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Is the Court of Appeal now moving to allow schemes to adopt a slightly less prescriptive approach in their formal documentation? 

Shannon v Viavi Solutions – a case concerning some murky pension scheme documentation where, for once, the Court of Appeal took a pragmatic approach. 

The difficulty here was that there was a corporate re-organisation in the 1990s but no consideration was given at that time to the impact of this on the pension scheme. There was no formal deed of substitution to change the scheme’s principal employer to reflect the new arrangements. Instead the new company just executed a new trust deed and rules some time later as though it was the principal employer. The Court of Appeal used the principle that if all parties aware of the relevant facts, conduct themselves in such a way that makes it inequitable for them to deny that they have given approval to a change, that approval is deemed to be given.

So it’s not possible for them to deny subsequently that the new company was the scheme’s principal employer. 

The new trust deed effectively “perfected” the trust and the change of principal employer was allowed to have occurred as far back as was necessary to achieve a legal substitution. “Agreement” to the course of action, a requirement under the earlier trust deed to change principal employer, was widely interpreted and could also include ratification, waiver or estoppel and the necessary consent could be given by each of the necessary parties at separate times.

The Court of Appeal respected the need for certainty. Let’s hope they continue to do so in pension cases, as trying to unpick historical past events is a nightmare.

Published: July 2018


Pensions Law Update - July 2018

Key Contact

Penny Cogher