IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors (Rev 1), Court of Appeal - Chancery Division, February 20, 2015, [2015] EWHC 389 (Ch)

Issuing Organization:Chancery Division
Actores:IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors (Rev 1)
Resolution Date:February 20, 2015
 
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Case No: HC10C01796

Neutral Citation Number: [2015] EWHC 389 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 20/02/2015

Before :

MR JUSTICE WARREN

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Between :

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Andrew Simmonds QC, Paul Newman QC, Joseph Goldsmith and Emily Campbell (instructed by Bond Dickinson LLP ) for the Claimants

Nicolas Stallworthy QC, Lydia Seymour and Benjamin Faulkner (instructed by DLA Piper UK LLP) for the 1st and 2nd Defendants)

Andrew Spink QC, Andrew Short QC, Jonathan Evans QC, Edward Sawyer, Andrew Mold and Saul Margo (instructed by Nabarro LLP) for the 3rd Defendant

Hearing dates: 21st, 22nd, 23rd, 24th, 25th, 28th, 29th, 30th, and 31st July 2014

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JudgmentMr Justice Warren :

Introduction

  1. Following the handing-down of my judgment dated 4 April 2014 (``the Judgment'') and the delivery of a short judgment at a directions hearing on 13 June 2014 (``the June Judgment''), I have heard further submissions over the course of 9 days dealing with the remedies for the breaches of duty on the part of IBM established by the Judgment. I shall use the same terms and abbreviations in this judgment as I used in the Judgment and the June Judgment.

    The Judgment -¯ Clarification

  2. There has been disagreement between IBM, on the one hand, and the Trustee and the Representative Beneficiaries, on the other hand, about the meaning of what I said in certain parts of the Judgment and about precisely what conclusions I have reached as a matter of binding decision. The authorities establish, I consider, that I am able, before judgment is entered (that is to say, before any order is sealed) to give further clarification of the Judgment and to correct any errors and eliminate inconsistencies. The court has an untrammelled inherent jurisdiction to amplify its reasons and clarify the meaning of its judgment at any time prior to the sealing of its order: see for instance Paulin v Paulin [2009] EWCA Civ 221; [2009] 3 All ER 88. Indeed, there is even jurisdiction to alter an actual decision (see In re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8; [2013] 1 WLR 634) although it is not, as will be seen, necessary for me to exercise that jurisdiction in the present case. That case shows that the exercise of this power is not restricted only to exceptional circumstances.

  3. The lack of clarity in the Judgment arises out of my consideration of the separate elements which went to make up Project Waltz. In carrying out that exercise, I considered the 2009 NPAs ``in isolation''. I used those words in different ways in different paragraphs of the Judgment. In doing so, I have caused some confusion. As well as causing confusion, I may have said, in using those words, certain things which read literally do not reflect my true views. The difficulties were raised at the hearing in June. I did not consider it appropriate to deal with these difficulties at that hearing, considering that the matter should be left for fuller argument at the remedies hearing, although I did give some indications of my then thinking. Having heard submissions about what the parties consider I did mean by what I said and what is, and is not, open for me to clarify or even review, I am now in position to deal with the confusion which I engendered. I propose to clarify matters by considering each of the paragraphs of the Judgment which might be seen as giving rise to confusion or even inconsistency and, in so doing, state, or restate, my conclusions. I will refer to paragraphs of the Judgment thus: Judgment [xxx].

  4. In carrying out this task, I occasionally use the phrase ``Project Waltz as a whole'', a phrase which I also used in the Judgment. By that, I mean (and meant in the Judgment) to include not only the 5 elements identified at Judgment [19], but all the surrounding circumstances of Project Waltz, the purposes which it was designed to achieve and the method and strategies involved in attempting to achieve those purposes. In this context, the 2010 and 2011 NPAs form part of Project Waltz.

  5. At Judgment [1511], I said that there can be no doubt that the Project Waltz changes conflicted with the Reasonable Expectations which I had identified. There were three factors which I mentioned expressly in support of that conclusion: active members of the DB Plans would (i) cease to accrue further DB benefits from 6 April 2011 (ii) obtain no salary increases in the future (notwithstanding that Mr Riley had announced increases for 2009) unless they entered into the 2009 NPAs albeit that, after the initial announcement, the ``future'' in this context was limited to 2009 to 2011 with a review thereafter and (iii) be subject to the detrimental change in ER policy. Enhanced M Plan members would also be subject to (iii).

  6. Mr Newman suggests that item (ii) should be omitted from that list because there was no Reasonable Expectation that there would be any salary increase at all. But that is not the point: the point is that if a salary increase were granted, it would not be pensionable. Following Soto, members had a Reasonable Expectation that benefit accrual would continue at least until April 2011 so that, if salary increases were in fact awarded, they would be pensionable in part. To put that in different words, the members had a Reasonable Expectation that salary increases would be pensionable; the 2009 NPAs displaced (to use a neutral word) that Reasonable Expectation even if it is right to say that the member was not entitled to any salary increase and had no Reasonable Expectation that he would receive any. This is not to say that this displacement was a breach of duty. That is a question which I addressed later in the Judgment. I should add that I did not, in the Judgment, identify the pensionability of salary increases as giving rise to a separate Reasonable Expectation. It is, however, a necessary part of the Reasonable Expectation that benefit accrual would continue in relation to salary, because the increase is part of the salary.

  7. At Judgment [1512], I concluded that it was right that the Project Waltz changes should be viewed as a whole in assessing whether there was any breach of duty. I then went on to say that the individual elements of those changes must be considered separately. I stated that this was for two related reasons:

    i) The first is that one or more of the individual elements may of themselves give rise to a breach of duty. It is important to know whether that is so.

    ii) The second is that it is important, when it comes to considering any remedy, to know what Holdings could properly have done to avoid a breach of duty if it has committed one, and in that context it is important to know what, if any, individual element would have given rise to a breach of duty taken by itself.

  8. I did not, in that paragraph, use the words ``in isolation'' although the words ``separately'' and ``by itself'' have much the same flavour. In referring to each element separately, I was intending to identify each element of Project Waltz with a view to considering whether that element, viewed apart from Project Waltz as a whole, would have given rise to a breach of duty. I was therefore drawing a distinction between each element in the context of Project Waltz as a whole and (counterfactually) that same element apart from Project Waltz. I was not, however, at this stage of the Judgment, drawing a distinction between two different scenarios: the first (``Scenario A'') is one where, ignoring the other elements of Project Waltz, each element is to be considered in the context of the Reasonable Expectations which were established; the second (``Scenario B'') is one where not only are those other elements to be ignored but also each element is to be considered on the assumption that no Reasonable Expectations at all had been established. Under Scenario B, there might be a breach of duty quite apart from any Reasonable Expectation. This could have been so, for instance, in relation to the earlier 2009 NPAs (and the same goes for the 2011 NPAs) which were unlimited in duration: this is the caveat mentioned in Judgment [1521]. Of course, a breach of duty under Scenario B would necessarily be a breach of duty in the context of Project Waltz as a whole. When I said that each element must be considered separately, the enquiry could embrace both Scenario A and Scenario B.

  9. At Judgment [1515] I dealt expressly with the 2009 NPAs in the context of Project Waltz as a whole and concluded (on the hypothesis there under consideration that there were no global or local strands) that Holdings' conduct in relation even to the Later 2009 NPAs was a breach of duty.

  10. I then went on to refer in Judgment [1516] to the 2009 NPAs ``in isolation''. I did not distinguish between Scenario A and Scenario B in that paragraph. The words ``in isolation'' would subsume both Scenarios. The rest of that paragraph and also Judgment [1517] and [1518] are concerned with Mr Tennet's submission that there was a separate Reasonable Expectation engendered by Ocean and Soto that members would not be treated differently so far as concerned pay increases depending on their election in 2006. I stated that if there was an entitlement to pay increases such as Mr Tennet maintained, it did not arise as the result of a separate Reasonable Expectation but would be the result of the Reasonable Expectations actually established (in the context of and taking into account Project Waltz as a whole). I left that issue for a further hearing. Viewing the different elements ``in isolation'' did not feature in this part of my reasoning.

  11. At Judgment [1519] (continuing to examine the position in the absence of the global and local strands) I stated that my conclusion (ie that there was no separate Reasonable Expectation engendered by Ocean and Soto about pay increases)...

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