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[2013] ZAWCHC 180
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MNOPF Trustees Limited v SA Marine Corporation (Pty) Ltd (9085/2008) [2013] ZAWCHC 180 (11 December 2013)

THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT)
(Exercising
its Admiralty Jurisdiction)
Case
No: 9085/2008
DATE:
11/12/2013
In
the matter between:
MNOPF
TRUSTEES
LIMITED
...........................................................
PLAINTIFF
And
SA
MARINE CORPORATION (PTY)
LTD
....................................
DEFENDANT
Coram:
ROGERS
J
Heard: 18-21,
26 NOVEMBER 2013
Delivered:
11 DECEMBER 2013
JUDGMENT
ROGERS
J:
Introduction
[1]
The plaintiff is the corporate trustee of the Merchant Navy Officers
Pension Fund (‘the Fund’), a pension fund established
in
England by a trust deed executed in 1937. The defendant (‘SAMC’)
is a South African company which in 1950 became
an employer as
defined in the Fund’s trust deed and rules by signing the
prescribed form of participation agreement annexed
to the 1937 trust
deed. SAMC last employed a person qualifying for membership of the
Fund in 1997. The Fund’s triennial actuarial
valuations since
1999 have revealed deficits in the Fund’s resources for
purposes of meeting its actuarial liabilities to
members. In June
2000 the Fund’s board amended the Fund’s rules to provide
explicit machinery for recovering deficits
from employers. In the
present proceedings the Fund seeks to recover from SAMC the deficit
contributions allegedly owing by the
latter pursuant to the June 2000
amendment and resolutions taken by the trustee from time to time on
the strength of that amendment.
[2]
SAMC’s defence in essence is that its participation as an
employer in the Fund ceased with effect from 6 April 1978. This

defence rests on the fact that with effect from that date the Fund’s
board adopted a substituted deed and rules. SACM contends
that in
terms of the 1978 deed and rules it was a requirement that an
employer wishing to participate in the scheme should sign
the form of
accession agreement annexed to the 1978 deed and that this
requirement applied not only to employers joining the scheme
for the
first time after 6 April 1978 but also to firms who were
participating employers immediately prior to the coming into force
of
the 1978 deed and rules. SAMC also contends that due to the
substitution of the deed and rules in 1992, 1995 and 1999, a fresh

accession agreement is needed to be signed upon the coming into force
of those substituted deed and rules. It is common cause that
the only
accession agreement signed by SACM was the one of 1950.
[3]
The Fund’s claim is a maritime claim as contemplated in s
1(1)(s) of the Admiralty Jurisdiction Regulation Act No 105
of 1983.
The claim is not one in respect of which a court of admiralty in the
Republic had jurisdiction immediately before the
commencement of Act
105 of 1983. Accordingly, in terms of s 6(1)(b) of the Act the law to
be applied is Roman-Dutch law. By virtue
of the principles of our
private international law, the interpretation of the Fund’s
trust deed and rules as they have existed
from time to time is
governed by English law, since that is where the trust deed and rules
of the Fund from time to time were executed,
where the Fund’s
principal place of business has at all times been located and where
it is administered, and where it receives
pension fund contributions
and pays out benefits.
[4]
The Fund was represented at the hearing by Mr NGD Maritz SC leading
Mr R Patrick while SACM was represented by Mr MJ Fitzgerald
SC
leading Mr AM Smalberger. The only witness who gave oral evidence was
Mr Peter McEwen, the chairman of the board of directors
of the
corporate trustee. By agreement the expert report of Mr Paul
Burbridge, an English actuary, was handed in as proof of the
truth of
its contents. The report dealt with the quantification of the deficit
contributions.
The
Fund and its governing documents
[5]
The Fund was established to provide pensions for officers of the
British Merchant Navy. Such officers might be employed by British

ship owners or by non-British ship owners. The scheme was an
industry-wide one which took into account that officers would
typically,
over the course of their careers, be employed by several
different employers and might have intermittent periods of
unemployment.
Once an officer became a member, contributions in
respect of his benefits would be made by the participating employer
by whom he
was for the time being employed. Contributions would cease
for as long as the officer was unemployed or was employed by a ship
owner who was not a participating employer.
[6]
Until 1978 the Fund’s pension scheme was a so-called money
purchase scheme in terms of which the benefits payable to an
officer
upon retirement were linked to the contributions which had been paid
in respect of his membership. Pursuant to the enactment
of the Social
Security Pensions Act of 1975, the Fund’s trust deed and rules
were amended with effect from 6 April 1978.
The amended scheme
comprised a pre-1978 and post-1978 section. The pre-1978 section
(which applied to contributions paid in respect
of members prior to 6
April 1978) continued to provide pension benefits in accordance with
the historical position. The post-1978
section (which applied to
contributions paid in respect of members, including existing members,
as from 6 April 1978) provided
for pensions on a defined benefit
basis linked to average career salary. The post-1978 section of the
Fund involved a permissible
contracting-out of certain provisions of
the 1975 Act, resulting in a reduction in the contributions which
officers and employers
needed to make in respect of National
Insurance in England. It was a requirement of such contracting-out
that the pension scheme
should make provision for a guaranteed
minimum pension, hence the introduction of a defined benefit section
in the Fund.
[7]
The governing documents of the Fund comprise a trust deed and a set
of rules annexed as a schedule to the trust deed. All underlining
in
the quotations in this judgment have been added by me to highlight
wording of possible significance to the arguments.
[8] The
1937 trust deed defined the term ‘Employers’ as primarily
meaning and including:
‘
(i)
all such Owners of British Merchant Ships to which the National
Maritime Board Officers Rates of Pay Agreements apply (either
as
standard rates or as minimum rates) and Wireless Companies employing
Radio Officers in such ships except and to the extent that
any such
owner or company is maintaining and continues to maintain a private
scheme as hereinbefore defined, provided that nothing
in this clause
shall be construed as preventing any such owner or company from
extending any private scheme established prior to
[1 November 1937]
so long as notice of any such extension is given to the Committee
before [1 January 1938] and such extension,
unless the Committee
extend the date in the approved cases, is in full operation by [1
July 1938] and (ii) such other Owners of
British Merchant Ships and
Employers of British Merchant Officers as the Committee may from time
to time determine to bring within
the Scheme, and who in either case
undertake, by way of the Agreement set forth in the Second Schedule
hereto or otherwise to the
satisfaction of the Committee, the
obligations imposed on employers by the Trust Deed and the Rules and
become contributors to
the Fund. The expression shall also extend to
include such institutions (including the Fund and the Trustees as
employers of staff)
or undertakings formed for purposes connected
with or relating to the British Merchant Navy as the Committee may
from time to time
determine to bring within the Scheme and to
undertake in manner aforesaid the said obligations and become
contributors to the Fund’.
[9]
The accession agreement annexed as the second schedule to the 1937
deed was in the form of a document addressed to the Fund’s

Committee of Management and read thus:
‘
We,
[employer’s name and address], having received a copy of the
Trust Deed and Rules dated the ____ day of ____ 1937 and
constituting
and regulating the Merchant Navy Officers Pension Fund HEREBY AGREE
to assume and be bound by the obligations undertaken
by Employers
thereunder or under any subsequent variation that may be duly made
therein.’
Provision
was made for signature and for the place and date thereof to be
inserted.
[10]
The expression ‘Trustees’ in the deed and rules has at
all times been a reference to the corporate trustee of the
Fund.
Originally the administration of the Fund was in the hands of a
Committee of Management comprising equal representation from

employers and employees (appointed respectively by the employer and
employee components of the Navigating and Engineering Officers
Panels
of the National Maritime Board). In 1986 the administration of the
Fund was entrusted directly to the corporate trustee,
whose board of
directors was to comprise an equal number of employer and employee
representatives.
[11]
Clause 19 of the 1937 deed provided that the deed and rules could be
‘varied or added to in any way’ by means of
a
supplemental deed executed by two members of the Committee as the
latter might appoint to execute same. Every such variation
first had
to be approved by a majority of the full number of employer
representatives and by a majority of the full number of employee

representatives. The power of variation was subject to certain
qualifications prohibiting a change to the main purpose of the Fund

or the return of contributions to employers or the prejudicing of
annuitants’ rights or a derogation from the principle of
equal
representivity.
[12]
On 1 March 1950 SAMC, which was a South African company employing
British merchant naval officers, signed an accession agreement
in the
prescribed form.
[13]
Amendments were made to the 1937 deed and rules from time to time.
With effect from 5 October 1966 the Committee substituted
the 1937
deed as amended by way of a consolidated deed and set of rules. The
definition of ‘Employers’ in the 1966
deed was identical
to the definition in the 1937 deed. The 1966 deed also contained an
identical power of variation. Because the
1966 deed repeated the
definition of ‘Employers’ in the 1937 deed, the deed
applied to those employers who signed the
prescribed accession
agreement or who otherwise undertook the obligations of employers to
the satisfaction of the Committee.
[14]
The 1966 deed and rules were substituted with effect from 6 April
1978 by a revised deed and set of rules. As noted, the 1978
deed and
rules introduced significant changes to the Fund’s benefit
structure in relation to contributions made as from 6
April 1978. The
preamble to the 1978 deed recorded that it had been adopted in
accordance with clause 19 of the trust deed (ie
in accordance with
the power of alteration in clause 19 of the 1966 deed as it read
immediately prior to the adoption of the 1978
deed).
[15]
In the 1978 documents the definitions, which formerly had been
contained in the trust deed, were located in the rules. The
1978
rules defined the term ‘Employers’ as primarily meaning
and including (my underlining):
‘
(i)
all such Owners and Managers of British Merchant Ships to which the
National Maritime Board agreements apply and Wireless Companies

employing Radio Offices in such ships except and to the extent that
any such owner or company is maintaining and continues to maintain
a
Private Scheme for officers in its employment; (ii) such other
employees of British Merchant Navy Officers and/or former British

Merchant Navy Officers as the Committee may in their absolute
discretion from time to time determine to bring within the Scheme;

(iii) such other employers who were participating in the Scheme on
5th April 1978; and (iv) such institutions (including the Fund
and
the Trustees as employers of staff) or undertakings formed for
purposes connected with or relating to the British Merchant
Navy as
the Committee may from time to time determine to bring within the
Scheme and who in any such case undertake in manner provided
under
Clause 2 of the Trust Deed the obligations imposed on Employers by
the Trust Deed and the Rules and become contributors to
the Fund’.
The
definition of ‘Employer’ in the 1937 and 1966 documents
did not contain the third category I have underlined in
the above
quotation.
[16]
Clause
2 of the 1978 deed stipulated as follows:
‘
Each
Employer participating in the Scheme shall undertake by entering into
the form of Agreement set forth under the Second Schedule
hereto or
otherwise to the satisfaction of the Committee of Management of the
Fund the obligations imposed upon such Employer by
the Rules’.
The
form of accession agreement prescribed under the 1978 deed remained
substantially as it was under the 1937 deed, save that the
blank form
referred to a copy of the deed and rules ‘dated the ___ day of
197_’ and there was added at the end of the
undertaking the
phrase ‘and promptly to pay to the Fund all contributions due
under the Rules’.
[17]
The deed and rules have been substituted from time to time since 1978
to consolidate intervening amendments and to introduce
other
alterations. The distinction between the pre-1978 and post-1978
sections of the Fund has remained. Substituted deeds and
rules were
adopted with effect from 1 December 1992, 27 January 1995 and 6 April
1997 (the last of these substituted deed and rules
were adopted on 25
June 1999 with retrospective effect). Each new set of substituted
documents was adopted under the power of variation
contained in the
immediately preceding version of the trust deed.
[18]
The 1992 deed replaced the term ‘Employer’ with
‘Participating Employer’, and that nomenclature was

retained in the 1995 and 1999 documents. The term ‘Participating
Employer’ was defined in the 1992 rules as meaning:
‘
an
employer who has completed the Participating Employers form of
Agreement contained under the First Appendix of the Trust Deed
and
has been admitted to the Scheme as (1) and Owner or Manager of
British Merchant Ships who adheres to the terms of the National

Maritime Board Agreements or (2) such other employers of British
Merchant Navy Officers and/or former British Merchant Navy Officers

as the Trustees may in their absolute discretion from time to time
determine or (3) an employer of staff engaged in the administration

of the Scheme or the National Seat Training Trust or other
institution or undertaking formed for purposes connected with all
relating
to the British Merchant Navy as the Trustees in their
absolute discretion may from time to time determine to bring within
the Scheme
but so as not to prejudice the Approval of the Scheme…’
It
will be observed that the 1992 definition did not record the third
category contained in the 1978 definition, namely ‘such
other
employers who were participating in the Scheme on 5th April 1978’.
Also, the definition no longer referred to the requirement
that an
accession agreement should be signed and so forth. In the 1992
documents that element was contained only in the trust deed,
clause
7.0 whereof provided as follows:
‘
Each
Participating Employer shall undertake by entering into the form of
Agreement set forth under the First Appendix or in such
other form as
shall be determined by the Trustees the obligations imposed upon a
Participating Employer by the Rules’.
The
form of accession agreement prescribed under the 1992 deed remained
substantially as the one prescribed by the 1978 deed, save
that the
blank form referred to a copy of the deed and rules ‘dated the
___ day of 199_’.
[19]
The 1995 deed and rules, effective as from 27 January 1995, were
identical to the 1992 documents in the respects relevant to
this
case.
[20]
The current version of the Fund’s trust deed and rules is the
1999 set of documents as amended from time to time. The
definition of
‘Participating Employers’ in the 1999 rules reflects one
potentially significant change. The definition
in rule 3 now refers
to:
‘
such
companies or firms as may have become Participating Employers in
accordance with Clause 6.0, or which have previously become

Participating Employers under other documentation which then governed
the Scheme.’
Clause
6.0 of the 1999 trust deed reads as follows:
‘
A
company or firm may take part in the Scheme and so become a
Participating Employer if:
(I)
the Trustees determine that it falls within one of the categories set
out in clause 6.1 below
(ii)
it agrees to enter into the form of agreement set out in the First
Appendix to this Trust Deed, or in such other form as shall
be
determined by the Trustees
(iii)
its participation will not prejudice Approval.’
Clause
6.1 of the 1999 trust deed sets out the different categories of
employers substantially as in the definitions of ‘Participating

Employers’ in the 1992 and 1995 rules.
[21]
The power of variation which featured in each of the earlier trust
deeds is now to be found in clause 30 of the 1999 trust
deed.
[22]
All versions of the trust deed since 1937 have contained a
substantially similar provision dealing with the contingency of
a
deficit. Clause 29.2 of the 1999 deed provides in that regard as
follows:
‘
If,
as a result of the Actuary’s report, it shall appear that there
is a deficiency or anticipated deficiency in the Scheme’s

resources, the Trustees shall consider what if any action, having
regard to any recommendations made by the Actuary in his report,

should be taken either by way of increasing contributions or
decreasing benefits to render the Scheme solvent. If necessary, the

Trustees shall take such steps as are herein laid down for amendment
of the Trust Deed and the Rules, or if the deficiency or anticipated

deficiency cannot be made good, for the winding up of the Scheme.’
[23]
The Fund’s triennial actuarial valuation as at 31 March 1999
reflected a deficit of £55 million in the post-1978
section of
the Fund. This was the first occasion on which the post-1978 section
was in deficit. Although various actions and adjustments
to
assumptions reduced the deficit as at 31 March 2000 to £8
million, the board had to give consideration to the way in which

deficits, if they continued to arise, would be addressed. By way of a
circular to employers dated 17 April 2000 the board solicited
views
on the matter, sketching certain options. The upshot of this was that
on 8 June 2000 the board resolved to amend the rules
by replacing the
definition of ‘Participating Employers’ and by inserting
a new rule 5.2A.
[24]
In terms of the new definition of ‘Participating Employers’,
that expression means:
‘
such
companies or firms as may have become Participating Employers in
accordance with Clause 6.0, or which have previously become

Participating Employers under other documentation which then governed
the Scheme. No company or firm shall cease to be a Participating

Employer either as a result of ceasing to employ Active Members on or
after 8 June 2000 or otherwise as a result of ceasing to
employ
persons in the categories described in Clause 6.1 of the Trust Deed
on or after that date or otherwise (save in accordance
with Rule
5.2A).’
[25]
Rule 5.2 of the 1999 rules contains provision for participating
employers to contribute at a specified rate of aggregate pensionable

salaries of the active members in its employment. Similar provisions
had been contained in earlier versions of the rules. The new
rule
5.2A adopted on 8 June 2000 reads thus:
‘
Without
prejudice to Rule 5.2, each Participating Employer (whether or not
employing Active Members and whether or not employing
persons in the
categories described in Clause 6.1 of the Trust Deed) shall make such
further contributions (if any), which may
include lump sum
contributions, from time to time as may be decided by the Trustees,
having regard to the advice of the Actuary,
in order to reduce or
eliminate any deficiency or anticipated deficiency in the Scheme’s
resources. Such deficiency shall
be calculated for this purpose by
reference to the ongoing basis of calculation adopted in the then
most recently completed actuarial
valuation of the Scheme (that is,
the basis which assumes that the Scheme remains in full operation),
with such modifications,
if any, as the Trustees shall determine
having regard to the advice of the Actuary in order to take account
of the lapse of time
and any events during the intervening period.
For the purposes of the calculations in this Rule 5.2A, the Trustees
and the Actuary
shall take into account, to the extent that they
consider it appropriate:
(I)
the proportion of the amount of the deficiency or potential
deficiency which the Scheme’s liabilities attributable to
the
employment with that Participating Employer bear to the total amount
of the Scheme’s liabilities attributable to employment
with all
of the Participating Employers;
(ii)
any lump sum or other contributions paid, payable or prospectively
payable by any Participating Employer for the purpose of
reducing or
eliminating a deficiency or potential deficiency, whether under this
Rule 5.2A, Section 75 of the Pensions Act 1995
or otherwise; and
(iii)
any debt which, in the opinion of the Trustees, is unlikely to be
recovered.
A
Participating Employer may, if the Trustees consent, cease to be a
Participating Employer for the purposes of the Scheme on such
date as
the Trustees shall determine if it shall make such contributions (or
undertakes to do so in terms satisfactory to the Trustees)
as the
Trustees, having regard to the advice of the Actuary, shall
determine, or if the Trustees, having regard to such advice,
shall
determine that no such contribution shall be required. Such
determination shall be made in accordance with this Rule 5.2A,
but
having regard to such basis of calculation as the Trustees may
reasonably determine in order to protect the interests of the

Members.’
[26]
I should mention for the sake of completeness that the Fund closed to
new members on 1 November 1996.
The
English proceedings
[27]
On 15 June 2000 the Fund’s board wrote to employers advising
them of the amendment of 8 June 2000. The board informed
employers
that the Fund was intending to approach the court for confirmation
that participating employers could be held liable
for their pro rata
share of deficits despite the fact that they had ceased to employ
active or eligible members.
[28]
This was followed by a further letter to employers on 6 March 2001,
in which the Fund indicated that it wished to identify
a
representative employer for each relevant category of employers so
that such representative employer could be cited as a defendant
in
the proposed proceedings. Employers were invited to complete an
attached questionnaire and volunteer. On 21 September 2001 the
Fund
wrote a further letter to employers indicating that it had as yet
received no volunteers to act as a representative defendant
in
certain categories.
[29]
In the event, employers willing to represent the various categories
were found and proceedings were launched in England. There
were three
defendants, representing the following categories of employers: [a]
participating employers who employed no active members
(ie members in
respect of whom contributions were being paid) as at 8 June 2000 (the
date of the rule amendment) – this class
was represented by FT
Everard & Sons Ltd (‘Everard’); [b] participating
employers who employed no active members
as at 8 June 2000 and also
did not as at that date employ officers who would have qualified for
membership – this class was
represented by Pandoro Ltd
(‘Pandoro’); and [c] participating employers who employed
active members as at 8 June 2000
– this class was represented
by Everard (Guernsey) Ltd. (SACM, the defendant in the proceedings
before me, probably belongs
in the first of these categories. It
certainly did not employ active members as at 8 June 2000.) It was
not possible to find a
representative defendant in respect of a
fourth category of possible relevance, namely employers who only ever
contributed to the
pre-1978 section (ie who employed no contributing
members on or after 6 April 1978).
[30]
The essential question on which the Fund sought a ruling from the
English court was whether a firm which at any time contributed
to the
Fund as an employer could be held liable for deficits in accordance
with a rule adopted at a time when the firm in question
was no longer
contributing to the Fund, ie had ceased to employ active members. I
should mention that according to the evidence
of the only witness for
the plaintiff, Mr McEwen, the rule amendment of 8 June 2000 was
adopted on a ‘belt and braces’
basis, because the advice
received by the Fund was that they could probably have levied the
lump sum deficit contributions they
did without a rule amendment.
[31]
The first and second defendants (Everard and Pandoro) argued that
they were not subject to the rule amendment of 8 June 2000
because
they had ceased to employ active members when the change took effect.
Unsurprisingly, the third defendant joined the Fund
in arguing the
contrary (it suited active employers as at 8 June 2000 to have the
deficit burden spread among as larger a group
of employers as
possible).
[32]
The matter was argued before Patten J in the Chancery Division. He
delivered judgment on 22 March 2005 (the neutral citation
of the case
is MNOPF Trustees Ltd v FT Everard & Sons Ltd & Others
[2005]
EWHC 446
(Ch)). Patten J held, in summary, that the trust deed and
rules at no stage made provision for participating employers to
withdraw
from the pension fund scheme. The accession agreement signed
by a party as an employer bound such party to the scheme for its
duration.
The liability of such parties during the duration of the
scheme depended on the powers and degree of control which they
conferred
on the corporate trustee under the terms of their accession
agreements. In the accession agreement the party agreed to be bound

not only by obligations imposed on employers by the then current
trust deed and rules but also by obligations arising from any

variation to the trust deed and rules. Rule 29.2 (dealing with
deficits) read with the power of variation in rule 30 empowered
the
board to adopt the amendment of 8 June 2000 and thereby to impose an
obligation on any party which had agreed to participate
as an
employer in the pension fund scheme.
[33]
The order made by Patten J, insofar as relevant to the present case,
was as follows:
‘
On
a true construction of the Current Trust Deed and Rules, the
Participating Employers of the Scheme from which the claimant as

trustee of the Scheme may require contributions (including lump sum
contributions) to the Scheme are all companies or firms which
have
ever become Participating Employers or Employers in accordance with
clause 6.0 of the Current Trust Deed or in accordance
with
documentation which previously governed the Scheme, whether or not
they continue to employ Active Members.’
[34]
Mr Fitzgerald did not seek to challenge the finding of Patten J that
a party who at any stage was an employer or participating
employer
could be held liable for deficits even though such party had ceased
to employ active members as at 8 June 2000. His argument
was that
SACM at no stage became an ‘Employer’ or ‘Participating
Employer’ in the post-1978 section of
the Fund. In other words,
the decision of the Fund’s board to levy lump sum deficit
contributions from parties who had made
contributions as employers on
or after 6 April 1978 simply did not apply to SACM because it at no
stage acceded to the status of
an ‘Employer’ or’
Participating Employer’ in the post-1978 section of the Fund.
[35]
Since the question before me is ultimately one of construction
governed by English law, it is convenient here to quote Patten
J’s
summary in para 40 of the principles applicable to the interpretation
of pension fund trust deeds and rules:
‘
The
principles of construction relevant to a pension scheme were
identified by Arden LJ in her judgment in British Airways Pension

Trustees Limited v. British Airways Plc
[2002] EWCA Civ 672.
Whilst
explaining that there are no special rules of construction to be
applied, Arden LJ considered that the following factors
are likely to
be relevant to a consideration of a pension scheme. They can be
summarised as follows:
(1)
Members of a scheme are not volunteers: the benefits which they
receive under the scheme are part of the remuneration for their

services and so are in a different position in some respects from
beneficiaries of a private trust;
(2)
a pension scheme should be construed so to give a reasonable and
practical effect to the scheme;
(3)
pension schemes are often subject to considerable amendment over
time: the general principle is that each new provision should
be
considered against the circumstances prevailing at the date when it
was adopted rather than as at the date of the original trust
deed;
(4)
a provision of a trust deed must be interpreted in the light of the
factual situation at the time it was created: this includes
the
practice and requirements of the Inland Revenue at that time, and may
include common practice among practitioners in the field;
(5)
the function of the Court is to construe the document without any
predisposition as to the correct philosophical approach;
(6)
a pension scheme should be interpreted as a whole: the meaning of a
particular clause should be considered in conjunction with
other
relevant clauses.’
The
deficit contributions levied
[36]
It is unnecessary to describe in any detail the manner in which the
deficit contributions were levied from time to time pursuant
to the
amendment of 8 June 2000. In summary, the deficit in the Fund’s
resources for the purposes of meeting the defined
benefits of
beneficiaries in the post-1978 section was apportioned pro rata among
all parties who had contributed to the Fund as
employers at any time
during the life of the post-1978 section. This would roughly mean
that each such party would bear the deficit
attributable to the
period of time and quantum of contributions made by such party in
respect of any particular member. Unsurprisingly,
certain of the
entities which had made contributions as employers had ceased to
exist by the time the deficit contributions were
levied. These
so-called ‘orphan liabilities’ were apportioned pro rata
among the extant employers.
[37]
The quantification of SACM’s liability for deficits, if it is
liable at all, depends on whether the Fund has correctly
identified
the members in respect of whom SACM made contributions and has
correctly calculated the quantum of the contributions.
Save in
respect of a Mr Benney, to whom I shall refer later, there is no
dispute on these matters. If Mr Benney has correctly been
included
among the persons for whom SACM made contributions as a participating
employer, SACM’s liability for deficit contributions
would be
as follows: [a] £251 240 in respect of the actuarial valuation
as at 31 March 2003; [b] £217 367 in respect
of the actuarial
valuation as at 31 March 2006 (incorporating an amount of £36
178 which was a shortfall in the deficit previously
determined as at
the 31 March 2003); [c] £464 934 in respect of the actuarial
valuation as at 31 March 2009; [d] £150
811 in respect of the
actuarial valuation as at 31 March 2013. On each occasion that the
board determined the contributions, it
also set a due date for
payment and adopted a contribution collection policy would set out
the rate of interest payable on contributions
as from the due date.
There is no dispute as to these rates.
[38]
It is likely that further deficit contributions will be levied on
parties such as SACM pursuant to actuarial valuations lying
in the
future.
SACM’s
participation
[39]
As previously mentioned, SACM signed an accession agreement on 1
March 1950 in the form then prescribed. Although SACM contends
that
it did not lawfully become an ‘Employer’ in relation to
the post-1978 section of the Fund, it was established
by the evidence
and ultimately not in dispute that as a fact SACM paid contributions
in respect of qualifying officers employed
by it in the period from 6
April 1978 until 28 February 1993. These contributions were paid on
its behalf by its English subsidiary
and agent, Safmarine (UK) Ltd
(‘SUK’). There were, according to annexure ‘E’
to the particulars of claim,
92 such members. The last contributions
in respect of these persons were paid on dates ranging from 6 April
1978 to 28 February
1993. In respect of Mr Benney, the Fund received
contributions until 30 June 1997. The Fund treated those
contributions as having
been made by SACM though there is a dispute
as to whether SACM was the employer of Mr Benney.
[40]
The explanation for the cessation of contributions as at 28 February
1993 (save in the case of Mr Benney) appears to be that
with effect
from 1 March 1993 the active members then employed by SACM were
transferred into the employ of a company called Celtic
Pacific. The
latter was a service company which made naval officers available to
ship owners. It seems that the members in question
may well have
continued to work on vessels operated by SACM but the latter was no
longer responsible for paying contributions to
the Fund.
[41]
With effect from 30 March 1999 SACM sold its liner business, which
historically had traded under the name Safmarine, to Safmarine
(Pty)
Ltd (‘SPL’), a new subsidiary established for that
purpose by the ultimate acquirer, Maersk. The Safmarine liner

business was the enterprise in which SACM had primarily needed the
services of naval officers who were members of the Fund. A number
of
officers who had been employed by SACM as at 28 February 1993 and
whose employment had been transferred to Celtic Pacific on
1 March
1993 became employees of SPL with effect from 30 March 1999. SPL, for
several years as from 1 March 1999, made contributions
to the Fund in
respect of these officers. It was common cause that SPL signed its
own accession agreement – this would have
been under the 1995
or 1999 version of the trust deed and rules. Despite the fact that
SACM and SPL are different entities and
that each signed its own
accession agreement, the Fund appears initially to have drawn no
distinction between the two. The result
was that at one stage the
Fund claimed from SACM deficit contributions associated with the
contributions paid by SPL in the period
since 1 March 1999. When,
pursuant to correspondence, the distinction came to light, the Fund
split the deficit contributions between
SACM and SPL. In the current
proceedings, the Fund only seeks deficit contributions in respect of
contributions made by SACM up
until 28 February 1993 (save for Mr
Benney). In respect of the period thereafter, the Fund has claimed
the relevant deficit contribution
from Celtic Pacific and from SPL.
[42]
It should also be mentioned here that on 23 September 1999 but with
effect from 1 January 1999 the share capital in SACM was
sold by its
holding company, Safmarine & Rennies Holdings Ltd (‘Safren’),
to a Liberian company, Capital Finance
SA (‘CFSA’). This
sale was on the basis that SACM would have disposed of its liner
business and would only retain its
bulk division. (Safren has
subsequently gone into liquidation. There is an indication in the
documentary exhibits that if SACM
is liable in the present
proceedings, CFSA may consider itself to have recourse under the sale
agreement against Safren.)
SACM’s
liability
Interpretation
of 1978 definition of ‘Employer’
[43]
Mr Fitzgerald’s main submission on behalf of SACM in oral
argument was in summary the following. In terms of the 1978
rules the
definition of the term ‘Employers’ sets out four
categories of qualifying employers. The definition then
adds the
general qualification ‘and who in any such case undertake in
manner provided under Clause 2 of the Trust Deed the
obligations
imposed on Employers by the Trust Deed and the Rules and become
contributors to the Fund’. The phrase ‘in
any such case’
refers back to the four categories of qualifying membership. The
third of those four categories in the 1978
definition was ‘such
other employers who were participating in the Scheme on 5th April
1978’. It follows, argued Mr
Fitzgerald, that employers such as
SACM who had signed accession agreements prior to the coming into
force of the 1978 deed and
rules would only become ‘Employers’
under the 1978 scheme if they signed the accession agreement
prescribed by the
1978 deed.
[44]
Mr Fitzgerald did not contend that the same argument would have held
good in respect of the 1966 deed and rules. He pointed
out that the
definition of ‘Employers’ in the 1966 deed did not have a
specific category for persons who were already
participating as
employers as at 5 October 1966. He also submitted that the 1966
version of the deed and rules was merely a consolidation,
and that
the consolidated trust deed still styled itself as a trust deed
executed in 1937. He thus accepted that SACM remained
a participating
employer after 5 October 1966 even though it did not at that time
execute a fresh accession agreement.
[45]
Somewhat inconsistently with his stance in respect of the 1966 deed
and rules, Mr Fitzgerald argued that his argument in respect
of the
1978 deed and rules also applied to the 1992, 1995 and 1999 rules –
he contended that with the adoption of each of
those new sets of
documents, existing employers were required to sign fresh accession
agreements if they were to remain as participating
employers. I say
that the argument is inconsistent, because the 1992, 1995 and 1999
documents omitted the express inclusion, in
their definitions of
‘Participating Employers’, of employers who were already
participating in the scheme immediately
prior to the coming into
force of the new version of the deed and rules.
[46]
Be that as it may, the critical question is the interpretation of the
1978 deed and rules, because if Mr Fitzgerald’s
argument is
correct in relation to that version of the deed and rules, the 1992,
1995 and 1999 version of the deed and rules could
not have had the
effect of converting SACM into a participating employer in the
post-1978 section. Although the 1992 version of
the deed and rules
may not have required participating employers to sign fresh accession
agreements, that version of the deed and
rules would at best for the
Fund have applied (in the absence of a fresh accession agreement) to
parties who were already participants
in the post-1978 section of the
Fund, and on Mr Fitzgerald’s argument SACM was not such an
employer. (The same analysis would
apply mutatis mutandis to the 1995
and 1999 deed and rules.)
[47]
In support of his argument, Mr Fitzgerald contended that it was not
implausible, given the significant changes brought about
by the 1978
deed and rules, that the framers of the new documents would have
required fresh accession agreements from employers
who were already
participating in the Fund. The amended deed and rules introduced a
new defined benefit section into the Fund.
It was that section which
would apply to all contributions made to the Fund as from 6 April
1978. Participation in the post-1978
section was potentially more
onerous to participating employers because a defined benefit pension
scheme increases the risk that
employers will need to make good any
deficiencies in the Fund’s financial ability to meet benefits.
[48]
He also pointed out that the form of accession agreement prescribed
by the 1978 deed was a form which required the employer
to
acknowledge having received a copy of deed and rules envisaged to
have been executed in a date in the 1970s (in the event, 1978).

Participating employers immediately prior to the coming into force of
the 1978 deed and rules would only have acknowledged by their

accession agreements that they had received the 1937 deed and rules.
[49]
Mr Fitzgerald said, furthermore, that the 1978 form of access in
agreement contained an additional undertaking by the employer:
‘…
and promptly to pay to the Fund all contributions due under the
Rules’. However, I do not regard this as
a significant
alteration. From the outset the trust deed and rules have contained
provisions which would have the same legal effect.
For example,
clause 8(b) of the 1937 rules provided, in relation to contributions,
that each employer ‘shall account to the
Fund at such intervals
and in such manner as the Committee may from time to time determine’.
The requirement for prompt payment
of contributions, ie by due date,
has always been implicit, if not explicit.
[50]
Linguistically, there is much to be said for Mr Fitzgerald’s
argument that the phrase ‘in any such case’
in the 1978
definition of ‘Employers’ applies inter alia to persons
who were participating as employers immediately
prior to 6 April
1978. It can be assumed that in formulating the 1978 deed and rules
the persons responsible for its drafting had
to hand the immediately
preceding version of the deed and rules, and would where appropriate
have adopted or varied the provisions
of the 1966 deed and rules. The
1937 and 1966 deeds defined the term ‘Employers’ by
describing two broad classes of
qualifying employers (under the
numbering (i) and (ii)) and then adding the general qualification
‘and who in either case
undertake…’. This was
clearly a reference back to the two broad classes. The 1937 deed
naturally had no occasion to
refer to persons already participating
as employers (there were none). Since the 1966 deed, despite its
consolidated amendments,
was as a matter of formulation described as
a deed adopted in 1937, there was arguably no reason on that occasion
to make reference
to persons who were already participating
employers. The framers of the definition in the 1978 rules grouped
the qualifying employers
under four numbered categories instead of
two, and then added the qualification ‘and who in any such case
undertake…’.
The use of the word ‘any’
rather than ‘either’ indicates that the drafters,
appreciating that there were
now four broad categories of qualifying
employers rather than two, changed the general qualification so as to
embrace all four
categories.
[51]
However, the purpose of interpretation is to arrive at the true
intention of the parties. There are two possible reasons why
the
framers of the 1978 definition expressly included, as a third
category of qualifying employers, such employers as were already

participating in the scheme on 5 April 1978. The first, which is the
one for which Mr Fitzgerald contends, is that because the
1978 deed
introduced significant and potentially burdensome provisions, it was
required that existing employers should sign fresh
accession
agreements. The second is that the framers wished to make clear that
those employers already participating in the Fund
would automatically
qualify as such. The framers knew that existing employers had already
signed the accession agreements prescribed
in the definition of
‘Employers’ in the 1937 or 1966 rules. On the latter
view, existing employers automatically qualified,
while other
employers who wished to participate would need to fall within the
first, second or fourth of the qualifying categories
and would need
to sign an accession agreement.
[52]
I am satisfied (for reasons which I shall presently explain) that the
second of these views is correct. Linguistically, there
are two
alternative ways in which one could arrive at this conclusion. The
first is to adopt a restrictive interpretation of the
phrase ‘in
any such case’, so that it applies only to the first, second
and fourth numbered categories of qualifying
employers. This
limitation is not expressed but there are occasions where apparently
wide and unlimited language can legitimately
receive a restrictive
interpretation. The second way would be to read clause 2 of the 1978
deed (to the requirements of which the
1978 definition of ‘Employers’
refers) as incorporating, in the case of existing employers, an
implied reference to
the virtually identical provisions for accession
under predecessor versions of the deed and rules. Put differently,
the words,
‘form of Agreement set forth under the Second
Schedule’, in clause 2 of the 1978 trust deed could be read as
including
an accession agreement prescribed under the earlier
versions of the deeds, such earlier accession agreement being in
substantially
the same ‘form’ as the one prescribed in
the 1978 deed.
[53]
Whichever of these methods is preferred, I am satisfied that the
requirement that the accession agreement prescribed under
clause 2 of
the 1978 deed only needed to be signed by employers who were not
already participating in the scheme immediately prior
to the coming
into force of the 1978 deed and rules. A restrictive interpretation
of the phrase ‘in any such case’
would not be
inconsistent with the change from ‘either’ to ‘any’,
because ‘either’ would have
been inappropriate, whether
the requirement of an accession agreement applied to only three or to
all four categories in the 1978
definition. There are several
considerations which lead me to this conclusion.
[54]
Firstly, although the 1978 deed and rules introduced significant
changes, they were, in character, variations to the 1937 deed
and
rules. They were adopted under the power of variation conferred by
clause 19 of the 1937 deed and retained in the 1966 deed.
If the 1978
deed and rules were not adopted under the power of variation in the
preceding version of the deed, the 1978 documents
would not have been
valid at all, since the Committee of Management would not have had
the power to adopt them. Nobody suggests
that the 1978 the deed and
rules was not validly adopted. No new trust or pension fund was
created; the Fund continued to exist
under varied rules. The
character of the 1978 deed and rules as a variation of the deed and
rules as they existed immediately prior
to 6 April 1978 is not to my
mind affected in the least by the fact that the 1978 deed recorded in
one of its preambles that the
revisions to the rules required to
bring about the desired changes were such as ‘to require the
adoption of new Rules’
and that it was thought ‘expedient’
at the same time ‘to adopt a new Trust Deed so that henceforth
these presents
may alone be looked to as the instrument regulating
the Fund’. That being so, employers who had signed accession
agreements
prior to 6 April 1978 would without more have been bound
by the 1978 deed and rules; under the form of accession agreement
prescribed
by the 1937 and 1966 deeds the employer in question agreed
to be bound by any subsequent variation of the deed and rules.
[55]
The requirement that there should be a signed accession agreement
appears to me in general to have been a requirement imposed
by the
various versions of the deed and rules for the benefit of the Fund,
not for the benefit of employers. It is the means whereby
the Fund
could be satisfied that the employer would be bound. That this is so
is apparent from the fact that in every version of
the deed or rules
the Committee or trustee was given the power to dispense with the
requirement of the prescribed form of accession
agreement provided
the Committee was otherwise satisfied that the employer in question
had undertaken the obligations imposed by
the deed and rules. When
the 1978 variations were adopted, the Committee of Management would
have known that employers who had
already signed accession agreements
under the 1937 or 1966 deed had undertaken to be bound by further
variations, including those
adopted in 1978. There was thus no need
in law for the framers of the 1978 deed and rules to have imposed a
requirement that existing
employers sign fresh accession agreements.
[56]
There were also no equitable considerations which required that
existing employers should sign fresh agreements. The 1978 deed
and
rules were adopted by the Committee, on which there was equal
representation from employers and employees. In the nature of
things,
the employer representatives would have been drawn from companies and
firms that were existing employers participating
in the Fund. The
1978 deed and rules could only have been adopted because they enjoyed
the support of a majority of the full number
of employer
representatives. Although there was no evidence to this effect, I can
safely assume that in the period between the
coming into force of the
Social Security Pensions Act of 1975 and the adoption on 2 January
1978 of the 1978 deed and rules, there
was communication with
participating employers regarding the proposed changes. An existing
employer who did not wish to participate
in the post-1978 section
could (unless such employer fell within the category of employers
bound by the National Maritime Board
agreements) simply have opted
out by ceasing to pay contributions in respect of its employed
officers (subject, of course, to the
terms of the employment contract
between such employer and its employed officers).
[57]
Mr Maritz for the Fund also drew attention to the concluding phrase
in the 1978 definition of ‘Employers’, namely
‘and
become contributors to the Fund’. That general requirement is
allied to the other general requirement that a participating
employer
should undertake the obligations of an employer in the manner
required by clause 2 of the trust deed, and both these requirements

are, semantically, applicable ‘in any such case’. Persons
who were already employers immediately prior to 6 June 1978
would
already have been contributors to the Fund; they would not ‘become’
contributors (even if they signed a fresh
accession agreement) –
they would simply continue contributing. This tends to indicate that
the two general requirements,
ostensibly applicable ‘in any
such case’, were not intended to apply to the third category of
qualifying employers,
namely those who were already participating as
at 5 June 1978 and thus already contributing.
[58]
The Committee would also have been aware that to require fresh
accession agreements would be administratively burdensome. There
were
a great many participating employers immediately prior to the coming
into force of the 1978 deed and rules. The Committee
would have
needed to send a request to each such employer and would have had to
follow up with those who did not return a new signed
accession
agreement.
[59]
Moreover, a requirement that existing employers sign fresh accession
agreements would have led to disruption in the seamless
transition of
existing employers from the pre-1978 section to the post-1978
section. That a seamless transition was contemplated
is perfectly
clear. The 1978 rules defined ‘Post-1978 Service’ as
meaning employment with an ‘Employer’
on and after 6
April 1978. In terms of clause 6 of the rules, an existing member as
at 6 April 2008 was entitled to the pension
specified in the
pre-existing version of the rules up to 6 April 1978 and a pension as
from 6 April 1978 as specified in the 1978
rules. On Mr Fitzgerald’s
argument an existing employer did not become a participating employer
in the post-1978 section
unless, and presumably until, such employer
signed a fresh accession agreement. The post-1978 section came into
operation on 6
April 1978. What would happen if the existing employer
only signed the fresh accession agreement in late 1978 or during
1979? Presumably,
on Mr Fitzgerald’s argument, such person
would not have been a participating employer in the post-1978 section
in the intervening
period (unless the accession agreement stated that
it would have retrospective effect, something for which the
prescribed form
of accession agreement annexed to the 1978 deed did
not make express provision). The term ‘Membership’ in the
1978
rules referred to officers employed by ‘Employers’
to whom the scheme applied. Contributions towards benefits could
only
be made by an ‘Employer’ and with reference to an
employed ‘Member’. It would follow, on Mr Fitzgerald’s

argument, that no contributions could be made in respect of an
employed officer in the post-1978 section until the existing employer

had signed a fresh accession agreement. Such a result, which was
administratively inevitable, could not have been intended. On
the
other hand, there would be no difficulty in accepting that a new
employer did not qualify as such until it had signed an accession

agreement.
[60]
A further consideration is that, as in the case of the 1937 and 1966
deed and rules, the 1978 rules provided for a accession
not only by
employers but also by members. Clause 4 of the 1978 rules stated that
the Fund was open to membership on the part of
all those in ‘Service’
in accordance with the rules, the term ‘Service’ meaning
employment with an ‘Employer’.
Clause 4 required that
such members should
‘
ratify
this agreement and express their assent to be bound by the Scheme and
these Rules by the execution of the Form of Assent
and Authority
which is set out in the Third Schedule to the Trust Deed or by such
other appropriate method as the Committee may
prescribe’.
In
the form prescribed in the third schedule to the 1978 trust deed, the
employee in question acknowledge having received a copy
of the trust
deed and rules ‘dated the ___ day of 197_,’ and agreed to
‘become’ a member of and to contribute
to the Fund and to
be bound by all its provisions, rules and regulations or any
subsequent variation thereof. He also authorised
his ‘Employer’
to deduct the contributions payable to the Fund. It appears most
implausible that the framers of the
1978 documents intended that the
thousands of existing members of the Fund as at 1978 would have to
sign fresh agreements of assent.
The agreements of assent prescribed
under the 1937 or 1966 deed sufficed, and the Committee would have
known that. One thus cannot
read clause 4 of the 1978 rules as
requiring existing members to sign the form of assent prescribed in
the third schedule to the
1978 trust deed. If that is so, there is no
reason why fresh accession agreements should have been required from
the employers
of those same members. Yet on Mr Fitzgerald’s
argument, the existing members (who did not need to sign fresh assent
agreements)
could not continue to be members unless and until their
existing employers signed fresh accession agreements. Such a view is
so
far removed from business sense and practicality that it can be
rejected.
[61]
That the draftsman could (on the view I take of the clause) have made
his intention clearer is obviously so. Nevertheless,
I remind myself
of the fifth general principle of interpretation in Lord Hoffmann’s
oft-quoted speech in Investors Compensation
Scheme v West Bromwich
Building Society
[1998] 1 All ER 98
(HL):
‘
The
“rule” that words should be given their “natural
and ordinary meaning” reflects the common sense proposition

that we do not easily accept that people have made linguistic
mistakes, particularly in formal documents. On the other hand, if
one
would nevertheless conclude from the background that something must
have gone wrong with the language, the law does not require
judges to
attribute to the parties an intention which they plainly could not
have had. Lord Diplock made this point more vigourously
when he said
in The Antaios Compania Neviera SA v Salen Rederierna AB
[1985] 1 AC,
201:
“…
if
detailed and syntactical analysis of words in a commercial contract
is going to lead to a conclusion which flouts business commonsense,

it must be made to yield to business commonsense”’.
Although
(using Lord Hoffmann’s vivid word) the draftsman of the
contract in the Investors Compensation Scheme matter may
have
‘mangled’ the language, it was nevertheless clear, having
regard to the dictates of business common sense, that
the phrase used
in that contract, ‘any claim (whether sounding in rescission
for undue influence or otherwise)’ should
be interpreted
(without the need for rectification) as meaning ‘any claim
sounding in rescission (whether for a undue influence
or otherwise)’.
[62]
There was evidence as to how the Committee in fact conducted itself
administratively following the adoption of the 1978 deed
and rules,
in particular that the Committee had not called upon or required
existing employers to sign fresh accession agreements
and that, save
for a few isolated instances apparently unrelated to any such
requirement, existing employers had not signed fresh
accession
agreements. This evidence was led, and submissions were made in
argument, on the unstated assumption that the manner
in which the
Committee and employers conducted themselves in and after 1978 was
admissible in construing the 1978 deed and rules.
Such evidence might
have been admissible if the matter were governed by South African law
(see MTK Saagmeule (Pty) Ltd v Killyman
Estates (Pty) Ltd 1980 (3) SA
(A) at 12F-H; Christie The Law of Contract in South Africa 6th Ed at
226-227). However, my subsequent
researches have indicated that
English law does not permit regard to be had to subsequent conduct in
interpreting contracts (James
Miller & Partners Ltd v Whitworth
Street Estates (Manchester) Ltd
[1970] AC 583
(HL) at 603E, 611D-E
and 615A; L Schuler AG v Wickman Machine Tool Sales Ltd
[1973] UKHL 2
;
[1974] AC 235
(HL) at 252C-F, 260C-G, 261A-262B, 265E-268E, 272E-273A; Bank St
Petersburg & Another v Arkangelsky & Another
[2013] EWHC 3529
(Ch) paras 56-57), and this is stated by a leading author also to be
applicable to trust deeds (Lewin on Trusts 18th Ed para 6.12).
I thus
do not intend to examine the evidence though I accept, if it were
admissible, that it would provide strong support for the
Fund’s
interpretation.
[63]
It was pointed out by Mr Maritz that a departure from the way in
which the 1978 deed and rules were implemented by the Fund
and
employers would have catastrophic consequences for many members and
for the Fund. According to the actuarial report as at 31
March 2003
the Fund had 2 821 active members (ie for whom contributions were
still being made), 12 093 pensioners and widows/dependants
in receipt
of pensions, and 15 193 deferred pensioners (members in respect of
whom contributions had been made and with a prospective
entitlement
to a pension upon reaching retirement age). Among these would be the
92 persons listed in annexure ‘E’
to the particulars of
claim and in respect of whom SACM made contributions over varying
periods from 6 April 1978 to 28 February
1993. In a significant
number of these 92 instances, there are pensioners or widows in
receipt of a pension; others are deferred
pensioners. I have not been
given data as to how many employers who have contributed since 6
April 1978 were already participating
employers as at that date but
it is fair to assume that there are a number of them and that since 6
April 1978 they made substantial
contributions in respect of a
significant number of employees. Since we know that only in a few
isolated instances did such employers
sign fresh accession
agreements, an acceptance of Mr Fitzgerald’s argument would
lead to the conclusion that the contributions
made by such employers
over a period of many years as from 6 April 1978 were not made by
‘Employers’ in respect of
‘Members’ as
envisaged in the rules and could thus not be received by the Fund as
contributions or give rise to pension
benefits. The putative members
and employers who contributed to the post-1978 section of the Fund
would at best have a claim for
a refund of contributions. Putative
members and their widows and dependants would not be entitled to the
pension benefits which
they expected to receive pursuant to many
years of contributions. The Fund might be obliged to stop paying
pensions currently in
the course of payment to such persons, and
would possibly need to recoup pensions paid in error over many years.
(I do not presume
to comment on the requirements for such refund
claims under English law.)
[64]
While it would be pleasing to be able to reach an interpretation
which avoided these catastrophic consequences, I do not think
they
are relevant in interpreting the 1978 deed and rules. English law,
like our own, would lean against an interpretation leading
to
absurdity or to a very unreasonable result (Chitty on Contracts 29th
Ed Vol 1 para 12.055). In the present case, however, the
calamitous
consequences, if a finding were now made against the Fund, would in
the main be the result of many years of erroneous
implementation
rather than anything inherently harsh or unreasonable in Mr
Fitzgerald’s proposed interpretation. Put differently,
if the
1978 deed and rules bear the interpretation for which Mr Fitzgerald
contends, the hardship would not have been nearly as
significant, as
it will now be, if the deed and rules had been correctly applied from
the outset, ie if fresh accession agreements
had promptly been sought
from all existing employers. I do accept, though, that not
inconsiderable inconvenience and hardship would
nevertheless be
inherent in Mr Fitzgerald’s interpretation, because there would
inevitably have been a period of delay between
the coming into force
of the 1978 deed and rules and the signing of fresh accession
agreements by existing employers. That is a
consideration to which I
referred earlier.
[65]
No reference was made in argument to the powers of the Committee in
terms of clause 7 of the 1978 trust deed. The concluding
part of that
clause reads as follows:
‘…
The
Committee shall also have full power conclusively to determine all
questions or matters of doubt arising on the construction
or
operation of the Trust Deed or the Rules or otherwise relating to the
Fund. Every such determination or decision of the Committee
under
this Clause, whether made upon a question actually raised or implied
in the acts or proceedings of the Committee, shall be
conclusive and
binding on all parties.’
[66]
It seems, at very least, to be implied, from the manner in which the
Committee dealt with pre-existing employees as from April
1978, that
the Committee interpreted the definition of ‘Employer’ in
the 1978 rules as not imposing any requirement
that pre-existing
employers should sign fresh accession agreements. Since I was not
addressed on the scope of clause 7, I prefer
not to place reliance on
it. Nevertheless, and for the reasons I stated earlier, I conclude
that it was not a requirement for participation
in the post-1978
section of the Fund that an employer such as SACM, which had signed
an accession agreement prior to 6 April 1978,
was required to sign a
fresh accession agreement. This being so, the effect of Patten J’s
judgment in the English proceedings
is that the Fund is entitled to
exact deficit contributions from SACM. As I have said, by the end of
the trial there was, save
for the case of Mr Benney, no dispute that
SACM was the contributing employer in respect of the persons listed
in annexure ‘E’
to the particulars of claim and that the
deficit liability was correctly calculated.
Compliance
by other means?
[67]
If, contrary to the above conclusion, Mr Fitzgerald’s argument
were the correct one, the question might arise whether
there was not
in any event compliance with the requirement that SACM should
undertake the obligations of an employer in the manner
provided in
clause 2 of the 1978 trust deed. As previously mentioned, clause 2 of
the trust deed required employers participating
in the scheme to
undertake the obligations imposed by the rules either by entering
into the prescribed form of accession agreement
‘or otherwise
to the satisfaction of the Committee of Management’. I have
already suggested that this is one of the
indicators pointing to the
conclusion that the qualification in the definition of ‘Employers’
read with clause 2 of
the trust deed was inserted for the benefit of
the Fund, not employers. In the present case, the Fund de facto
accepted that SACM
was a participant in the post-1978 section of the
Fund. From 6 June 1978 until at least 1 March 1993 the Fund accepted
contributions
made on behalf of SACM. SACM, through its agent SUK,
rendered monthly contribution returns as from April 1978 until at
least February
1993. There was also written and telephonic
correspondence between the Fund and SACM’s agent, SUK,
regarding SACM’s
participation in the Fund on random occasions
over the period 1980 to 1989 where it was either taken for granted
that SACM was
a participating employer or it was clarified that the
participating employer was SACM, not SUK (there was some confusion in
the
Fund’s records in that regard).
[68]
I would have thought, in the light of these considerations, that it
was fairly arguable that the original accession agreement
signed in
1950, coupled with the monthly rendering of contribution returns and
payments of contributions in respect of April 1978
and in respect of
each succeeding month until February 1993, satisfied the Committee
that SACM had undertaken the obligations of
an employer under the
1978 rules. It is almost a case of res ipsa loquitur. However, I
raised with Mr McEwen in evidence whether
the Committee had ever
considered or applied the provision ‘or otherwise to the
satisfaction…’ in clause 2.
He replied that he was not
personally aware of that having been done. Mr Maritz did not pick up
on this aspect in further questioning
or in argument. I thus do not
base my decision on this alternative and express no final opinion on
it; I mention it only lest it
otherwise be thought that an obvious
answer to the case had been overlooked.
The
1950 accession agreement
[69]
In their heads of argument SACM’s counsel submitted that SACM’s
obligations must be determined with reference to
what was within the
contemplation of the parties when SACM signed its accession agreement
in 1950. It was argued that when SACM
agreed to be bound by the
obligations undertaken by employers under the 1937 deed and rules or
under any subsequent variation thereof,
it could never have been
envisaged that SACM would become liable for deficit contributions at
a time when it had long since ceased
to employ qualifying officers or
to contribute to the Fund.
[70]
This argument seems to me to be closed to SACM by Patten J’s
judgment in the English proceedings, the correctness of
which was not
challenged. It could just as well be said that an employer who only
joined the Fund after 6 April 1978 but then ceased,
some years before
the amendment of June 2000, to employ active members would not have
envisaged, when signing its accession agreement,
that it might be
found liable for deficit contributions long after it had ceased to
employ active members. There is no distinction
in that regard between
a pre-existing employer and one who only joined the Fund after 6
April 1978. Patten J’s judgment authoritatively
established
that employers who signed accession agreements were bound by
subsequent variations, even though they had ceased to
employ active
members.
[71]
In the context of the above argument, SACM’s counsel submitted
in their heads of argument that the accession agreement
signed by
SACM had to be interpreted in the light of the circumstances
prevailing in 1950, when liability of the kind arising from
the
amendment of June 2000 would not have been present to the minds of
the parties. Apart from the fact that the end-point of the
argument
would be, as I have said, contrary to Patten J’s judgment, I do
not think it is correct that the accession agreement
falls to be
interpreted with reference to the circumstances prevailing when SACM
signed the accession agreement or with reference
to any particular
factors which may have been present at that time to the mind of the
Fund on the one hand and SACM on the other.
The accession agreement
was in a form prescribed by the trust deed. Its meaning cannot change
from year to year nor can it mean
one thing for a particular employer
and a different thing for another employer. And, most importantly,
the fact that the employer
agreed, in the accession agreement, to be
bound by any subsequent variations is inconsistent with an attempt to
limit the terms
which can bind such employer. Provided a particular
variation was adopted in accordance with the power of variation
conferred by
the trust deed, and provided the Committee did not
breach any other duty when adopting the variation, the employer is
bound, whether
or not such employer foresaw the possibility of such a
variation. Particularly in the case of a pension fund which is
expected
to be in existence for many years, it may very well occur
that amendments are made at a later time which nobody would have
envisaged
at an earlier time. An employer who acceded to the Fund in
its early days was aware that variations could be made in the future,

the content of which was unknown and unknowable, given that
variations would be made in response to unpredictable changing
circumstances.
[72]
Mr Fitzgerald argued, further, that the undertaking signed by SACM in
1950 only bound it to the obligations imposed on employers
under the
1937 deed and rules or any variation of them, and that the 1978 deed
and rules were not merely a variation. I have already
explained why
that contention must be rejected.
Estoppel
[73]
I should mention for the sake of completeness that, although SACM
pleaded estoppel in very wide terms, Mr Maritz in argument
confirmed
that he relied on estoppel only in relation to the question whether
SACM was the employer of the particular members listed
in annexure
‘E’ (and in the event this only remained relevant to the
position of Mr Benney). The Fund did not contend
in argument that
SACM was estopped from asserting that it never became an ‘Employer’
in the post-1978 section of the
Fund by virtue of its failure to have
signed a fresh accession agreement.
[74]
I think this view is probably correct. Because the Fund’s
understanding was that pre-existing employers did not need
to sign
fresh accession agreements, it was not led to believe, by SACM’s
continued payment of contributions, that SACM had
signed a fresh
accession agreement.
[75] It
might be thought that estoppel could be invoked, more generally, to
establish the interpretation of the 1978 deed and rules
for which the
Fund contends. Following the decision of the English Court of Appeal
in Amalgamated Investment & Property Co
Ltd v Texas-Commerce
International Bank Ltd
[1982] 1 QB 84
, there have been many English
cases in which litigants have sought to rely on a form of estoppel
known as estoppel by convention.
Evidence of subsequent conduct,
inadmissible in interpreting a contract, has often been relied upon
in an endeavour to make out
a case of estoppel by convention. The
requirements for successful reliance on estoppel by convention seem
to present particular
difficulties in relation to pension funds
schemes, because the trust deed and rules are intended to apply to a
large number of
people (see Redro plc v Pedley & Others
[2002]
EWHC 983
(Ch) paras 59-66; In re IMG Pension Plan: HR Trustees Ltd v
German & Another
[2009] EWHC 2785
(Ch) paras 185-189; Stena Lines
Ltd v Merchant Navy Ratings Pension Fund Trustees Limited &
Another [2010] EHC 1805 (Ch) paras
134-155). A mere passive
acquiescence by a group of members or employers in the manner of
implementation adopted by trustees appears
to be insufficient; the
requirement is for both sides consciously to have adopted a
particular interpretation which they shared
with each other. Since I
was not addressed on estoppel by convention or the authorities I have
cited, I shall say nothing more
about it.
Mr
Benney
[76]
The Fund has apportioned to SACM a pro rata share of the deficit
attributable to SACM’s alleged employment of Mr Benney
over the
period 1 October 1978 to 30 June 1997. Mr Fitzgerald argued that the
Fund failed to prove that SACM was the employer of
Mr Benney. (SACM
should not be criticised for adopting this stance; the current
controllers of SACM only acquired the company with
effect from 30
March 1999 and thus do not have knowledge of any of the relevant
facts.)
[77]
The Fund made discovery of, and included in the trial bundle, all the
contribution forms in its possession submitted on behalf
of SACM. The
earliest available records date back to February 1966. As noted, the
Fund treated Mr Benney as having commenced employment
with SACM in
October 1978. The contribution return made in respect of that month
by SUK on behalf of SACM listed Mr Benney as one
of 19 members in
respect of whom contributions were being made. A single cheque was
enclosed in payment of these members’
contributions. It is
common cause that the rest of the persons listed in this contribution
return were employees of SACM and that
SUK was SACM’s English
agent. The form did not distinguish between the position of Mr Benney
and the other members. The form
specified a single Employers Econ
number in respect of all of the members listed in the form. (The Econ
number was a unique employer
number allocated by the Superannuation
Funds Office in England, which was a department within Inland
Revenue.) The contribution
returns in each succeeding month followed
the same pattern, with no distinction between Mr Benney and the other
employees of SACM.
[78]
With the transfer of the employment of SACM’s other members to
Celtic Pacific in March 1993, Mr Benney was the only remaining
member
for whom contribution returns were made as from April 1993. The first
three contribution returns in this era (April, May
and June 1993)
were submitted, as before, in the name of SUK. Thereafter and until
June 1997 (the last contribution month in respect
of Mr Benney) the
contribution forms were made variously in the names ‘Safmarine
(Pentow)’, ‘Pentow Safmarine’,
‘Safmarine’,
‘Pentow’ or (in one instance) ‘Safmarine (UK) Ltd’.
Safmarine was a trading name
of one of SACM’s businesses until
that business was sold on 30 March 1999. These returns reflect the
unique code assigned
to SACM in the Fund’s records and SACM’s
Econ number (though in some instances one or other of the codes is
omitted).
[79]
Mr Benney took optional early retirement under the Fund’s rules
in 1997 and has been a pensioner in the Fund for a number
of years.
According to the Fund’s records, Mr Benney signed a retirement
application form on 21 August 1997. He named his
employer as ‘Pentow
Marine’ of Cape Town. Annexed to the application were payslips
issued by Pentow Marine (Pty) Ltd
(‘PMPL’). These
payslips (not all of which are fully legible) appear to span a period
of April 1992 to June 1997.
[80] In
the agreement of 23 September 1999, in terms whereof CFSA acquired
the share capital in SACM from Safren, it was recorded
in an annexure
that one of SACM’s investments was a 50% shareholding PMPL and
it was further stated in a disclosure schedule
that SACM was in the
process of disposing of its investment in Pentow Marine.
[81]
On the other hand, on 22 December 2008 SACM’s then attorney, Mr
Ash, deposed to two affidavits in interlocutory proceedings
in which
he stated his instructions to be that Safmarine and Pentow Marine had
been ‘business units within’ SACM.
[82]
SACM did not offer any evidence to clarify the matter. It is thus
unclear whether and during what periods the Pentow Marine
business
was conducted as a trading division of SACM or through a subsidiary
or through a company in which SACM held only a 50%
shareholding. What
is perfectly clear is that SACM and its English agent SUK at all
times dealt with the Fund on the basis that
Mr Benney was an SACM
employee for whom SACM was liable to make contributions to the Fund.
Apart from the general manner in which
monthly contribution returns
were rendered, there were several specific occasions on which SACM
through SUK expressly stated to
the Fund that it was the employer of
Mr Benney. For example, on 17 June 1980 SUK advised the Fund (with
copy to Safmarine in Cape
Town) that all officers for whom SUK paid
contributions were employed by SACM. As noted, among the officers in
respect of whom
SUK was paying contributions at that time was Mr
Benney. On 7 November 1988 the Fund wrote to SUK seeking clarity as
to which company
employed a specified list of members, including Mr
Benney. On 9 November 1988 SUK replied that all those officers were
in the employ
of SACM. On 18 November 1988, and at a time when there
was confusion as to whether SACM had ever signed an accession
agreement,
SACM completed an employer’s application form in
which it identified SUK as its agent and listed the merchant naval
officers
in its employ. The first name on that list was Mr Benney’s.
There is no evidence in the Fund’s records that PMLP or
any
other entity owning the Pentow Marine business signed an accession
agreement. The Fund pleaded that if SACM was not in fact
the employer
of Mr Benney, SACM is estopped in these proceedings from so
contending. I accept that proposition. If SACM had not
represented
that it was the contributing employer in respect of Mr Benney, the
Fund would not have accepted contributions in respect
of him without
obtaining an accession agreement from his actual employer. As matters
stand, those contributions were received on
the strength of a
representation that they were made on behalf of SACM as a
participating employer, and Mr Benney has for some
years on that
basis been in receipt of a pension from the Fund.
[83]
I thus find that for purposes of these proceedings Mr Benney is to be
treated on the same footing as the other members in respect
of whom
SACM made contributions.
Release
[84]
SACM pleaded that its membership of the Fund terminated with effect
from 30 March 1999 (assuming it had ever been a participating

employer in the post-1978 section). The precise import of the plea is
unclear. In the light of Patten J’s judgment, a participating

employer would not cease to be such merely because it ceased to
employ qualifying officers.
[85]
SACM, in raising this defence, placed reliance on a supposed
acknowledgement by the Fund, in a letter dated 8 September 2005,
that
SACM had ceased to be a participating employer with effect from 30
March 1999. This letter was written by the Fund to SACM
after it had
learnt of the distinction between SACM and SPL and that the relevant
members had been employed by SPL as from 30 March
1999. The second
and third paragraphs of this letter read as follows:
‘
We
have previously been advised that [SACM] sold its shipping business
to [SPL]. We have split the liability between these two companies
at
what we understand to be the appropriate date of 30 March 1999. This
invoice relates only to [SACM] in respect of MNOPF membership
up to
30 March 1999.
An
invoice [for £251 240] is enclosed, together with payment
instructions. Please refer to the Policy regarding the terms
applying
on late payment.’
[86]
Mr Maritz correctly contended that by no stretch of the imagination
can this letter be regarded as an acknowledgement that
SACM was
released from liability as a participating employer. On the contrary,
the letter demanded payment of a substantial sum
of money based on
the fact that SACM was a participating employer liable for deficit
contributions in respect of the period for
which it had made
contributions to the Fund. The demand in the letter was in accordance
with the judgment of Patten J delivered
about five months previously.
Prescription
[87]
SACM raised a special plea of prescription in relation to a part of
the claim but this was abandoned at the trial.
Conclusion
and order
[88]
It follows that the claim must succeed. It may seem hard on parties
such as SACM that they should be held liable for deficits
arising
from contributions made many years previously in circumstances where
they have for some years not employed any active members.
However,
the fact that parties so placed may be held liable for deficit
contributions was authoritatively determined by the judgment
of
Patten J, the correctness of which has not been challenged in these
proceedings. Any employer who considered that the board
exercised an
improper discretion in adopting the amendment of 8 June 2000 was at
liberty to bring proceedings to set the resolution
aside. It appears
from Mr McEwen’s evidence that no such challenge has been
mounted either in England or elsewhere. SACM
has certainly not done
so.
[89]
The employment of two counsel was warranted. Counsel were in
agreement that the costs reserved in the interlocutory orders
of 23
June 2010 and 1 October 2013 should follow the result.
[90]
I shall therefore make an order in terms of the draft furnished to me
by the plaintiff’s counsel, subject to my handwritten
insertion
in para 3 regarding the reserved costs.
ROGERS
J
APPEARANCES
For
Plaintiff: Mr NGD Maritz SC and Mr RG Patrick
Instructed
by:
Webber
Wentzel
15th
Floor
Convention
Towers
Heerengracht
For
Defendant: Mr M Fitzgerald SC and Mr AM Smalberger
Instructed
by:
Deneys
Reitz Inc.
10th
Floor
Norton
Rose House
8
Riebeek Street
Cape
Town