High Court authorises trustee of British Airways pension scheme to continue appeal to the Supreme Court in “unprecedented circumstances”

Airways Pension Scheme Trustee Limited v (1) Mark Owen Fielder (2) British Airways plc [2019] EWHC 29 (Ch)

The Trustee of the Airways Pension Scheme has successfully obtained approval from Mr Justice Arnold to pursue to the Supreme Court its appeal against the decision of the Court of Appeal in British Airways plc v Airways Pension Scheme Trustee Ltd [2018] EWCA Civ 1533, [2018] Pens LR 19, and to be indemnified in respect of the costs of doing so from Scheme funds.

Henry Day, led by Jonathan Hilliard QC, acted for the Trustee and Elizabeth Ovey, led by Michael Furness QC, for the representative member of the Scheme, Mr Fielder.

Background

The dispute underlying the appeal 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 2011 the Scheme’s then Trustees decided to use their unilateral power of amendment to amend the Scheme’s rules by inserting a power to grant discretionary increases. In 2013 the Trustees exercised this power to grant an increase of 0.2%, being half the then gap between RPI and CPI.

BA issued proceedings in December 2013, challenging the Trustees’ decisions on a wide range of grounds. Following a seven-week trial in 2016, those challenges were rejected by Mr Justice Morgan.

BA appealed to the Court of Appeal, which in its judgment of 5 July 2018 held by a majority (Lewison and Peter Jackson LJJ, Patten LJ dissenting) that the 2011 decision was invalid because it was a use of the Scheme’s power of amendment for an improper purpose. The 2013 decision was therefore also held to be invalid.

Very unusually, the Court of Appeal granted the Trustee permission to appeal to the Supreme Court. The Trustee duly filed a Notice of Appeal and then issued a claim for Beddoe relief, seeking court approval to pursue the appeal and an indemnity from Scheme funds in respect of its costs.

 

Decision

Arnold J described the circumstances of the Trustee’s claim as “unprecedented”, Beddoe relief in respect of an appeal having never previously been granted to a trustee so far as the court and counsel were aware. He held, however, that, contrary to BA’s argument, there is no inflexible rule against a trustee obtaining Beddoe relief in such a situation and that, on a proper analysis of the case law, a trustee is entitled to be indemnified from the assets of the trust if, in the specific circumstances of the case, the trustee would be acting in the interests of the trust as a whole by appealing.

Arnold J went on to find that in pursuing its appeal to the Supreme Court the Trustee would be so acting, taking into account (among other considerations) the appeal’s good prospects of success, the fact that, if successful, it would benefit the vast majority by value of the Scheme’s members, the significant amount potentially in issue (a sum of £424 million having previously been included in the Scheme’s liabilities for funding purposes), the uncertainty surrounding the exercise of the Scheme’s power of amendment caused by the decision of the majority of the Court of Appeal, and the practical difficulties involved in any other party taking carriage of the appeal.

Beddoe relief was therefore granted to the Trustee.

The full judgment is available here.

The Supreme Court hearing has been listed provisionally for 3-4 July 2019, at which the Trustee will be represented by Keith Rowley QC, Jonathan Hilliard QC and Henry Day.

Henry was instructed by Eversheds Sutherland (International) LLP and Elizabeth by Hogan Lovells International LLP.