Smithson & Ors v Hamilton

Under Civil Procedure Rules 1998, r 19.7, the court may appoint representatives for classes with the same interest where some members cannot be found or readily ascertained, or where representation would further the overriding objective.

A settlement may be approved where it benefits all represented persons. The court may defer its binding effect, require notice and allow applications in the interim where affected persons may be unaware of the compromise. The judge regarded this as a discretionary safeguard arising from the circumstances, while being inclined to accept that the representative procedure was compatible with Article 6.

The trustees and participating companies of a pension scheme challenged a defective scheme rule which allowed certain deferred members to take an unreduced pension from age 60. The claim sought avoidance or a declaration that the relevant words were void, relying on equitable principles concerning trustees’ decisions affected by mistake. A deferred member brought a counterclaim.

Sir Andrew Park dismissed both the claim and counterclaim in a judgment reported at [2008] 1 WLR 1453. The claimants appealed and the respondent cross-appealed. Before the appeal was heard, the parties reached a compromise. The central issues were whether representatives should be appointed under CPR 19.7, whether the compromise benefited all represented persons, and when it should become binding.

The Court of Appeal approved the compromise and made representation orders under CPR 19.7. The appeal and cross-appeal were therefore disposed of by settlement rather than determination of the underlying pension dispute.

1. Representation. Rule 19.7 permitted representation of persons who could not readily be ascertained or found, provided the relevant class had the same interest, and also permitted representation where it would further the overriding objective. The respondent was appointed to represent members and dependants interested in maintaining the relevant rule or a normal retirement age of 60. The sixth appellant was appointed to represent the remaining members and their dependants.
2. Approval of settlement. The court considered the lower court’s judgment, the appeal submissions, the parties’ written arguments and financial evidence. It was satisfied that the compromise benefited everyone represented by the two orders. Approval was therefore given under CPR 19.7, and the relevant words in the scheme were ordered to be treated as avoided.
3. Binding effect. Although an approved representative settlement may bind all represented persons, the court exercised its discretion to provide that the compromise would bind them 28 days after the trustees dispatched a letter notifying affected members. Each represented person was given liberty to apply during that period. This was intended to address the concern that members might be affected without knowing of the compromise, not to encourage applications.
4. Article 6 and costs. The judge was inclined to accept that Article 6 provided no basis for questioning CPR 19.7 or requiring every represented member to receive an individual hearing. The deferred commencement was nevertheless retained as a practical safeguard. The respondent’s costs were payable by the sixth appellant and were to be assessed on the indemnity basis if not agreed.

• Court of Appeal (Civil Division). The appeal and cross-appeal were compromised before the hearing. The court appointed representatives, approved the compromise under CPR 19.7 and directed that it would become binding after notice and a 28-day period for applications.
• High Court of Justice, Chancery Division. Sir Andrew Park dismissed the claim and counterclaim. The judgment was reported at [2008] 1 WLR 1453.