Lock v Westpac Banking Corporation and Others

(1991) 25 NSWLR 593

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(Judgment by: Waddell CJ)

Lock
vWestpac Banking Corporation and Others

Court:

Judge:
Waddell CJ

Case References:
Stephens v Stephens - (2007) 38 Fam LR 149; 212 FLR 362; [2007] FamCA 680
Trustees Ltd v Evans - [1990] 1 WLR 1587; [1991] 2 All ER 513
Kerr v British Leyland (Staff) Trustees Ltd (unreported) 26 March 1986 Court of Appeal (Civil Division) - [1986] Transcript No 286 of 1986
Mihlenstedt v Barclays Bank International Ltd, The Times, 18 August 1989, Court of Appeal (Civil Division) Transcript No 817 of 1989 - [1989] IRLR 522
Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd - [1991] 1 WLR 589; [1991] 2 All ER 597
Ritchie v Blakeley - [1985] 1 NZLR 630 at 639
Rees v Dominion Insurance Co of Australia Ltd (In Liq) - (1981) 6 ACLR 71
UEB Industries Ltd v Brabant - (New Zealand Court of Appeal, 2 July 1991, unreported)
Wilson v Metro Goldwyn Mayer - (1980) 18 NSWLR 730
Hockin v Bank of British Columbia - (1990) 46 BCLR (2d) 382
Hospital Products Ltd v United States Surgical Corporation - (1984) 156 CLR 41
Mihlenstedt v Barclays Bank International Ltd - [1989] IRLR 522
Woods v W M Car Services (Peterborough) Ltd - [1981] ICR 666
Woods v W M Car Services (Peterborough) Ltd - [1981] ICR 666
Lewis v Motorworld Garages Ltd - [1986] ICR 157
Cowan v Scargill - [1985] Ch 270

Hearing date:
Judgment date: 26 August 1991

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Judgment by:
Waddell CJ

The plaintiff is a member of the Westpac Banking Corporation Australian Staff Superannuation Scheme. The first defendant is Westpac Banking Corporation (the Bank). The second to ninth defendants are trustees of the scheme (the Trustees). The scheme is constituted by a deed dated 18 September 1981 (the deed). Rules set out in the first schedule thereto (the rules) provide for contributions to be made by the Bank (and associated employers) and by employees and for the nature and amount of benefits. The parties to the deed were the Bank and the original Trustees. On 10 May 1990, the board of the Bank (the board) purported by resolution to exercise a power to amend the deed and the rules, given to it by cl 35 of the deed, to insert in the deed provisions enabling the board, subject to certain conditions, to apply the amount by which the value of the assets of the scheme exceeds the value of the liabilities in certain ways, including by repayment to the Bank. It also resolved to make a number of amendments to the rules, the effect of which was to reduce contributions payable under the scheme by members and to improve benefits payable to members. It also resolved that $300 million of surplus assets be returned to the Bank and that $300 million worth of amendments to the scheme be made for the benefit of the members.

The plaintiff contends that the purported amendment of the deed and the resolution that $300 million of surplus assets be returned to the Bank were not validly made and that the Bank should repay the said sum to the Trustees.

The scheme is of a kind sometimes called a designated benefits scheme. The rules specify the amount of, and the circumstances in which, benefits are payable, the percentage of salary to be contributed by members, and for the Bank to pay to the scheme an additional contribution after considering the advice of the actuary to the Trustees (r 4(2)). The purpose of the latter provision is that the Bank's contributions should ensure that the assets of the scheme are sufficient to meet the benefits provided by the rules.

Clause 1 of the deed provides that the scheme "shall be vested in, controlled and administered by the Trustees". Clause 4 provides that there shall be "eight Trustees of whom four shall be appointed by the Board (the appointed Trustees) and four shall be elected by the members (the elected Trustees) and that of the appointed Trustees, two shall be members of the Board and two shall be full-time employees of the Bank (who may or may not be members of the board)". The elected Trustees are to be members who are full-time employees.

Before the amendments cl 15 provided:

"15.(1)

The Trustees with the approval of the Board shall appoint an Actuary to the Scheme on such terms as the Trustees may think fit and the Trustees may (and shall if so directed by the Board) remove at any time any Actuary and with like approval appoint another in his stead.

(2)

At the Commencement Date and at intervals of not more than three years thereafter and also at any point of time at which in the opinion of the Trustees any major changes have occurred in the position of the Scheme the Actuary shall be required to report to the Trustees on:

(a)

the ability of the Scheme to meet the accruing liability of the Scheme to provide benefits, and to advise the Trustees of the amounts or rates of contribution required from the Bank and each Associated Company to provide the benefits payable under the Rules; and

(b)

such other matters as shall be nominated from time to time by the Trustees with the approval of the Board.

(3)

The Trustees will provide the Actuary with all such information concerning the Scheme and its Members as may be required to enable the Actuary to give any report pursuant to this Clause."

Clause 23 provides that the board may in its absolute discretion give notice to the Trustees that the scheme shall be dissolved.

Subclause (3) provides:

"Upon expiry of that notice the Scheme shall be dissolved and in lieu of the benefit entitlements under the Rules all money and other assets of the Scheme after payment of any expenses incurred by the Trustees in connection with the dissolution shall be distributed by the Trustees upon the advice of the Actuary and with the approval of the Board in such manner as the Trustees consider equitable taking into account the provisions of the Deed and the Rules and any other circumstances they consider relevant provided always that no benefit shall be paid to any Member until he ceases to be in Service or in such circumstances as are approved by the Commissioner of Taxation."

Clause 35(1) provides:

"The Board may at any time by oral or other resolution with the previous written consent of the Trustees alter or replace the provisions of the Deed and the Rules provided that such alteration or replacement shall be made only if the Actuary certifies that the value of the rights of Members and their Dependants and Pensioners accrued at the time of making such alteration or replacement are not reduced thereby or if at least three quarters of the Members for the time being consent thereto in writing."

Until the purported amendment which is in question in these proceedings was made, the deed contained no provision for a return of surplus assets or funds of the scheme to the Bank. The only way provided by the deed and rules for reducing any surplus was for the contributions of the Bank to be reduced pursuant to r 4(2).

The purported amendments to the deed were as follows.

Clause 15(2) was amended to read:

"(2)

At the Commencement Date and at intervals of not more than three years thereafter and also at any point of time at which in the opinion of the Trustees any major changes have occurred in the position of the Scheme or at the request of the Board the Actuary shall be required to report to the Trustees on:

(a)

the ability of the Scheme to meet the accruing liability of the Scheme to provide benefits, and to advise the Trustees of the amounts or rates of contribution required from the Bank and each Associated Company to provide the benefits payable under the Rules; and

(b)

whether or not in the opinion of the Actuary, after taking into account the advice under paragraph (a), the value of the assets of the Scheme exceeds the value of the liabilities of the Scheme; and

(c)

such other matters as shall be nominated from time to time by the Trustees with the approval of the Board."

A new cl 22 was inserted as follows:

"If the Actuary in a report under clause 15 has advised the Trustees or the Trustees are otherwise satisfied that the value of the assets of the Scheme exceeds the value of the liabilities of the Scheme (the 'excess amount') then the Board on the advice of the Actuary:--

(a)

may apply the excess amount to reduce its contributions to the Scheme; or

(b)

with the consent of the Trustees may determine that the excess amount be applied in any one or more of the following ways--

(i)

in reducing the contributions of Members;

(ii)

increasing the benefits payable under the Scheme;

(iii)

by being repaid to the Bank;

(iv)

as a reserve for the Scheme; or

(v)

for such other purpose as the Bank and the Trustees may agree."

The actuary made an actuarial investigation into the scheme as at 30 June each year to report on the ability of the scheme to meet its accruing liability to provide benefits and to advise the Trustees of an appropriate rate of contribution to be paid by the Bank and associated companies. A report on these matters was generally made early in the following year. Among other matters the report stated the amount of any surplus or deficit disclosed by the investigation. It appears from annual reports for the scheme that the report as at 30 June 1986 showed a surplus of $216.86 million. The report as at 30 June 1987 merely said that the scheme was in surplus by an amount sufficient to withstand the decline in the market value of its investments that occurred in the share crash of October 1987.

The full text of the actuary's report as at 30 June 1988, both in a draft and a final form, is in evidence. The report records that the actuary, Mr Harris, had been appointed on 25 September 1981 and had subsequently retired from his employment with the Bank and had become a beneficiary of the scheme. The final report disclosed that the scheme had a surplus of $314 million. It is stated that the surplus at 30 June 1986 of $217 million was reduced to $9 million by improving benefits and pensions and reducing the Bank's contribution rate. The surplus arising during 1986-1988 of $814 million was made up of that sum together with a lower than estimated payment of benefits ($103 million), income and profit on realisation of investments and variation in value placed on investments ($332 million), surplus from change in service table for contributors and change to interest rate used for discounting future benefits and contributions ($445 million), and was reduced by other factors ($75 million).

The draft report outlined a number of ways in which this surplus might be dealt with. It was suggested that the Bank should stop contributing to the scheme until a later actuarial investigation showed that contributions were needed again. The actuary placed a value on the Bank's future contributions of $398 million which, if the suggestion were to be accepted, would reduce the surplus to $416 million. As to this amount suggestions were made as to members' contribution rate and improvements of a variety of benefits which would reduce the surplus to about $373 million. The report raises the question of whether a payment of some $300 million might be made to the Bank, thus leaving a surplus of about $73 million.

The final report, which was prepared after discussing the draft report with officials of the Bank to see whether it was felt to be appropriate to make such detailed recommendations as to how the surplus might be used, merely recommended that no further basic contribution be paid by the Bank and noted that this would reduce the surplus to $416 million and that what further action might be taken to reduce this amount was being discussed with the Bank.

The significance of this report is that it shows that for the first time the surplus had become so large that it could not be eliminated by reducing the Bank's contribution and by making improvements to benefits which did not require a good deal of consideration. The draft report was the origin of the idea that $300 million of the surplus might be returned to the Bank. On 17 August 1989, the board resolved that Mr G B K Trehair be commissioned to provide it with an independent actuarial opinion on the state of the scheme as evidenced in Mr Harris' report as at 30 June 1988 and on any recommendations arising from the report and/or from the actuarial investigation to be completed as at 30 June 1989 and that the costs payable to Mr Trehair be borne by the Bank. The Bank had in fact on 1 October 1988 ceased making contributions to the scheme, no doubt because, in conformity with cl 15(2)(a) of the deed, Mr Harris had advised it that it might do so and that he proposed to make a recommendation to this effect in his report.

After discussion with officers of the Bank of draft reports, Mr Trehair's report was presented to the Bank early in February 1990. It is a comprehensive document forty-nine pages in length. It was based on Mr Harris' report as at 30 June 1988. It expresses the view that the surplus which his investigation produced "could increase up to a maximum of $1,250 million, if less conservative assumptions had been used" and that that indicated the underlying financial strength of the scheme. It made a number of recommendations, those immediately relevant being that if it were desired to return any of the surplus to the Bank the opinion of a Queens Counsel should be obtained as to the legality of an alteration to the trust deed to enable that to be done and that the Bank should conduct a major review of its superannuation arrangements. It also commented on the suggestions which Harris had made for an immediate improvement in benefits available to members.

On 16 March 1990, the board received the report, approved, in principle "a major (restructure) review" of the scheme as recommended and approved, in principle, changes as recommended to specific terms and conditions, increasing benefits, such changes to be "in concert with" changes to the deed and that the cost of the changes be offset against impending 3 per cent superannuation claims by employee unions.

An opinion from senior counsel was sought by the Bank as to whether the deed might be amended to return surpluses to it. In an advice dated 5 April 1990 he expressed the view that there was no barrier to the board passing a resolution amending the deed so as to enable a surplus to be returned and that the real issue was whether the Trustees could consent to such a resolution. As to this, after discussing the relevant principles and authorities at length, he said:

"In my opinion, which has been arrived at after some doubt and hesitation, it would not be a breach of Trust for the Trustees to consent to a resolution of the type proposed."

On 10 April 1990, a memorandum was circulated to the board recommending for its consideration that the Trustees be asked to consider amendment of the deed to allow return of surplus assets to the Bank, that following such an amendment, $300 million of fund surplus be repatriated to the Bank in conjunction with the benefits to members which were approved in principle by the board on 16 March. The recommendation noted that the Bank had obtained a Queens Counsel opinion that no legal impediment existed to altering the trust deed to allow a return of surplus and had, as an appendix, a table showing an indicative distribution of surplus assets in the scheme. This stated the estimated surplus at 30 June 1990 as being $1,000 million, of which $400 million was to be retained in the fund to finance future Bank contributions and administration/review expenses and the remaining $600 million as being divided between the Bank and members of the fund, $300 million being repatriated to the Bank, and $300 million being used for member benefit improvements, including those set out and others yet to be identified resulting from a major review/restructure of the scheme, adjustments to existing pensions, and a possible one-off credit to members. This memorandum was apparently approved by the board.

On 17 April 1990, the Manager, Staff and Superannuation Funds, sent to each of the Trustees a copy of the actuary's report of his investigation as at 30 June 1989 which had recently been received and was dated 10 April. The covering memorandum stated that the report would be listed for discussion at the next Trustees' meeting -- Wednesday, 30 May 1990. Other papers, not specified, were also enclosed.

On 2 May 1990, the secretary to the scheme sent to each Trustee an agenda for a meeting to be held at 3 pm on 7 May 1990. Notice of the meeting had already been given to the Trustees. The first item on the agenda was"Appointment of Actuary to the Scheme". The evidence indicates this was necessary because Mr Harris was absent on leave for the period 16 April to 28 May 1990. It was stated that the board had recommended that the Trustees appoint Mr M J Wood as actuary for the duration of the leave of absence of Mr Harris and a suggested resolution was noted. The second item was "Application of surplus assets". Under this was stated, consideration of an attached memorandum of 1 May from the general manager, Group Resources, Mr Yates, and an "overview" to be presented by him. There was then a summary of suggested resolutions.

The memorandum commenced with recommendations as to how the surplus assets in the fund should be applied, which were made by the general manager Group Human Resources. The first recommendation was that the Trustees should give their written consent to amendment of the trust deed "to allow dealing with surplus assets (requested by the Board pursuant to Pt 35 of the Trust Deed of the Scheme)". The second recommendation was that, subject to this amendment, the Trustees should give their written consent"to the return of $300m of surplus assets to the Bank, together with $300m worth of amendments to the Scheme for the benefit of the members", such improvements to be implemented by improvements effective 1 June 1990 and others to be determined following a "major review/restructure of superannuation at Westpac" to be effective by 1 January 1992. A number of documents were attached as appendices to the recommendation. Appendix 1 contained a summary of findings by Trehair's firm in relation to surplus assets and market competitiveness of the scheme. Appendix 2 was a copy of the opinion given by senior counsel and of a letter from the Bank's solicitors summarising his conclusions. Appendix 3 was a letter dated 1 May 1990 addressed to the board from Mr Wood stating that he had been appointed actuary to the scheme from April 16 to May 28 1990 and that pursuant to Pt 22 of the trust deed (as amended) and having regard to actuarial investigations at 30 June 1988 and 30 June 1989, and to an independent actuarial review in February 1990 by Mr Trehair, he recommended the return of $300 million surplus assets to the Bank together with improvements to the scheme for the benefit of members to the value of a further $300 million. The letter obviously anticipates Mr Wood's appointment as actuary. Appendix 4 is a second letter from Mr Wood, again as actuary, to the board dated 1 May 1990. In this he outlines the intention to amend the deed and certifies, for the purposes of cl 35(1) of the deed, that in his opinion the value of the rights of members and their dependants and pensioners accrued at the date of the amendment will not be reduced by the proposed amendment of the deed and rules. The fifth appendix was a copy of a letter from the Bank's solicitors and of the proposed amendments which they recommended enclosed with the letter. The sixth appendix was a statement of actuarial estimates of costs of immediate improvements to the fund totalling $82 million signed by Mr Wood as actuary.

The minutes of the meeting of 7 May 1990 record that the Trustees unanimously supported the recommendations and each of them signed a document recording that they had resolved to amend the deed and the rules accordingly, that they consented to the return of $300 million of surplus assets to the Bank "together with amendments to the Scheme for the benefit of members to the value of a further $300 million", to be implemented in ways which were set out and a further resolution which is not relevant.

The consent of the Trustees to the proposed alterations to the deed of rules was conveyed to the board by a memorandum of 8 May 1990 at a meeting of the board on that date. The board resolved to make the alterations to the deed and the rules and that, subject to these amendments, $300 million of surplus assets be returned to the Bank and $300 million worth of amendments to the scheme be made for the benefit of members. The two letters of Mr Wood already described were no doubt before the board. From the above it would appear that in purporting to make the amendments to the deed and the rules the Trustees complied with the requirements of cl 35(1) in that they had the previous written consent of the Trustees and the actuary had certified in the terms required. It would also seem that they had complied with the terms of cl 22 as inserted in the trust deed in returning $300 million to the company in that they had the consent of the Trustees and by that consent the Trustees had indicated that they were satisfied that the value of the assets of the scheme exceeded the value of its liabilities by an amount which permitted the return to be made together with an increase in benefits under the scheme to the same amount.

However, the plaintiff attacks the validity of the resolution purporting to alter the deed by inserting a new cl 22, a new cl 15(2)(b) and of the consent of the Trustees to the amendment and to the resolution returning the $300 million to the Bank. A number of grounds are set out in his further amended statement of claim.

The evidence for the plaintiff consists entirely of the tender of a substantial number of documents produced on discovery and of answers to interrogatories by each of the second to ninth defendants. Objection was taken by the defendants to a number of the documents tendered, some on the ground of relevance, some on the ground of form, and some on both grounds. By agreement of the parties and the Court these objections were left to be determined, so far as might be necessary, in the course of giving reasons for judgment. It is not necessary to determine any of these objections.

The defendants took objection to a number of the submissions put for the plaintiff on the ground that these departed from the allegations in the statement of claim and should not, therefore, be permitted. For this reason, it is proposed to deal with the attack on the validity of the actions of the board and the Trustees by reference to the allegations in the statement of claim as finally amended by leave granted during the trial on 10 April 1991.

Board's resolution beyond power :

It is alleged in the statement of claim that the resolution of the board purporting to amend the trust deed and rules was beyond the power of alteration and replacement conferred upon the board by cl 35 of the trust deed.

It will be observed that the power of amendment given by this clause is unrestricted as to subject matter and may be exercised subject to two conditions. The first is that the board have the previous written consent of the Trustees. The plaintiff contends, for several reasons, that the consent given by the Trustees was ineffective but it should be assumed to have been effective for the purpose of considering the plaintiff's claim that there was no power to make the amendments to the deed. The second condition is that the actuary should have certified "that the value of the rights of members and their dependants and pensioners accrued at the time of making such alteration or replacement are not reduced thereby ...". Subject to one matter which is mentioned later, there is no contention that the board did not have such a certificate.

It is submitted that although the power of amendment and alteration is expressed in unrestricted terms, it did not entitle the board to amend the deed to enable any part of the value of the assets of the scheme to be repaid to the Bank.

The argument is that, as is shown by recital A to the deed, the fund was established for the purpose of providing superannuation benefits for eligible employees, that the funds were impressed with a trust solely for this purpose and therefore cannot be returned to the Bank as no power to do so was reserved in the original deed. It is said that the amendment is ineffective because it would destroy the substratum of the trust. It is also said that any surplus certified by the actuary is a notional amount and that a power to enable a return of such a surplus to the Bank cannot be regarded as an acceleration of any surplus which might arise after a winding up of the fund and a distribution pursuant to cl 23(2) of the deed to which the Bank might be entitled under a resulting trust.

As has been pointed out in a number of decisions, pension plans are different in nature from traditional trusts. They are based upon a contract between the employer, the trustee, and employees pursuant to which both the employer and the employees contribute to the fund for the purpose of providing defined benefits in defined circumstances to employees. The usual form of trusts involve the creation of a benefit by the settlor for which the beneficiary gives no consideration. Pension schemes are created in the context of the employer/employee relationship and are part of the terms of engagement. The provisions reflect the provisions of laws relating to income tax which are intended to encourage the creation of such schemes. They also reflect the nature of the competition between employers for the engagement of suitable staff. An employer who has a power to amend a scheme would naturally take into account the effect of the amendment upon its industrial relations with its staff and the terms of the scheme provided by other employers in the same sphere of activity.

I agree with the following comments of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 at 1610; [1991] 2 All ER 513 at 537:

"... the court's approach to the construction of documents relating to a pension scheme should be practical and purposive, rather than detached and literal ... although there are no special rules governing the construction of pension scheme documents, the background facts or surrounding circumstances in the light of which those documents have to be construed -- their 'matrix of fact' (to use the modern phrase coined by Lord Wilberforce) include four special factors. The first factor is that, as the Court of Appeal pointed out in two unreported cases... namely Kerr v British Leyland (Staff) Trustees Ltd (unreported) 26 March 1986; Court of Appeal (Civil Division) [1986] Transcript No 286 of 1986 and Mihlenstedt v Barclays Bank International Ltd , The Times, 18 August 1989, Court of Appeal (Civil Division) Transcript No 817 of 1989, [[1989] IRLR 522], the beneficiaries under a pension scheme such as this are not volunteers. Their rights have contractual and commercial origins. They are derived from the contracts of employment of the members. The benefits provided under the scheme have been earned by the service of the members under those contracts and, where the scheme is contributory, pro tanto by their contributions."

See also, what was said by the Vice-Chancellor, Sir Nicolas Browne- Wilkinson, in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589 at 597-598; [1991] 2 All ER 597 at 605-606; Davis v Richards & Wallington Industries Ltd [1990] 1 WLR 1511 at 1538-1543; [1991] 2 All ER 563 at 589-594; Ritchie v Blakeley [1985] 1 NZLR 630 at 639; Rees v Dominion Insurance Co of Australia Ltd (In Liq ) (1981) 6 ACLR 71; UEB Industries Ltd v Brabant (New Zealand Court of Appeal, 2 July 1991, unreported).

It is true that in some cases a power to vary a trust deed may be held not to extend to a variation which would alter the substratum of the trust: see, eg, Re Dyer [1935] VLR 273, cited with approval by Megarry J in Re Ball's Settlement Trusts [1968] 1 WLR 899 at 904; [1968] 2 All ER 438 at 441-442. But, in the present case, the recital to which the plaintiff points cannot be regarded as outlining the substratum of the trust. It is necessary, in my opinion, to construe the deed as a whole in order to determine whether cl 35 authorised the variation which is in question.

A number of cases have been cited in which a purported amendment was held not to have been authorised by a provision providing for amendment. In Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730, a decision of Kearney J, amendment was authorised "in any respect which would in the opinion of the Company not prejudice any benefit secured by contributions made on behalf of any member prior to the date of such alteration or amendment". The company intended to give notice of its intention to discontinue the fund which would have resulted in the fund being wound up. One of the provisions of the deed provided that any money in the hands of the trustees which was surplus to the benefits payable to members be applied "for the provision of such (further) benefits to such members as the Company may direct". It was held, as a matter of construction, that, for the purpose of the amendment clause, "any benefit secured by contributions" included the further benefits payable under this provision. Accordingly, an amendment which the company proposed to make before the fund was discontinued, that any moneys in excess of the benefits payable to members should be paid to the company was in breach of the amendment provision.

In UEB Industries Ltd v Brabant , a decision of the Court of Appeal of New Zealand, 2 July 1991, a superannuation trust deed conferred on the trustees a power of amendment, with the approval of the company, "provided that no such (amendment) shall be made without the Member's consent if the amendment would reduce or adversely affect that Member's interest in the Fund at the date of (the amendment)" (Cooke P at 22). There was a provision for distribution among the members of any surplus arising on termination of the fund. There was also a provision that all moneys contributed by the company should cease to be its property. The trustees, with the consent of the company, purported to amend the provisions relating to distribution on winding up of the fund so as to enable part of any surplus to be paid to the company. It was held that to intrude the employer as a potential beneficiary in any surplus, without the member's consent, was plainly adverse to the member's interest in the ordinary sense of language and within the meaning of the proviso to the amendment provision. The purported amendment was therefore invalid. This decision was given after judgment in this case was reserved. The plaintiff and first defendant have made written submissions in relation to it.

Cooke P also held the purported amendment to be invalid on another ground. The original deed provided that no amendment or alteration should be made or permitted the effect of which would authorise any payment or reversion to the company of any moneys or investments held in the fund. Subsequently the trustees, with the consent of the company, purported to amend the deed by removing this provision. However, Cooke P held that the power of amendment did not extend to removing a restriction on the exercise of that power. Accordingly, the amendment which authorised payment of surplus to the company was contrary to that provision and invalid.

The other members of the court, Richardson, Casey, Hardie Boys and Thorp JJ, in substance, agreed with Cooke P, although Richardson J expressed some reservation as to whether the exercise of the power of amendment was subject to the provision just discussed so that in no circumstances could any part of the moneys or investments held in the fund be paid to or revert to the company.

A Canadian case, a decision of the British Columbia Court of Appeal, Hockin v Bank of British Columbia (1990) 46 BCLR (2d) 382, demonstrates the close regard which must be had to the provisions of the deed in question. There was a dispute between former employees and their former employer over entitlement to an apparent accumulated surplus of approximately $21 million remaining in the fund after provision for existing benefits and other liabilities. Like all the schemes so far mentioned, this was a designated benefit scheme with the employees obliged to make specific contributions in accordance with the rules and the company obliged to pay such amounts as were certified by the actuary to ensure that the benefits earned under the scheme were fully funded. The power of amendment was in the following terms (at 386):

"The Bank reserves the right to amend the Plan by written instrument from time to time provided that no amendment affecting the powers and duties of the Trustee can be made without its consent and provided further that no amendment can serve to reduce the Member's benefits which have accrued and which have been funded prior to the date of amendment without setting forth the proposed amendment to all the Members and obtaining the approval in writing of a majority of such Members."

The provision relating to termination was (at 386):

"The Bank may terminate the Plan at any time in which case the entire Fund shall be used for the benefit of retired Members, Members, widows, children and their beneficiaries and estates and no part of the Fund shall be returned to the Bank provided always that any distribution of the Fund will be subject to the provisions of any law of Canada governing the Plan."

The fund had not been terminated but, as a result of a take-over and the liquidation of the bank, there were only two employees left, although there were a substantial number of claims for benefit. The bank clearly had in mind, if it was at liberty to do so, to exercise its power of amendment in a way which would result in the return of a substantial part of the surplus to it. The question which the court had to decide was (at 388): "At the time the Bank of British Columbia settled the trust did it irrevocably alienate its interest in the fund?" The trial judge answered this question, no. The Court of Appeal agreed.

It was submitted for the members entitled to benefits that, by the plan and the accompanying trust agreement, the bank had settled a trust which vested and completely disposed of the fund in favour of a closed and certain class of beneficiary which did not include the bank and that the power of amendment was repugnant to the settlement of the trust. It was said that the exercise of this power would so fundamentally change the nature and disposition of the fund that it ought not to be found to extend to directing any part of the surplus to the bank in the absence of express language.

The court held (at 391) that there was not a closed trust for specified beneficiaries such as might be found in a testamentary document, "but rather an accommodating, open trust to provide a range of pension benefits to fluctuating groups of beneficiaries in a range of circumstances". It pointed out (at 392) that the bank as settlor had no control over excessive contributions because these were determined by the independent actuary. It said that when the purpose of the trust was fulfilled, how could revocation of that part of the trusts relating exclusively to surplus be contrary to or inconsistent with the settlement of the trust. It suggested that, as the surplus represented excess contributions, it was necessary that the provisions of the scheme should be partially revoked to restore the excess to the bank as settlor. Consequently, the proposed amendment was not repugnant to the purpose of the scheme.

The court then considered (at 393) the meaning of the restriction on the power of amendment relating to "benefits which have accrued and which have been funded prior to the date of amendment". It took the view that such benefits could only be those to which the members became entitled under the plan by virtue of years of service, earnings, marital status and so forth. It was not realistic or sensible to characterise any possible interest a member might have under the termination provision in the fund as a benefit which had accrued. It pointed out that the surplus was only to be claimed by the members if it existed if and when the plan was terminated, which had not then happened. Accordingly, it was open to the bank, before the plan was terminated to, in effect, revoke the termination provisions so as to enable the whole or part of the surplus to be returned to it.

The essential difference between this decision and that of Kearney J in Wilson v Metro Goldwyn Mayer is that in that case the qualification on the power of amendment was, in his Honour's view, expressed in terms which extended to not only designated benefits under the scheme but to the benefits provided in any surplus on termination.

Accordingly, the court held (at 393) that "the documentary provisions to the effect that the bank is not to share in the surplus, if any, on termination of the plan" did not preclude "the bank from amending the plan during the lifetime of the fund so as to entitle the bank to remove any surplus prior to termination " (my emphasis). The court went on to distinguish a number of other cases (at 394) in which "an amending power ... was specifically qualified by an exclusivity provision expressly stating that all contributions were irrevocable or that they must be used exclusively for the benefit of the members of the plan".

It will be seen that the decision in Hockin v Bank of British Columbia turned on the extent of the qualification of the amending power and the conclusion of the court that the provision for dealing with a surplus on termination did not come within this qualification.

In my opinion, the question whether the amendment in contest was within the amending power should be approached in the same way. Unlike most of the reported decisions, the present proceeding does not concern entitlement to a surplus in a fund which has been, or is about to be, terminated. It concerns a surplus existing at the present time and which is of such a magnitude that it cannot be removed except by reducing the contributions of the Bank to nil and by further increasing the benefits to members beyond those envisaged in the $300 million worth of benefits provided for by the resolution of the board, a course which obviously the Bank does not wish to pursue.

The power of amendment may be exercised only with the prior written consent of the Trustees and contains two further alternative qualifications. As there has been no consent of members the first is applicable, namely that the alteration or replacement shall be made only if the actuary certifies that it involves no reductions in accrued rights. The actuary has given such a certificate. The certificate has not been challenged by any allegation in the statement of claim. It might, perhaps, have been open to challenge if the plaintiff contended that the members had an accrued right to any surplus on termination of the fund, but such a submission has not been put. It is, I think, clear that they do not. Accordingly, the qualifications expressed in the provision for amendment, were satisfied.

Is there any further qualification to be found in the other terms of the deed? There is no provision which in any way corresponds with provisions in question in some of the cases cited to the effect that moneys or assets in a fund were not to be returned to the company or that the company was to have no interest in any such moneys.

In the course of submissions attention was directed to the question whether, on dissolution of the fund, there would be any resulting trust in favour of the Bank of any surplus which remained after a distribution had taken place in accordance with cl 23(3) which is set out above. The plaintiff contended that the provisions of this clause require that the whole of the fund remaining on dissolution should be distributed to members in lieu of their benefit entitlements and that, therefore, no surplus could arise. The defendants contend that only so much should be distributed to members as is equitable"taking into account the provisions of the Deed and the Rules and any other circumstances (the Trustees) consider relevant". It is submitted that it would be open to the Trustees not to consider it equitable to distribute to members the whole of any surplus remaining after their entitlements under the rules had been met and which has arisen, wholly or partly, because of excessive contributions by the Bank. There would then be a resulting trust of the balance in favour of the Bank.

Approaching the interpretation of the deed in the manner mentioned above, it is my opinion, that the defendant's submission is correct: see Davis v Richards & Wallington Ltd (at 1538ff; 589ff) and Re Canada Trust Co and Cantol Ltd (1979) 103 DLR (3d) 109.

However, even if cl 23(2) requires the whole of any surplus on termination to be distributed among members, it would not, in my opinion, give rise to any implied qualification on the power of amendment. While the scheme was established, as is recited in the deed, for the purpose of providing superannuation benefits for eligible employees, this does not mean that, should there be a surplus, the whole of it should be held irrevocably on trust to provide the defined benefits for the eligible employees and to await the possibility of a dissolution of the fund. Any increase in benefits can be made only by resolution of the board. Any surplus can be reduced by the Bank ceasing its contributions if the actuary advises that it is entitled to do so. There is no obligation of any kind on the Bank to convert any surplus into benefits under the rules. The existence of the surplus may be the consequence of the Bank having made contributions which have proved to be excessive. These considerations negative any such implied qualification. One way the argument was put by the plaintiff was to say that if there would be no resulting trust for the Bank of the fund remaining after distribution pursuant to cl 23(3), it could not be said in any sense to be a beneficiary under the deed. Accordingly, to provide for a return of surplus would be to introduce an additional beneficiary which would destroy the substratum of the trust and, hence, be invalid. In my opinion, what is the substratum is to be determined as a matter of construction of the deed and having regard to the circumstances. If the amendment is as a matter of construction within power, it cannot be an infringement of the substratum.

In my opinion, there is no implied qualification to the power of amendment to be found in the deed and the amendments in question were made within the power provided.

Board's duties to the beneficiaries of the scheme : It is submitted for the plaintiff that the board owed a fiduciary duty to the beneficiaries of the scheme, or alternatively, an obligation of good faith or, further alternatively, was entitled to exercise the power of amendment only for the purpose or with an intention within the scope of the trusts of the deed and that in purporting to make the amendments it did not discharge such duties or did not act for such a purpose or with such an intention. It is said that the board was not entitled to make an amendment for the purpose of benefiting itself.

A fiduciary relationship exists where a person has undertaken or agreed to act for or on behalf of or in the interests of another in the exercise of a power, and not in his own interests: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, Gibbs CJ (at 68-72); Mason J (at 96-97, 99, 102-103); Wilson J (at 118); Deane J (at 122-123); Dawson J (at 140-149). Having regard to the provisions of the deed, and in particular to the fact that the scheme provides defined benefits, that the employees contribute fixed amounts and the Bank is obliged to make sufficient additional contributions to fund the designated benefits and to the circumstance that the provision of superannuation benefits is an incident of the relationship between the Bank and its employees, there seems to me to be no reason to conclude that in making any amendments the Bank was under a fiduciary duty not to act in its own interests. The deed deliberately qualifies the capacity of the Bank to make amendments pursuant to cl 35 by the restrictions imposed therein. Those restrictions recognise that, subject to the Bank complying with them, it is entitled to act in its own interests. In Imperial Group Pension Fund Ltd v Imperial Tobacco Ltd , the committee of management under a pension scheme had a power to amend the provisions of the scheme with the consent in writing of the company. It was conceded that the power of the company to consent was not a fiduciary power, a concession with which Browne-Wilkinson V-C agreed. He said (at 597; 605-606):

"As the Court of Appeal have pointed out in Mihlenstedt v Barclays Bank International Ltd [1989] IRLR 522 a pension scheme is quite different [that is, from a traditional trust]. Pension benefits are part of the consideration which an employee receives in return for the rendering of his services. In many cases, including the present, membership of the pension scheme is a requirement of employment. In contributory schemes, such as this, the employee is himself bound to pay his or her contributions. Beneficiaries of the scheme, the members, far from being volunteers have given valuable consideration. The company employer is not conferring a bounty. In my judgment, the scheme is established against the background of such employment and falls to be interpreted against that background.

In every contract of employment there is an implied term --

'that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee;' Woods v W M Car Services (Peterborough ) Ltd [1981] ICR 666 at 670, approved by the Court of Appeal in Lewis v Motorworld Garages Ltd [1986] ICR 157.

I will call this implied term 'the implied obligation of good faith'. In my judgment, that obligation of an employer applies as much to the exercise of his rights and powers under a pension scheme as they do to the other rights and powers of an employer."

He went on to say that the rights and powers of the company under the scheme were impliedly subject to the limitation that they could only be exercised in accordance with the implied obligation of good faith. I agree with this analysis. In my opinion, the power of amendment is subject to an implied condition that it be exercised honestly and in good faith, but is not a fiduciary power.

The particulars in the statement of claim given of the allegations being discussed are:

"It was the purpose of the Board, and/or its intention, to secure a benefit for Westpac and to achieve a purpose not the object of the power, namely the purpose of effecting a change to the Trust Deed to permit the distribution of part of the Scheme fund from time to time to Westpac, that being a purpose not within the scope of the Trust Deed."

I do not understand it to be contended for the plaintiff that the actual decision of the board to make the amendment was in breach of the duty of good faith to its employees owed by the Bank for any other reason. Whether the allegation in the particulars is made out depends upon whether, in making the amendment, the board had as its purpose or intention to secure a benefit for the Bank which was outside the purpose for which the power of amendment is given by the deed. This, I think, is another way of saying that, in so far as the amendment permits the return of any surplus in the fund to the Bank, it exceeds the power given by cl 35. That submission has already been rejected. I do not consider that in making the amendment the board breached its obligation of good faith or exercised the power of amendment in any way beyond the scope of the trusts of the deed. The decision to make the amendment was no doubt taken as a matter of commercial judgment in the context of the Bank's relationship with its employees who were represented by an industrial union. The Bank judged that it was appropriate to apply half the surplus for the benefit of members and to return half to itself, an approach which is not said to be unreasonable in the circumstances.

The board committed a fraud on the power of amendment :

It is alleged in par 12 of the statement of claim that the board committed a fraud on the power of amendment by introducing Westpac as the beneficiary under the trust deed. This allegation puts in another way allegations which have already been discussed and rejected.

Validity of the purported consent by the Trustees to the proposed alterations of the trust deed :

In the statement of claim it is alleged, for several reasons, that the purported consent by the Trustees to the proposed alterations of the trust deed is and was void and of no effect in law. It is convenient to consider first what was the Trustees' duty in considering whether or not to give their consent to the proposed alterations. These, of course, included both the proposal to amend the deed to provide a power of returning a surplus to the Bank and the proposal to amend the rules to reduce contributions and provide further benefits.

The Trustees' fiduciary duty . In par 17 it is alleged that, in exercising the power to consent, the Trustees owed fiduciary duties to the beneficiaries of the scheme and were entitled to exercise the power only for a purpose or with an intention within the scope of the trust deed.

It is not disputed that, in a general sense, the Trustees owed a fiduciary duty to the members in considering whether or not they would consent to the proposed amendment of the deed relating to a return of surplus to the Bank and that their power to consent was a fiduciary power. The question is, what was the extent and nature of their fiduciary duties having regard to the terms of the deed and the circumstances to which it is directed.

The provisions relating to appointment of trustees have already been mentioned. These indicate that it is intended that the Trustees be representative, both of the interests of the Bank and of the members. Clause 7(3) of the deed provides that questions arising at any meeting of Trustees are to be decided by a majority of votes and that, in the case of equality of votes, the chairman of the Trustees is to have a second or casting vote. Clause 7(5) provides that the board shall appoint the chairman who is to be one of the Trustees who is a member of the board. The Trustees, therefore, represent the parties to the deed and act by majority but the appointed members are in a position to out-vote the elected members because of the chairman's casting vote.

It is to be noted that of the eight Trustees six are to be full-time employees. It is almost certain that each of these will be a member of the fund. This means that, in many matters which arise for decision by the Trustees, six of them may have a personal interest in the result. It is not suggested in the present case that any of the Trustees should not have consented to the amendment of the deed because he had a personal interest in securing the benefits which went with the package.

Clearly enough, in exercising their power to consent to the amendment to the deed the Trustees were obliged to act honestly and in good faith, to act in what they consider to be the interests of the members, and to act for proper purposes and upon relevant considerations. In Metropolitan Gas Co v Federal Commissioner of Taxation (1932) 47 CLR 621 at 633, Gavan Duffy CJ and Starke J said that the Trustees of a pension scheme "are, of course, in a fiduciary position under the trust instrument, and must exercise their powers honestly and reasonably in the interest of contributors. Otherwise, we apprehend, they would be controlled by a Court of competent jurisdiction". These remarks were directed to the power of Trustees to consent to the exercise by the company of its power to alter the rules.

In Cowan v Scargill [1985] Ch 270, Sir Robert Megarry V-C was concerned with the exercise by the Trustees of a pension fund of their power of investment. In this context he said (at 290):

"... I can see no reason for holding that different principles apply to pension fund trusts from those which apply to other trusts. Of course, there are many provisions in pension schemes which are not to be found in private trusts, and to these the general law of trusts will be subordinated. But subject to that, I think that the trusts of pension funds are subject to the same rules as other trusts."

There seems to me to be no reason why these remarks should not have general application.

It seems to me that in the present case the Trustees, while they had a duty to act in the interests of the members, were entitled to take into consideration the interests of the Bank in relation to the surplus which had accumulated in the fund in considering whether or not to consent to the proposed amendment to the deed. If they were satisfied on reasonable grounds that the overall package was a resolution of the interests of the parties in the surplus which was fair both to the Bank and to the members, they were, in my opinion, entitled to consent to an amendment enabling part of the surplus to be returned to the Bank.

It is to be noted that the deed does not attempt to regulate the matters to which the Trustees are to give consideration in the exercise of any of their powers. This means that they are left to be the judge of what material is adequate for the decision which they are called upon to make and of what decision should be made on that material. Their decision is valid unless it can be said that, on the material before them, it was not open to them as reasonable persons to make it or, of course, if it was in breach of the rules already mentioned.

By par 19 it is alleged that, in purporting to consent, the Trustees were influenced by their desire that the trust deed should be altered to enable a distribution of part of the fund to be made to the Bank. A proposal had been made to the Trustees by the board before the Trustees consented to the proposed alterations. By par 20 it is alleged that, in purporting to consent, the Trustees did not act in the interests of, or alternatively, did not act solely in the interests of, the beneficiaries but acted in the interests of, or partly in the interests of, Westpac and thus in breach of their fiduciary duty to the beneficiaries.

In my opinion, there is no evidence to support any allegation that the Trustees were influenced by any desire that the deed should be amended to enable a distribution of part of the fund to be made to the Bank. All the evidence suggests that they were prepared to give their consent as part of a package which they considered appropriate in the circumstances.

Matters considered by the Trustees . In par 18 of the statement of claim it is alleged that the Trustees acted upon matters which were not relevant to or properly to be relied upon in exercising their power to consent to the proposed alterations to the deed and the rules, namely the matters set out in par 14. In par 16 it is alleged that the Trustees should have considered each of the matters referred to in par 15 in considering the proposed alterations to the deed and rules. While the alterations to the deed related to a return of any surplus to the Bank, the alterations to the rules were to reduce contributions and improve benefits.

The Trustees considered both sets of alterations at the one time. The amendments to the deed and the rules were approved by one resolution. As part of the one set of proposals, the Trustees had to consider whether they would consent "to the return of $300 million of surplus assets to the Bank, together with amendments to the Scheme for the benefit of Members to the value of a further $300 million" to be implemented by certain amendments effective as at 1 June 1990 and others to be effective by 1 January 1992. Accordingly, they had to consider a number of matters, some of which may not have been directly relevant to, say, the amendment of the deed were relevant to whether consent should be given to the return of the $300 million. However, it seems to me that they were entitled to have regard to the Bank's proposal for increased benefits and reduced contributions by members in considering whether or not it was proper for them to consent to the amendments to the deed relating to return of surplus funds to the Bank.

It is common ground that the matters mentioned in par 14 of the statement of claim were considered by the Trustees at the meeting of 7 May 1990. With one exception they relate directly to increased benefits, reduced contributions and the return to the Bank of the $300 million. In my opinion, the Trustees were also entitled to take these matters into account in deciding whether or not to consent to the amendments relating to return of any surplus. It must be remembered that under the deed reductions in members' contributions and improvements in benefits can be achieved only on the initiative of the Bank by the board seeking to amend the rules pursuant to cl 35. The exception is the matter that there was legal opinion in support of the power to make these proposed alterations. I do not see how having regard to this matter can affect the validity of the Trustees' decision. Paragraph 15 of the statement of claim sets out four matters which, it is said, the Trustees failed to consider properly or at all. The first is whether the Bank had any equitable entitlement to any surplus arising from time to time in the fund before dissolution of the scheme or at all. The interrogatories show that none of the Trustees considered precisely this matter although all considered that the Bank had contributed approximately double the amount the members had contributed and some stated that the Bank was, in fairness, entitled to return of some of the surplus. All the Trustees had regard to the legal opinion which was before them to the effect that the amendments to the trust deed might validly be made. I do not understand how it could be said that any failure to consider this matter would affect the validity of the decision of the Trustees to consent to the proposed amendments.

The second matter is whether or not members' benefits might be further improved. Only one Trustee specifically considered this. But in the light of answers by other Trustees to interrogatories it must, I think, be inferred that they considered the improvements put forward to be adequate although they did not turn their minds to whether something more might be got from the Bank as the price of consenting to the proposed amendments to the deed. The third matter is "all the causal factors that might contribute to a surplus that might arise from time to time in the Scheme Fund". This seems to be a theoretical consideration although, perhaps, it might include how it was that the surplus which the Trustees had to consider had arisen. While none of the Trustees in their answers to interrogatories included in the matters which he had considered, the way in which the surplus under consideration had arisen, each of them had had the actuary's report for the years ended 30 June 1988 and 30 June 1989 in both of which the way in which the surplus had arisen is analysed. Clearly they were satisfied that there was a sufficient surplus.

The fourth matter is "whether in the circumstances a decision should be deferred in order to make further investigation of relevant matters". None of the Trustees considered this matter but it is to be inferred from their answers to interrogatories that each was satisfied to give his consent to the amendments on the basis of the material which was before them. In my opinion, the decision of the Trustees to consent is not invalidated by any of the matters which they considered, or did not consider, as is alleged in the paragraphs of the statement of claim just discussed.

Information before the Trustees . In par 21A of the statement of claim it is alleged that the information the Trustees had was inadequate to enable them properly to exercise their power to consent to the proposed resolutions. The particulars given of this allegation are that they did not have adequate opportunity to consider the Trehair report and the recommendations contained therein and that the proposed amendment was put to them only upon the basis of the actuarial investigation as at 30 June 1988. This allegation was perhaps prompted by one of the documents made available to the plaintiff on discovery by the Bank, namely the memorandum dated 1 May 1990 directed to the Trustees from Mr Yates, general manager Group Human Resources, to which the documents already mentioned were annexed. One of these was a summary of the findings made in the Trehair report in relation to surplus assets and market competitiveness of the scheme. The plaintiff seeks to draw the inference from this that the whole of the report was not available to the Trustees.

One of the interrogatories administered to each of the Trustees was a question asking what considerations, matters, things or advice caused him to be satisfied, in effect, as to the value of the surplus. In their answers each of the Trustees stated that he had had regard to the Trehair report and six out of the eight said specifically that the report was at the meeting. The defendants rely upon the affidavits of discovery of the second to eighth defendants which reveal that seven of the Trustees had possession of the report and had it in their possession on 7 May 1990, the date of the meeting. The affidavit of the eighth Trustee, the ninth defendant, states that he still has possession of the report. There is no evidence which indicates whether, and if so how long, the Trustees had the report before the meeting. The report is a document of some forty-nine pages. Much of it is historical and contains material which would be likely to be known to the Trustees. There is, I think, no evidence from which it could be inferred that the Trustees did not have an opportunity to consider the Trehair report or the recommendations contained therein which they might reasonably have considered adequate.

The second allegation, namely that the proposed amendment was put to the Trustees only on the basis of the actuarial investigation of the scheme as at 30 June 1988, was relied upon by the plaintiff, as is recorded in the reasons given for allowing the amendments, only as alleging that in a formal sense the investigation as at 30 June 1989 was not put to the Trustees. However, each of the Trustees had been sent the report of the investigation on 17 April 1990 and each in his answers to interrogatories shows that he relied upon it. There seems to me to be no reason why documents should have been put in a formal sense to the Trustees which had been sent to them as a matter of routine and which it was their duty as Trustees to read and consider. Accordingly, I do not think that the allegations in par 21A affect the validity of the Trustees' consent.

Actuary's certificate . Paragraph 24 alleges that before the purported alterations to the trust deed the Trustees purported to resolve, pursuant to cl 22 (that is the later purported amendment), to consent to the payment of $300 million to the Bank. Paragraph 25 alleges that before making that resolution the Trustees did not receive a report from the actuary under cl 15 of the trust deed (that is in the form to which it was purportedly later amended) as required by cl 22. Paragraph 26 alleges that the Trustees received such a report and the actuary did not have regard to the matters required by cll 15 and 22 of the deed.

Clause 22, as amended, required that the Trustees should not consent to a return of funds to the Bank unless the actuary had in a report under cl 15 advised them or they were otherwise satisfied that the value of the assets of the scheme exceeded the value of the liabilities. However, the defendants do not rely upon the Trustees having been given such a report. They rely upon it being shown by the evidence that the Trustees were otherwise satisfied that the value of the assets of the scheme exceeded the value of the liabilities. This, I think, is the only inference to be drawn from the evidence in the light of the material to which the Trustees, in their answers to interrogatories, say they had regard.

The amount of the surplus . Paragraph 26A alleges that, if the Trustees were otherwise satisfied that the value of the assets of the scheme exceeded the liabilities, they should not have been satisfied, on the material before them, that the excess amount referred to in the proposed cl 21A of the deed was $600 million or more than that amount. The relevance of the $600 million is, of course, that such a surplus was needed to justify a return of half of it to the Bank and the use of the other half in providing immediate benefits and others by January 1992.

Having regard to the matters to which each of the Trustees referred in his answers to interrogatories, it seems to me that it cannot be said that the conclusion which they obviously reached, to the effect that the surplus was sufficient to make the return of money to the Bank and to support the benefits proposed, was one to which reasonable persons could not have come on the material before them.

In my opinion, it has not been shown that the consent of the Trustees to the proposed alterations to the deed was given invalidly.

Matters not alleged in the statement of claim : The defendants objected to a number of submissions put for the plaintiff which they submitted did not reflect any allegation in the statement of claim. The plaintiff did not seek to make any further amendment to the statement of claim. These matters included the following.

The plaintiff submitted that the board was under a fiduciary duty and an obligation of good faith to the members of the scheme to present proposed amendments of the deed to the Trustees candidly and to provide them with all material in its possession necessary for an informed consideration of the proposals in a form and at a time which would enable them to give proper consideration to them. A number of particular matters are relied upon. I do not consider that this submission comes within any allegation in the statement of claim. The matters relied upon include several upon which the defendants could well be able to give evidence. For instance, it is said that the full Trehair report was omitted from the documents distributed before the meeting of the Trustees on 7 May 1990. The defendants claim that this allegation could have been rebutted. In my opinion, this submission should not be considered.

As has already been mentioned, cl 35 provides that an alteration or replacement of the provisions of the deed or rules shall be made only if the actuary certifies that the value of the rights of the members and their dependants and pensioners accrued at the time are not reduced. Mr Harris was appointed actuary to the scheme pursuant to cl 15 on 25 September 1981. In May 1990 he was away on vacation and was not available. With the approval of the board the Trustees at their meeting on 7 May 1990 appointed Mr M J Wood to be "Actuary to the Scheme from 16 April 1990 to 28 May 1990 in terms of cl 15(1) of the Trust Deed". It was his certificate upon which the board relied when they purported to make the amendments which are in question. It is submitted that the trust deed made no provision for a temporary appointment and that his appointment could only have been made if Mr Harris had first been removed. This submission does not reflect any allegation in the amended statement of claim and should not, in my opinion, be determined.

Finally, it is submitted that the formula used in both the new cl 22 and the amendment to cl 15 introduced as subcl (2)(b), "the value of the assets of the Scheme exceeds the value of the liabilities of the Scheme" is ambiguous and that both provisions are too uncertain to be enforced and presumably, therefore, invalid. It seems to me that, as this submission does not reflect an allegation in the statement of claim it should not be determined. It would quite possibly be relevant to have evidence as to what is involved in calculating the surplus in a pension fund which is in operation. There are references in some of the decisions cited to the notional nature of such a surplus but it would, in my opinion, be unwise to determine the question without the benefit of evidence.