UK Pensions speedbrief: British Airways plc v Airways Pension Scheme Trustee Limited – RPI or not RPI? The debate continues.

• United Kingdom

• Pensions

02-06-2017

Summary

Further to the judgment in British Airways plc v Airways Pension Scheme Trustee Limited dated 19 May 2017 (the “Judgment”), Morgan J has granted BA (i) permission to appeal 2 technical aspects of the Judgment, and (ii) an injunction restraining the Trustee from paying the discretionary increase awarded on 19 November 2013 (“2013 DI”) until BA’s appeal is determined.

Background

Further to the Judgment (Speedbrief: British Airways plc v Airways Pension Scheme Trustee Limited – RPI or not RPI?), BA sought various applications consequential to the Judgment at a hearing on 25 May 2017.

Key facts

BA sought permission to appeal the following aspects of the Judgment:

0. the Judge’s decision as to the meaning of “benevolent or compassionate” in the Trust Deed and his conclusion that the decisions taken by the Trustees were within the scope of the amendment power and the discretionary increase power; and
0. the Judge’s decision that in exercising the amendment power and/or the discretionary increase power, the Trustees did not act inconsistently with the purposes of the Scheme or otherwise for an improper purpose.

BA also sought an injunction restraining the Trustee from paying the 2013 DI until the determination of BA’s appeal by the Court of Appeal. It had been agreed between the parties that in the event the Trustee were to grant any further discretionary increase, it would give notice in writing to BA at least 7 days before announcing to members, and 28 days before payment.

Decision

Morgan J ordered:

0. BA be granted permission to appeal (and the Trustee be entitled to have its cost of the appeal paid by BA); and
0. BA be granted the injunction. This was on the condition that, if BA’s appeal failed, BA would pay affected members interest on the 2013 DI at 2% above base rate from 25 May 2017 to the date of a decision by the Court of Appeal.

Comment

The Judge expressed sympathy for the members’ position and recognised that thousands of members were likely to die before the outcome of BA’s appeal is known. He also recognised that whether to make payment of the 2013 DI whilst the outcome of BA’s appeal was pending was likely to be a difficult decision for the Trustee. The Judge considered that in granting the injunction, and requiring BA to compensate members for the delay in the event its appeal failed, the Court was taking a difficult decision out of the Trustee’s hands, whilst granting some compensation for members for the delay in payment of the 2013 DI.

The Judge accepted that BA had a “real” i.e. “more than merely fanciful” prospect of success on appeal, although he remained of the view that the appeal would ultimately fail. He noted that had he not granted permission to appeal, there would likely be a further delay whilst BA sought permission to appeal from the Court of Appeal. Even with permission, it is unlikely that a decision from the Court of Appeal will be received within 18 months.