S was the principal employer under two defined benefit occupational pension schemes that were being wound-up. The scheme rules stated that, on a winding-up, benefits would be provided as nearly as practicable the same as the members' entitlements under the scheme. The respondent trustees of the schemes had obtained an order that the rules permitted them to carry out a partial buy-out of members' benefits, then calculate any shortfall of the schemes and obtain that amount from S, before applying the shortfall to purchase further annuities to satisfy the member's full entitlement.
HELD: The rules of a pension scheme had to be construed in a purposive way, in the sense of being given a meaning that respected the context in which the rules were drafted and the purpose they were intended to achieve, Stevens v Bell [2002] EWCA Civ 672, [2002] O.P.L.R. 207 applied. When considering what powers were to be implied in relation to the performance of an express duty it was necessary to start with a consideration of the nature of the duty. The relevant rule in the instant case said nothing about whether it had to be carried out as a single exercise or in stages. Both were equally consistent with the stated objective and purpose of the duty, which was to provide as nearly as practicable the entitlements under the scheme. If by carrying out the duty as a two-stage process the trustees were able to increase the value of the assets available to fund the purchase of annuities, that would seem more, rather than less, consistent with their duty. It followed that the powers to be implied should be those that gave the trustees the maximum flexibility to carry out their duty. The absence of an express discharge on a partial buy-out was not an indication that no power to effect a partial buy-out existed. The rule mandated a result and the trustees were, by implication, empowered to do what was best calculated to achieve that result (see paras 30-34 of judgment).
Appeal dismissed
Counsel:
For the appellants: Andrew Simmonds QC, Joseph Goldsmith
For the respondents: Keith Rowley QC
Solicitors:
For the appellants: Shakespeares Legal LLP
For the respondents: Eversheds LLP
Counsel:
For the appellants: Andrew Simmonds QC, Joseph Goldsmith
For the respondents: Keith Rowley QC
Solicitors:
For the appellants: Shakespeares Legal LLP
For the respondents: Eversheds LLP
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