British Airways Plc v Airways Pension Scheme Trustee Limited  EWCA Civ 1533
The appeal concerned whether the Scheme had been effectively amended to include a trustee power to award discretionary pension increases and whether the subsequent exercise of that power was valid.
The dispute originally arose following the Government’s announcement in 2010 that it intended to use CPI instead of RPI for increasing public sector pensions. As a consequence of its public sector origins, this new practice applied to the Scheme.
In March 2011 the Scheme’s Trustees decided to use their unilateral power of amendment to amend the Scheme’s Rules by inserting a power to grant discretionary increases. In June 2013 the Trustees decided to exercise this power to grant a discretionary increase of 0.2%, being half the gap between RPI and CPI. In November 2013, following a challenge to that decision by BA as the Scheme’s sponsoring employer, the Trustees took their decision afresh and reached the same result.
BA issued proceedings in December 2013, challenging the Trustees’ decisions on a wide range of grounds.
The trial was heard between October and December 2016. Shortly before it commenced the Trustees were replaced by a corporate Trustee.
Morgan J gave judgment for the Trustee, holding that the amendment of the Scheme’s rules in March 2011 and the exercise of the discretionary increase power in November 2013 were valid and effective.
BA appealed Morgan J’s decision in two limited respects, arguing that the introduction of the discretionary increase power was beyond the scope and contrary to the purpose of the Scheme’s power of amendment, and that the discretionary increase constituted a “benevolent or compassionate” payment (such payments being prohibited by the Scheme’s objects clause).