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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Allan v Johnson Controls Automotive (UK) Ltd [2008] EWHC 402 (QB) (01 February 2008) URL: http://www.bailii.org/ew/cases/EWHC/QB/2008/402.html Cite as: [2008] EWHC 402 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH

		Royal Courts of Justice
		1st February 2008

JUDGE FOSTER QC:

1. Synopsis. Ian Allan alleges that there was an oral variation of his contract of employment giving him a 1/30^th per annum accrual rate on his final salary pension entitlement. His case is based on an alleged meeting at the defendant company's premises in Silloth in about April 1991. The offer was allegedly made by Mr. MacDonagh, the UK managing director of the defendant company, and explained by Richard Beeson, their financial director. Mr. Stuart MacDonald was present. There are no documents to support the variation. Rather all the documentation flowing from the defendant asserts a 1/50^th per annum accrual rate to which the claimant made no objection. The only time the claimant alleges he asserted his right to a 1/30th per annum accrual rate was at a meeting with Callum Allison in the spring of 2001.
2. I heard evidence from the claimant, Mr. Richard Beeson and Mr. Stuart MacDonald. The evidence of Mr. Cooper and Mr. Dullage does not go to the alleged meeting giving rise to the contractual entitlement. The claimant, Mr. Beeson and Mr. MacDonald all appeared honest witnesses and I had no reason to doubt the genuineness of their testimony. They all asserted that an offer of an enhanced 1/30^th accrual rate was made and accepted. The remaining party to the conversation, Mr. McDonough, was not called to give evidence. Nor was Mr. Alison, the only other witness to any relevant conversation. In those circumstances, it might be thought that the evidence of the oral variation is all one way. However, the defendant argues that the passage of time and the contrary documentary evidence should make me cautious to accept such an unusual and far-reaching conclusion. Alternatively, they argue that the defendant is estopped (I say in parenthesis by convention) in asserting such a variation.
3. The issues. The first issue is an issue of fact as to what was said at the alleged meeting. The second issue is a question of law as to whether any words spoken amounted to a variation of the defendant's contract of employment. The third issue is a mixed question of fact and law as to whether the claimant is estopped from asserting such a variation. The parties are agreed that a pension contract can be subject to an oral variation. I do not see any inherent problem with the alleged lack of consideration in a continuing employment contract.
4. Ian Allan joined PPM Limited in Silloth as its manager director on 1^st January 1990. He was then one day short of his 51^st birthday. He had a good, albeit varied, record of senior employment. PPM Limited went into receivership on 1^st March 1991, but was acquired by the defendant company on 12^th April 1991. It was a time of uncertainty for the claimant. For the defendants it was the start of their growth in Europe. They then had one plant in Essex. They were keen to expand their business and to entice good quality staff to those businesses.
5. The defendants operated a number of pension schemes. Ian Allen was originally on the CHI scheme in his original employment. That was absorbed into the JC Foam scheme which itself was later absorbed into the JCA UK scheme. Under those schemes Mr. Allan had a 1/50^th per annum accrual rate as part of his pension terms.
6. The defendants also operated what is known as the Hoover scheme which was capable of treating employees as paid up to their maximum final salary pension rate despite the fact they had not done 40 years service on the specified 1/60^th per annum accrual rate. The scheme was of course subject to the normal Inland Revenue restrictions and therefore subject to a maximum accrual rate of 1/30^th.
7. It would therefore take 20 years to earn the maximum pension of 2/3^rd of final salary. Because it could be used to earn a pension more quickly than otherwise, it was apparently known as the one thirtieth scheme, although that did not accurately reflect its internal workings.
8. The alleged offer was a very significant improvement in Mr. Ian Allan's existing pension benefits, which was 1/50^th accrual rate per annum and a significant feature in his overall remuneration.
9. Over the years Ian Allan received a number of documents. In particular: (i) special members letters which specified the accrual rate at 1/50^th per annum. There are a number of examples of these although I imagine that he must have received such letters each year; (ii) wage slips which again would have shown employers and employees contributions to pension schemes; (iii) notices in 1995 and 1996 showing how his CHI scheme had been absorbed into the defendant's pension schemes; (iv) notices about the mergers of these schemes; (v) contractual documents in 1995 and 2000 which made reference to his pension entitlement. Mr. Allan challenged these contractual documents on a number of less important details.
10. It is relevant that I mention one other document which is a pension calculation completed in 2000 as an early retirement quotation. At the end of the document there is a calculation based on a 1/30^th accrual rate. When I first saw this document it seemed to me to be the missing confirmation of the claimant's assertions about the conversation in 1991. On reflection, I consider that it is no more than a final check that the Inland Revenue maxima were not being overridden in the pension quotation. I cannot see any other reason for this figure otherwise appearing in all the documentation when it is otherwise absent in all the other documentation.
11. I observed the claimant, Mr. Ian Allan, give evidence for over an hour and watched him carefully over the two days that we were in court. I reached the following conclusions: (i) Ian Allan was and is a capable man. He has achieved and maintained high positions of responsibility during his working life; (ii) he is a careful man who realises the significance of actions and records; (iii) he would have understood the significance of the pension offer, that is that it was a very considerable enhancement to his existing pension and remuneration; (iv) he was a trustee of the early pension funds. He can therefore be taken to understand how pension schemes operated and the type of documentation which was sent out to members; (v) he would have realised the importance of ensuring that verbal agreements were evidenced in writing; (vi) he would have realised the importance of being able to establish his pension right; (vii) he would have realised the significance of not receiving any documentation about this 1/30^th per annum accrual rate. It was of course theoretically possible for the offer to be implemented in other ways but in the real world highly unlikely; (viii) when he did allegedly raise the matter with Mr. Allison in 2001 he was invited to get supporting information but effectively did nothing about it. It will be apparent from the above that I am very surprised that Mr. Allan did not challenge the repeated 1/50^th per annum accrual rate assertion or assert his own right to a 1/30^th per annum accrual rate.
12. In addition, I heard evidence from Richard Beeson and Stuart MacDonald. Although Mr. Beeson was a very senior director of the defendant company and obviously experienced and successful in the world of finance, I found him curiously casual in the manner in which he gave his evidence. He was inaccurate in the way in which he described the enhanced benefit scheme. Having said that, he was consistent in the thrust of his evidence. He was first asked to remember these events in 2005, that is 14 years after they took place.
13. Stuart MacDonald was an obviously decent man. He said he had reason to remember the conversation because he was envious of the offer made to Ian Allan. Again, he was first asked to remember events 15 years later.
14. Experience has shown that it is very difficult to accurately remember the detail of events in the comparatively recent past. There is a very very real temptation to rationalise. I am left with the unenviable task of having to balance the testimony of three decent and honest men with the inherent unlikelihood that Ian Allan said nothing about this agreement until he retired 13 years later.
15. Having heard all the evidence and assessed the witnesses, I have concluded that something probably was said about pensions at a meeting in April 1991. However, on the balance of probabilities whatever was said fell well short of an agreement to provide a pension at 1/30th accrual rate. The claimant does not therefore make out his case for a contractual entitlement to a pension based on a 1/30^th per annum accrual rate.
16. In those circumstances, it is not necessary for me to consider the issue of estoppel. For what it is worth, I cannot see that what the claimant did, or more particularly did not do, is something which was capable of removing what would otherwise have been a clear contractual right.

JUDGE FOSTER QC: Mr. Davies, I am afraid you fail.

MR. GRANT: My Lord, before my learned friend ... can I just point out three small errors in your Lordship's judgment? Twice you called Richard Beeson Richard Beeson, although that was corrected later on.

JUDGE FOSTER QC: Thank you very much.

MR. GRANT: Paragraphs 1 and ----

JUDGE FOSTER QC: It is all right, we can deal with that.

MR. GRANT: Paragraph 3 of your Lordship's judgment you said whether the defendant was estopped from relying on the contract. It was the claimant.

JUDGE FOSTER QC: The claimant, yes.

MR. GRANT: Thirdly, I think finally in paragraph 9 you said the pension calculation completed in 2001, from recollection it was 2000.

JUDGE FOSTER QC: That similarly can be corrected.

MR. GRANT: Yes, those are the observations I want to make.

JUDGE FOSTER QC: Thank you very much.

MR. DAVIES: My Lord, I of course have comparatively little to say, although I did have conduct of this matter at trial. The only thing which I would seek to raise at this stage is that I do formally ask for leave to appeal.

JUDGE FOSTER QC: I regret I refuse leave. This is essentially a factual question.

MR. DAVIES: So be it, my Lord.

MR. GRANT: My Lord, the only outstanding matter is the question of costs. No schedules, or certainly no schedule was filed and served by those instructing me. I understand one might have been by the claimant's solicitors. In any event, I am certainly not inviting your Lordship to assess ... there is not one today, I simply ask that there be the usual costs to be subject to detailed assessment if not agreed.

JUDGE FOSTER QC: I think they have to follow, do they not, Mr. Davies?

MR. DAVIES: My Lord, given the overwhelming nature in the sense of your Lordship's reasons today, I do not think there is anything I can say to counter that sensibly.

JUDGE FOSTER QC: I do not think there is. I award costs on the basis that Mr. Grant has asked, albeit not without some sympathy for the claimant's position who, as I have said, I regarded as a decent and genuine witness.

MR. GRANT: I am grateful, my Lord.

JUDGE FOSTER QC: Thank you very much.