Safeway Ltd v Newton & Anor

In an occupational pension scheme, a power stating that amendments must be made by supplemental deed does not ordinarily permit amendment by announcement. A reference to an earlier announcement identifies an effective date for a deed amendment; it does not create a separate mode of amendment. Clear wording governs, and industry practice or the parties’ subjective understanding cannot supply an additional power.

Under Article 119 of the Treaty of Rome, future levelling down may be permitted, but equalisation during the open Barber window may require levelling up by reference to existing scheme rights. Whether that principle required defeasible rights to become indefeasible was not acte clair and was referred to the Court of Justice.

Safeway appealed from an order of Warren J in the Chancery Division concerning the date on which normal pension ages under the Safeway Pension Scheme became 65 for both men and women. Safeway relied on a September 1991 announcement and a 1996 deed stated to have retrospective effect. Mr Newton contended that the amendment took effect only when the 1996 deed was executed.

The appeal raised whether clause 19 of the 1984 trust deed permitted amendment by announcement and whether Article 119 prevented retrospective levelling down. The Court of Appeal upheld the first-instance construction on the deed issue, referred the EU-law issue to the Court of Justice, and deferred consideration of section 62 of the Pensions Act 1995.

The court dismissed the appeal on the construction issue and referred the unresolved EU-law issue to the Court of Justice.

1. Clause 19 of the 1984 Deed provided one method of amendment: a supplemental deed executed by the principal company and the trustees. Its latter wording dealt with the date from which a deed amendment could operate, including the date of a prior written announcement. It did not confer a separate power to amend by announcement.
2. The scheme was a professionally drafted trust instrument principally benefiting employees and their families. Its clear language therefore had to be given its ordinary meaning. The parties’ subjective understanding, alleged pension-industry practice, and concerns about trustee liability could not justify reading an additional power into the clause. The court applied the beneficiary-protection reasoning in Bestrustees v Stewart [2001] Pens.L.R. 283 and the approach to private dictionaries discussed in Chartbrook v Persimmon [2009] UKHL 38.
3. The court broadly accepted the established Article 119 framework. Different pension benefits for post-17 May 1990 service were unlawful. Levelling down could be used for future service after effective measures were taken, but during the open Barber window the disadvantaged class generally had to receive the rights enjoyed by the advantaged class. The scheme deed and rules supplied the benchmark, subject to minimum interference with domestic rights.
4. Because the 1991 Announcement did not validly amend the Scheme, the Barber window closed on 2 May 1996 when the 1996 Deed was executed. The court proceeded on the basis that men required an NPA of 60 for service before December 1991, while women’s rights from December 1991 until May 1996 were defeasible under domestic law.
5. The court was not persuaded that Smith v Avdel Systems Ltd [1995] ICR 596 necessarily established that defeasible rights had to become indefeasible during that period. Coloroll Pension Trustees Ltd v Russell [1995] ICR 179 was materially different because the domestic power of retrospective amendment had ended. The question was not acte clair, so a reference was required. The effect of section 62 of the Pensions Act 1995 was left for later determination.

1. Court of Appeal (Civil Division) The court upheld Warren J’s construction that clause 19 permitted amendment only by supplemental deed. It referred the unresolved Article 119 question to the Court of Justice and deferred the section 62 issue.
2. High Court of Justice, Chancery Division Warren J held that the 1991 announcement did not amend the Scheme and that equalisation took effect only from execution of the 1996 deed.