Scottish courts favour pragmatism over legal technicality again in pension scheme amendment cases

In each of the four cases, the changes were made in order to equalise the retirement ages for men and women under the schemes in line with a 1990 Court of Justice of the European Union (CJEU) decision. The changes took effect on 1 December 1993, and went unchallenged for over 20 years.

Lord Tyre ruled that the legal principle referred to by its Latin name of 'omnia praesumuntur rite esse acta', or 'all things are presumed to have been done duly in the usual manner', applied in each of the cases. The points raised by the trustees of the now combined Johnston Press Pension Plan and the sponsoring employers were not sufficient to displace that presumption, he ruled.

"In my opinion this is the kind of situation in which the presumption operates most appropriately," he said in his judgment.

"It accords with common sense to presume, where no procedural challenge was raised at the time of the decision, all concerned have proceeded on the basis that the change had been effectively made, and the passage of time now precludes an exhaustive investigation, that the requisite and not very demanding formality [in one of the cases, a board resolution] was observed by the principal company," he said.

"It follows from the above that I find in all four cases that the necessary steps were taken to equalise retirement ages without avoidance delay, and that in none of the cases have the pursuers sustained any loss," he said.

Lord Tyre's decision "clearly builds" on the approach developed by the Scottish courts in the 2010 Low and Bonar case, and when finding in favour of the scheme trustees in the Scottish Solicitors' Staff Pension Fund at the end of 2015, according to pensions law expert Ian Gordon of Pinsent Masons, the law firm behind Out-Law.com.

"The case reaffirms that the approach of the courts in Scotland is to look at the substance of what has been done, and not to get hung up on the precise mechanics by which it has been achieved," he said.

"This should give trustees of pension schemes who fear that they may still have similar issues lurking in the closets greater reassurance that they can keep the door shut, and rely on the presumption of validity to fend off any argument that a change which has been acted upon for many years was not properly documented," he said.

The court had been asked to consider whether, and if so when, the so-called 'Barber window' pension age equalisation transitional provisions ended in relation to four separate pension schemes that have all since been transferred into the Johnston Press Pension Plan. The administrators of each scheme, plus the sponsoring employers, were pursuing the former schemes' administrators for breach of contract, arguing that by not introducing amendments in strict accordance with the scheme rules they were required to provide additional benefits to more members for a longer period of time.

In each case, Lord Tyre found that the amendments had in fact been properly made, on the grounds that everyone involved had proceeded on the basis that the change had been made.