Milestone Court of Appeal judgment published in McGaughey & Davies v USSL

The Court of Appeal has published its judgment in (1) Lawrence Ewan McGaughey (2) Neil Martin Davies (Claimants/Appellants) -v- Universities Superannuation Scheme Ltd (First Defendant/First Respondent), the landmark company multiple derivative case which raised the question of directors’ duties in relation to divestment in fossil fuels for the first time.

In a significant judgment (found here) handed down on Friday 21 July 2023 Asplin LJ, with whom the Rt Hon. Sir Julian Flaux, Chancellor of the High Court, and Snowden LJ agreed, dismissed the appeal on all grounds.

Two members of a pension scheme had sought permission to bring a claim against the current and former directors of one of the UK’s largest pension schemes by assets in the form of a company multiple derivative action governed by the common law principles initially laid down in the seminal case of Foss v Harbottle.

The judgment contains a clear analysis of the distinction between company multiple derivative actions and beneficiary derivative actions, concluding that this claim brought by members of a pension scheme did not meet the requirements of the common law company derivative action test.

The Court of Appeal upheld the judgment of Leech J which included a finding that there was no prima facie case that the directors had breached their statutory duties. The case marks the first occasion the Court of Appeal has considered a claim that directors have breached their statutory duties in failing to take steps towards divestment in fossil fuels. Further details of the previous decision can be found in Outer Temple’s previous article here.

The appeal was listed in The Lawyer’s ‘Top 10 Appeals of 2023’ and has attracted significant media and industry attention.

David E Grant and Philip Stear acted on behalf of the Appellants, instructed by Leigh Day, in the Court of Appeal in (1) Lawrence Ewan McGaughey (2) Neil Martin Davies -v- Universities Superannuation Scheme Ltd. 

Andrew Short KC and Helen Pugh acted on behalf of the First Respondent, instructed by Mark Atkinson, Dan Tench and Nadia Latti of CMS Cameron McKenna Nabarro Olswang LLP.

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Andrew Short KC‘s pensions work encompasses both private and public sector schemes and includes issues of construction, funding issues, preservation and revaluation, Beckmann claims and various regulatory issues including contribution notices and financial support directions. He is particularly sought after in cases that require a knowledge of both pensions and employment or discrimination law, including some of the most significant equalisation cases of recent years. He is ranked as a Star Individual in directories and is on the Consultation Board of Practical Law: Pensions. Contact Nick Levett on +44 (0)20 7427 4908 for more information.

David E Grant KC has been involved in some of the most high-profile pensions cases in recent years including appearing before the Grand Chamber of the ECJ in Safeway Ltd v Newton & Anor [2020] Pens.L.R. 4 as to whether a scheme can be retrospectively levelled down. He acts for employers, trustees, members, professional advisors and public bodies, and has acted in nearly all the rectification cases in the last few years. David is recommended in Chambers & Partners and Legal 500 and is described as “The go-to junior for Part 8 and professional negligence claims concerning pension schemes.”

Philip Stear has a broad (advisory and contentious) chancery practice with a particular focus on private trusts and occupational pension schemes. He is an acknowledged expert in relation to technical pensions law and regulatory practice, and combines this with long practical experience of occupational pension schemes and the practical challenges they face in relation to governance and trusteeship, benefit design and modification, funding and security and member communications and disputes.

Helen Pugh specialises in general commercial litigation, civil fraud, civil fraud, contentious insolvency and company law issues, and professional negligence. Her practice has a strong international element with expertise in jurisdiction disputes and conflict of law issues, including as they arise at an interim stage in applications for worldwide freezing orders and service out applications or on the substantive claim, and in the cross-border insolvency context.

For more on our pensions team, please contact Matt Sale +44 (0)20 7427 4910 or George Bennett on +44 (0)207 427 0807.

News 25 Jul, 2023