Bank of New Zealand v. Board of Management of the Bank of New Zealand Officers' Provident Association (New Zealand) [2003] UKPC 58

Judicial Committee of the Privy Council
Case No Privy Council Appeal No. 73 of 2002Venue FROM THE COURT OF APPEAL OF NEW ZEALAND
Between
Bank of New ZealandAppellantBoard of Management of the Bank of New Zealand Officers' Provident Association (New Zealand)Respondent
Before
Lord HoffmannLord Hobhouse of WoodboroughLord MillettLord Walker of GestingthorpeSir Andrew LeggattDate 14 July 2003
[1]:- Lord Hoffmann Lord Hobhouse of Woodborough Lord Millett Lord Walker of Gestingthorpe Sir Andrew Leggatt [Delivered by Lord Walker of Gestingthorpe ] The Bank of New Zealand Officers' Provident Association ("the Association") is a body originally incorporated under a slightly different name by a private Act of Parliament, the Bank of New Zealand Officers' Guarantee and Provident Association Act 1900 ("the 1900 Act"). It had previously existed as an unincorporated association, established in 1887. It was reincorporated by the Bank of New Zealand Officers' Provident Association Act 1971 ("the 1971 Act"), a private Act of Parliament which repealed and replaced the 1900 Act.[2]Under the 1900 Act the Association (like its unincorporated predecessor) had two main purposes. One was to provide security, as banking law then required, for the due discharge of their duties by officers of the Bank of New Zealand ("the Bank"). This purpose was effected by members of the Association paying subscriptions to a guarantee fund which was to be used to indemnify the Bank, within specified limits, against losses sustained through the dishonesty of any member. That purpose lapsed some time before the passing of the 1971 Act.[3]The other main purpose of the Association in its original form, and now its only main purpose, is to provide a provident fund (or superannuation fund) for the Bank's employees. Originally only male employees were admitted to membership, but that discrimination ended in 1974. According to an affidavit of Mr Allan Taylor, a member of the Association's Board of Management ("the Board of Management") the Association is the oldest private sector superannuation scheme in New Zealand, and is still one of the largest. It is registered under the Superannuation Schemes Act 1989 but (because it is established by Act of Parliament rather than by a trust deed) several important provisions of that Act (and especially section 9, which restricts the exercise of powers of amendment) do not apply to it: see the decision of the Court of Appeal of New Zealand in Board of Management of BNZ Officers' Provident Fund Assn v Alexander (1998) 1 NZSC 40, 381.[4]This appeal is the latest (and, it is to be hoped, the last) round in a protracted sequence of litigation which has so far led to three sets of proceedings and two appeals to the Court of Appeal. The problems have arisen, unusually and paradoxically, not because the superannuation scheme is under-funded but because it is over-funded. In order to explain the problems (which come before their Lordships as a single issue as to the validity of rule amendments proposed by the Board of Management) it is necessary to set out some of the provisions of the 1900 Act and the 1971 Act, and the rules scheduled to those respective Acts; to describe the major reorganisation of the superannuation scheme which took place in 1990; and to summarise the factual position as it has developed since 1990. The facts are set out at length in the affidavit evidence and the exhibits (there are three affidavits made by Mr Taylor, one made by Mr Mark Dowland, the Bank's General Counsel and Company Secretary, and one each from two actuaries, Mr John Errington and Mr John Melville). But for present purposes a relatively brief summary is sufficient. It is common ground that if the proposed amendments can lawfully be made, their terms will have to be carefully reconsidered in the light of changes in circumstances since they were first formulated. Their Lordships are concerned with the principle of the matter, not with the financial detail.[5]The preamble to the 1900 Act referred to the original unincorporated association and its second purpose:
"… of maintaining and increasing the Provident Fund by the contributions of such officers [sc of the Bank], and of providing pensions and allowances for officers of the said Bank, and for other cognate purposes."
Section 7 provided as follows:
"The rules for the conduct and management of the business and affairs of the Association shall consist of the rules set out in the Schedule to this Act, with such additions as may be made from time to time, but subject to any alterations or amendments that may be made therein by the Association in the manner prescribed in and by such rules. Any copy of the rules of the Association sealed with its seal shall be prima facie evidence that they were duly made and are the rules for the time being in force."
[6]The rules in the schedule set out the Association's objects (rule 2):
"(a) To provide a guarantee to the Bank for the fidelity of officers now or at any future time in its service, and to maintain a Guarantee Fund for that purpose. (b) To maintain a Provident Fund to be applied for the benefit of full members of the Association."
The reference to full members leads the reader to rule 6:
"The members of the Association shall consist of the persons who were formerly on the staff of the Bank but are now pensioners, and such other persons as are now or may at any time hereafter be placed on the staff of the Bank, and they shall be divided into three classes:- (1) Full members, ie, members who contribute to both the Provident Fund and Guarantee Fund, or who are full members as provided in Rule 18 [relating to an alternative guarantee fund]. (2) Members who contribute to the Guarantee Fund only. (3) Pensioners."
Rule 9 provided (subject to an exception which is not now material) that a member of the Association continued to be a member only so long as he was an officer in the employment of the Bank or in receipt of a pension from the Association.[7]Rule 28 provided as follows:- "These rules shall not be cancelled varied or added to without the assent of a majority of the votes of full members at any ballot, of which reasonable notice, with particulars of the proposed alteration, shall have been previously given by circular addressed to them, nor shall any such alteration be effective until it has received the sanction of the Board of Directors of the Bank; but such sanction shall not be withheld unless the proposed alteration would prejudicially affect either the Guarantee Fund or Provident Fund or the interests of the Association. Any dispute under this rule shall be subject to the final decision of a Judge of the Supreme Court in the same way as a dispute under Rule 26 [giving the Board of Management full control of the Provident Fund]."[8]Some of these provisions produce an element of circularity which cropped up repeatedly in the course of argument. The objects of the Association are defined in terms of full membership, which is regulated mainly by rules 6 and 9. But those rules are capable of being amended, so long as the amendments do not conflict with the basic purpose of the scheme to which they relate (see In re Courage Group's Pension Schemes Ryan v Imperial Brewing and Leisure Ltd [1987] 1 WLR 495, 505, discussed below). The basic purpose of a scheme may not be entirely apparent from the face of its documentation. In particular, an objects clause containing words or expressions which are specially defined, but may be capable of amendment, is not necessarily a reliable guide to the scheme's basic purpose.[9]The 1971 Act follows the same general lines as the 1900 Act, except that the guarantee fund has disappeared. Section 7 (1) of the 1971 Act is similar to section 7 of the 1900 Act:
"The rules for the conduct and management of the business and affairs of the Association shall consist of the rules in force at the passing of this Act, with such additions, alterations, and amendments as may from time to time be made in accordance with those rules."
The rules scheduled to the 1971 Act set out the superannuation scheme as it then stood. It was a contributory, defined benefit scheme (that is a scheme under which a member's benefits on retirement are calculated by reference to his final pensionable salary and his years of pensionable service). Membership of the scheme was compulsory for all permanent staff. As is well known, defined benefit schemes often deviate from the actuarial ideal of equilibrium for a variety of reasons, including good or bad investment performance, redundancies, and changes in the financial and demographic assumptions made by actuaries. In the late 1970s the Association's fund had a modest deficit. But by the end of 1989 this had turned in to a surplus of about $278m. This was caused partly by successful investment, and partly by the Bank continuing to make contributions in excess of the level required by the actuary. However since 1990 the Bank has made no further contributions to the fund.[10]In 1990 there was a major restructuring of the scheme, effected by amendment of the rules. Mr Taylor described the changes as follows:
"In 1990 the rules were redrawn so as to create two divisions. Division 1 was for existing pensioners and those existing members who wished to remain part of the traditional pension scheme, while Division 2 provided for a new cash accumulation benefit structure. Within this new Division, members' benefits were defined by reference to the members' individual contributions and those made by the employer, together with earnings on those contributions. Members could elect to transfer to the new division of the scheme. Those members who transferred across to the cash accumulation division took with them a 'transfer value' that reflected the actuarial value of their accrued pension based benefits. Over 95% of members elected to transfer to Division 2. As membership of Division 2 was voluntary, a number of members chose to exit the existing scheme following transfer. The pension based scheme (Division 1) was closed to new members. After 1990 all new members therefore had to join Division 2 (cash accumulation benefit structure)."
The main reason for the restructuring was as a response to changes in the employment environment in New Zealand. As Mr Dowland said in his affidavit, employees no longer expected to remain with the Bank throughout their working lives, and the Bank no longer expected that they would.[11]The current rules were consolidated as at 18 April 2000. They are divided into three parts: rules common to all members and pensioners (these are designated C1, C and so on); rules relevant to Division 1 (designated 1.1, 1.2, and so on); and rules relevant to Division 2 (designated 2.1, 2.2, and so on). Apart from some definitions which are largely self-explanatory (but again, infected by some degree of circularity) the most important common rules are as follows: (1) (Rule C 1.2 - object):
"The object of the Association is to maintain a Provident Fund for the benefit of Members and Pensioners of the Association and their dependants." (2) (Rule C 1.5.1 - alteration of rules): "
Except as provided for in Rule C 1.5.2 [which relates to tax changes, and is not relevant] the Board may vary these Rules: (a) In respect of the rules relating to Division 1 Members (including the Common Rules which relate to such Members) with the sanction of the Directors and the assent of a majority of votes of Division 1 Members at a ballot reasonable notice of which, together with particulars of the proposed alterations, shall have previously been given to them; and (b) In respect of the Rules relating to Division 2 Members and the Common Rules which do not relate to Division 1 Members with the sanction of the Directors. The sanction of the Directors referred to in sub clauses (a) and (b) above shall not be withheld unless in the opinion of the Directors the proposed alterations would prejudicially affect the Provident Fund or the best interests of the Association. No variation shall be made which would adversely affect any Member's or Pensioner's interest in the Provident Fund already accrued at the date of variation without the written consent of that Member or Pensioner or which would be in breach of the Superannuation Schemes Act 1989." (3) (Rule C 2.3 - periodical investigations by actuary): This provides for triennial investigation and includes the requirement:
"the Board shall take whatever action for ensuring the equilibrium of the Fund as in its opinion is rendered necessary by the Actuary's report and/or recommendations"
. Rule C 5.3 – investment return – was very important in some of the earlier litigation (see Board of Management of BNZ Officers' Provident Fund Assn v BNZ (1999) 1 NZSC 40,462) but is not directly relevant, except as background, to this appeal.[12]The Division 1 rules do not call for summary. The Division 2 rules set out the structure of the cash accumulation (or defined contribution) scheme. These rules are quite complicated, but their general effect is that Division 2 members decide to make contributions (as a percentage of salary, and subject to specific limits). Their contributions are then deducted by the Bank and paid to the Association at regular intervals. Members may also pay in lump sums. The member gets credit for all these contributions and for what are called "Distributed Earnings" (and "Interim Distributed Earnings") allocated in respect of his contributions, as augmented by employer's contributions. Rule 2.5 provides that the Bank shall contribute to the Association on behalf of Division 2 members such amounts as the Bank after seeking the advice of the actuary determines are required to provide the benefits in respect of Division 2 members. Their Lordships were not addressed about the effect of Rule 2.5, which appears on its face to be inconsistent with the normal structure of a defined contribution scheme. It appears from the evidence that in practice the Bank made a contribution equal to a Division 2 member's contributions up to a maximum of 7% of his salary and in 2000 the Bank decided to increase its contributions to 150% of Division 2 members' contributions up to 10% of salary; these contributions were not paid in cash but were satisfied by recourse to the scheme's notional surplus.[13]It is important to note (and for those accustomed to the rigid and tax-driven regulation of pension schemes in the United Kingdom, it is a matter of some surprise) that the benefits taken from Division 2, whether on retirement at the age of 60 or on the earlier cessation of employment with the Bank, are taken as tax-free lump sums without any statutory or other obligation to use them in acquiring an annuity. It appears that in New Zealand the tax burden is front-loaded in that an employee's contributions are not tax-deductible nor is the scheme itself exempt from tax. The consequence is that Division 2 does not and will not have any pensioners in the ordinary sense (although under rule 2.8 the distribution of death benefits and permanent incapacity benefits is at the discretion of the Board of Management and may in that special case involve payment of something like an annuity).[14]The Bank was successful in encouraging existing members to transfer from Division 1 to Division 2. There is now only a single member in Division 1, and about 300 Division 1 pensioners. The number of Division 2 members was 4264 in 1990 but had fallen to 2766 by 1995. It has since fluctuated between about 2500 and 3000. Although membership of Division 2 is voluntary the position in 2000 was that about 60 % of the Bank's permanent employees were Division 2 members. The Bank's declared aim is to raise the membership to the level of 75%, or if possible even higher.[15]By 1995 the actuarial surplus (which had peaked in 1989) had been reduced to about $107m, partly because of the Bank's contribution holiday (which began in April 1990) and partly for other reasons (including benefit improvements). The surplus then began to rise again, reaching about $129m in 2000. The Bank and the Board of Management are agreed on the general strategic aim of eliminating the surplus by 2015 at the latest, but there have been serious differences of opinion as to how this should be achieved.[16]Despite the notional division of the fund into Division 1 and Division 2, there was not any actual division or appropriation of the fund's assets. This was a conscious decision of the Board of Management in order to enable the actuarial surplus, and notional earnings on that surplus, to fund the Bank's contributions credited to Division 2. The Board of Management also sought to increase the amounts credited to Division 2 by their policy in relation to distributed earnings under rule C 5.3. Mr Taylor described this as follows:
"Following the introduction of the new cash accumulation division in 1990, the Board adopted an earnings policy that saw earnings on surplus assets included in the earnings distributed to members by way of the declaration of an annual earnings rate. If the earnings rate declared by the Board had not incorporated the earnings on the surplus assets, those additional earnings would have been retained in the Fund, thereby increasing the size of the surplus. The Board saw its earnings policy as being equitable in that it enabled members to benefit from the existence of the surplus in the Fund at the same time as the Bank was benefiting from its presence by taking a contribution holiday (that is its obligation to fund its share of the accruing benefits were being met from the surplus funds in the scheme)."
However in 1995 the Bank challenged the legality of this policy and in a second round of litigation ( Board of Management of BNZ Officers' Provident Assn v BNZ (1998) 1 NZSC 30, 546, Ellis J, (1999) 1 NZSC 40,462, Court of Appeal) it was held invalid. The Board of Management had to abandon the policy, but the Bank did not seek to reopen transactions which had taken place before 1995.[17]The outcome was that the surplus started to grow again and at 31 October, 2000 (the last accounting date before these proceedings were issued) it was about $129m. It is in those circumstances that the Board of Management formulated rule amendments intended to increase benefits to Division 2 members including persons who had been members (but had since left the Bank's employment) at any time after 1 November, 1995. The Board of Management commenced proceedings on 5 April, 2001 for a declaration that the amendments would be valid, and those proceedings were heard together with other proceedings commenced shortly afterwards by the Bank. On 31 October, 2001 the surplus was approximately $104m. On 31 October, 2002 it was approximately $83m.[18]The crucial issue in this appeal is the scope of the power of amendment contained in rule C 1.5.1 of the current rules. That power is subject to some express restrictions, but it is not suggested that the proposed amendments would infringe them (all existing pensioners and members will retain their accrued rights, and their rights will continue to be amply secured). Nor is the power subject to the wide restrictions contained in section 9 of the Superannuation Schemes Act 1989, since the scheme was established by statute, not by a trust deed. Any relevant restriction is to be derived from the general principle that a power must be used only for the purposes for which it must be supposed to have been intended.[19]Formulated in that way, the general principle tends to beg the question. How is the court to discern the limits of the proper purposes and scope of a power of amendment? Millett J addressed that question in In re Courage Group's Pension Schemes Ryan v Imperial Brewing and Leisure [1987] 1 WLR 495, 505-506:
"It is trite law that a power can be exercised only for the purpose for which it is conferred, and not for any extraneous or ulterior purpose. The rule-amending power is given for the purpose of promoting the purposes of the scheme, not altering them. Before I consider this question, I should make some general observations on the approach which I conceive ought to be adopted by the court to the construction of the trust deed and rules of a pension scheme. First, there are no special rules of construction applicable to a pension scheme; nevertheless, its provisions should wherever possible be construed to give reasonable and practical effect to the scheme, bearing in mind that it has to be operated against a constantly changing commercial background. It is important to avoid unduly fettering the power to amend the provisions of the scheme, thereby preventing the parties from making those changes which may be required by the exigencies of commercial life. This is particularly the case where the scheme is intended to be for the benefit not of the employees of a single company, but of a group of companies. The composition of the group may constantly change as companies are disposed of and new companies are acquired; and such changes need to be reflected by modifications to the scheme. Secondly, in the case of an institution of long duration and gradually changing membership like a club or pension scheme, each alteration in the rules must be tested by reference to the situation at the time of the proposed alteration, and not by reference to the original rules at its inception. By changes made gradually over a long period, alterations may be made which would not be acceptable if introduced all at once. Even the main purpose may be changed by degrees."
Millett J then referred to a case about the rules of a members' club established for sporting activities (originally pigeon shooting) and concluded his general observations (at page 506), "So the main purpose of a club or pension scheme may be enlarged by appropriate amendments to the rules; and once it becomes too late to challenge the amendments, the enlarged purposes become the new basis by reference to which any further proposed changes must be considered."[20]These observations have frequently been approved and followed, both in England and in New Zealand (see Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294, 296, 307-8, although in that case there was an express restriction on the power of amendment which proved decisive). Fisher J made some similar observations in Waitakere City Council v Waitemata Electricity Shareholders Society Inc [1996] 2 NZLR 735, 743 (which their Lordships quote with the omission of several authorities referred to by Fisher J), "… the power to amend is not unlimited. A well-recognised limitation is that a society cannot amend its rules in a way which would conflict with its own fundamental objects … But for this purpose a wide scope is normally given to a society's fundamental objects … The matter is essentially one of contractual intent. A person joining a society must foresee rule changes in general but not those which would conflict with the very point of having the society in the first place. To find the point of the society its constitutional statement of principal objects is the first port of call." Counsel for the Bank submitted that their Lordships should be cautious about equating the rules of a pension scheme with those of members' club or other unincorporated association. There are significant points of difference, including the relative contributions of contractual and equitable obligations to the legal framework. But one common feature is that in each case the objects clause will be (as Fisher J put it) the first point of call. The objects clause will not however always be decisive.[21]An illustration of a situation in which the objects clause will not be decisive is where there have been changes in the organisation of an enterprise, through a process of natural development, making it necessary or expedient for the objects to be restated. If the trust deed of a pension scheme declares that its object is to provide pensions and other benefits for employees of X Ltd, and the business of X Ltd is restructured so as to be carried on by several subsidiary companies employing the workforce previously employed by the holding company, there can be no doubt that the scheme's power of amendment (unless exceptionally and specifically restrictive) could be exercised so as to bring in employees of the subsidiaries. The amendment, so far from frustrating the commercial purpose of the scheme, would prevent it being frustrated, since otherwise the group's management would have to choose between the unattractive alternatives of setting up a new pension scheme or abandoning an advantageous restructuring. On the other hand the amendments proposed in the Courage case were not permissible because they were part of an unnatural and manipulative plan which would have severed the pension fund from the workforce for whom it was established (see [1987] 1 WLR at pp 509-510).[22]For these reasons their Lordships do not find it necessary to go far into the detailed submissions which were made about the precise language in which the purposes or objects of the Association have been expressed at different times, either in the preambles to the 1900 Act and the 1971 Act or in the constantly-changing rules. That is not the way in which documents establishing and regulating a superannuation scheme ought to be approached: see the UEB Industries case at page 297, approving the observations made by Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587, 1610 (who was himself following Millett J in Courage).[23]There are no doubt contexts in which a word descriptive of a person's occupation or status cannot apply to someone who once was, but has ceased to be, within that description. Sometimes a reference to a wife does not include an ex-wife or a widow. But if the purpose of a superannuation scheme is recognised as being to provide pensions or other retirement benefits for employees, it would be wholly inconsistent with that purpose (as well as over-literal) to suggest that the expression did not include ex-employees. The whole point of a superannuation fund is to provide benefits for ex-employees, traditionally in the form of pensions for those who remain with the employer until normal retirement age. But there have been profound changes in employment conditions, reflected in the extensive changes made in 1990 to the Association's rules. A superannuation scheme, especially if it is a contributory scheme, has to be attractive to all employees, including those who leave employment before normal retirement age in order to go to another job. Moreover in Division 2 (which is already much the most important part of the scheme, and may in due course constitute the whole scheme) all benefits, with the possible exception of some benefits on death or permanent incapacity, are now taken as lump sum payments. Subject to that minor exception, Division 2 will have no pensioners whatsoever. But there will be an increasingly large number of ex-employees who have received lump sum Division 2 benefits, and there is no obvious reason why they should not at some later time receive some enhancement of those benefits, just as pensioners often receive enhancement of their pensions while in course of payment.[24]The current objects clause (rule C1.2) refers to Members and Pensioners (and their dependants). A "Pensioner" is defined (in rule C1.1) as a retired Member who is entitled to a pension under the Division 1 rules (and includes a former Member entitled to a deferred pension from the Association). Here again the scope of the power of amendment in rule C1.5.1 cannot be regulated, in a way which tends to circularity, by definitions which have been expressed in terms appropriate to the current Division 2 rules, but which might become much less appropriate if for any reason the Division 2 rules had to be recast.[25]These were the considerations which led the Court of Appeal (in a judgment of the Court delivered by Blanchard J) to allow the Board of Management's appeal (so far as is now relevant) and declare that the proposed amendments were within the Board of Management's powers. The Court observed in para 36 of its judgment, "It therefore seems clear to us that when in its preamble the 1971 Act referred to the purpose of providing pensions and allowances for 'officers', that expression must have been intended to include former officers. Although the Act speaks only of pensions or allowances, it has never been questioned that payments can be made by way of lump sum related to service and contributions and that the rules may allow for this. We see no reason why, if the rules so permit or are amended to enable it, a lump sum payment of this character cannot be made to an officer after cessation of the employment in respect of his or her period of service with the Bank. Indeed, it is not to be expected that any lump sum payment of such character will ordinarily be made until after the employment has ended. It must then follow that a payment can be made at a later time in circumstances not involving any impermissible retrospectivity (i.e. the disturbance of other persons' rights) provided that it is made in respect of the former officer's period of service, or part thereof." Their Lordships respectfully agree with the reasoning and conclusion of the Court of Appeal.[26]In the courts below the Board of Management's power to make a retrospective amendment was dealt with as a separate topic. But before their Lordships it was rightly conceded that this topic is merely a reflection of, or another (and possibly less helpful) way of putting, what is essentially the same point as to the scope of the power of amendment. Modern authority (as reviewed and summarised by Lord Mustill in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486, 524-525) has recognised that when the law raises a presumption against the retrospective operation of an enactment or a disposition (including a rule change), it is concerned with fairness in the circumstances of the particular case, rather than with the application of some general formula. In the amendment of pension scheme rules, back-dating (that is, deeming a change of the rules to have been made at a date earlier than the date of the actual change) cannot be used as a device so as to rewrite history or validate an amendment which would otherwise be beyond the scope of the power of amendment. But if the substance of what is proposed is within the power, back-dating will not by itself lead to invalidity (whether it will be more or less helpful, simply as a matter of drafting technique, will depend on the circumstances).[27]Counsel referred to some other fairly recent New Zealand decisions on pension schemes. None is of direct relevance, although two of them reflect the general point made in the last paragraph. In Cullen v Pension Holdings Ltd (1991) 1 NZSC 40, 259, McGechan J decided that trustees could not back-date a block transfer payment into a pension fund because that would be an attempt to rewrite history: it would be (as the judge said at page 40, 266) at best a fiction. Similarly in Craddock v Crowhen (1995) 1 NZSC 40, 331, Tipping J decided, for good practical reasons, that trustees could not back-date a resolution to wind up the scheme. In Re Motorola New Zealand Superannuation Fund [2001] 3 NZLR 50 the main point (on which, their Lordships were told, the decision of McGechan J is regarded as controversial) was as to the construction of a power of amendment mirroring section 9 of the Superannuation Schemes Act 1989. It is not directly relevant as the power of amendment in the Association's rules contains no comparable restriction.[28]The facts of Motorola had at least a faint resemblance to those of the present case in that the Motorola trustees had made an error of judgment in failing to anticipate, and enable members leaving employment during the interim period to benefit from, a privatisation windfall which was predictable from December 1996 but only actually received in January 1998. McGechan J held that the trustees had power to take action to correct that error. That part of his decision is akin to that of Goulding J in In r e Locker's Settlement Meachem v Sachs [1977] 1 WLR 1323 (which was not referred to in Motorola but was cited to their Lordships). It is not necessary to express a definite view as to whether this part of the decision in Motorola, and Re Locker , would be an alternative route to the same result. In Re Locker , Goulding J held (at page 1328) that fresh objects (that is, those who had only recently qualified as beneficiaries) could not benefit from what he called stale income (that is, income which ought to have been distributed at an earlier date). But Goulding J did not in terms hold that stale income could be distributed to those who might be called stale objects (that is, persons who had ceased to be objects, such as a wife who was still alive but had been divorced during the interim period). It is safer to rest the decision of this appeal simply on the scope of the power of amendment in rule C1.5.1.[29]For these reasons their Lordships will humbly advise Her Majesty that the Bank's appeal should be dismissed with costs.

Cited in 8 later judgments