Stena Line v Merchant Navy Ratings Pensions Fund

The Court of Appeal dismissed the appellant's challenge to the trustee's power to amend the trust deed and rules of the Merchant Navy Ratings Pension Fund. The central legal issues were whether the power of amendment in clause 30 was subject to an implied, entrenched restriction reinstating the effect of former rule OR 31.0(ii) (the "Critical Expression") and whether, on construction, OR 31.0(ii) would enable a Participating Employer to force winding up if non-consenting employers were affected by a new deficit-repair scheme. The court held that (1) the appellant had conceded that OR 31.0(ii) had been validly removed in 2000/01 and that concession was an important factor; (2) the trust deed and rules, read as a whole against the admissible background (including the 2000 circular and the 2001 scheme), did not support implication of an entrenched restriction limiting clause 30; and (3) the power of amendment should be given its true, objective meaning rather than expanded by implication to protect non‑assenting employers. The court applied the approach to implication and interpretation explained in Attorney General of Belize v Belize Telecom and relevant pension-scheme interpretation principles, and concluded the appellant failed on the entrenchment point and so the appeal was dismissed.

The MNRPF (a defined benefit occupational pension scheme) had, in 2001, adopted a deficit-repair package (the 2001 scheme) which included removal of a rule (OR 31.0(ii)) that had previously provided that the trusts should terminate if there was a deficiency and "no agreed measures acceptable to the Participating Employers" for overcoming it. A substantial new deficit later emerged and the trustee might propose a further deficit-repair amendment that would affect Participating Employers who had not been parties to the 2001 scheme (the "Specified Employers"). P & O Ferries Ltd (the appellant), appointed to represent the Specified Employers, appealed from Briggs J's order rejecting its contention that clause 30 was subject to an implied restriction requiring reinstatement of the protection formerly afforded by OR 31.0(ii) before employers who had not consented could be made liable.

Nature of the claim/application: an appellate challenge to the judge's interpretation of the trust deed and rules and to the existence of an implied, entrenched restriction on the power of amendment.

Issues framed:

• whether clause 30 is subject to an implied constraint (an "entrenchment" or mandatory balancing provision) that OR 31.0(ii) or equivalent must be reintroduced before non‑consenting Participating Employers can be made liable by amendment;
• if so, whether on true construction OR 31.0(ii) would enable a single or group of non-consenting employers to force winding up (the construction issue).

Background and procedural posture: the trustee had sought and obtained court approval for the 2001 scheme (Blackburne J), which effectively removed OR 31.0(ii) as part of a package affecting the Current Employers. The appellant conceded the 2001 removal was valid but sought on appeal to establish an implied protection for the Specified Employers.

Court's reasoning (concise): the Court of Appeal affirmed Briggs J's approach. It applied established principles for interpreting pension schemes and the Privy Council's formulation in Belize that implication is part of interpretation: the court must ask what the instrument, read against its background, would reasonably be understood to mean. The admissible background included the contemporaneous 2000 circular and the terms of the 2001 scheme showing that removal (not merely temporary suspension) of OR 31.0(ii) was integral to the package. Clause 30 contained express provisos and restrictions (for example equal representation and statutory limits) and the structure suggested those were intended as an exhaustive list of limits; there was no textual basis for a further implied entrenchment. The concession that OR 31.0(ii) had been validly removed fortified the conclusion that no implied protective restriction survived. The court emphasised that powers of amendment must be given their true objective meaning and not extended by implication to favour a majority or to reinstate removed provisions.

Outcome: appeal dismissed.

The Court of Appeal dismissed the appeal. It held that clause 30 of the trust deed was not subject to an implied restriction entrenching the effect of former OR 31.0(ii). The conceded, valid removal of OR 31.0(ii) as part of the 2001 package and the admissible background (including the 2000 circular and the structure of clause 30) showed that no implied reinstatement or balancing provision was to be read into the amendment power. Consequently the appellant’s entrenchment argument failed and the appeal was dismissed.

Appeal from Briggs J in the High Court, Chancery Division: Briggs J [2010] EWHC 1805 (Ch). This Court of Appeal judgment: [2011] EWCA Civ 543, dismissing the appeal.