Barnardo’s v Buckinghamshire and others [2018] UKSC 55

Supreme Court rules on the interpretation of pension scheme definition of the Retail Prices Index

On 7 November 2018, the Supreme Court published its judgment, in which it dismissed the employer’s appeal in the matter of Barnardo’s v Buckinghamshire and others. The case concerned a question of construction of the applicable rules of the Barnardo pension scheme, namely whether the trustees currently have power to substitute CPI for RPI for the purposes of pensions increases and revaluation. The Supreme Court agreed with Warren J and the majority of the Court of Appeal that they did not.

Permission to appeal to the Supreme Court was granted because it was thought that there might be clauses in many pension schemes which contained similar wording. The case is also of interest for its discussion of the principles of construction of pension schemes.

Brian Green QC and Emily Campbell acted for the employer in the application to the Supreme Court for permission to appeal and in the appeal which followed when permission was granted.

The Estate of Lady Hood v Commissioners for HM Revenue and Customs [2018] EWCA Civ 2405

Jonathan Davey QC has acted successfully for the Respondents in an important inheritance tax dispute before the Court of Appeal. The case concerned the late Lady Hood’s grant of a long lease in respect of residential property in Chelsea. The question in issue was whether in granting the lease, Lady Hood had reserved a benefit within the meaning of the relevant IHT legislation thereby giving rise to a tax liability for her Estate. The Court of Appeal (Patten LJ, Henderson LJ, Sir Colin Rimer) upheld the decision of the Upper Tribunal (Mrs Justice Rose and Judge Bishopp) [2017] UKUT (TCC) that on a proper analysis of the facts and relevant legal principles she had reserved such a benefit. The appeal of the Estate was therefore dismissed.

The case is of significance in testing the scope of a number of key House of Lords and Court of Appeal decisions in this area including Buzzoni v Revenue and Customs Commissioners [2013] EWCA Civ 1684.

Ravin Ramkissoon v Estate Management & Business Development Co Ltd

David Phillips QC has successfully resisted a challenge to a Norwich Pharmacal Order that he obtained in Trinidad & Tobago earlier this year.  On 29 October 2018 the Court of Appeal handed down a reserved judgment in an application for permission to appeal in Ravin Ramkissoon v Estate Management & Business Development Co Ltd.  This was the first occasion on which the Court of Appeal had had occasion to consider the application of the Norwich Pharmacal jurisdiction in Trinidad.  The decision endorsed David’s submissions, and adopted the Norwich Pharmacal practice that has developed in England and Wales.  A copy of the full judgment may be viewed here.

Danilina v (1) Chernukhin (2) Navigator Equities Ltd (3) Kargin [2018] EWCA Civ 1802.

This was an appeal on quantum of security for costs. While the Third Defendant was granted security for costs, under CPR 25.13(2)(a) (claimant resident out of the jurisdiction), Iain Pester argued on appeal that the Judge adopted an incorrect approach when it came to fixing the quantum of the security awarded. The Judge held that, while there was in fact a real risk of non-enforcement of any eventual English judgment in the Third Defendant’s favour abroad, namely in Russia, that risk was “not high” (while still being “real”). The Judge then went on impermissibly to adopt a “sliding scale” as to what constitutes the risk of non-enforcement, and this is wrong as a matter of law, and led to an entirely arbitrary and unprincipled approach to fixing the quantum of security awarded.

The Court of Appeal reversed the Judge, and held that “once it has been established that there are “substantial obstacles” sufficient to create a real risk of non-enforcement, the starting point is that the defendant should have security for the entirety of the costs and there is no room for discounting the security figure by grading the risk using a sliding scale approach.” (at [64])

Iain successfully appeared for the Third Defendant in the appeal to the Court of Appeal.

Clutterbuck & Paton v Cleghorn [2018] EWHC 2125 (Ch)

The Claimants’ multi-million-pound claim for damages arising out of a property joint venture agreement relating to prime residential property in Belgravia was dismissed in its entirety following an eleven-day trial involving evidence from nine witnesses.  The detailed judgment contains points of interest relating to:

• The court’s refusal to permit expert evidence ‘gaps’ to be plugged at the last minute;
• Guidance on the relevance of previous adverse findings in relation to a witness’s credibility; and
• The potential impact of failing to call an important witness.

The Defendant was successfully represented by Squire Patton Boggs (UK) LLP and Jonathan Seitler QC and Emer Murphy.

Background

1. This case concerned the redevelopment of a property in the ultra-prime Cliveden Place in Belgravia (the “Property”). Back in the early 2000s, the Property was separated into four flats and in a dilapidated condition.
2. The Claimants (a property development duo) owned two of the flats, and an SPV known as Westbrooke purchased the other two. Westbrooke and the Claimants entered into a joint venture agreement (the “JVA”) on 3 August 2006, which provided for the flats to be transferred to Westbrooke, for Westbrooke to purchase the freehold and to redevelop the Property using bank funding and for the eventual sale profits to be split between the parties.  The developer behind Westbrooke (Mr Elliot Nichol) signed the JVA as guarantor of Westbrooke’s obligations.
3. The redevelopment took a lot longer than envisaged by the parties and the Property was eventually sold in early 2013. No profit was realised and Westbrooke entered into insolvent liquidation.  Mr Nichol had died in the meantime, and after his death the Claimants raised a series of allegations against the representatives of his estate.   In particular, the Claimants alleged as follows:
   • That Mr Nichol had lied to them prior to their entry into the JVA as to the value that the Bank of Ireland would accept as the then-current value of the Property (which had an impact on their share of the sale proceeds);
   • That Mr Nichol caused Westbrooke to breach the terms of the JVA by drawing down an extra £1m of bank funding in early 2008 and paying that money across to Mr Nichol as an ‘equity release’, without the Claimants’ knowledge;
   • That Westbrooke had breached the terms of the JVA by deliberately delaying the redevelopment, and by using an inadequate standard of workmanship, in relation to which the Claimants claimed on Mr Nichol’s guarantee;
   • Finally, that Westbrooke owed the Claimants £50,000 under a side agreement.
4. The case considered at trial was the remaining element of the Claimants’ £50m claim, the majority of which had been struck out by the Court of Appeal [2017] EWCA Civ 137 because of the Claimants’ failure to comply with the Aldi Stores requirements[1] and raise their allegations against Mr Nichol during earlier proceedings against another alleged joint venturer, Sarah Al Amoudi (see Clutterbuck v Al Amoudi [2014] EWHC 383 (Ch), permission to appeal refused [2015] EWCA Civ 1593).

The judgment

5. In a detailed judgment handed down on 10 August 2018, following an eleven-day trial in the High Court involving extensive cross-examination of witnesses, the Claimants’ claims were dismissed in their entirety. The Judge found as follows:
   • The alleged misrepresentation had not been made by Mr Nichol;
   • Though the £1m equity release was a breach of the JVA, this claim also failed for two reasons:
     • One, part of the £1m equity release was used to pay the balance of a sum known as the Westbrooke Flats Value. The Judge accepted the Defendant’s submissions that increasing the borrowing to pay this sum was consistent with, and not a breach of, the JVA’s terms on their true construction;
     • Two, the Judge accepted the Defendant’s evidence that Mr Nichol and his estate had contributed more than the £1m equity release (and the interest charged thereon) to the redevelopment of the Property, such that the Claimants suffered no loss;
   • There was no evidence in support of the Claimants’ allegation of deliberate delay, and no expert evidence to establish or quantify the Claimants’ defects claim; and
   • Any agreement in relation to £50,000 was not covered by Mr Nichol’s guarantee in the JVA.
6. Points of interest in the detailed judgment of HHJ Pelling QC (sitting as a judge of the High Court) include the following.

Expert evidence ‘gaps’ cannot be plugged

7. The Claimants (who acted in person at various stages, though they retained a direct-access barrister for the trial) had failed to call any expert evidence to support their defects claim and to support their assertion that, had the Property been completed earlier and to a higher standard, it would have sold for more.
8. To deal with these deficiencies, the Claimants suggested a split trial in closings. This was rejected by the Judge for two reasons:
   • The Claimants had sought such a direction at an earlier case management hearing, this was refused and the resulting order had not been appealed nor had an application been made to vary or set aside that order. The Judge accordingly concluded that “any order for a split trial at this stage would impermissibly undermine the finality principle” (§31);
   • In any event, an order for a split trial would ignore “the fact that [the Claimants] could and should have applied for permission to adduce expert evidence at a much earlier stage in these proceedings” (§32).
9. The Judge also rejected the Claimants’ attempts to plug the gap in valuation evidence by relying upon property valuations produced at various points during the redevelopment. The Claimants had no permission to rely upon such evidence, it was produced for a different purpose and did not comply with the CPR requirements for expert evidence: see §182-183.
10. Without admissible valuation evidence, the Claimants’ claims in relation to delay and defects were bound to fail. As the Judge concluded at §203: “Even assuming that I was satisfied that a higher standard of finish was required, I cannot simply pull a figure from the air as to what price might have been achieved with such finishes”.

Previous credibility findings relevant but not decisive

11. This trial came a number of years after another unsuccessful case brought by the same Claimants, which also related to property joint ventures. In that action, Asplin J (as she then was) dismissed the Claimants’ evidence as not credible[2].  The Defendant in the present action relied upon those findings to support his attack on the Claimants’ credibility.  This led the Judge to hold as follows (at §50):

“it is necessary to remember that it does not necessarily follow from the fact that a witness has been shown to be dishonest or unreliable in a previous case that his evidence in all subsequent cases must be rejected. It is the duty of a judge determining a particular case to reach a conclusion concerning the credibility of the evidence given in that case on the material available to that judge in that case. Conclusions reached in other cases concerning the credibility of a particular witness may be a relevant consideration in reaching such a conclusion but … not necessarily decisive much less conclusive.”

Failure to call a key witness significant

12. In relation to the Claimants’ allegations that Mr Nichol caused the development to be delayed deliberately, the Claimants failed to call any evidence from the previous contractor on site. This was the case even though the Claimants had issued a number of witness summonses to other witnesses prior to the trial.  This failure was a substantial factor in the Judge’s decision that deliberate delay was not made out.  As the Judge held at §168:

“It was submitted on behalf of [the Defendant] that it would have been open to the claimants to call the principal of [Westbrooke’s] contractor if they had wished to advance such a case [deliberate delay]. They did not do so. That is significant in my judgment given the absence of any evidence from which deliberate collusion between the contractor and the Deceased can be inferred …”

Conclusion

13. The findings in this case support the tougher stance now taken by the court towards failures by parties to get their cases ready for trial. It is a stark reminder to all litigants that, if you fail to adduce the necessary evidence or make your points at trial, you will lose your opportunity to do so, and lose your case.

 

You can download a copy of the judgment here.

 

[1] [2007] EWCA Civ 1260; [2008] 1 W.L.R. 748;

[2] [2014] EWHC 383 (Ch)

Iain Barker v Paul Baxendale-Walker

The insolvency aspect of the long-running Baxendale-Walker litigation adds much needed to clarity to two practical issues arising in bankruptcy. James Bailey acted for the petitioning creditor.

• First, it confirms that where a bankruptcy petition it based upon a judgment debt which is being appealed, a mere application for permission to appeal is not a “pending appeal” for the purposes of 2016IR r.10.24(2), which provides a discretion by which the petition might be stayed or even dismissed. However it most likely would be considered a pending appeal if the permission application were listed to be heard with any substantive appeal to follow.
• Secondly, the court may appoint specific individuals as trustees in bankruptcy upon the making of a bankruptcy order pursuant to the court’s inherent jurisdiction, or alternatively pursuant to its power under s.363 of the Insolvency Act 1986.

The Debtor was a former solicitor and barrister who once specialised in advising on tax structures designed to reduce or eliminate his client’s tax liabilities, in particular through the use of Employee Benefit Trusts. Thereafter his lifestyle underwent a dynamic change and he is reported to have produced and acted in certain niche genres of film, as well acquiring publications such as the men’s magazine Loaded.

In 1999 he had provided some advice to the Petitioner which was found by the Court of Appeal in 2018 to have been negligent, resulting in a judgment debt in a sum of around £16million.

The Petitioner presented a bankruptcy petition and, unusually, secured the appointment of joint interim receivers pending its determination on account of the risk of dissipation by the Debtor of his assets.

At the hearing of the petition the Debtor argued that he had made an application for permission to appeal the underlying judgment to the Supreme Court. The Debtor contended that such an application amounted to a “pending appeal” for the purpose of IR 10.24(2) which provides:

“If the petition is brought in relation to a judgment debt, or a sum ordered by any court to be paid, the court may stay or dismiss the petition on the ground that an appeal is pending from the judgment or order, or that execution of the judgment has been stayed.”

The Debtor sought to rely upon the decision of Arden J in Parkin v Westminster City Council [2001] BPIR 1156 which concerned an appeal to the Court of Appeal against a County Court judgment with permission on a separate application as to whether or not orders for payment of costs should be stayed whilst a set off as to costs was worked out. On the petition, Arden J (as she then was) considered that the court should have regard to whether the appeal had a reasonable prospect of success.

However the Petitioner contended that an application for permission to appeal was a bare right, relying on Rimer LJ in Commissioners for HM Revenue & Customs v Rochdale Drinks Distributors Ltd [2013] BCC 419: “The existence of a right of appeal says nothing as to whether any appeal will have merit….”. Further, the decision of Lewison J in Rehman v Boardman [2004] EWHC 505 which did not immediately appear to be consistent with the decision in Parkin, suggested that mere permission to appeal was not a pending appeal.

ICC Judge Briggs (Chief Registrar) was persuaded by the distinction drawn by Lewison J between those cases where permission to appeal and the substantive appeal were to be heard together (as in Parkin) and those where permission would be determined at an earlier stage. However although the application before the Supreme Court in the instant case did not trigger the discretion under IR r.10.24(2), he found that it could still be considered under the general discretion as to whether to make a bankruptcy order pursuant r.10.24(1). Ultimately, the continuing risk of dissipation of assets weighed heavily in the exercise of discretion and a bankruptcy order was made.

At the handing down of judgment, it had been understood by the Petitioner, the Debtor, the Joint Interim Receivers (“JIRs”) and the court that the Official Receiver intended to apply for a Secretary of State appointment pursuant to s.296 of the 1986 Act to permit the JIRs to continue in office. This seemed the sensible solution given their enhanced understanding of the Debtor’s affairs as a result of the 3 months they had already spent in office.

However as a result of other so-called creditors (which were said to be under the control of the debtor) surfacing within a day of the hearing and claiming debts of tens of millions of pounds, the Official Receiver considered that a Secretary of State appointment was no longer appropriate.

Concerned about delay, and the probability of any creditors’ meeting being hijacked, the Petitioner made an application pursuant to sections 375 seeking the appointment of the joint interim receivers as trustees in bankruptcy. Whether that procedural route was right or wrong, it was the route preferred by the Official Receiver who accordingly did not appear to oppose the application.

The substantive jurisdictions relied upon by the Petitioner behind s.375 were s.363 and the court’s inherent jurisdiction. In particular, the Petitioner relied on Clements v Udal [2001] BCC 658 where Neuberger J (as he then was) used the section to appoint a particular administrator.

The court observed that the court’s inherent jurisdiction is not statutory as it applies to an almost limitless set of circumstances and is called in aid to control its own processes and control the procedure before it. It can be used to ensure fair dealing in legal proceedings and aid convenience. At the same time, the court reminded itself that the jurisdiction was exceptional, per Neuberger J in Lancefield v Lancefield [2002] BPIR 1108.

The court considered that the jurisdiction under s.363 is different from the inherent jurisdiction of the court, and that s.363 gave the court a power over all bankruptcy matters, as defined in s.385. The power appears to be very broad, and the Petitioner relied upon Donaldson v O’Sullivan [2009] 1WLR 924 where Lloyd LJ observed: “There is also scope for the court to direct that things be done (or not done) in apparent conflict with express provisions of the legislation.”

The opposing purported creditors contended that notwithstanding the power of the court, it was not possible to go so far as to appoint the interim trustees because to do so would run contrary to s.291A. However the court dealt with this as follows.

Firstly, the new section does not state that the “full power” provided by section 363 does not apply.

Secondly, the new section merely closed the time when the Official Receiver became the trustee. Previously upon the making of a bankruptcy order the official receiver would automatically become the manager and receiver for a certain period of time, being 8 or 12 weeks. The legislators felt that the limbo period was too long and therefore made his appointment as trustee automatic upon the making of an order of bankruptcy. In other words he no longer becomes a receiver and manager immediately. He becomes the trustee. That is the only change.

Thirdly, the court is given a specific power by section 291A to appoint a supervisor of an IVA. What is contemplated here is convenience. A supervisor is in charge of the affairs of the bankrupt. He may be the petitioner, and more often and not is likely to be the petitioner due to a failure of a term in the IVA. It is just and convenient that the supervisor, if he wishes to take the appointment, be able to do so. After all he will know the affairs of the debtor. Far more uncommon is a bankruptcy following the appointment of interim receivers as the appointment of such receivers is itself unusual.

Lastly, the fact that the section is silent as to a receiver’s appointment gives rise the court’s inherent jurisdiction to make an appointment of interim receivers as trustees. That vacuum can, where it is just and convenient to do so, be filled in exceptional circumstances such as these. That is part of controlling the court’s own process. There is nothing in statute to prevent such an appointment and there is nothing that permits such an appointment. The overarching power of control and management of the insolvency process is provided by section 363 or the court’s inherent jurisdiction in insolvency.

The court therefore found that it was able to use its inherent jurisdiction to appoint the joint interim receivers as trustees, but that even if it was wrong to do that, it could achieve the same effect pursuant to s.363.

 

Zinc Hotels (Investment) Limited and Top Zinc Ltd v Beveridge and others [2018] EWHC 1936 (Ch)

Conflicts of interest on the part of Administrators and the Court’s powers to grant remedial relief by appointing so-called “conflicts” administrators have become real hot topics in insolvency litigation, in particular following the decisions this year in VE Vegas Investors IV LLC  and Davey v Money.

On 20 July 2018, Mr Justice Henry Carr gave judgment in Re  Zinc Hotels (Holdings) Ltd and other companies in administration (aka Zinc Hotels (Investment) Limited and others v Beveridge and others [2018] EWHC 1936 (Ch)), in which Marcia Shekerdemian QC, leading Joseph Curl, appeared on behalf of the Security and the Security Trustee.

The judgment contains important guidance on (i) the source, nature and extent of the Court’s power to appoint a conflicts administrator and (ii) the ambit of any material conflict of interest.

This was an application by Shareholders for interim orders (i) for the appointment of a concurrent conflicts administrator to represent their interests pending the trial of the main action and (ii) a direction requiring the administrators not to distribute the sale proceeds of a portfolio of Hilton-branded hotels to the companies’ secured creditors (a consortium of banks) pending the trial of the main action.

The incumbent administrators had been appointed by Marcia’s clients as qualifying charge holder on behalf of the banks. The main proceedings sought their removal under paragraph 88 to Schedule B1 to the Insolvency Act and/or relief for unfair harm under paragraph 74. It was common ground that there might be a surplus for the shareholders from the sale of the hotels.

It was argued on behalf of the Shareholders (i) that the Administrators (and their former solicitors) were hopelessly conflicted because they had been heavily involved in advising the Banks on contingency planning for some time prior to their appointment and (ii) the Court had inherent jurisdiction to appoint an additional administrator pending trial.

The application for interim relief was opposed by the Administrators, by the Banks and the Security Agent and Security Trustee.

Dismissing the Interim Application, the Judge found:

1. That the Court does not have any inherent jurisdiction to appoint an additional administrator.
2. That the Court does not have power to appoint a provisional administrator before a company has gone into administration
3. That the Court does have power to appoint a concurrent administrator on an interim or final basis, provided that the conditions under paragraph 103 of Schedule B1 are complied with.
4. Where the administration appointment has been made by a qualifying floating charge holder, only they (or the administrators on application to court) can appoint an additional administrator.
5. The Shareholders had no standing to seek the appointment of an additional administrator where the appointment had been made by a qualifying floating charge holder under Paragraph 14 of Schedule B1.
6. There was in any event no conflict of interest on the part of the Administrators.
7. It is well established that the existence of a prior relationship between an administrator and a creditor is not a bar to the former taking the appointment.
8. In most insolvencies of any size and complexity, the administrator will have been engaged prior to his appointment to do the necessary preparatory work. The subsequent appointment as administrators was unlikely to involve any investigation of the work done by him prior to his appointment.
9. This was to be contrasted with “pre-pack” cases, such as VE Vegas and Clydesdale Financial Services v Smailes in which it was alleged that the administrators themselves had been involved in wrong doing and were conflicted because they could not investigate their own conduct.

A copy of the judgment is available to download here.

FA Regulatory Commission in the case of Tony Henry

On 3 July 2018 David Phillips QC chaired a FA Regulatory Commission in the case of Tony Henry.  Mr Henry, the then Director of Player Recruitment at West Ham, admitted making improper comments about recruitment of African players, and that those comments constituted an aggravated breach.  After an oral hearing at Wembley Stadium on 3 July 2018 the Commission (amongst other things) suspended Mr Henry from all football related activities for a period of 12 months, and directed that he should attend a FA face to face education course.  The Written Reasons can be seen here.

British Airways plc v Airways Pension Scheme Trustee Ltd

The Court of Appeal has this week given judgment in British Airways plc v Airways Pension Scheme Trustee Ltd, allowing BA’s appeal from the judgment of Mr Justice Morgan. The majority of the Court of Appeal (Lewison and Peter Jackson LJJ) has made clear that the role of pension scheme trustees is simply to administer the employer’s scheme, and not to take on the role of “paymaster”, deciding what benefits pensioners should receive.

Facts

The Airways Pension Scheme (APS) was established in 1948, and closed to new members in 1984, but remained open for accrual by existing members. It was (until the recent appointment of a corporate trustee) managed by 12 individual trustees, 6 appointed by BA and 6 elected by members and pensioners. In recent years the scheme has had a substantial deficit – at 31 March 2012 this amounted to £680 million on the technical provisions basis, and £1.5 billion on the solvency basis – and BA had been paying £55 million each year in deficit repair contributions.

Under the rules of APS, pensions are increased each year automatically in accordance with the Pensions Increase (Review) Orders made by the Treasury to set increases for public sector pensions. These had for some years always been set increases in line with the Retail Prices Index (RPI). In 2010 the Chancellor of the Exchequer announced that the Orders would thereafter be set in line with the Consumer Price Index (CPI), which is usually (though not invariably) lower than RPI.

APS pensioners were vocal in their concern that CPI pension increases would not provide adequate inflation-proofing. In response, the Trustees voted in 2011 to use their power of amendment – which, unusually, did not require the consent of BA as an employer – to amend the rules to confer on themselves a power to grant discretionary pension increases. In 2013 they made use of that power for the first time, voting to award a discretionary increase for 2013 of 0.2%, on the basis that this was half the gap between CPI and RPI for that year. The Trustees’ aspiration was ultimately to return to paying full RPI increases.

BA challenged these decisions, and although unsuccessful before Mr Justice Morgan [2017] EWHC 1191 (Ch), was given permission to appeal on the grounds that (i) the 2013 discretionary increase breached the prohibition in clause 2 of the Scheme trust deed on making “benevolent or compassionate” payments, and (ii) that the Trustees, by arrogating to themselves the role of setting the amount of the pensions to be paid, had acted for an improper purpose.

Benevolent and compassionate

The Court of Appeal did not consider that the 2013 discretionary increase payment was “benevolent or compassionate”. Although Patten LJ considered that the Trustees’ motivation for awarding the discretion increase “may include an element of generosity”, this did not make it “benevolent” so as to fall foul of clause 2. Instead, Patten LJ considered that the relevant distinction was between “the provision of pension benefits on retirement in accordance with the provisions of the scheme and purely gratuitous payments of a benevolent or compassionate kind which are not pension payments” [82]. Lewison and Peter Jackson LJJ agreed with Patten LJ on this point.

Proper purposes

However, the majority of the Court of Appeal (Lewison and Peter Jackson LJJ, Patten LJ dissenting) accepted BA’s argument that although the Trustees’ exercise of the amendment power was intra vires as a matter of construction [84], [113] it was nevertheless invalid as the purported exercise of a power for an improper purpose.

Both Lewison and Peter Jackson LJJ focused on the terms of the APS trust deed, and in particular clause 4 which provides that the Trustees “shall manage and administer the Scheme and shall have power to perform all acts incidental or conducive to such management and administration…” [101]. Both judges in the majority thought that this indicated that (per Lewison LJ) “the function of the trustees is to manage and administer the scheme; not to design it” [102].  They also drew attention to other provisions of the deed and rules under which the Trustees did not have the unilateral power to alter benefits.

Although the Trustees had a unilateral power of amendment, the majority concluded that (per Peter Jackson LJ) “there is nothing to suggest that the power of amendment was intended to give the trustees the right to remodel the balance of powers between themselves and the employer” [121]. Indeed, in Peter Jackson LJ’s view, the Trustees’ purported amendment of the rules to confer the discretionary increase power “resulted in a scheme with a different overall purpose, in which the trustees effectively added the role of paymaster to their existing responsibilities as managers and administrators”.

The Court of Appeal had been referred to earlier cases in which trustees of pension schemes had used a power of amendment to augment benefits or to increase the contributions payable by employers. But Lewison LJ accepted BA’s argument that those cases were either concerned with augmentation from surplus (e.g. Patten J’s decision in Law Debenture Trust Corp Plc v Lonrho Africa Trade & Finance Ltd [2003] Pens LR 13) where the “trustees are doing no more than managing assets that have already been entrusted to them.” [92], or they entailed increasing employer contributions in order to fund the payment of benefits already promised – not to increase those benefits (e.g. PNPF Trust Co Ltd v Taylor [2010] Pens LR 261; Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustee Ltd [2010] Pens LR 411) [88]-[89].

The majority, therefore, considered that the Trustees’ purported exercise of the amendment power in 2011 to introduce the discretionary increase power was invalid and ineffective as an exercise for an improper purpose. With no valid discretionary increase power, there could be no valid discretionary increase in 2013.

Michael Tennet QC, Sebastian Allen and Michael Ashdown acted for British Airways plc. Jonathan Hilliard QC acted for the Airways Pension Scheme Trustee Ltd.

The FA v Bradley Wood

In April 2018 David Phillips chaired an FA Regulatory Commission in case of Bradley Wood.  Mr Wood was alleged to have committed match-fixing offences relating to both a betting cartel and related matters.  After a two day hearing, the Commission found the charges proved and (amongst other things) suspended Mr Wood from all football-related activities for a period of 6 years.  The Written Reasons can be seen here.  The FA appealed the decision, arguing that the penalty was unduly lenient and that Mr Wood should have been suspended for life.  After a two day hearing, on 19 June 2018, the Appeal Board delivered Written Reasons dismissing the appeal and upholding the decision of the Regulatory Commission.