Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd & Anor

A power to amend pension-scheme rules must be construed objectively, in the context of the instrument as a whole and the relevant circumstances. It is neither to be enlarged by a predisposition in favour of amendment nor unduly restricted.

An implied restriction arises only where it spells out what the instrument would reasonably be understood to mean in context. A valid express deletion of a rule, together with an exhaustive list of express restrictions on amendment, will ordinarily preclude implication of an equivalent protection. The approach in Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988 governs that inquiry.

The Merchant Navy Ratings Pension Fund had formerly provided that, where there was a deficiency and no measures acceptable to participating employers, the trusts would determine. As part of a 2001 deficit-repair scheme, that provision was validly removed. A later substantial deficit raised the prospect of a further scheme which might impose contributions on participating employers who had not been consulted about the 2001 scheme.

P & O Ferries Ltd, representing those employers, appealed from Briggs J’s order [2010] EWHC 1805 (Ch). It contended that the amendment power was subject to an implied requirement to restore an equivalent employer veto before such employers could be affected. The central issue was whether the former rule survived as an implied restriction on the power of amendment.

1. The appeal was dismissed. Lady Justice Arden, with whom Toulson and Rimer LJJ agreed, held that the trustee’s amendment power was not subject to an implied obligation to reintroduce a provision equivalent to the deleted employer-veto rule.

2. Pension-scheme documents are construed objectively and as a whole. Their practical and changing commercial setting is relevant, but a power enabling a majority process to alter an agreed framework must be given its true meaning, neither more nor less. The court rejected any predisposition to give such a power a specially broad construction merely because the scheme must endure changing conditions.

3. The question whether a restriction should be implied was one of interpretation. Applying Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988, the question was whether the proposed restriction expressed what the instrument, read as a whole against its relevant background, would reasonably be understood to mean. Business efficacy and obviousness were possible aids, not separate tests.

4. The relevant background included the 2000–2001 materials and the later re-adoption of the amendment clause. Those materials showed that permanent deletion of the former rule was an integral part of the deficit-repair package. It could not reasonably be understood to have survived by implication.

5. Clause 30 contained specified restrictions on amendment, including protection for equal employer and member representation, but none resembling the proposed veto. Its structure strongly indicated that the listed restrictions were exhaustive. The rules also expressly made the former veto rule subject to amendment. Once its deletion was validly effected, it could not be treated as a fundamental right continuing as an implied restraint.

6. Having rejected the entrenchment issue, the court did not decide the separate question concerning the former rule’s construction or the circumstances in which it could have required winding up.

• Court of Appeal (Civil Division): dismissed P & O Ferries Ltd’s appeal and upheld the conclusion that no implied restriction required restoration of the deleted rule.

• High Court (Chancery Division), Briggs J: by order dated 27 July 2010, answered the relevant issue of interpretation in the negative: [2010] EWHC 1805 (Ch).