British Telecommunications Plc V (1) BT Pension Scheme Trustees Limited (2) Linda Bruce-Watt [2018] EWHC 69 (Ch)
Judgment was given today by Zacaroli J in BT plc v BT Pension Scheme Trustees Limited. The case again raised the issue whether it was open to a Scheme’s sponsoring employer to move pension indexation from RPI to CPI. In the case of this scheme, the Trustees of which were represented by Brian Green QC, this was a move which would have reduced value of benefits by around £2 billion. This was the second trial in 2017 on that issue following Thales in March (in which Robert Ham QC, Emily McKechnie, Brian Green QC, and James McCreath acted for the parties).
The wording of the rule in the present case meant it was of potentially particular interest to other schemes. The test required that RPI had “become inappropriate” for the purposes of increasing pensions. BT argued that it had. The representative beneficiary, represented by Michael Furness QC and James McCreath, argued that that was not the case, and that BT remained liable to fund RPI benefits. The Judge accepted those submissions, holding that the conditions for a move from RPI had not been satisfied.
IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation (NNPC)
Alan Gourgey QC and Emily McKechnie represent IPCO.
Jonathan Nash QC, James Willan and Catherine Jung represent NNPC.
An 8 week trial concerning the enforcement of a $400 million arbitration award.
IPCO, a Nigerian construction company, has applied under section 101 of the Arbitration Act 1996 to enforce a Nigerian arbitration award in its favour concerning the construction of the Bonny Export Terminal, a petroleum export terminal in Nigeria.
The respondent, NNPC, is the national corporation responsible for operating Nigeria’s petroleum supplies.
NNPC resists enforcement of the arbitration award on two grounds:
(1) under section 103(3) of the Arbitration Act 1996, on the basis that enforcement of the award would be contrary to public policy – NNPC alleges that IPCO fraudulently inflated the value of its claim before the arbitration tribunal by forging documents.
(2) on the basis that the arbitration tribunal misconducted itself, such that the award would be set aside under Nigerian law.
The trial will shed new light on the Court’s approach to the public policy exception under section 103(3), including the extent to which partial enforcement will be permitted.
Naftogaz v Gazprom (SCC Arbitration)
Gazprom has secured a substantial award in its favour in a long-running and hard-fought SCC arbitration against Naftogaz. The dispute related to a long term gas supply contract. In a ruling handed down by the tribunal on 22 December 2017, since reported in the media, the tribunal ordered Naftogaz to pay Gazprom just over $2bn with interest. The tribunal rejected Naftogaz’s claim for an award of around $14bn for alleged overpayment for gas supplied between May 2011 and April 2014 but made modifications to the ‘take or pay’ provisions in the contract.
Gazprom was represented in the arbitration by Alan Gourgey QC (Wilberforce Chambers) and Philip Chong (DLA Piper London). They led a strong team consisting of Kassie Smith QC and Thomas Sebastian (Monckton Chambers), DLA Piper (London), DLA Piper (Moscow) and Vinge (Stockholm).
Rolle Family & Company Ltd v Rolle
Andrew Mold appeared for the successful Respondent in the recent Privy Council decision of Rolle Family & Company Ltd v Rolle [2017] UKPC 35. The case (on appeal from the Court of Appeal of the Bahamas) considered the subjects of the delivery of deeds in escrow and pre-incorporation contacts.
The Privy Council’s judgment was given by Lord Sumption who held that a deed could not be delivered in escrow where the grantee under the deed was not yet in existence. As Lord Sumption explained: ‘Delivery is an essential condition for the effectiveness of a deed. It requires unequivocal words or conduct signifying an intention to be bound. A deed purportedly delivered to a non-existent party could never be more than a statement of intention, recallable at will, and could not therefore be said to have been delivered’.
The Privy Council provided a useful explanation of the meaning and effect of section 22 of the Companies Act which deals with the notoriously difficult subject of pre-incorporation contracts (i.e. contracts purportedly entered into with a company before the company has been incorporated). Like many other jurisdictions, the Bahamas has introduced statutory provisions enabling pre-incorporation contracts to be adopted by a company following its incorporation. Under section 22, any such act of adoption must take place within a ‘reasonable time’.
In the circumstances of the case, the Privy Council rejected the appellant’s reliance on section 22 on the basis that no act of adoption had taken place within a reasonable time. For practical reasons, any act of adoption should take place within a short period of time. As Lord Sumption explained: ‘The temporal limitation is not there for the benefit of the company. It is there for the benefit of third parties dealing with it’.
Andrew was instructed by Tynes & Tynes and Harcus Sinclair LLP.
In re China Agrotech
Clare Stanley QC, leading Shaun Maloney of Ogier, acted in the ground-breaking case of In re China Agrotech FSD 157 of 2017 (NSJ), in which the Grand Court of the Cayman Islands (Mr Justice Segal) granted recognition and assistance to liquidators appointed by the High Court of Hong Kong, inter alia, to present a scheme of arrangement under s.86 of the Companies Law (as revised) on behalf of a Cayman incorporated company. The decision is the first reported judgment explaining the basis of and reasons for the Cayman Court exercising its jurisdiction to recognise and assist foreign liquidators of a Cayman incorporated company in circumstances where there are no parallel insolvency proceedings in Cayman.
Safeway v Newton [2017] EWCA Civ 1482
In its judgment in Safeway v Newton [2017] EWCA Civ 1482, the Court of Appeal held that Harland & Wolff Pension Trustees Limited v Aon Consulting Financial Services Ltd [2006] EWHC 1778 (Ch) had been wrongly decided and that the very issue for which it had stood as authority should be referred to the Court of Justice of the European Union (“CJEU”) for determination.
This was a failed equalisation case where the trustees and sponsoring employer of the Safeway Pension Scheme (“the Scheme”) had sought by written announcement dated 1 December 1991 to raise the Normal Pension Ages (“NPAs”) of women to NPA 65 so that they had the same NPAs as men. The written announcement was followed by a consolidation deed executed on 2 May 1996 which brought the trust deed and rules of the Scheme up to date in a variety of respects, including prescribing NPAs of 65 for men and women with effect from 1 December 1991.
The Court of Appeal found that the amendment power of the Scheme required any amendment to be made by deed and so the written announcement had not in itself been sufficient to change members’ benefits.
The question was whether the deed dated 2 May 1996 was valid in retrospectively reducing members’ benefits by increasing the NPAs of women with effect from 1 December 1991. The amendment power permitted retrospective amendments to be made to members’ benefits back to the date of a prior written announcement as a matter of domestic law and because the amendment was made prior to s.67 of the Pensions Act 1995 coming into force on 6 April 1997 there was no statutory obstacle to such a retrospective amendment being made. The question was whether such a retrospective amendment was permissible as a matter of EU law and, specifically, whether it was precluded by the decision of what is now the CJEU in Smith v Avdel Systems Ltd (Case C-408/92) [1995] ICR 596.
The domestic law decision in Harland & Wolff had stood as authority for the proposition that the decision in Smith v Avdel required that benefits accruing during the “Barber window” (that is between the date of the decision in Barber and the date on which “measures” were brought into force to bring about equalisation) had to be “levelled up” and could not be “levelled down”, even where there was a domestic law power to reduce benefits during that period which had been exercised.
Brian Green QC and Sebastian Allen who acted for Safeway, argued that Harland & Wolff had been wrongly decided because the proposition for which it stood as authority was not in fact supported by the decision in Smith v Avdel and indeed was inconsistent with well-established principles of EU law.
The Court of Appeal agreed that Harland & Wolff had been wrongly decided and concluded that Smith v Avdel could not safely be relied upon as supporting the conclusion that EU law prohibited “levelled up” benefits that were defeasible as a matter of domestic law from being defeased. The Court of Appeal agreed that the quality of the domestic law benefits (i.e. whether they were defeasible or indefeasible) had not been considered in Smith v Avdel and concluded that there was consequently an open question of EU law that needed to be referred to the CJEU for determination.
Sana Hassib Sabbagh v Wael Said Khoury & 9 Ors [2017] EWCA Civ 1120
Court of Appeal
The Claimant Appellant in these high value conspiracy proceedings has successfully established that the English courts have jurisdiction to hear her claims. At first instance part of her claim was found to have no real prospect of success against the anchor defendant and on that basis the Judge had found the requirements of Article 6(1) of the Brussels Regulation not to be satisfied. In a judgment that serves as a reminder of the importance of avoiding summary mini-trials, the Court of Appeal unanimously held that the Judge had been wrong so to conclude. Also of wider interest will be the Court’s divided obiter views on whether Article 6 (1) involves a merits threshold at all. John Wardell QC and James Walmsley from Wilberforce Chambers acted for the Claimant.
British Airways v Airways Pension Scheme Trustee Ltd
In 2010 the Chancellor of the Exchequer announced the switch from RPI to CPI for future public sector pension increases. Under the Deed and Rules of the Airways Pension Scheme (APS), the same change automatically applied to APS members. This caused dissatisfaction among some scheme members, who believed that they had previously been promised RPI increases, and that CPI increases would be less valuable. The trustees of APS subsequently used their (unusual) unilateral power of amendment to confer upon themselves the power to award discretionary pension increases to members. In 2013, the APS trustees exercised this power to grant an increase of 0.2% (half the difference between RPI and CPI for that year) at a cost of £12 million. This was done without the agreement of BA as scheme employer, and despite the most recent APS triennial valuation showing a deficit of £680 million on the technical provisions basis as at 31 March 2012.
BA brought proceedings challenging the trustees’ decisions on a wide variety of grounds, but primarily that they had acted for an improper purpose in seeking to increase members’ benefits without the employer’s agreement while the scheme was in deficit, that they had contravened the express prohibition in the APS Deed on making benevolent or compassionate payments, that the member nominated trustees had improperly predetermined the outcome of their deliberation and did not properly consider how to proceed, that they acted irrationally, and that their deliberation was inadequate.
Morgan J dismissed BA’s claim, but gave permission to appeal in relation to BA’s arguments on improper purpose and the prohibition on benevolent and compassionate payments. The case is expected to come before the Court of Appeal in spring or summer 2018.
Michael Tennet QC, Sebastian Allen and Michael Ashdown appeared for BA. Jonathan Hilliard QC appeared for the APS trustees (together with Keith Rowley QC and Henry Day).
Twin Benefits v Barker
Jonathan Seitler QC acted for the successful Claimant seeking third party disclosure of allegedly privileged documents.
Icebreaker – Seven Individuals v HMRC
Seven Individual Referrers v HMRC [2016] UKUT 0361 (TCC)
Jonathan Davey QC won a major victory for HMRC in a high profile tax case. In the appeal of the “member level” issues in the long running Icebreaker litigation the Upper Tribunal (Mr Justice Nugee) decided all points in favour of Jonathan’s clients. The case concerns whether multi-million pound losses incurred by creative industry limited liability partnerships can be utilised by members of the partnerships to reduce their income tax liability. The Upper Tribunal held that they could not. The issues dealt with by the Upper Tribunal included: (i) whether the trades of the partnerships were carried on on a commercial basis and with a view to profit (answer – no); and (ii) whether the arrangements in question had a main tax avoidance purpose (answer – yes).
Jonathan was leading Imran Afzal (Field Court Tax Chambers), Nicholas Macklam (Radcliffe Chambers) and Sam Chandler (5 Stone Buildings).