Associate Charlotte Clewes-Boyne comments in Pensions Expert on the High Court dismissing trustee’s Barber window claim
The High Court recently dismissed a claim brought by trustees of the CMG UK Pension Scheme against the sponsoring employer CGI IT UK over payment of arrears due more than six years prior.
The claim focused on application of the Barber ruling – a 1991 European Court of Justice ruling that the right to equal pay for men and women applied to occupational pension schemes.
The CMG scheme was administered on the basis of this equalisation, however the scheme’s deed and rules remained unamended for some time. This resulted in various incorrect benefit payments.
The judge upheld rule 5.11 as a forfeiture clause, stating that it “should be constructed on the basis that any benefit or instalment of a benefit which has not been claimed within six years of the date on which it fell due for payment is forfeited and the entitlement to that benefit or instalment is extinguished.”
“The judge accepted that context is not irrelevant and a purposive construction may be necessary,”
However, she noted that the case “did produce some useful principles when looking at the specifics of a scheme’s rules – for example, noting that you don’t need the word ‘forfeit’ in a rule for it to operate as a forfeiture clause.
“In this case, the judge preferred an interpretation which did not require any extra wording to be added into the clause, focussing on the wording of the rules in front of him and what they did, and importantly, did not say.
“That said, it was also relevant that the rule in question had remained broadly unchanged over multiple iterations of drafting, and in this case, looking at the archaeology of the rules of a scheme was deemed appropriate.
“Citing the Stena case, the judge took the view that the forfeiture clause in this case had been intended to retain its historic meaning, and also placed weight on the accepted principle that in a pensions context, greater weight is placed on the specific language chosen by the drafter.
“Overall, the judge’s determinations on context and drafting suggest that future cases of this nature could end up being a bit of a lottery.
“The relative importance of the drafting of the scheme rules and their context remains a balancing act in the hands of the Court. It will depend entirely upon an individual scheme’s circumstances, drafting and archaeology.”
Read Charlotte’s comments in Pensions Expert.
The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.