Independent Television News v Ward 1

United Kingdom

Reference: (1997) OPLR 14

Paragraph 18 of the ITN scheme booklet issued in 1976 stated that pensions "will be increased by 3 per cent per annum compound on each anniversary of commencement." Two years later a leaflet was distributed in which the 3 per cent figure was replaced by 4 per cent.

The scheme had the usual power of amendment subject to the rights of members not being affected adversely. In October 1979 a new definitive deed was signed which provided that pension increases should be "4 per cent per annum compound or such other amount as the trustees shall from time to time decide."

In 1993 the trustees obtained legal advice that the rules did not guarantee pension increases and in 1994 they gave an increase of only 2.5 per cent and in 1995 an increase of only 3.3 per cent.
Two pensioners complained to the Ombudsman that they should get 4 per cent annual pension increases. The Ombudsman ruled that the 1979 deed allowed increases below 4 per cent but until then the 4 per cent increases were guaranteed, because an "estoppel by convention" had arisen which prevented the trustees from going back on the statements made to members in respect of benefits accrued up to the rule change. The complainants were entitled to 4 per cent increases on that part of their pensions attributable to pensionable service before October 1979. The Ombudsman also said that the trustees and ITN were guilty of maladministration because they continued to tell members (until 1993) that they would be entitled to the 4 per cent annual increases despite the rule change in 1979. And so he ordered ITN and the trustees to pay compensation of GBP 400 for disappointment and distress to each complainant.

ITN and the trustees appealed. They argued that paragraph 18 of the booklet gave a target figure of 4 per cent but there was no guarantee that it would stay at that figure forever. Laddie J agreed, saying that the Ombudsman had not given proper regard to the totality of the contents of the booklet and the fact that it was stated to be a summary and incomplete. Paragraph 23 of the booklet said that "amendments or additions to the Scheme may be made at any time" which indicated strongly against there being a guarantee in perpetuity. There was nothing in the booklet taken as a whole to suggest that the trustees could not alter the level of increases and paragraph 23 suggested the opposite. The judge concluded that no estoppel by convention arose and so the scheme was permitted to give pension increases of less than 4 per cent.

The appeal against the finding of maladministration was rejected.