IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors (Rev 2) [2015] EWHC 389 (Ch) (20 February 2015)

IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors (Rev 2) [2015] EWHC 389 (Ch) (20 February 2015)

The court held that both the Initial and Later 2009 NPAs, viewed in the context of Project Waltz and the established Reasonable Expectations, were procured by IBM in breach of its contractual duty of trust and confidence. The NPAs themselves were not contracts, but the actual salary increases awarded on a non-pensionable basis constituted variations of the employment contract, which were also tainted by the breach. The correct remedy is to assess the cumulative effect of Project Waltz as a whole, not to treat each element in isolation. The NPAs and related non-pensionability terms are unenforceable to the extent they were procured in breach of duty.

Citation
[2015] EWHC 389 (Ch)
Parties
Claimant: IBM United Kingdom Holdings Limited; Claimant: IBM United Kingdom Limited; Defendant: Stuart Dalgleish; Defendant: Lizanne Harrison; Defendant: IBM United Kingdom Pensions Trust Limited
Jurisdiction
England and Wales
Judgment Date
20 February 2015
Procedural Posture
Chancery Division Civil Claim / Post Liability, Remedies Judgment Following Main Liability Judgment and Directions Hearing
Outcome
NPAs and related non-pensionability terms unenforceable to the extent procured in breach of duty; salary increases awarded under such terms are pensionable; remedies to be assessed by reference to Project Waltz as a whole.
Legal Topics
Employer Duties, Pension Scheme Amendments, Implied Contractual Duties, Breach of Trust and Confidence, Remedies for Breach of Duty, Non Pensionability Agreements, Variation of Employment Contracts
Employment Law Pensions Law Trusts Law Employer Duties Pension Scheme Amendments Implied Contractual Duties Breach of Trust and Confidence Remedies for Breach of Duty +2 more

Case Brief

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Parties

IBM United Kingdom Holdings Limited

Claimant

IBM United Kingdom Limited

Claimant

Stuart Dalgleish

Defendant

Lizanne Harrison

Defendant

IBM United Kingdom Pensions Trust Limited

Defendant

Procedural Posture

Chancery Division Civil Claim / Post Liability, Remedies Judgment Following Main Liability Judgment and Directions Hearing

Legal Issues

  1. 1 Whether the 2009, 2010, and 2011 Non-Pensionability Agreements (NPAs) were void, voidable, unenforceable, or valid
  2. 2 Whether IBM breached its contractual duty of trust and confidence and/or the Imperial duty in procuring NPAs and implementing Project Waltz
  3. 3 Whether salary increases awarded under NPAs were pensionable

Ratio Decidendi

The court held that both the Initial and Later 2009 NPAs, viewed in the context of Project Waltz and the established Reasonable Expectations, were procured by IBM in breach of its contractual duty of trust and confidence. The NPAs themselves were not contracts, but the actual salary increases awarded on a non-pensionable basis constituted variations of the employment contract, which were also tainted by the breach. The correct remedy is to assess the cumulative effect of Project Waltz as a whole, not to treat each element in isolation. The NPAs and related non-pensionability terms are unenforceable to the extent they were procured in breach of duty.

Court Disposition

NPAs and related non-pensionability terms unenforceable to the extent procured in breach of duty; salary increases awarded under such terms are pensionable; remedies to be assessed by reference to Project Waltz as a whole.

Orders

  • Declarations as to unenforceability of NPAs and non-pensionability terms procured in breach of duty
  • Directions for Trustee to administer DB Plans in accordance with the judgment