A legal dispute involving trustees of the Johnston Press Pension Plan about the equalisation of retirement ages has been put to bed by the Scottish Court of Session, using a quirk of law known as the “presumption of regularity”.
Passing judgment, Lord Tyre decided that consultancy Mercer and its now defunct subsidiary Sedgwick Noble Lowndes had taken necessary steps to equalise the benefits of four schemes later merged into the Johnston Press plan without avoidable delay.
This was despite documentation of the trustee boards’ actual decision to equalise having been lost. The court deemed that this was reasonable given that it would have been written more than 20 years ago.
It’s not something that means schemes should be rushing off to change their jurisdiction
James Bingham, Sackers
Instead, the judge relied on supporting literature, referencing or implying that a decision had been made, alongside the presumption of regularity.
Relying on probabilities
The maxim, derived from a Latin phrase, is “an inference which may reasonably be drawn when an intention to do some formal act is established; when the evidence is consistent with that intention having been carried into effect in a proper way; but when the actual observance of all due formalities can only be inferred as a matter of probability,” explained Lord Tyre.
It allowed the court to use supporting documentation discussing equalisation as evidence the act was probably carried out.
For example, in the first cause, which concerned The Yorkshire Weekly Newspaper Group Limited Pension Fund, no “minute of such a board resolution or memorandum by officers of the principal company” could be found.
However, Mercer were able to provide documents, including a letter to Johnston Press providing advice on equalisation, and argued that this showed the trustees had decided to, and been advised to, equalise on the correct date.
The other schemes involved in separate actions were the Beckett Retirement Benefits Scheme, the West Sussex County Times Limited Pension and Life Assurance Scheme and the Wilfred Edmunds Limited Pension and Assurance Scheme. All four schemes were merged into the Johnston Press fund after the time discussed in the case.
The trustees had sued for the cost of providing members with the benefits they had missed out on between the date that equalisation should have taken effect and the allegedly different date at which it did take place.
No disturbance to schemes
With the decision, no retrospective benefits will now have to be paid. “This is clearly a pragmatic and helpful decision on the behalf of the Scottish courts,” said Robert West, partner at law firm Baker McKenzie.
The presumption of regularity maxim exists in English as well as Scottish law, although it has been interpreted more narrowly.
However, West raised the possibility that this approach could be applied to English cases where formal documentation of an amendment is missing.
“In general this won’t be a binding precedent, but it can be a persuasive authority, and it’s particularly persuasive here,” he said.
The case is also unusual in that each of the four schemes were originally based in England but the decision was made under Scottish law.
Different jurisdictions
However, others doubted the ease with which this judgment could influence an English court.
Mark Smith, partner at law firm Taylor Wessing, said the Scottish mindset of “substance over form” stood in contrast to the English interpretation of the presumption.
“In England we’re stricter and the approach the English court would take is basically not to make the logical leap,” he said.
Smith said the strict approach to interpretation was supported by Supreme Court president Lord Neuberger, and was therefore unlikely to change any time soon.
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Taking a strict line on interpretation of scheme documents did not seem unfair to members or those trying to run the scheme, Smith added.
Don't be tempted to switch borders
The jurisdictional differences may stretch even further, said James Bingham, a senior associate at pensions law firm Sackers.
Noting that the cases all dealt with whether a deed of amendment had been made, he said: “There’s a technical difference between the meaning of a deed under Scottish law as opposed to... under English law.”
While schemes might be keen to take advantage of the Scottish flexibility on this matter, Bingham pointed out that other nuances might have a negative impact.
“Whilst this may be one particular advantage of Scottish law, it’s not something that [means] schemes should be rushing off to change their jurisdiction,” he said.
