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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Power v Trustees of the Open Text (UK) Ltd Group Life Assurance Scheme & Ors [2009] EWHC 3064 (Ch) (07 December 2009) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/3064.html Cite as: [2010] Pens LR 89, [2010] STI 567, [2009] EWHC 3064 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		7 December 2009

Dated 7 December 2009

1. This action arises out of the untimely death of a Mr Hyland on 30 July 2007 following a car crash. At that time Mr Hyland was a senior employee of the second Defendant (Open Text) with the benefit of a contract of employment of which an incident was that the employer provide life assurance. There was a Group Life Assurance Scheme (the Scheme) written under a Trust with Open Text acting as the Trustee.
2. The Claimant, Ms Power, claims to be the relevant beneficiary under the Scheme and complains, first that she has not been paid what she should have been paid under the Scheme, and second that what she was paid was paid late such that she suffered substantial financial loss. She was paid £451,200 as to principal together with interest of £14,634.48 on 28 November 2008 whereas she claims she should have been paid £750,000 as to principal; further she claims that the money should have been paid in October 2007. Thus the claim is in two parts: a claim for about £300,000 in respect of the shortfall and a claim arising out of the delay in any payment for nearly 14 months. I was told that the total sum claimed was in the order of £1 million. It was agreed by the parties that the determination of the quantum of the second claim be stood over to be dealt with if liability was established.
3. The issue as to the amount which should have been payable upon the death in service of Mr Hyland has arisen because of legislation which limited the amount which could be paid out under certain life assurance schemes. Thus section 590C of the Income and Corporation Taxes Act (ICTA) 1988 provided for an earnings cap and a "permitted maximum" in the context of "exempt approved schemes" and the amount payable in respect of death in service benefits under such schemes. The Scheme was an "exempt approved scheme" for the purposes of the ICTA 1988 and it was a condition of its approval that any lump sum payable on death in service should not exceed four times an employee's final remuneration, and that in determining an employee's final remuneration any excess over the "earnings cap" was to be disregarded. At the time of his death, Mr Hyland's remuneration was greater than the permitted maximum and the effect of this legislation was that the lump sum payable on his death in service was determined by the permitted maximum and was £451,200.
4. These provisions of the ICTA 1988 were repealed by the Finance Act (FA) 2004 with effect from 6 April 2006 ("A day"). However, a transitional regime was implemented by schedule 36 and the Registered Pension Schemes (Modification of the Rules of Existing Schemes) Regulations 2006, one effect of which was that during the transitional period the Rules of the Scheme (and hence the restriction on "final remuneration") continued to apply as if ICTA 1988 s 590C(2) remained in force unless they were amended.
5. The transitional period, as originally defined in FA 2004 schedule 36, ended on the earlier of the making of an amendment to the Scheme terminating its application and the end of the tax year 2008-2009, extended by the FA 2005 to "the end of the tax year 2010-2011 or such later time as the Board of Inland Revenue may by regulations prescribe". There was no dispute between the parties about the nature and effect of these statutory provisions.
6. In the present case the Trustee of the Scheme did not take advantage of its powers to amend the Scheme prior to Mr Hyland's death with the result that the transitional period had not ended at that time. It was common ground that had there been such an amendment terminating the application of the transitional period the effect would have been to increase the lump sum payable from £451,200 to £750,000. Ms Power claims that the Scheme should have been so amended and that the lump sum payout to her as the beneficiary should have been in the higher sum. She claims that the Trustee was in breach of duty.
7. The Open Text Scheme has been in place since about 1998 and was so in place on 2 May 2005 when Mr Hyland commenced his employment with the company. From the 29 March 2006 until after Mr Hyland's death the Scheme was constituted by a Deed of Trust and rules which were attached (the Rules). By clause 1 of the Deed Open Text declared itself Trustee of the Scheme and clause 2 provided that the Trustee shall administer and manage the Scheme in accordance with the Rules and any amendments thereto. Clause 3 provided that the Scheme shall provide relevant benefits in respect of employees of Open Text and certain associated companies. Clause 5 provided that these benefits shall be secured by a policy effected by the Trustee with Canada Life Limited (or equivalent) and clause 6(i) provided that "The Trustee may at any time with the consent of [Open Text] by deed alter amend extend modify or add to all or any of the provisions of this Deed and may amend the Rules in accordance with the provisions thereof".
8. The Rules of the Scheme are in two parts, part A and part B. Section 1 of part B is a definition section and provides that 'Final Remuneration' in relation to someone like Mr Hyland "shall not exceed the permitted maximum as defined in section 590C(2) of the [ICTA 1988]".
9. Section 5 of Part B provides for the payment of lump sum benefit.

It provides by section 5(A) that:

The Trustee shall have power to pay or apply any lump sum benefit which becomes payable under the Scheme on the death of a Member [such as Mr Hyland] to or for the benefit of such one or more of: - [a list of persons and entities] in such shares and in such manner as the Trustee shall in its sole discretion decide after the Member's death.

And section 5(B) provides that:

To such extent (if any) as the said benefit shall not have been paid or applied in accordance with section (A) of this Rule within a period of 2 years from the date of the Member's death the benefit shall be paid to the Member's personal representatives provided that [certain matters not relevant].

10. Section 13 of part B provides for Amendment of the Rules. It is in these terms

The Trustee, with the consent of the [employer] may at any time amend the Rules and shall give details of any such amendment to any Members affected thereby.

11. Ms Power's claim is against the Trustee of the Scheme and two defendants were sued because of some uncertainty as to who that Trustee was. However it became common ground that the two defendants are the same legal entity wearing the hats of Trustee and Employer respectively. It is also common ground that Ms Power does not have a claim against Open Text in its capacity as employer of Mr Hyland. I understood that it was also accepted that, had Mr Hyland not died, he would not have been in a position to require Open Text (either as his employer or as trustee of the Scheme) to amend the Rules although, of course, he could have asked them so to do.
12. With respect to the first limb of the claim, the case as originally pleaded by Ms Power was that the Trustee owed a duty of care to potential beneficiaries of the Scheme to take reasonable steps to maximise the death in service benefit. Such would have had wide ranging implications and this case was not pursued at the hearing.
13. Ms Power also pleaded that the Trustee owed a duty to Members of the Scheme and Potential Beneficiaries

a. to consider regularly and/or in response to a material change in circumstances whether the Scheme Rules could or ought to be amended

b. (if they were to decide that this could or should be done or to conclude that some or all of the Members of the Scheme or Potential Beneficiaries would benefit from such an amendment) to notify the [employer] of those conclusions and/or invite the [employer] to consent to the proposed amendment.

14. Mr McLaren QC, counsel for Ms Power, submitted that the case was straightforward. He drew attention to the fact that it was common ground that from 6^th April 2006, it had been open to Open Text (as Trustee), with the consent of itself (as employer) to amend the Scheme Rules so as to remove the earnings cap. He argued there was a duty on Open Text (as Trustee) to consider whether the Rules should be amended, that had that duty been complied with the Trustee should have and would have noted that the earnings cap could be removed, that it would have informed itself (as employer) that the Rules could be amended to remove the earnings cap and that, as employer it would have seen that for a small increase in premium the Rules could be changed to lift the cap, that it would have been more than worth the extra cost to lift the cap and that the Scheme Rules would have been amended well prior to Mr Hyland's death with the result that Ms Power would have been paid £750,000 instead of the £451,200 she was in fact paid.
15. Mr McLaren submitted that the only reason there had not been a full and timely payout of the £750,000 was that the management of the Scheme was a total shambles and a disgrace. He said this was the clearest case of a trustee failing to perform its duty to consider whether the Rules should be amended, relying on the fact that the Trustee was not even aware it was a trustee, it was not aware of its duty to consider whether the Scheme Rules should be amended and so never came close to fulfilling that duty. In addition he pointed out that no-one at Open Text seemed even to have appreciated or focused on the fact that there was an earnings cap in place.
16. Mr McLaren drew my attention to the proposition that trustees who are the donees of a mere power are not entitled to refuse to consider the desirability of exercising that power and that from time to time they must form a judgment bona fide as to whether they should exercise that power (relying on Re Gulbenkian's Settlements [1970] AC 508, 518). He also drew attention to this passage in Scott v National Trust [1988] 2 All ER 705, 717f per Robert Walker J:

Trustees must act in good faith, responsibly and reasonably. They must inform themselves, before making a decision, of matters which are relevant to the decision.

Mr McLaren submitted that the Trustee of the Open Text Scheme did none of these things.

17. Mr Pearce QC, counsel for Open Text, had a number of answers to Mr McLaren's submissions. He accepted that the power provided by section 13 of part B of the Rules created a duty to consider periodically whether the Scheme Rules could or ought to be amended but submitted that the Scheme should be construed in accordance with its terms and in the light of the relevant background facts, and that when so construed there was no duty to put forward amendments which would increase the cost of the Scheme to the employer.
18. With regard to the position before 2006 Mr Pearce accepted that the Scheme was up and running and in place in 2005 and that there was no evidence that anyone other than Open Text was the trustee. He pointed out that there was no explanation as to why an express declaration of trust had not been made earlier but argued that the key point was that such an express declaration was made on 29 March 2006, and that the court was concerned with the trust which was expressed in the deed of that date.
19. Mr Pearce had a short, and in my judgment effective, answer to Mr McLaren's submission that a proper consideration of the Rules was long overdue by early 2006; that the trustee was in breach of duty by that time. That short answer was provided by the fact that on 29 March 2006 the employer and the trustee agreed what were to be the terms of the trust. He submitted and I accept that the trust deed speaks from that date and that it could not be and is not the case that the trustee (or the settlor) immediately became under an obligation to consider whether the terms it had just agreed should be changed to some different terms. At the date the Deed was agreed and the trust declared, the trustee and the settlor must be taken to have considered the terms of the Deed as being appropriate.
20. With respect to the obligations of the Trustee subsequent to that time, Mr Pearce submitted that these depended on the proper construction of the Deed and the Rules attached thereto. He drew attention to the following points (I have slightly modified some of his observations but retained, I hope, the gist):

1. The Scheme is part of a commercial product designed for and intended to serve the needs of an employer.

2. The Technical Guide relevant to the Scheme is based on the premise that the employer will make decisions about the level of cover, pay the premiums and provide all information required when a claim is made. The guide also makes clear that the benefits will be paid out to scheme Trustees to enable the benefits to be paid in accordance with the Rules.

3. The Members work for the Employer not the Trustee.

4. The benefits of the beneficiaries under the trust envisaged by the Scheme derive from the benefits the Employer confers on the Members qua its employees.

5. Some changes in benefits require a Rule change, others (e.g. of scheme salary) do not.

6. The Scheme expressly envisages that the Employer may be the Trustee.

7. It was always open to an employee to take out additional life cover

8. It was always open to an employer to take out additional unapproved life cover.

21. The purpose of these submissions was to show that the intention behind the Scheme was that it was the Employer not the Trustee who determined the level of cover provided by the Scheme. I accept this submission and, indeed, Mr McLaren did not seriously challenge it. The consequence is that the Employer, when he determines the level of cover, owes to the Members an implied duty of good faith, but no higher duty and no duty at all to potential Beneficiaries.
22. Mr Pearce used this consequence to support his argument that there was a limit on the duties of the Trustee in the context of its power to amend the Rules of the Scheme. He submitted that it would be irrational for a Trustee of the Scheme to owe a more extensive duty than an Employer who sets up the Scheme as regards the level of cover (and hence of premiums) provided by the Scheme. He submitted that this irrationality was eliminated if any duty of consideration owed by the Trustee as regards the exercise of the power of amendment is impliedly limited so as to not to extend to consideration (otherwise than on request) of amendments which would increase the cost of the Scheme. Any duty owed by the Trustee should be construed as being subject to that limitation. He went on to argue that since an Employer could not be liable for failing to increase the cover (following Lavarack [1967] QB 278 at 294) it would be irrational for a claim by a beneficiary against a Trustee based on identical facts to produce a different result.
23. The difficulty with this submission is that the nature of the fiduciary duty owed by a Trustee is different from the contractual duty owed by an Employer. In my judgement the real question is whether the Trustee owes any and if so what duty with respect to the level of cover provided by the Scheme. In this context, Mr Pearce submitted that there was no duty on the Trustee to consider, either periodically or at all, the adequacy of the level of cover or benefits provided by the Scheme. Mr McLaren's answer to this was to accept it. His submission was that the Claimant was not contending that there was any duty to consider the adequacy of the benefits, or to consider or undertake any cost/benefit analysis of any amendment, but that there was a duty to consider whether the Rules should be amended and if, for example, there had been a change in tax legislation, there was a duty on the Trustee to propose an amendment to the Rules for the employer to consider. He accepted that there was no duty upon the Trustee to make any recommendation about any proposal and he accepted that it was entirely up to the Employer to consider whether or not the Rules should be amended. But, he submitted, that had the matter been raised with the Employer, then, more likely than not, the Rules would have been amended so as to benefit the beneficiaries of Mr Hyland's cover.
24. I cannot accept Mr McLaren's argument on this point. If, as he accepts, there is no duty on the Trustee to consider the level of cover, then there must be no duty to consider whether the level of cover is appropriate or adequate or not or whether it should be changed. And if this is right, the Trustee does not need to put himself into a position where he is able to form a view as to whether the level of cover should be changed and, therefore, he cannot be required to put himself into a position where he would be able to propose changes to increase the level of cover (a fortiori when it is accepted there is no duty to make a recommendation about any proposed change). The duties upon trustees to inform themselves before making a decision (see Scott v National Trust, §16 above) cannot include a duty to inform themselves about matters outside their concern, in this case the level of cover.
25. A similar conclusion also follows from the content of the Deed itself. The primary obligations upon the Trustee are, as set out in clause 2 of the Deed of Trust, to administer and manage the Scheme in accordance with the Rules. In my judgment, the power to amend the Rules provided by clause 13 thereof is ancillary to that primary obligation; it enables the Trustees to make amendments (if the Employer agrees) to the Rules so as to facilitate better administration and management of the Scheme.
26. In case I am wrong in my conclusions with respect to the construction of the Deed and its Rules, I go on to consider Mr Pearce's argument which is set out in paragraph 22 above. The argument has some attraction but the difficulty I have is that a Trustee will not generally know if a proposed amendment will lead to an increase in cost to the employer until he has considered the amendment and proposed it, by which time, according to Mr McLaren, he has fulfilled his duty.
27. It may be contended that any increase in cover is likely to require an increase in cost to the employer, but this leads to the conclusion, if Mr Pearce is right, that the Trustees are under no duty to make any proposals to the employer which might lead to an increase in cover. If that is right, there seems little point in the Trustees considering them. I think it highly unlikely that the Trust contemplated that the duty of the Trustees, in this context, was only to consider whether there could be increased benefits for the same or lower cost to the Employer, especially since it was common ground that there was no duty at all to consider the adequacy of the cover. Accordingly I do not accept that Mr Pearce's formulation of the duty affords a practical construction of the Deed and the Rules.
28. I now turn to consider whether, if there were a duty as contended for by the Claimant, there was a breach by the Defendant (as Trustee) which has caused loss and damage to the Claimant.
29. The case as put is simple. It is said that had Open Text been alerted prior to Mr Hyland's death to the fact that the Rules could amended to remove the earnings cap, they would have been so amended with the result that the sum paid out would be £750,000 and not £451,200.
30. Mr Pearce urged upon me a number of propositions. First he submitted that I should be wary of the 20:20 vision of hindsight, citing Nestle v National Westminster Bank [1993] 1 WLR 1260 at 1276D. He said it was easy now to say that things should have been different but that I should be considering the position as it was at the time of the alleged breach of duty, i.e. any time prior to the death of Mr Hyland. I accept that submission. Secondly he submitted that if the Defendant's acts or omissions as regards the exercise of the power of amendment were such as could have been decided upon by a Trustee acting reasonably, then there is no breach of duty. He referred me to Cowan v Scargill [1985] 2 Ch 270 at 294G and again I accept his submission.
31. I now consider the facts relevant to this question. It is accepted that at all material times prior to Mr Hyland's death Open Text was not actively conscious that it was Trustee of the Scheme and that, either as trustee or employer, it did not specifically consider an amendment to the Rules which might have the effect of the earnings cap being lifted. But it did have a human resources (HR) department which was adequately staffed, although very busy at times.
32. Mr McDougle, the head of HR Northern Europe from August 2004 to January 2007, gave evidence for the Claimant. His evidence was that the HR department had general responsibility for administering the Scheme and other benefits policies within Open Text. He said that the HR department, on its own initiative, liaised with insurers and/or brokers, liaised with employees, reviewed the extent of cover, considered ways to optimise the cover and obtained necessary advice and recommendations from brokers and made regular recommendations as to the extent of the cover in consultation with relevant senior management personnel. Mr McDougle gave his evidence clearly and I found him to be a helpful and truthful witness.
33. Mr McDougle told me that at about the end of 2005 Open Text had some 180 employees in the UK but not all were on the same employment contract and not all had the same benefits package. Accordingly, he said, there was a move driven by senior management and HR to rationalise the position. He himself did a significant amount of work on the task in the months up to February 2006 and came to the conclusion that he doubted whether the benefits packages in place (there appear to have been a number of them) produced maximum value for either the employer or the employee. On 7 February 2006 he sent an email to all UK staff to the effect that a review was in hand and that by 1 July 2006 the aim was to integrate all UK employees onto a single employment contract and associated benefits package.
34. Mr McDougle told me that one of the matters that he was intending to consider as part of his proposed review was whether or not Open Text could take advantage of any changes or proposed changes to legislation to modify the current benefits package in order to maximise employee and company value. A firm called John Scott and Partners (JSP) was engaged in connection with the review and it was in discussion with JSP (through Mr Gillingham, its director of benefits) in early 2006 that Mr McDougle became aware that the earnings cap could be removed. He said that he expected the proposed JSP report would cover the issue of whether or not the cap should be removed. I infer from this that Mr McDougle thought it reasonable to wait until the report was completed before taking any particular action. That it was reasonable was supported by other evidence in the case (especially from Ms Van Haelen) and there was no evidence, other than that given in the knowledge of Mr Hyland's death, which might support a contrary view.
35. Shortly after the review process began JSP were taken over by Towry law, and in the summer of that year Mr Gillingham, who was producing the report for Open Text, was made redundant. He moved to a company called Surf & Consult Ltd. Mr McDougle was evidently impressed with Mr Gillingham's work (he described him as 'typically very thorough') and, after consultation with the Open Text finance director, Mr Leaf, he cancelled the review project with Towry Law and commissioned Mr Gillingham, now at Surf & Consult, to produce the report and recommendations on the employee benefits packages. Work started straightaway but was put on hold in the autumn of 2006 as a result of Open Text making further acquisitions and in particular that of a company called Hummingbird Ltd. Mr McDougle's evidence, which I accept, was that it did not make sense to continue with the review and report until the acquisition of Hummingbird was complete, as otherwise all the work would have to be done again. Mr McDougle said that he did not recall any further discussions about the cap at this time and that the focus was on the integration and harmonisation of benefits as quickly as possible. This seems to me to be entirely reasonable.
36. The Surf & Consult report was not completed until 24 May 2007, by which time Mr McDougle had been made redundant. His job was taken by Ms van Haelen, who had previously been the HR manager with Hummingbird. Mr McDougle was asked about the time it took Surf & Consult to complete its report and he gave some explanations as to why it had taken so long. He said that he would have liked it to have been done more quickly but that it was a valuable piece of work and had involved lots of meetings between himself and Mr Gillingham. He accepted that, in so far as it was not done as quickly as, perhaps, it could have been, there were good reasons for that. I am satisfied on the evidence that the Surf & Consult report was produced within a reasonable time of the initial commissioning of a report from JSP.
37. As anticipated by Mr McDougle, the Surf & Consult report covered the matter of the earnings cap and a quotation was obtained on the basis of the cap being lifted. Mr McDougle said he expected the report, even though A day had long passed, to obtain quotes based upon the earnings cap being lifted or not (since Open Text might have wanted to opt for the cheaper option), and the fact that there was no quote with the earnings cap still in place led him to conclude the matter had been the subject of discussion between Surf & Consult and Open Text.
38. The significance of this is that Open Text and its advisers were more likely than not aware of the costs implications of removing the cap by the latest early 2007, yet no one considered it appropriate to deal with this matter separately from the rest of the benefits review. Ms van Haelen, who gave evidence for Open Text, was the only witness challenged on this and her evidence was that this was what she would have expected. Moreover Mr McDougle accepted that it was reasonable for any company to make all proposed changes to benefits at the same time, usually at the end of a policy year. He levelled no criticism at Open Text for the lifting of the cap not having been done earlier than it was done.
39. As already mentioned, Ms van Haelen took over from Mr McDougle at the beginning of 2007. I found her to be a careful witness who was doing her best to assist me.
40. My attention was drawn to a letter of 20 March 2007from Towry Law to Ms van Haelen which, along with much other material, includes a passage drawing attention to the changes in legislation regarding death in service benefits and the fact that the requirement of linking benefits to the earnings cap can be removed. The letter asks whether Open Text would like to take advantage of the new rules going forward and if so to let Towry Law know. Ms van Haelen could not recall this letter. It was put to her that she must have seen it at the time and she did not disagree. It was put to her that if she had recognised its relevance she would immediately have gone back to the broker to establish what the costs implications of lifting the cap were. She would not accept this stating that other matters had a higher priority and that this matter would probably have been attended to at the relevant renewal date (and she had in mind the renewal date for the Hummingbird policies, which was October). She also said she was not following up all correspondence with Towry Law as there was a dispute between them over several matters including an £18,000.00 bill which had not been resolved. It was clear to me that Ms van Haelen had not been satisfied with Towry Law's service since at least early March and that she wanted to replace them.
41. I am also satisfied that if Ms van Haelen had engaged with Towry Law on this point then more likely than not nothing would have been done pending the delivery of the Surf & Consult report which had been commissioned to deal with all benefits. Moreover, taking into account all the evidence, I am satisfied that this would have been a reasonable course to follow.
42. As for Surf & Consult, Ms van Haelen, in consultation with Open Text's Compensation and Benefits Manager (Marion Kemmler) decided in January 2007 to let Surf & Consult complete its work. She received its report dated 24^th May 2007, was happy with it, and Open Text agreed to proceed in accordance with its recommendations. Mr Gillingham tried to persuade her to engage Surf & Consult as Open Text's broker but she would not agree to this as she wished to use Buck Consultants (Buck) as she had always found them to be very reliable.
43. In June 2007 Ms van Haelen received (from Towry Law) the renewal figures for the group's private medical insurance and she set in motion the implementation of Surf & Consult's proposals by Buck. However, she was informed by Buck that the figures which Surf & Consult had put forward were wrong. She asked Buck to get quotes for medical insurance from the market place and that matter was progressed. She also asked Buck to explain what she referred to as the 'debacle of the Surf & Consult report' and propose a way forward. She said she lost confidence in Surf & Consult and felt unable to recommend to her managers that Open Text act on its report. She wanted to commission a new report from Buck and discussed this with her boss, the Vice President of International Human Resources (Claudia Goldhammer). The result was a decision, made in late July 2007, to start the benefits review from scratch using Buck as the consultant. The result was that by the end of that month, when Mr Hyland was killed, the earnings cap had not been lifted.
44. Mr Kirkham, a former Executive Vice President Global Sales and director of Open Text (he left on 15 July 2007), took a different view from Mr McDougle and Ms van Haelen as to what should have been done. His evidence was that HR should have brought the effect of the change in legislation to the attention of the directors as soon as they could and had they done so the directors would have wanted the cap lifted as soon as possible. He believed that it was only possible to make changes to a policy at the end of any policy year, and that was the time he would have expected the changes to be made. He said that he had no involvement with the Scheme (apart from being a Member) and assumed that it was managed by the HR department.
45. Mr Kirkham accepted that it was the task of the HR department to review the extent of any cover and consider ways to optimise cover and when it was pointed out to him that during the policy years 2005 and 2006 HR had put in place procedures to change types of benefits, he accepted that appropriate changes to the Scheme were being made. He also accepted that the Surf & Consult report of May 2007 was a competent piece of work and that they appeared to have done their homework (of course, he did not know that some of the figures were inaccurate). He was cross examined upon what in fact Open Text had done in the period leading up to and including Ms van Haelen's discovery of errors in the Surf & Consult report and her wish to abandon that report and start again. He agreed that Open Text's decision to start again, made in about mid July 2007 (see paragraph 43 above), was not unreasonable.
46. Mr Kirkham also agreed that if the mistakes in the Surf & Consult report had not been uncovered and had Open Text proceeded with Surf & Consult's recommendations, it would not have been surprising if those recommendations had not been implemented before October 2007. He accepted that it was very likely that the changes would not have been implemented before the end of July and I understood this to be not because HR were failing in their duties but because that time frame would not have been reasonable in any event.
47. I have considered all of Mr Kirkham's evidence carefully. I have reached the conclusion that his evidence to which I refer to in paragraph 44 above was influenced by hindsight, by an appreciation which he now has of the importance of the point to a senior employee brought about by this tragic case. With hindsight it is easy to see that it would have been simple to arrange for the Scheme to be changed and the cap lifted so as to increase the cover of the few whose dependants may have benefitted. But I do not consider that Open Text acted unreasonably or in breach of duty in doing what it in fact did.
48. Accordingly, in my judgment the facts of this case have satisfied me that there was no breach of duty by Open Text even if, contrary to the view I have formed, such a duty as contended for by the Claimant existed.
49. I now turn to the second limb of the action, the claim based on the fact that payment of the £451,200 which Open Text admits to be due was not made until November 2008 whereas it should have been paid in October 2007. The claim was argued on the basis of negligence and breach of duty.
50. The Defendants' first answer to this claim is that the sum of £451,200 was offered to the Claimant in October 2007 and refused, a refusal which continued until March 2008 when Svedberg & Co solicitors asked for the sum to be paid forthwith. Thereafter, the Defendants' say, their solicitors were making reasonable inquiries into whether or not the Claimant was properly nominated as the beneficiary and it was only when they were satisfied about this had they a duty to pay, a duty with which they complied.
51. The following facts are material. On 24 September 2007, Open Text, as trustee, made a resolution to the effect that 100% of the amount received under the life insurance claim made after Mr Hyland's death be allocated to Ms Power. This resolution triggered the enabling power in section 5A of part B of the Rules of the Scheme.
52. The relevant correspondence starts on 2 October 2007, a time at which the Claimant was receiving daily updates about the progress of her claim (as a result of what the Claimant considered to be very slack and slow handling of the matter). By letter of 2 October Open Text, in anticipation of receiving monies from the insurer, asked the Claimant for her bank account details to 'enable us to transfer the monies on to you immediately after receipt'. There was no reply to that request. The Claimant accepted, however, that if she had responded and given her bank details then the Defendants would have been able to transfer the money to her account electronically. At this stage the parties thought that the sum which the Claimant would receive would be £750,000.
53. On about 7^th October 2007 Open Text were told by the insurers about the significance of the earnings cap being in place and that the sum that would be paid out would be £451,200. They decided to ask Mr Smith of Buck to make the call to Ms Power to tell her that she would be receiving that sum and not the sum of £750,000 which she was expecting. Mr Smith made that call (in fact two calls were needed as the first one was ended peremptorily by Ms Power). Not surprisingly Ms Power was very disappointed. Mr Smith's evidence was that Ms Power said that she would not accept the sum of £451,200 in spite of the fact that he said that Open Text had the money for her and wanted to pay it. There is some corroboration for this in a letter written by Ms Power's solicitors on 17 October 2007; the letter states that Ms Power refused to accept the payment given the £300,000 shortfall.
54. Ms Power's evidence about this conversation was rather different. She accepted that she was very emotional in the call but was adamant that she said that she would not accept the £451,200 in full and final settlement of her claim. She said she was well familiar from her experiences with the building trade of the dangers of accepting less than the full amount of monies owing to her and that she was clear on this occasion. Having heard Ms Power give evidence I can well understand that she was emotional in this telephone call. I can also well understand that Mr Smith came away from that call with the firm impression that Ms Power would not accept £451,200 on any basis and I find as a fact that Ms Power did lead him to believe that she would not accept the £451,200 which was being offered, the reason being that it was not the £750,000 which she thought was due.
55. On 29 October Open Text's solicitors responded to the 17 October letter from Fox Williams. In that letter they referred to the fact that they had been instructed that Ms Power confirmed to Mr Smith that she did not want to accept payment of the £451,200 until she had taken legal advice and that in the meantime the trustees had transferred the money to a high yielding interest account. There was no reply to that letter and no further correspondence from Ms Power until March 2008, some several months later.
56. In these circumstances, in my judgment Ms Power cannot complain of any delay in payment in the period up to March 2008.
57. One of the matters which was raised and left unanswered in the 29 October letter to Fox Williams was Ms Power's entitlement to sums under the Scheme in any event. The letter asserted that Mr Hyland had not nominated any beneficiary to receive the lump sum benefit and asked for further information which might establish Ms Power's entitlement. Not surprisingly, this matter was raised again when Ms Power's solicitors (no longer Fox Williams) wrote asking for the £451,200 on 11 March 2008.
58. There is some background to this which I must now explain. One of the matters in hot dispute at the trial was whether or not Ms van Haelen gave Mr Hyland's nomination form, or a copy of that form to Ms Power's father at the beginning of August 2007 when Mr Power was trying to assist his daughter in sorting out her affairs. Mr Power and his daughter are adamant that she did whereas Ms van Haelen was clear that she did not.
59. Given the view that I have taken of the position between October 2007 and March 2008 it is not necessary to make a finding as to whether the nomination form, or a copy of it, was handed over by Ms van Haelen to Mr Power or not. All that is necessary is a finding that in March 2008 there was a genuine difference between the parties as to what had transpired in early August 2007 and that Open Text had a bona fide and real reason for investigating the matter in the period after the letter of 11 March 2008. I have no hesitation in making such a finding. Furthermore the correspondence from 11 March 2008 seems to me to indicate that Open Text as trustee was acting reasonably and proportionately up and till the time payment was actually made (including taking and acting upon the advice of leading counsel). That being so, in my judgment the claim for breach of duty (or negligence) arising out of Open Text not paying the sums due on a date earlier than when they were in fact paid fails.
60. Mr Pearce also argued that in the circumstances of this case there was no such duty upon the Defendant trustees as alleged by the Claimant so the question of any breach did not arise. He relied upon the proper construction of the terms of the Scheme and the provisions regarding the making of payments provided by section 5 of Part B of the Rules (see paragraph 9 above). In view of my findings of fact it is not necessary for me to reach any conclusions on this matter and I do not do so.
61. I am very grateful to counsel for the assistance they gave me in this case.