Success in Court of Appeal in British Broadcasting Association v (1) BBC Pension Trust Limited (2) Christina Burns

The Court of Appeal has dismissed the BBC’s appeal and has held that the BBC fetter protects future service benefits. Andrew Spink KC and Saul Margo acted on behalf of the successful Representative Beneficiary.

The Court of Appeal has handed down its judgment in British Broadcasting Association v (1) BBC Pension Trust Limited (2) Christina Burns.

In upholding the decision of the High Court, this landmark decision is the second case (after Lloyds Bank Pension Trust Corporation v Lloyds Bank plc [1996] PLR 263) in which a domestic court has found that a fetter on a pension scheme’s amendment power protects future service benefits.

The case was brought because the BBC wishes to limit the ongoing costs of funding the BBC Pension Scheme and needs to understand the scope of the fetter on the Scheme’s amendment power. The fetter provides that no alteration or modification shall take effect as regards active members “whose interests are certified by the Actuary to be affected thereby”.

The BBC contended that, on a correct interpretation of the fetter, an active member’s “interests” extended no further than their past service rights.

In dismissing the BBC’s appeal, the Court of Appeal held (Lewison LJ giving the only judgment) that the word “interests” was “a deliberately simple, broad and open-textured word” and that “Unlike other examples of fetters on powers of amendment it is not tied to “rights”; still less to rights that have “accrued” or been “secured”. Nor is it limited by reference to any particular cut-off date. Nor is there any limitation by reference to “past contributions” or “contributions already made”. Lewison LJ went on to say that: “…one of the most valuable interests that an Active Member has is the ability to continue to accrue benefits on particular terms as their length of pensionable service increases, even if they have no enforceable legal right under the scheme to continue in employment with the BBC”.

In so holding, Court of Appeal rejected the BBC’s case that its interpretation was supported by the need to avoid unduly fettering the amendment power so that the BBC could deal with “the exigencies of commercial life”. Lewison LJ said that: “Even where the court is concerned to interpret a power of amendment in a pension scheme it must be ‘even-handed between the parties’. Such a power should not be interpreted with any greater liberality than other documents, purposively interpreted.”

Lewison LJ also reiterated his scepticism, as originally articulated in Barnardo’s v Buckinghamshire [2017] Pens LR 2 at [23], about whether it is useful to delve into the archaeology of a pension scheme, when current members of the scheme may have joined many years after the scheme was initially established.

As a result, the fetter places a significant limit on the scope that BBC has to close the Scheme to future accrual or to alter the basis upon which benefits continue to accrue. The BBC has not sought permission to appeal.

Andrew Spink KC and Saul Margo were instructed by Helena Berman at Stephenson Harwood.

The full judgment can be found here.

Find out more

Andrew Spink KC has a broad-based business law practice, specialising particularly in disputes relating to the interpretation or breach of most types of commercial contract and trust deed, claims for breach of fiduciary duty, freezing injunctions and asset recovery, cross-jurisdictional issues, CPR Part 8 claims as well as hostile CPR Part 7 claims for damages and other relief in the context of pensions and other commercial trusts, banking and financial services, a wide range of other commercial contracts and contractual issues (including cases of force majeure and frustration arising out of the Covid-19 pandemic and cases involving crypto-assets and associated worldwide freezing orders), professional negligence claims (acting for both claimants and defendants) and company law and insolvency issues.

To find out more about Andrew, email Lexie Johnson or call + 44 (0) 207 427 0801.

Saul Margo specialises in pensions and employment, as well as professional negligence claims relating to pension schemes. His pensions practice encompasses both pure pensions litigation and advisory work with his litigation experience including Part 8, professional negligence and rectification claims. Additionally, Saul is in demand for his specialist knowledge of cross-over pensions and employment work having been instructed in the litigation relating to the judges pensions scheme, the police pension scheme, sexual orientation discrimination claims relating to the Teachers’ pension scheme and in the leading case relating to discrimination arising from the provision ill-health retirement benefits.

To find out more about Saul, contact Nick Levett +44 (0)20 7427 4908.

News 9 Jul, 2024