Earnshaw & Ors v The Prudential Assurance Company Ltd (Rev 1)

On a summary judgment application, the court may grapple with difficult issues but must not conduct a mini-trial or prefer competing evidence unless one side’s evidence is obviously unreliable. It must consider reasonably available trial evidence and exercise caution where fuller investigation may alter the outcome.

A trust power to reduce an early-retirement pension is not exercised retrospectively. Where trustees have not exercised the power, unreduced benefits are not automatically payable. Limitation and the scope of any continuing administrative duty may be suitable for summary determination where the evidence is compelling, but fact-sensitive issues should proceed to trial.

The trustees and employer of an occupational pension scheme claimed damages from its former administrator for alleged contractual and tortious failures concerning early-retirement reductions, equalisation of male and female benefits, and other computational errors.

The defendant sought summary judgment under CPR 24.2 on the Early Retirement Claim and the Equalisation Claim. It argued that the trustees had not exercised the discretion required by the scheme rules, that parts of the claims were statute-barred, and that no continuing duty required pensions in payment to be rechecked.

1. Summary judgment principles. The court adopted the principles summarised in Easy Air Limited v Opal Telecom Limited [2009] EWHC 339 (Ch), as approved in AC Ward & Son v Caitlin (Five) Limited [2009] EWCA Civ 1098. The court must consider evidence reasonably expected to be available at trial and exercise caution where fuller investigation may alter the outcome. Avoiding a mini-trial does not prevent the court from addressing difficult legal issues, but it must not choose between conflicting evidence unless one side’s evidence is obviously unreliable.
2. Early retirement. On the claimants’ construction of rule 12(C) of the scheme rules, the trustees had a discretion to determine the amount of any reduction by reference to the member’s age. The discretion was a trust power, not an automatic fixed reduction. Applying Entrust Pension v Prospect Hospice [2012] Pens LR 341, the power remained exercisable if omitted at the relevant time, but its exercise could not be backdated. As no reduction had been determined, the claimants’ case that the defendant should have paid reduced pensions had no real prospect of success.
3. The court also applied AON Trust Corporation v KPMG (a firm) and others [2005] EWCA Civ 1004. A retrospective attempt to reduce pensions in payment would engage the subsisting-rights restrictions in sections 67–67G and section 67A(3) of the Pensions Act 1995.
4. Limitation. The evidence established actual, constructive and constructive expert knowledge for section 14A of the Limitation Act 1980 by November 2008. The court accepted the principles summarised in Haward v Fawcetts [2006] 1 WLR 682 and Shore v Sedgwick Financial Services [2008] EWCA Civ 863. The Equalisation Claim was also statute-barred because the alleged errors were embedded in historic rule changes and did not constitute a continuing breach.
5. The issue whether the administrator owed a continuing duty to review pensions in payment was fact-sensitive and unsuitable for summary determination. The court drew assistance from Capita (Banstead 2011) Limited and another v RFIB Group Limited [2015] EWCA Civ 1310, but left the scope of the duty for trial. The mitigation issue was likewise fact-intensive.
6. Judgment was entered for the defendant on the Early Retirement Claim and the Equalisation Claim.