Imperial Group Pensions Trust Ltd v Imperial Tobacco Ltd

Imperial Group Pensions Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597

The Sir Nickolas Browne Vice-Chancellor said at pp 605-606:

“Pension scheme trusts are of quite a different nature to traditional trusts. The traditional trust is one under which the settlor, by way of bounty, transfers property to trustees to be administered for the beneficiaries as objects of his bounty. Normally, there is no legal relationship between the parties apart from the trust. The beneficiaries have given no consideration for what they receive. The settlor, as donor, can impose such limits on his bounty as he chooses, including imposing a requirement that the consent of himself or some other person shall be required to exercise of the powers.

As the Court of Appeal has pointed out in Mihlenstedt v Barclays Bank International Ltd [1989] IRLR 522 a pension scheme is quite different. 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 judgement, 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 employer will not, without reasonable cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee...’

(see Woods v WM 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 judgement, 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.”

The Vice-Chancellor at pp 607 stated:

“In my judgment the obligation of good faith does require that the company should exercise its rights (a) with a view to the efficient running of the scheme established by the fund and (b) not for the collateral purpose of forcing the members to give up their accrued rights in the existing fund subject to this scheme.”


Referred to in Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 298.

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