Legal Proceedings by HPA

[Stephen Brichieri-Colombi]

The HPA today launched legal proceedings. Details will be released on Tuesday.

[Stephen Brichieri-Colombi]

Appeal to Upper Tribunal

On 7th July, Edward Evans, co-chair of the HPA, submitted an application to the Upper Tribunal on behalf of the HPA to appeal the decision by tPR to issue a Regulated Apportionment Arrangement (RAA) in respect of the HPS.  The appeal was submitted by Martin Jenkins, a solicitor from Irwin Mitchell LLP.

The Upper Tribunal is a court that hears appeals against decisions of various government agencies. Appeals normally have to be submitted within 28 days, but both tPR and the UT can waive that requirement. The UT has the power to award plaintiffs the costs of legal and other support, and to suspend the ultimatum until a judicial review has been undertaken.

The HPA has set out the grounds for its appeal, supported by an exhibit that sets out arguments rebutting the four key planks in the reasoning of tPR in issuing an RAA, viz:

1.   that insolvency of Halcrow is imminent
2.   that CH2M Hill derives and has derived no net benefit from its ownership of Halcrow
3.   that CH2M Hill are not seeking to engineer the position now prevailing
4.   that the experts on whom the Trustees (and therefore tPR) are relying have the full picture

We have indicated that we recognize that it may not be possible for our accrued rights to a pension under the HPS to be paid in full, and are open to a negotiated settlement that takes inflation into account. In our view, the £80 million so far offered by CH2M is well below what may be considered a reasonable offer.

We very much hope that the Pensions Regulator, Trustees and CH2M/Halcrow will recognize the need for full and frank discussions on options for a sustainable and transparent solution if the HPS is, as they allege, unsustainable. This should be based on full disclosure of the current assets of HPS and a comprehensive report in the style of the 2008 Valuation report, showing up-to-date and accurate estimates of the HPS pension obligations prepared using assumptions that are considered fair and reasonable by tPR.

Current payments into HPS average around £1 million per month, corresponding to £5 million from August until end 2016. This is far less than the £80 million that has been budgeted to be paid in September, and further £2 million in contributions, should the proposed HPS (No.2) go ahead, so there is no reason to believe Halcrow would be made insolvent, and jobs put at risk, due to any delays as a result of a judicial review.

In 2013, the year in which the 2011 Valuation Report should have been published, CH2M HILL proudly announced that it "was one of the first engineering and construction companies to publish a sustainability report in 2005. Every year since, we have continued this tradition to be transparent in reporting on internal operations related to sustainability." We ask that their actions support their words.

[Stephen Brichieri-Colombi]

Update
The Trustees, tPR and the Pension Protection Fund have today been advised in writing of our appeal to the Upper Tribunal against the grant of the Regulated Apportionment Arrangement, and that we are seeking a general postponement of the preparation of the RAA and the relevant consultation process whilst their claim is being considered by the Tribunal.

[David Slater]

It is suggested that members should "qualify your signature with the words 'without prejudice to the result of any future legal action' ".

I have two questions:

1) Could this not invalidate the selection of Option A, as it would not be an unconditional acceptance?

2) If the Appeal is successful, the entire process is eventually modified and conditions improved for the new pension scheme, would not the present process become redundant for all members, regardless of their first choice even if it was not qualified, and the revised Options would have to be put to members?

There appears to be a potential disbenefit and no clear benefit from adding the 'without prejudice'.

[billf]

I have specifically asked how HPS trustees would view a qualified response, and was advised that they would not accept it! I presume that would mean that the qualified response associated with transferring to HPS2 would be null and void and they would then assume a nil response which would mean a vote for the PPF!

[Tim SMITH]

David and Bill make good points. If there has been no postponement of the decision return date within the next 10 to 14 days, it might be wise for HPA to obtain guidance from its lawyers, and to publish it in time to guide HPS members.

[ericc]

I totally support comments from David, Bill & Tim regarding  the need for legal opinion on the issue of the validity of a qualified response.

We also need a definitive legal opinion as to whether HPS2, should it fail, is protected by the PPF, as is the case with HPS1. This issue has been discussed elsewhere but I don't think it has ever been satisfactorily answered.

The clock is ticking.

[tpeacock]

Fully agree with the others' comments. First prize would be advice from our legal advisers. Otherwise, for those of us overseas for whom advice may not come in time, how about something like "...as may be subsequently amended in my favour by the parties"?

[tpeacock]

Meanwhile, many thanks to Steve, Edward & Co for all their efforts. And kind regards to other old friends.
Tony

[Stephen Brichieri-Colombi]

Signing the form: Action
The Trustees have acknowledged our legal challenge in the Q&A dated 15 July 2015. As this may take time, we have consulted our lawyer about signing the options document while it is under way, and received this advice:

"The offer of a choice between reduced benefits in a new plan or PPF is only legally valid if the Regulated Apportionment Arrangement is in place. Accordingly if the legal challenge is successful any agreement to reduced benefits should not in my view continue to apply."

If you select Option A, you sign away your accrued pension rights, which cannot be taken away without your consent. To overcome this, our legal advisor advises that if you want to reply before we hear about the response from the Upper Tribunal to our challenge,you qualify your reply with the words: "Accepted subject to any legal challenge not changing the position."

If you have already signed Option A and sent your form, you can e-mail the Trustees to say you wish to modify your option by including this qualification, and ask for your signed form to be amended accordingly, or a new one issued. Alternatively, you can download and print off a new form from the HPA website, and send that.

[John Ratsey]

 Yesterday, tPR wrote to the Upper Tribunal (UT) to ask that they refuse to hear our case on the grounds that we are not Directly Affected Parties. They infer that we are "mere busybodies", but have asked for an urgent decision on this interpretation by the UT. We believe every pensioner who have their pension frozen is affected, and will argue accordingly.

A copy of the tPR letter is attached.

[Stephen Brichieri-Colombi]

Newsflash: The UT has just rejected tPRs request to deny us a hearing and asked them to show why the UT does not have jurisdiction in this matter.

Qualified Response to Options: The following letter has just been emailed to the Pensions Team

"I refer to the email of 20th July 2016 that you sent to a number of members of the HPS.

The situation has arisen because the Trustee has not sought the blessing of a court on the current arrangement, and the very dubious procedure of circumventing restrictions on the use of RAA by creating a company in order to make it insolvent, as explained in your circular of 15th July. We assume their reluctance to do so is a result of the failure of their previous attempt to reduce our pensions.

On the basis of legal advice, the HPA advised members to qualify their acceptance because of the legal challenge being put forward by a member of the HPS on behalf of the HPA, in the form of an appeal to the Upper Tribunal. Although tPR has sought a decision from the UT that the appeal be denied on the grounds that we are "mere busybodies", their request has been denied and the UT has now called for legal arguments to be presented under Section 8.2(a) of their Rules, to show that the Upper Tribunal does not have jurisdiction in relation to the proceedings.

As a result of the appeal, the legality of the ultimatum you have presented to members is now in question, and a decision on how to proceed is before a judge.

We therefore ask that, as a matter of urgency, the company (whose consultation this is) and the Trustee (who has an obligation to protect members interests) issue guidance to all members of the HPS and confirm that an acceptance will not be treated as binding in the event of a change of position following the challenge.

Please confirm you will bring this email to the attention of the company and the Trustee.

Regards

Stephen

Stephen Brichieri-Colombi
Chairman, HPA

[Edward Evans]

Thought members might enjoy this quote from the House of Commons library briefing paper  "The Pensions Regulator - powers to protect pension benefits":
The new clauses are designed to protect the PPF and scheme members from another moral hazard—the risk posed by
unscrupulous employers who might seek to use company structures and business transactions as a cover for side-stepping
their pension obligations in the form of the debt due from the employer under section 75 of the Pensions Act 1995.
... The actions taken by company groups might include withdrawing funding for the employer company, selling off its assets, paying a
large dividend to strip out any assets in the company or transferring the employees to another company such as a service
company, which would then become the employer and which would never have traded or have had any assets to speak of.

Edward

[tonyfoster]

At least we have helped others.

Pity no action by the regulator in 2011.

[Jane Tordoff]

As the HPA has received no reply to the email sent to the Pensions Team on 20 July, we have asked Martin Jenkins to send a version of our message to the Trustees and the Pensions Team.