Brass Trustees Ltd v Hayley Goldstone & Anor

On a trustee blessing application, the court examines whether the proposed exercise of power is lawful, within the trustees’ powers and consistent with rational, honest and reasonable decision-making. It does not substitute its own view for that of the trustees.

The trustees must identify relevant considerations, disregard irrelevant or improper considerations, and act on a rational evidential basis. The relevance of Pension Protection Fund protection is context-specific. Trustees must not exploit the PPF to justify conduct that would otherwise improperly worsen members’ position or the scheme deficit.

Approval is appropriate where the trustees formed the relevant opinion, a properly directed and reasonable trustee body could have reached it, and no conflict vitiated the decision.

Brass Trustees Ltd, the sole corporate trustee of an occupational pension scheme, sought approval under Part 8 for its decision to petition for the winding up of the scheme’s two sponsoring employers. The scheme was substantially underfunded, the employers owed significant sums, and the trustee considered that continued delay would cause Scheme Drift and PPF Drift.

A representative beneficiary was appointed under CPR, Part 19.9(2). The Pension Protection Fund supported the decision. The central issues were whether the trustee had properly exercised its fiduciary powers, whether it had taken account of relevant matters and ignored irrelevant ones, and how far the existence and interests of the PPF could be considered.

1. Approval jurisdiction. The application was a momentous-decision blessing application within the jurisdiction described in Public Trustee v Cooper. The court’s role was supervisory. It had to determine whether the proposed exercise was within the trustee’s powers, lawful, and consistent with the standards applicable to ordinary, reasonable and prudent trustees. It was not required to decide whether it would have made the same decision itself.
2. Trustee decision-making. Trustees exercising fiduciary powers must inform themselves of relevant facts, take relevant considerations into account, disregard irrelevant or improper considerations, and act rationally and reasonably. Rationality concerns the quality of the decision-making process, including good faith, logical connection with the evidence and the absence of arbitrariness. Reasonableness requires that the decision be one which no reasonable trustee properly directing itself could have reached.
3. PPF considerations. The relevance of the PPF depends on the context, the purpose of the power and the manner in which the PPF is taken into account. Trustees cannot use the availability of PPF compensation to justify conduct which would otherwise be improper, including allowing the scheme deficit or asset erosion to worsen. The court did not need to decide the wider question because the trustee had resolved to petition irrespective of the PPF. It nevertheless agreed that the PPF could not be used in this case to justify failing to protect the scheme’s position.
4. Application. The trustee had considered the employers’ financial circumstances, the debts owed, the prospects of recovery, Scheme Drift, the erosion of scheme assets, its duties to protect scheme assets and beneficiaries, and appropriate actuarial, financial and legal advice. It had formed the relevant opinion. A properly directed and reasonable trustee could have reached it, and no conflict of interest was shown.
5. The court approved the trustee’s decision to issue winding-up petitions against Biwater Holdings Ltd and Biwater International Ltd.

This was a first-instance Part 8 claim in the High Court. The court appointed a representative beneficiary under CPR, Part 19.9(2) and approved the trustee’s proposed decision.