Tahmassebi v Persia International Bank Plc

The meaning of a written commercial agreement is determined objectively from its words, read as a whole and in their factual context. Subjective intentions are ordinarily inadmissible. A best-endeavours obligation concerning pension payments may be continuing where the agreement refers to continuing payments and the surrounding circumstances support that construction. The obligation may extend to all pension rights arising from the employment, rather than being confined to one pension scheme. However, recovery requires proof of a legal entitlement and loss. An entitlement under Iranian pension rules could not be calculated by combining those rules with an English salary and pension scheme. The claim therefore failed because no actionable loss was proved.

Mr Tahmassebi’s employment with Bank Mellat ended in December 1995. He settled unfair-dismissal, pension-discrimination and related proceedings by an agreement under which the Bank promised to use its best endeavours to secure payment of his lump-sum and continuing pension payments.

Bank Mellat was treated as the defendant’s predecessor. The dispute concerned the meaning of the pension-payment obligation, whether it was continuing, whether an estoppel arose, and whether Mr Tahmassebi had suffered recoverable loss. He claimed that the obligation covered an Iranian pension calculated by reference to his English salary.

1. Construction. The court construed the agreement objectively by reference to its words, read as a whole and against the surrounding circumstances. Subjective beliefs and intentions were inadmissible. Clause 4 extended to all pension rights arising from the claimant’s employment, including Iranian and Standard Life pension rights. It was not confined to either pension alone.
2. Estoppel. The estoppel by representation or convention defence failed. The Bank had continued making Iranian pension contributions, contrary to the alleged common understanding, and the plea could not properly disregard pension accrued before 1981.
3. Continuing obligation. Although unnecessary to the outcome, the court held that Clause 4 imposed an ongoing obligation rather than requiring only a single attempt. The words “continuing pension payments”, the claimant’s location in England and the Bank’s position in Iran supported that conclusion. The claim was therefore not statute-barred on the Bank’s limitation argument.
4. Entitlement and loss. The claimant’s proposed calculation had no legal basis. Iranian pension law and practice calculated the pension by reference to the corresponding Iranian basic salary and job allowance, not the English salary. The claimant had made no Iranian contributions between 1981 and 1996 and had received the applicable English pension benefits through Standard Life. A hybrid calculation could not be adopted.
5. The Bank had maintained an Iranian pension account containing sums calculated for the period 1962 to 1996, including an additional period for which the claimant strictly had no Iranian entitlement. The claimant could obtain the money through an Iranian attorney. Any earlier failure to facilitate payment therefore caused no recoverable loss. The claim was dismissed, subject to consequential orders and costs being addressed separately.