Litigation Recent Decisions 20/1/98

Pensions following railway privatisation

South West Trains v (1) Paul Wightman (2) Julie Wightman (3) Railways Pension Trustee Co (4) Derek Scott (5) Keith Victor Walker (6) David Edward Allen (7) David John McCloud (8) Shaun Terence William Brady (9) Alan McKnespiey (10) David Butler (1997)

Court: ChD (Neuberger J) 18/12/9Summary: Collective agreement on pension rights between employees and employers following restructuring of working practices and remuneration binding on individual employees.

Following the privatisation of British Rail, the new Railways Pension Scheme (RPS) was established for the industry, governed by a trustee (the third defendant). The employees of the plaintiff company, South West Trains (SWT), were covered by the SWT sub-section of the Shared Costs Section of the RPS, to which a proportion of the assets of the Shared Costs Section was transferred. A pensions committee representing employer and employees was set up and the pension was calculated by reference to the pay received in the last year of service. SWT renegotiated the terms and conditions of three categories of staff: drivers, revenue protection inspectors and fleet staff. The case of the drivers was typical. The drivers voted in favour of these proposals and they were put into effect. However, when SWT and the trustee sought the approval of the pensions committee for a draft deed to change the rules of the section to reflect the agreement, Brady (the eighth defendant) objected to the deed on the ground that it appeared to worsen the position of the drivers. SWT sought a declaration that the drivers were debarred from obtaining pensions at a higher rate than those contained in the proposals and consequential relief, including an authorisation for the trustee to execute a deed amending the rules of the section appropriately and a declaration that the pensions committee ought to request the trustee to execute such a deed. It was common ground that the deed before the court reflected the enforceable agreement (if there was one) between SWT and the drivers. The issues in the case were (1) On the assumption that, as a matter of common law, there was a binding pensions agreement which would otherwise be fully enforceable by SWT against the drivers, would that agreement fall foul of the Railways Pensions Scheme Order 1994 in relation to drivers who were employed by the board on 31 May 1994 (when the 1994 Order came into force)? (2) Assuming that there would otherwise be such a binding pensions agreement, was any aspect of it invalidated by s67 of the Pensions Act 1995? (3) Was there in fact a binding pension agreement between each driver and SWT? (4) If there were such an agreement, (a) could it be enforced and (b) could the section be varied so as to reflect that agreement?