Burgess & Ors v BIC UK Ltd

A pension scheme’s power to grant or augment benefits may validate increases in pensions in payment even where the increases are not recorded in the scheme rules, provided the relevant power is sufficiently broad and its formal requirements are satisfied. A later deed and rules may operate retrospectively where doing so gives effect to an earlier decision and does not impermissibly rewrite history or validate an act outside the original power.

A purely discretionary power cannot be treated as exercised merely because the trustees decided how it should be exercised but failed to comply with formalities. Equitable recoupment of pension overpayments is not subject to the six-year limitation period, although laches or estoppel may arise in individual cases.

The claim was brought by the trustees of the BIC UK Pension Scheme against BIC UK Limited. The proceedings concerned limited price indexation increases paid on pensions relating to pre-April 1997 service from 1992 onwards. BIC UK had challenged their validity and payments had been suspended.

The court was asked to determine whether the increases had been validly granted, whether valid increases could later be stopped, and, if invalid, whether the trustees could recover past overpayments. The claim also raised issues concerning estoppel, equitable recoupment, section 91 of the Pensions Act 1995, limitation, laches and individual estoppel.

1. Validity of the increases. The 1991 trustees’ minutes recorded a decision to improve future benefits by RPI or 5 per cent, whichever was lower, to be implemented as soon as practicable. BIC UK had consented to the decision, notwithstanding the absence of a formal board minute.
2. The increases were not validly granted under rules 32 or 36 of the Fourth Edition of the Rules. Rule 32 concerned increased employer contributions, while rule 36 required a signed writing. The equitable maxim that equity regards as done what ought to be done could not cure non-compliance with a purely discretionary power.
3. The 1993 Deed and Rules were deliberately retrospective. Applying the principles in Bank of New Zealand v Board of Management of the Bank of New Zealand Officers’ Provident Association [2003] UKPC 59, retrospective operation was permissible because the increases could have been granted under the earlier power and the defect was formal. It did not impermissibly rewrite history.
4. Clause 4 and clause 9 of the 1993 Deed, and rules 3(c)(iii) and 9(a) of the 1993 Rules, each independently validated the increases. Clause 9 and rule 9(a) were sufficiently broad to cover scheme-wide increases and new joiners. Rule 4(a), by contrast, concerned benefits payable to individual members and did not authorise scheme-wide alterations.
5. The decision to grant the increases was irrevocable. They therefore could not be stopped.
6. If the increases had been invalid, estoppel by convention or representation would not have prevented BIC UK from asserting the true position. Equitable recoupment would in principle have been available, subject to section 91 of the Pensions Act 1995. A Pensions Ombudsman determination was not an order of a competent court, but a County Court order enforcing it could be.
7. Equitable recoupment was not subject to the six-year period in section 5 of the Limitation Act 1980. Laches and estoppel could not be determined on a group basis because they depended on the circumstances of individual members.

First-instance decision. No prior appellate decision is stated in the judgment.