failing to have the proper processes in place.

[3] The pursuer's case is based upon an averment in Article 3 of Condescendence that the defenders were under an obligation:

"to inform their policyholders in writing, including the Pursuer, within a reasonable time (and not exceeding four weeks) of a material fact or matter pertaining to change or changes to policy valuations and anticipated values namely transfer and final or bonus values at retirement, and in particular a decision to reduce final bonuses by an average of 10%."

In the course of the discussion, the last five words were at times substituted by the expression "by a material amount", but nothing turns on this for present purposes. The pursuer also has an esto case, namely that if the obligation on the defenders was not absolute but was qualified by reference to a duty to take reasonable care, the defenders were in breach of that qualified duty in that they ought to have taken steps to ensure that their computerised mailing system sent notification to all policy holders, including himself, who provided them with contact details.

[4] The obligation founded upon is variously said to arise by way of an implied contract, an implied unilateral obligation and/or an implied term of the policy. In the case of the implied term of the policy, which relates back to the date of inception of the policy, the implication is said to be necessary to give the contract business efficacy. In the other cases, where the implied obligation arises under a "stand alone" contract or a unilateral obligation arising at a later date, the implication is said to derive from the defender's conduct, set against this background of necessity. I shall refer to that conduct in due course.

[5] The averments concerning the existence of the obligation were the subject of attack by the defenders at debate. The defenders argued that these averments were irrelevant and sought dismissal of the action. During the hearing the pursuer made certain amendments to Articles 2 and 3 of Condescendence. The debate proceeded upon the pleading thus amended.

The relevant facts

[6] From 1998 onwards (and possibly from earlier than that), the defenders sent annual statements to policy holders such as the pursuer. I shall refer to these as the "Annual Statements". The Annual Statements are directed specifically at the particular policyholder and the particular policy. In the case of the pursuer, an Annual Statement was sent in September of each year to coincide with the anniversary of the policy.

[7] A number of the Annual Statements were lodged in process. That for September 2000 is typical. It describes itself as "Yearly update no.7, as at 8 September 2000" in respect of the pursuer's plan. It gives the pursuer's retirement date at age 65. There is then, on the first page, a "Plan Summary" bearing to record payments made in the past 12 months (£0.00) and explaining that on death before retirement the value of the pursuer's fund would first be used to provide any Guaranteed Minimum Pension that might be payable to the pursuer's wife. In a marginal note beside the words "Plan Summary" there is written the following:

"You'll get an update every year to help you review your pension needs."

Underneath all that there is a section about Standard Life. This is followed on the next page by an "Illustration of your future pension benefits", with a caveat in a marginal note that the figures are not guaranteed. On the third page, under the heading "Guaranteed minimum pension", it sets out the minimum amounts which the defenders were required to pay the pursuer at age 65. Below this, under the heading "Progress towards your pension", are set out the payments received since the plan started (only the initial £115,453.00) and details of the value of the fund as at the date of the update.

[8] It is clear, and I did not understand this to be in dispute, that the promise in the Annual Statement that the policyholder would "get an update every year to help [him] review [his] pension needs" is properly to be understood as a statement, or promise (call it what you will), that every year the policyholder will received an Annual Statement of the kind which I have described, tailored specifically to giving an update of his own policy.

[9] In February and Autumn 2001 and Autumn and Winter 2002, the defenders distributed to their policyholders documents which are (somewhat confusingly from the point of view of this litigation) described as "Updates". I propose to call them Updates. So as to avoid unnecessary confusion, I should make it clear - as was very fairly accepted by Mr Beynon for the pursuer - that these documents are not the "yearly updates" promised in the marginal note to the Annual Statements. The two types of document are entirely different. Whereas the Annual Statements are policy specific, the Updates deal in more general terms with the performance and strength of Standard Life. The Update for February 2001 describes itself as "our first Members' Update" and bears to be a "simple, informative magazine" telling policyholders more about the company, giving them updates on the company's products and describing the company's plans for the future. Within its pages are comparisons between the performance of Standard Life's policies and those of comparable policies of other companies. The Update for Autumn 2001 contains a similar type of material. So too does that for Autumn 2002, though the Autumn 2002 Update also contains information about the decisions taken by Standard Life to which I have referred in para.[2] above. The introduction to the Autumn 2002 Update referred inter alia to the difficult stock market conditions being experienced, which it described as "the most severe market downturn we have seen for almost 30 years", and went on to say that despite the financial strength of the company

"... the persistent severity of recent investment conditions has made it necessary for us to reduce our terminal bonus rates, and to make additional adjustments to some surrender and transfer values."

On page 4, under the heading "Bonus Declaration" it stated the following:

"In order to ensure fairness for all policy holders we have taken the decision to declare new final bonus rates now. These changes have the effect of reducing maturity pay outs by an average of around 10%. If we waited until February next year and did not take action now, it would mean that maturing policies could be treated more generously than those with a number of years to run."

It is not necessary to look in any greater detail at the Updates.

The pursuer's averments in support of the implied obligation

[10] In its original form, the pursuer's pleading evidenced some confusion about the documents issued by the defenders. That was clarified by amendments made during the course of the debate. The pursuer's case in Article 3, as thus amended, is that the implied contract and/or obligation in the terms set out in para.[3] above:

"... arose out of Standard Life's said conduct in issuing the annual statements containing the statement 'You will get an update every year to help you review your pension needs.'"

In addition, the pursuer contends that the implied contract and/or obligation and the implied term have an underpinning in necessity and the need for business efficacy. It is explained that:

"The absence of the implied term would mean that Standard Life were under no duty to keep policy holders properly informed of policy decisions or changes (whether positive or negative) to pension values or anticipated values, including transfer values and final bonus entitlements, on retirement."

The pursuer avers that that would be entirely unreasonable and inequitable. After certain other averments, the pursuer says this:

"Given the scale of the decision to reduce the final bonuses it would not have been open to Standard Life to postpone intimation of that decision having been made until the sending out of the next annual statement in September of the following year. It is accepted by the pursuer that Standard Life were required to make the relevant decision and then to intimate it to all policy holders so that fairness would ensue. Any reasonable provider of pension policies would, as at September of 2002, have regarded themselves as under an implied contractual obligation to send [the Autumn 2002 Update] to all policy holders affected by the decisions therein specified in the absence of an express obligation to do so. That approach would have been arrived at for the reasons already given and as part of the regulatory regime relating to the provision of information to policy holders under the principle of 'policy holder's reasonable expectations'. That approach would have been in accordance with usual or ordinary market practice with respect to providers of pension policies of the type that the pursuer had taken out with Standard Life."

Submissions

[11] For the defenders, Mr Sellar QC emphasised the significance of the issue under discussion, since the pursuer's arguments, if correct, would affect not only the pursuer's own policy with Standard Life but life policies generally.

[12] Mr Sellar made his submissions by reference to a Note of Argument dealing in detail with the different ways in which the pursuer's case was advanced. In view of the conclusion I have reached on this matter, and at risk of failing to do justice to them, I do not propose to set out his submissions at great length. He made a number of observations about the difficulties inherent in attempting to imply a contract or unilateral obligation from conduct. If the parties would (or might) have acted as they did without there being any such contract or obligation, there was no necessity to imply one. He referred, in the context of implied contract, to Baird Textiles Holdings Limited v Marks & Spencer Plc [2002] 1 All ER (Comm) 737, in particular per Mance LJ at para.61. The question was whether the conduct was unequivocally referable to there being such a contract rather than it being explicable on some other basis. The same test applied mutatis mutandis to an implied unilateral obligation, though he doubted whether a statement giving rise to a unilateral obligation could ever be inferred from conduct - the textbooks, such as Gloag on Contract (2^nd ed), did not suggest that it could be. The usual tests for implication of terms (as to which, see below) were relevant here too. It was difficult to interpret a statement as one creating a legal obligation, whether unilateral or contractual, when the parties were already bound together by an existing contract, a fortiori where that contract was lengthy and detailed and in a standard form. In addition to the cases already mentioned, Mr Sellar also referred to Equitable Life Assurance Society v Hyman [2002] 1 AC 408, Goshawk Dedicated Limited v Tyser & Co Limited [2006] 1 All ER (Comm) 501, Pagnan SPA v Feed Products Limited [1987] 2 Lloyds Rep 601, Jayaar Impex Limited v Toaken Group Limited [1996] 2 Lloyds Rep 437, Cawdor v Cawdor [2007] SC 285 and Scott v Dawson (1862) 24 D 440, as well as to various passages in McBryde, The Law of Contract in Scotland.

[13] Turning to deal with the case based upon an implied term of the policy, Mr Sellar referred to the well known tests for implication. The term must be necessary to make the contract work in the way in which the parties clearly intended it to work; and, though this may simply be another way of saying the same thing, it must be obvious, i.e. one to which each party would have agreed without hesitation. Further, it must be certain; it must be reasonable; and it must not contradict the express terms of the contract. Mr Sellar emphasised the difficulties of implying a term into a very detailed contract such as the policy in question. On the implied term issue generally he referred to Equitable Life Assurance Society v Hyman (supra), Scally v Southern Health Board [1992] 1 AC 294, Thomson v Thomas Muir (Waste Management) Limited 1995 SLT 403 and Lothian v Jenolite Limited 1969 SC 111, as well as to Lewison, The Interpretation of Contracts (4^th ed) at para 6.07

[14] Mr Sellar submitted that the pursuer had not put forward a relevant case. Although the word "necessity" was used in the averments, the pursuer did not offer to prove anything to support that, or to suggest that an obligation of the type sought to be implied, whether by way of contract or unilateral obligation, was the only explanation of the defenders having done what they did. The defenders sent out Annual Statements. It was questionable whether they were obliged to do so, but that question did not arise in the present case. No complaint was made that the Annual Statements were not sent out. Those Annual Statements contained a statement that the policy holder would get "an update every year" to help him review his pension needs. Even if that could be taken as a promise, it was not a promise which could translate into the implied obligation which the pursuer sought to establish. Indeed, a promise to send out an update every year was inconsistent with any obligation to notify policy holders within a reasonable time (and not exceeding four weeks) of any material fact or matter or decision to change policy valuations or transfer values or bonuses by a material amount.

[15] Responding for the pursuer, Mr Beynon did not contend for any different approach to the question of implication (whether of contract, unilateral obligation or term of the policy). He referred to the advice of the Privy Council in BP Refinery (Western Point) Pty Limited v Shire of Hastings (1977) 180 CLR 266 at 283 for a convenient summary of the relevant tests. He also referred, in the context of the qualified obligation for which he contended in the alternative, to North American and Continental Sales Inc. v Bepi (Electronics) Limited 1982 SLT 47

[16] Mr Beynon's submissions concentrated more on showing how the alleged implication might arise on the facts averred on record. He said that there were a number of non-contentious facts. First, the pursuer was a policy holder with Standard Life. The policy was a s.32 policy (c.f. section 32 of the Finance Act 1981). Second, the pursuer had a contractual right to transfer his pension to another provider. Third, there was no dispute about the policy schedule and terms. The policy terms in the booklet were silent as to the provision of material financial information - they did not give policyholders any express right to receive financial information from Standard Life. Fourth, from 1999 onwards Annual Statements were sent to policy holders, including the pursuer, which included the statement: "You'll get an update every year to help you review your pension needs". The Annual Statements gave details of payments made, units held, predicted benefits and guaranteed minimum payments. They were intended to represent the state of play at the particular moment. Fifth, the defenders did not send the Autumn 2002 Update to the pursuer. Sixth, it was clear that the defenders intended to send the Autumn 2002 Update to the pursuer. The defenders accepted that it was intended to be issued to all policy holders in October and they accepted that, having checked their records, it had not been issued to the pursuer.

[17] Mr Beynon stressed the importance of the Autumn 2002 Update. The introduction made it clear that there was to be a bonus reduction and adjustments to some surrender and transfer values. Page 4 (which I have already quoted) gave further information bringing this home to the reader. Although the Update was a very different type of document from the Annual Statement, any reasonable policy holder receiving the Autumn 2002 Update would have been able to work out what his position was and take decisions about his policy. This was admitted by the defenders on record. The Autumn 2002 Update was obviously a document which enabled a reasonable policy holder to carry out a review, just as was envisaged in the marginal note in the annual statement.

[18] Mr Beynon explained that the pursuer's case on implied contract or unilateral obligation started with the sentence in the Annual Statements that the policy holder would get an update every year to help him review his pension needs. That sentence was perfectly clear in its terms. It was expressed in absolute terms ("you will get"). This was the language of promise, i.e. of contract or obligation. It was not the language of reasonable care. It was up to the defenders to promise what they wanted to promise. Their failure to fulfil their promise arose from a failure of their internal procedure, a failure to merge one list with another. That was no excuse. The promise was made in the context of providing assistance to the policyholder with reviewing his pension needs. If there were a material decision made, it could not simply wait for up to eleven months for the next annual statement before it was communicated to policyholders. The sentence was therefore indicative of a wider obligation. The essential basis for expanding that sentence to the obligation for which the pursuer contended was the reasonable need for a policyholder to be able to review the adequacy or otherwise of his pension in light of material decisions taken about the reduction of final bonuses. The Annual Statement for 2002 was sent to the pursuer on 8 September 2002. Standard Life issued a press release 30 September 2002 announcing the reduction in bonus rates. If there was no implied obligation of the kind contended for (however derived and however expressed), a policyholder such as the pursuer might not be told of such a decision, and might therefore not come to hear of it, until he received the next Annual Statement nearly a year later. Because the Autumn 2002 Update was not received, the pursuer was not aware of the changing value of the policy. The Autumn 2002 Update was sent out to enable policy holders to review their position. Other Updates may not have been sent out with the aim of giving notice of particular decisions, but that of Autumn 2002 had the aim of notifying policy holders of the material decision which had been taken. It should have been sent to the pursuer.

[19] In answer to a question from the court, Mr Beynon accepted that the promise of an "update every year" in the marginal note in the Annual Statements was a promise of a policy specific update. It was not an Update of the type that was sent out in October 2002 (the Autumn 2002 Update). Accordingly, the pursuer did not take the "direct route" and argue that the promise in the Annual Statement led directly to a complaint that the Autumn 2002 Update should have been sent out to each policyholder. The Autumn 2002 Update was not the "update every year" contemplated by the marginal note in the Annual Statement. The pursuer had to argue that, by reason of their conduct in sending out the Annual Statements and (from 2001) the Updates and their promise in the Annual Statements that policy holders would get "an update every year" to help them review their pension needs, the defenders impliedly undertook to inform policyholders promptly of any decision having or likely to have a material effect on final bonuses.

Discussion

[20] The pursuer's primary case, whether formulated in terms of implied contract or unilateral obligation, is that by their conduct after inception of the policy the defenders came under an obligation to inform their policyholders in writing, "within a reasonable time (and not exceeding four weeks) of a material fact or matter pertaining to change or changes to policy valuations and anticipated values, namely transfer and final or bonus values at retirement, and in particular a decision to reduce final bonuses by an average of 10%" or by a material amount. For present purposes it is not necessary to look to the precise terms of the alleged obligation. As formulated, it gives rise immediately to a number of questions: why four weeks? why 10%? how is one to identify what facts or matters are "material"? and so on. But for present purposes I put these cavils to one side. The essence of the obligation contended for is (i) that Standard Life should be required to inform policy holders of major or significant decisions or changes to policy values, and (ii) that they should be required to do so promptly as and when (or shortly after) such decisions are taken or changes occur.

[21] The obligation contended for is said to stem from two aspects of their conduct, namely (a) the issuing of Annual Statements every year containing the words "You'll get an update every year to help you review your pension needs", and (b) the sending out periodically of "Updates" such as those sent out to policyholders in February and Autumn 2001 and Autumn 2002. All this set against a background of the need to give the contract business efficacy, to make it work as the parties must have intended it to.

[22] In my opinion such an obligation cannot possibly be inferred from those aspects of the defenders' conduct. Although the submission made on behalf of the pursuer quite properly requires the conduct relied upon to be viewed as a whole, I consider that it is useful first to look separately at the Annual Statements and the Updates. The Annual Statements are just what their name implies, statements sent every year on or about the anniversary of the policy. They are policy specific. They give details of payments made, units held, predicted benefits and guaranteed minimum payments. They are, in my view, designed to keep the policyholder updated on an annual basis of the value of his policy, including both predicted and guaranteed payments, and thereby to assist him in reviewing his pension and his pension needs. I do not need to decide whether the Annual Statements themselves are contractual documents, i.e. documents both required by the contract to be sent out and by their terms creating further obligations binding on the defenders - the passage at para.10.28 of McGee, The Law and Practice of Life Assurance Contracts, suggests that they are not. But even if they are contractual documents in this sense, so that the statement in the Annual Statements of an "update every year" is to be regarded as a binding "promise" that that sort of document (i.e. the Annual Statement) will be sent out every year, that promise (as I shall hereafter call it for convenience) cannot be construed either as a promise that some other document will be sent out annually, or that similar information will be given to policyholders other than annually. Mr Beynon does not suggest that it can. Thus, the promise in the Annual Statements cannot on any view lead directly to a requirement on the defenders in terms of the obligation sought to be established. Nor can it lead directly to a complaint that the Autumn 2002 Update (or any other document referring to the decision taken by Standard Life) was not sent to the pursuer.

[23] By contrast, the Updates themselves are, generically, a different type of document altogether. They are neither policy specific nor tailored to the individual policyholder. Nor are they sent out every year or, indeed, on any regular basis. They are in the form of a magazine for policyholders, designed (putting it crudely) to extol the virtues of investing with Standard Life. It is true, of course, that the comparisons given between Standard Life policies and other comparable policies may lead recipients to make decisions about their policies, or at least to take advice; but since the Update is not related to any particular policy it cannot be said that it falls within the type of document contemplated by the promise in the Annual Statements. For that reason, if for no other, the issue of such Updates cannot support the argument that the defenders were under an obligation to send out communications to policyholders notifying them promptly of major decisions or changes in the value of their policies.

[24] That is not to say that the Autumn 2002 Update, which the pursuer complains about not having received, did not in fact contain information which would have been valuable to the policyholder. The Autumn 2002 Update contained a summary and explanation of the decision taken by Standard Life in September/October 2002, and it is admitted by the defenders on record that a reasonable policyholder who received the Autumn 2002 Update could have looked at his last Annual Statement and worked out, in general terms, the effect of the 10% reduction on the illustrated benefits shown on that Annual Statement. But that again does not, in my view, enable the pursuer to say that there was an obligation on the defenders to provide this information and to do so promptly. Whatever may be the full extent of the legal test for the creation of a contractual or unilateral obligation, one necessary element is communication. The obligation, insofar as it may be owed to the pursuer, cannot come into being by the issue of a document which the pursuer did not receive. If it is said that the obligation is owed to the policyholders at large then, it is true, there was communication to the vast majority of them. But this was the first Update containing such information. There had been two Updates in 2001, but neither contained this sort of information. While a course of conduct repeatedly sending out by such means information about important changes and decisions might (in some circumstances, when combined with other factors) give rise to the inference that an obligation was being assumed to continue acting in such a way, no such inference can possibly arise from the first such occasion on which such information is sent out. Further, any obligation thus assumed would speak to the future and could not bite on what had or had not already happened. Insofar as the pursuer relies on the sending out of the Autumn 2002 Update itself to create the obligation, he has to invoke the inadequate distribution of that Update both for the creation of the obligation and its breach. Despite Mr Beynon's careful submissions, I am unable to go that far with him.

[25] Of course, the Annual Statements and the Updates must be looked at together. But taking them together, I cannot accept that they give any support to the implied obligation sought to be established. The terms of the Annual Statements, promising yearly updates, seem to me to point strongly against any obligation to communicate promptly after major changes or decisions. The terms of the Updates, before the Autumn 2002 Update of which complaint is made, do not suggest that the defenders were sending out such information in accordance with the obligation contended for (though this might simply be because there was no such information requiring to be sent out).

[26] For these reasons I accept Mr Sellar's submission that the pursuer has not averred a relevant case on implied contract or implied unilateral obligation. That is because on the facts as averred by the pursuer, taken pro veritate, I can detect no possible basis for the inference that the defenders were undertaking to do more than provide the information they did provide in the Annual Statements. In those circumstances, and despite the care with which the law was presented to me, I do not need to indulge in a detailed analysis of the legal principles involved. That can await a case where, on the averments of fact, the considerations are more finely balanced.

[27] As to the alleged implied term, the term, if it exists, must have existed from inception of the policy, before any Annual Statements were sent out to the pursuer and before the defenders started to send out any Updates of the kind described. Accordingly, the argument for there being such a term is not assisted by the issuance of such documents but focuses instead on the ordinary principles of obviousness, necessity and business efficacy. The argument is summarised in the passage quoted in para.[10] above. It would be entirely unreasonable and inequitable if Standard Life were under no duty to keep policy holders properly informed of important policy decisions or changes to values. The absence of such a duty might mean, as is averred to be the case here, that a decision taken in late September of one year would not be communicated to a policyholder until early September of the next year. Accordingly, it is said, any reasonable providers of pension policies would have regarded themselves as bound to communicate all such major changes and decisions promptly to policyholders.

[28] In the passage in Article 3 of Condescendence quoted in para.[10] above, two additional matters are relied upon. The first is that the approach contended for by the pursuer would have been arrived at as part of the regulatory regime relating to the provision of information to policy holders under the principle of "policy holder's reasonable expectations". However, Mr Beynon accepted that the regulatory obligation might co-exist with a contractual obligation, and he further accepted that the regulatory obligation goes no further than an obligation on the defenders to send out the Annual Statements. He did not therefore rely upon that in support of the implied obligation or term sought to be established.

[29] The second matter relied upon in that passage is that the approach contended for by the pursuer was in accordance with "usual or ordinary market practice with respect to providers of pension policies of the type that the pursuer had taken out with Standard Life". At a By Order hearing just before the debate, Mr Beynon made it clear that the averment about usual or ordinary market practice was not intended to be an averment of custom and usage binding upon the defenders, in the well-known technical sense of that expression. He was simply averring that that is what people in the industry had begun to do by that time - if they did not do it, they too were negligent. Such an averment does not seem to me to assist, particularly if the time referred to post-dates the inception of the policy. In answer to a complaint by Mr Sellar that the averment, even if relevant, was wholly lacking in specification, Mr Beynon accepted that the only material which could be produced in support of that averment was certain correspondence from Equitable Life between March 2001 and November 2002, copies of which were lodged in process by the defenders (7/23-34). Mr Sellar took me through these documents. He submitted that it was within judicial knowledge that Equitable Life had had severe problems at that time and it was clear from the documents that these were dealing with quite different matters from those which were the subject of the present action. I accept that submission. It seems to me that I get nothing from them to assist the pursuer's case. There being no other specification offered of the averment about market practice, it seems to me that I should not take it into account.

[30] Mr Beynon emphasised the importance of the information being given to policy holders. Final bonuses were not a "bounty"; they were a significant part of the consideration for the premiums paid. It was right that policyholders should be told as and when important decisions were made and important changes occurred. The sending out of the Updates in 2001, 2002 and 2003 showed that it was not impracticable to provide policy holders with information and, indeed, it was the natural thing to do. This supported the "of course" test for implication. In my opinion, however, this does not go nearly far enough. The points made by Mr Beynon may show (I do not express a view) that it would be reasonable for companies in the position of Standard Life promptly to give such information to policyholders but, even if that is shown, that is not enough. The term must be necessary to make the contract work as the parties must have intended it to work. The policy contains a large number of detailed terms which do not touch upon an obligation of the type contended for. A judgement has been made by Standard Life, and no doubt by other policy providers, that the interests of policyholders are well, or at least adequately, served by information given to them annually about payments made, units held, predicted benefits and guaranteed minimum payments. Such information is given annually in the Annual Statements. Although I was not taken to the relevant regulations, as I have said Mr Beynon accepted that the regulatory requirements do not go any further than this. In those circumstances, I would be reluctant to impose a contrary view of what is necessary to make the contract work. Nothing averred by the pursuer goes as far as to suggest that the term is necessary in this sense. The fact that policies of this sort have been in existence for many years without it having been found that a term such as this is necessary is, to my mind, telling.

[31] The pursuer's case seems to be premised upon the notion that if there was not an obligation of the type contended for, policyholders such as himself would be unable to find out what was going on in relation to their policies. If that is the underlying concern, it seems to me to be based upon a misapprehension. It is open to a policyholder to ask about the value of his policy at any time. There are averments and admissions on record that the pursuer did this, both in correspondence and by telephone. Further, the decision to reduce bonus rates was the subject of a press release by the defenders on 30 September 2002. Copies of press cuttings were lodged in process by the defenders (7/21). The pursuer admits those press cuttings for their terms "beyond which no admission was made". The pursuer says that he did not get to know of the decision until after he had completed the transfer of his policy to another provider. He says that he could not reasonably have been expected to become aware of it before then. The pursuer's actual knowledge is, I suppose, a matter which, if relevant, would have to go to proof. What he might reasonably have been expected to know is something which, if relevant, might be capable of decision on the basis of the averments and admissions on record. But it is not relevant. The fact is that press coverage was given to the decision. That is what one would expect. Such press releases and coverage are, in my view, sufficient to meet the needs of business efficacy without there having to be implied a term of the type contended for by the pursuer.

[32] Had I been in favour of the pursuer in principle, it would have been necessary to consider in more detail whether such a term was workable and the precise terms of any implication. Mr Sellar asked rhetorically what was to happen if events occurred - due, for example, to stock market movements - which reduced bonus values by 10% but only for a short time before the markets began to rise again. Would the defenders have to send out information which could well be out of date before it was received? There is considerable force in such points. I would have had to look closely at whether the implied obligation for which the pursuer contended, far from achieving business efficacy, in fact ran counter to it. But this aspect was argued only briefly and I say no more about it.

[33] The pursuer's esto case of a qualified obligation is parasitic on the success of his plea that there was some obligation on the defenders to provide information promptly about their decision. Since I have held that there was no such obligation, the esto case too must fail.

Disposal

[34] For the above reasons, I shall sustain the defenders' first plea in law and dismiss the action.