Pension scheme - Equality of treatment of men and women - Claimant companies participating in scheme

Re Sea Containers Services Ltd and other companies (in liquidation): ChD (Companies Court) (Mr Justice Hildyard): 19 September 2012

The first claimant was the principal employer in a pension scheme (the scheme). The second claimant was the ultimate parent company of the third to fifth claimant companies and the direct holding company of the first claimant. The third to fifth claimants were participating employers in the scheme. The claimant group of companies (the group) implemented various arrangements to equalise the benefits of male and female scheme members with respect to their retirement age.

In 1994, all pre-existing female members were to have their normal retirement date equalised up to 65 in respect of future service. A letter written on the headed notepaper of the first claimant (the letter) was provided to certain female employees of the group identified as members who would be especially adversely affected by the equalisation process (the special members). The letter contained a promise that the recipient could elect to retire at her previous retirement age of 60 and the company would provide a pension at age 60 equivalent to that which would have been available prior to the scheme changes (the promise).

The claimants all subsequently went into liquidation. The defendant was a former employee of the companies and recipient of the letter. She was appointed to represent all members of the scheme and argue for a broad interpretation of the promise. The parties sought the determination of preliminary questions.

It fell to be determined: (i) whether a special member had to elect to retire when actually aged 60; (ii) whether the benefit of the promise was limited to those who took the pension immediately upon leaving service with a group company; (iii) whether the promise should be treated as having been given by the principal employer only; and (iv) whether other benefits should be taken into account in determining what was due to the special member.

The court ruled: (1) In order to benefit under the promise, a special member should elect to retire at the age of 60 and not before or after that age. The words of the promise were clear and did not admit of different interpretation on their face (see [96], [97] of the judgment). The answer to issue (i) was yes (see [141] of the judgment).

(2) A special member who had left the service of a group company and had taken an immediate pension had plainly elected to retire within the meaning of the promise. However, ‘elect to retire’ in the promise did not mean that a special member would become entitled to the enhanced benefits provided for in the promise if she: (i) had left service with a group company but had not taken an immediate pension; (ii) had left service with a group company, had not taken an immediate pension, but then at some point thereafter took a pension; (iii) had taken a pension without leaving service with a group company; (iv) had left service with a group company, had not taken an immediate pension and left service with a non-group company; or (v) had taken a transfer of pension benefits to another pension scheme entirely, whether or not she had taken an immediate pension, and left service with a non-group company (see [101], [141] of the judgment). The answer to issue (ii) was yes (see [141] of the judgment).

(3) The promise could not be enforced directly against any company other than the first claimant. The facts were inconsistent with the assumption of a direct personal obligation to the special member concerned by any company other than the first claimant. The second claimant might have assumed economic responsibility for pension liabilities vis-a-vis its group companies but there was nothing substantively to support the assumption of direct legal liability by it or any other company than the first claimant to the special members (see [128], [129] of the judgment). The answer to issue (iii) was yes (see [141] of the judgment).

(4) The benefits under the scheme should be taken into account in determining the amount payable under the promise. That would not mean or suggest that benefits accrued under a separate third party scheme should be taken into account because there would be no warrant for such an approach (see [139], [140] of the judgment). The answer to issue (iv) was yes to benefits under the scheme and no to benefits under a third-party scheme (see [141] of the judgment).

Sarah Asplin QC and Fenner Moeran (instructed by Bingham McCutchen) for the claimants; Andrew Short QC (instructed by Wragge & Co) for the defendant.