Headway Plc v Eastearly Ltd

Headway Plc v Eastearly Ltd

The arrangement proposed by the trustee is lawful and effective to increase the section 75 debt, as section 75(6) of the Pensions Act 1995 requires disregarding any scheme provision limiting liabilities by reference to assets. Section 19 of the Pension Schemes Act 1993 does not preclude partial buy-out of GMPs, but the scheme rules prevent partial buy-out without member consent. Therefore, the arrangement can be implemented in full with consent of high GMP members, or in truncated form for other members.

Parties
Appellant/defendant: Headway PLC; Respondent/claimant: Eastearly Limited; Intervener: Secretary of State for Work and Pensions
Jurisdiction
England and Wales
Judgment Date
23 July 2009
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)
Outcome
Appeal dismissed; arrangement upheld subject to conditions
Legal Topics
Occupational Pension Scheme Winding Up, Section 75 Debt Calculation, Guaranteed Minimum Pensions (gmps), Partial Buy Out of Pension Liabilities, Interpretation of Trust Deed and Rules, Statutory Discharge of Liability
Pensions Law Trusts Law Employment Law Occupational Pension Scheme Winding Up Section 75 Debt Calculation Guaranteed Minimum Pensions (gmps) Partial Buy Out of Pension Liabilities Interpretation of Trust Deed and Rules +1 more

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Parties

Headway PLC

Appellant/defendant

Eastearly Limited

Respondent/claimant

Secretary of State for Work and Pensions

Intervener

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Whether the trustee can lawfully implement an arrangement to increase the section 75 debt by completing a partial buy-out before quantifying the debt
  2. 2 Whether statutory and scheme provisions preclude partial buy-out of GMPs or require full buy-out
  3. 3 Whether the arrangement is precluded by the need to provide GMPs in full or can be implemented in truncated form

Ratio Decidendi

The arrangement proposed by the trustee is lawful and effective to increase the section 75 debt, as section 75(6) of the Pensions Act 1995 requires disregarding any scheme provision limiting liabilities by reference to assets. Section 19 of the Pension Schemes Act 1993 does not preclude partial buy-out of GMPs, but the scheme rules prevent partial buy-out without member consent. Therefore, the arrangement can be implemented in full with consent of high GMP members, or in truncated form for other members.

Court Disposition

Appeal dismissed; arrangement upheld subject to conditions

Orders

  • Arrangement to increase section 75 debt is lawful and may be implemented subject to obtaining consent from high GMP members or in truncated form for other members.
  • Leave to appeal to the House of Lords (Supreme Court) refused.