“A. The Provider has determined to establish the [Pennines/Mendip] RBS (“the Scheme”) with effect from this present date for the sole purpose of providing pensions and lump sum benefits under occupational pension arrangements made by individuals and individuals’ employers in accordance with the [Pennines/Mendip]RBS Scheme Rules 2010 [sic] (‘the Rules’) as may be amended from time to time.” [B.. C..]
“the aggregate of • The contributions paid to the scheme by or in respect of the member, • Any transfer payment accepted by the scheme in respect of the member, • Any pension credit rights accepted by the scheme in respect of the member, and • Any income or capital gain arising from the investment of such amounts.”
“a pension scheme established by an employer or employers and having or capable of having effect so as to provide benefits to or in respect of any or all of the employees of (a) that employer or those employers or (b) any other employer (whether or not it has or is capable of having effect so as to provide benefits to or in respect of other persons.”
“an asset held for the purposes of the pension scheme is used to provide a benefit (other than a payment) to – (a) the person, or (b) a member of the person’s family or household.”
“13. In the premises in making the Transfers the 1st and 2nd Defendants were in breach of their duties as trustees in that to the extent that the Transfers were ‘investments’ in any sense: (i) They were not calculated to ensure the security, quality, liquidity or profitability of the portfolio as a whole, in that loans to or investments in the 3rd Defendant, and preference shares in the 4th Defendants, are not secure, liquid or profitable; (ii) Loans to or investments in the 3rd Defendant, and preference shares in the 4th Defendant, are not investments admitted to trading on regulated markets; (iii) They were not kept to a prudent level. (iv) There was no, or no proper, diversification of investment so as to avoid excessive reliance on a particular asset, issue or group of undertakings, and they exposed the Schemes to excessive risk concentration.” (i) They were not calculated to ensure the security, quality, liquidity or profitability of the portfolio as a whole, in that loans to or investments in the 3rd Defendant, and preference shares in the 4th Defendants, are not secure, liquid or profitable; (ii) Loans to or investments in the 3rd Defendant, and preference shares in the 4th Defendant, are not investments admitted to trading on regulated markets; (iii) They were not kept to a prudent level. (iv) There was no, or no proper, diversification of investment so as to avoid excessive reliance on a particular asset, issue or group of undertakings, and they exposed the Schemes to excessive risk concentration.”
“Their Lordships have considered the analysis of the effect of the Rule Against Perpetuities on pension schemes made by the English Law Commission in its recent Report on The Rules Against Perpetuities and Excessive Accumulations (1998) (Law Com. No. 251) at para. 3.53. They regard it as correct, at least in relation to a defined benefit scheme like the present. In their Lordships’ view such a scheme can properly be regarded as comprising a series of separate settlements. Every time an employee joins the scheme, a new settlement is created. The settlement comprises the contributions made in respect of the employee whether by him or by the Company. The Rule Against Perpetuities must be applied separately to each individual settlement, and each employee must be treated as a life in being in relation to his own settlement. On this footing, any benefits, whether payable as a lump sum or by way of an annuity, which are payable on the death or earlier retirement of the employee are valid. Their Lordships do not accept the appellants’ submission that this analysis is inappropriate where the trust fund is a common fund to which all Members have contributed. It would fail to save the trusts if it could be said that contributions made by one Member and which were not used to fund his own benefits could be made available to provide benefits to other Members who were not lives in being at the date of his settlement. But the essential feature of a defined benefits pension scheme is that the benefits payable in respect of each Member are fixed at the outset at an amount which is capable of being funded by the contributions payable in respect of the Member without recourse to the contributions of any other Member. Of course, in practice some Members will receive more than they contribute and others will receive less; but this ought not to render the trusts void for perpetuity. The trust fund is only a security for the payment of benefits, and a defined benefits scheme can be regarded for this purpose as a form of mutual insurance. Where each Member’s contributions are sufficient to fund his own pension by the purchase of an annuity from an insurance company, there is no perpetuity merely because they are in effect employed in the purchase of the pension from the trust fund. Regarded in this light, the pension payable to a Member who takes out more than he puts in can be said to derive, not from the funds of settlements made by other Members, but from the successful investment of his own settlement funds.”
“..this appeal raises a novel point on the liability of a trustee who commits a breach of trust to compensate beneficiaries for such breach. Is the trustee liable to compensate the beneficiary not only for losses caused by the breach but also for losses which the beneficiary would, in any event, have suffered even if there had been no such breach?”
“Before dealing with these two lines of argument, it is desirable to say something about the approach to the principles under discussion. The argument both before the Court of Appeal and your Lordships concentrated on the equitable rules establishing the extent and quantification of the compensation payable by a trustee who is in breach of trust. In my judgment this approach is liable to lead to the wrong conclusions in the present case because it ignores an earlier and crucial question, viz., is the trustee who has committed a breach under any liability at all to the beneficiary complaining of the breach? There can be cases where, although there is an undoubted breach of trust, the trustee is under no liability at all to a beneficiary. For example, if a trustee commits a breach of trust with the acquiescence of one beneficiary, that beneficiary has no right to complain and an action for breach of trust brought by him would fail completely. Again there may be cases where the breach gives rise to no right to compensation. Say, as often occurs, a trustee commits a judicious breach of trust by investing in an unauthorised investment which proves to be very profitable to the trust. A carping beneficiary could insist that the unauthorised investment be sold and the proceeds invested in authorised investments: but the trustee would be under no liability to pay compensation either to the trust fund or to the beneficiary because the breach has caused no loss to the trust fund. Therefore, in each case the first question is to ask what are the rights of the beneficiary: only if some relevant right has been infringed so as to give rise to a loss is it necessary to consider the extent of the trustee's liability to compensate for such loss.”
“I therefore conclude that the MPVA loans were unauthorised member payments as defined bys 160(2) of the Finance Act 2004 . Counsel are agreed that if that is the case they were outside the powers of the Schemes' trustees and void in equity, and cannot be validated either retrospectively or prospectively by the amendments recently made to the Schemes. But since this matter may go further, and in deference to the sustained arguments of Mr Stallworthy supported by Mr Clifford, I turn to deal with the issues as to validity which do not derive from the 2004 Act; and do so on the basis, contrary to the ruling I have just given, that the MPVA loans were not unauthorised member payments within the terms of the Act.”
“The purported exercise of a discretionary power on the part of trustees will be void if what is done is not within the scope of the power. There may be a procedural defect, such as the use of the wrong kind of document, or the failure to obtain a necessary prior consent. There may be a substantive defect, such as an unauthorised delegation or an appointment to someone who is not within the class of objects. Cases of a fraud on the power are similar to the latter, since the true intended beneficiary, who is not an object of the power, is someone other than the nominal appointee. There may also be a defect under the general law, such as the rule against perpetuities, whose impact and significance will depend on the extent of the invalidity.”
“In principle, cases where an act done by trustees which appears to be within their powers can be held to be void ought in my judgment to be kept to a minimum, just as at common law the cases where a transaction is void, rather than voidable, are few and far between.”
“...received the Transfers [defined in paragraph 10] knowing that they had been paid out in breach of trust, alternatively with such knowledge that it renders it unconscionable for them to retain the Transfers and they hold the Transfers and their proceeds as constructive trustees for [Dalriada] as trustee of the Schemes.”
“The other trustees, including any judicial or other new trustees, have locus standi to take proceedings against defaulting trustees. They can obtain replacement of lost assets even though they were themselves also guilty of the breach. Usually, where trustees take proceedings against former trustees to have a breach of trust redressed, no issues arise between one beneficiary and another, or as between a beneficiary and the current trustees. The object is to secure the return of the trust property for the benefit of all the beneficiaries according to their respective interests.”