We can work it out

Angela Dimsdale, Lovells

This is exactly what is happening in the Pilots Pension Scheme Litigation, one of The Lawyer’s top ten cases of the year (11 January 2010).

At the heart of the matter is the age-old question of scheme funding. Under pensions legislation a scheme’s sponsoring employer – and in some cases there can be numerous businesses all funding the same scheme – is obliged to make ongoing contributions to ensure the scheme is fully funded. If an employer leaves the scheme they pay a debt to the fund to ensure there is no shortfall in its funding.

It’s simple, right? Wrong. The problem is that between those two scenarios there’s a gap, meaning there is a category of people who are not currently liable to make any payments to their respective schemes. Which, given the level of deficits many pension funds have, is very bad news indeed.

The Pilots litigation is therefore seeking to clarify around 40 points – yes, 40! – to make sure the pension scheme, which is sitting on a deficit in the region of £200m, can collect all the cash it is entitled to.

This case differs from most litigations in that the claimant, scheme trustee Trust Company, is not actually suing the eight defendants in the traditional sense. Rather it is hoping the court can answer some very complex questions that will make administering its very complex scheme a little bit easier. In effect, the defendants are representatives in the litigation, with each agreeing to tackle a different legal point.

Which is why the pension fund will foot the entire cost of the litigation, including the legal fees for each of the defendants – the bill will top several million pounds. This may seem an extreme measure for a fund that has such a large deficit, but given that the aim of the court action is to secure millions to close the scheme’s funding gap, ultimately the trustees believe it will be money well spent.

While the scheme is itself a bit of an oddity in that the majority of its marine pilot members were self-employed, meaning this is no ordinary occupational scheme, the outcome of the litigation is being closely watched by the trustees of schemes across the country.

Past litigations such as Hearn & Ors v Dobson & Anor sought to clarify funding issues, but in fact just muddied the waters further.

Pilots aims to be definitive and pensions lawyers are literally waiting for its outcome with bated breath.


Claimant lawyers:

For Trust Company: Lovells partner Angela Dimsdale Gill instructed Michael Tennet QC of Wilberforce Chambers.

Defendant lawyers:

For Geoff Taylor: Linklaters partner Mark Blyth instructed Christopher Nugee QC of Wilberforce Chambers.

For Terry Clark: CMS Cameron McKenna partner Mark Grant instructed Andrew Spink QC of Outer Temple Chambers.

For Milford Haven Port Authority: Morgan Cole partner Michael Prior instructed Paul Newman QC of Wilberforce Chambers.

For Port of London Authority: Sacker & Partners partner Peter Murphy instructed Brian Green QC of Wilberforce Chambers.

For Shoreham Port Authority: Nabarro partner Jonathan Warne instructed Robert Ham QC of Wilberforce Chambers.

For Port of Tyne Authority: Eversheds partner Giles Orton instructed Sarah Asplin QC of 3 Stone Buildings.

For First Corporate Shipping (trading as Bristol Port Company): LG partner Thomas Ross instructed Michael Furness QC of Wilberforce Chambers.

For PD Teesport: Dickinson Dees partner Craig Monty instructed John Martin QC of Wilberforce Chambers.