Case No: B2/2002/2718 CCRTF
 Neutral Citation Number:  [2003] EWCA Civ.1075
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BOW COUNTY COURT
(His Honour Judge Bradbury)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Friday 25th July 2003

Before :

LORD JUSTICE BROOKE
LADY JUSTICE ARDEN
and 
LORD JUSTICE SCOTT BAKER
- - - - - - - - - - - - - - - - - - - - -
Between :

	              Daniel Ibekwe	ApAppellant/Claimant	
	               - and -		
	                      London General Transport 
                          Services Ltd                       	RespondenRespondent/Defendantt	

- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Worwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
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Mr Michael Hartman (instructed by Aina Khan Partnership) for the Appellant
Mr Russell Bailey (instructed by Moorhead James) for the Respondent

Judgment
As Approved by the Court

Crown Copyright ©

Lady Justice Arden  : 

Introduction
1.	This is an appeal by Mr Daniel Ibekwe against the order dated 5 December 2002 of HHJ Bradbury sitting in the Bow County Court dismissing Mr Ibekwe’s claim for damages for failure to inform him of his pension entitlement following the trial of preliminary issues.  The claim had arisen in this way.  Mr Ibekwe was a bus driver employed by London Transport Executive (“LTE”) and subsequently London General Transport Co Ltd (“LG”), then a subsidiary of LTE.  As such, Mr Ibekwe was a contributory member of LTE’s pension scheme, known as the London Regional Transport (“LRT”) pension scheme.  The shares of LG were subsequently purchased by a management and employee buy out (“MEBO”) completed in November 1994.  At that point Mr Ibekwe ceased to be a contributory member of the LRT pension scheme and became a member of the LG pension scheme.  However, in January 1995, he was dismissed because of incapacity.  He then discovered that, by reason of his failure to exercise an option to transfer the accrued value of his pension rights in the LRT pension scheme, he was unable to claim the same ill-health retirement pension that he could have claimed under the LRT pension scheme and that his benefits were limited to a deferred pension under that scheme.
2.	There were three preliminary issues which the judge had to determine:-
“[Duty]
(1)	The extent to which, if at all, [LG] had a duty to inform [Mr Ibekwe] of the proposed alterations to his pension arrangements which would arise on privatisation and in particular of the availability of a transfer of his interest in the LRT pension scheme with a special enhancement.
[Breach of duty]
(2)	Whether or not [LG] satisfied that duty.
[Causation]
(3)  If [LG] was in breach of any duty to[Mr Ibekwe], whether that breach of duty caused [Mr Ibekwe’s] omission to apply for a transfer with special enhancement and, if so, whether, if he had applied, he would have received a transfer with special enhancement.
It is agreed whether or not [Mr Ibekwe] would have qualified for an early pension on medical grounds and the valuation of those benefits on that basis or otherwise are matters to be dealt with as quantum.”
3.	As of January 1995, Mr Ibekwe could no longer claim an ill-health retirement pension from the LRT pension scheme because he had by then ceased to be an employee of the LTE group.  LG concedes that if Mr Ibekwe had effectively transferred his accrued benefits in the LRT pension scheme to the LG pension scheme he would in the events which happened have been better off because he would have been credited with at least the minimum number of years’ service necessary for an ill-health pension (in his case, about 75% of a full pension) from the LG scheme.  That is to say, he would have been better off unless the trustees of the LG scheme refused his claim to such a pension on the grounds that he had been an employee for less than six months at the date of his dismissal.  It is clear that in fact the trustees did refuse (or purport to refuse) to accept that Mr Ibekwe could exercise his option to transfer his accrued benefits with the LRT pension scheme to the LG pension scheme after the date of his dismissal.  This matter has implications for the third issue above.  
The judgment below
4.	The judge gave a detailed judgment, extracting the relevant parts of the many documents to which we have been referred.  In those circumstances, I will treat as incorporated into this judgment paragraphs 5 to 31 of the judge’s judgment, which are set out in the annex to this judgment. 
5.	The judge made his findings as to the claimant’s knowledge of the options available to him.  I need not set these out in full.  The judge found that Mr Ibekwe had been concerned in the MEBO and therefore that he would have known about it and that he was particularly interested in matters relating to employment.  He found that Mr Ibekwe had received the letters of 17 October 1994 and 2 November 1994.  However, he found that Mr Ibekwe had not received the letter dated 22 December 1994 sent on approximately 17 January 1995 or seen the announcement at about the same time.  In addition, the judge found that he had not received a statement of the changed terms.  Each of these documents is referred to in the annex to this judgment.
6.	Having made those findings, the judge then turned to analyse the judgment of Lord Bridge in Scally v Southern Health Board [1992] 1 AC 294.  In that case, doctors who entered the health service of Northern Ireland too late to complete forty years’ service before retirement had the right by virtue of a statutory instrument to purchase “added years” of pension entitlement on advantageous terms in order to make up the full forty years’ contributions.  However, that right was only exercisable within twelve months of the regulations coming into force or the commencement of employment if later.  Four doctors sued their respective health boards for damages on the grounds that they had not been informed of these rights.  The House of Lords held that where a contract of employment was negotiated between employers and a representative body and it contained a particular term conferring on the employee a valuable right contingent on his exercising an option, of which he could not be expected to be aware unless the term was brought to his attention, there was an implied obligation on the employer to take reasonable steps to inform him of that term.  Lord Bridge (with whom the other members of the House agreed) held:
“I recognise that a quite different situation might arise where the pension rights available to an employee in connection with his employment were not part of the terms of his contract of employment but arose out of a separate contract between the employee and an insurance company or the trustees of a pension fund.  But that is not this case.  Here there is no doubt whatever that the terms of the superannuation scheme as laid down in the regulations in force from time to time were embodied in the terms of the contract of employment of each plaintiff.  Since the relevant board was in each case the employer upon whom, although acting as agent for the department, all liabilities were imposed by paragraph 2 of the Schedule 1 to the Order of 1972, it seems to me beyond question that the legal obligation, if there was one, to notify the plaintiffs of their rights in relation to the purchase of added years rested in each case on the board, not on the department.
Will the law then imply a term in the contract of employment imposing such an obligation on the employer?  The implication cannot, of course, be justified as necessary to give business efficacy to the contract of employment as a whole.  I think there is force in the submission that, since the employee’s entitlement to enhance his pension rights by the purchase of added years is of no effect unless he is aware of it and since he cannot be expected to become aware of it unless it is drawn to his attention, it is necessary to imply an obligation on the employer to bring it to his attention to render efficacious the very benefit which the contractual right to purchase added years was intended to confer.  But this may be stretching the doctrine of implication for the sake of business efficacy beyond its proper reach.  A clear distinction is drawn in the speeches of Viscount Simonds in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555 and Lord Wilberforce in Liverpool City Council v Irwin  [1977] AC 239 between the search for an implied term necessary to give business efficacy to a particular contract and the search, based on wider considerations, for a term which the law will imply as a necessary incident of a definable category of contractual relationship.  If any implication is appropriate here, it is, I think, of this latter type.  Carswell J accepted the submission that any formulation of an implied term of this kind which would be effective to sustain the plaintiffs’ claims in this case must necessarily be too wide in its ambit to be acceptable as of general application.  I believe however that this difficulty is surmounted if the category of contractual relationship in which the implication will arise is defined with sufficient precision.  I would define it as the relationship of employer and employee where the following circumstances obtain:
(1) the terms of the contract of employment have not been negotiated with the individual employee but result from negotiation with a representative body or are otherwise incorporated by reference;
(2) a particular term of the contract makes available to the employee a valuable right contingent upon action being taken by him to avail himself of its benefit;
(3) the employee cannot, in  all the circumstances, reasonably be expected to be aware of the term unless it is drawn to his attention.  I fully appreciate that the criterion to justify an implication of this kind is necessity, not reasonableness.  But I take the view that it is not merely reasonable, but necessary, in the circumstances postulated to imply an obligation on the employer to take reasonable steps to bring the term of the contract in question to the employee’s attention, so that he may be in a position to enjoy its benefit.  Accordingly I would hold that there was an implied term in each of the plaintiffs’ contracts of employment of which the boards were in each case in breach.”
7.	The judge also considered three other cases:  University of Nottingham v Eyett and the Pensions Omsbudsman [1999] ICR 721;  Outram v Academy Plastics [2000] IRLR 499 and Hagen v ICI Chemicals & Polymers Ltd [2002] IRLR 31.  The judge concluded that the option for an enhanced transfer was not part of Mr Ibekwe’s contract of employment;  nor had it been negotiated by a representative body on his behalf.  The judge further concluded that the agreement of 2 November 1994, on which the transfer option was based, could not truly be said to have been negotiated with a representative body for Mr Ibekwe.  The agreement resulted from negotiations between the seller and the purchaser of the shares of LG.  The judge, therefore, concluded that there was no duty.  However, he went on to consider the question whether LG had taken reasonable steps to draw the proposed changes and options to Mr Ibekwe’s attention.  On that issue the judge held as follows:-
“43.  On the evidence, I have already found that probably the Claimant received the letter of 17 October 1994, with its accompanying announcement notice.  That was a letter direct from the Defendants.  On a balance of probabilities, the Claimant probably also received the letter from the London Transport Executive of 2 November 1994 that stated there would be an option to transfer the value of the deferred pension to the new scheme on a specially enhanced basis.  Other documents, on my findings, were not received.  LG did have an explanation for a policy of attaching documents to payslips, namely that employees may change home addresses and not notify LG.  I am satisfied with the reasonableness of that explanation, coupled with the back-up system by the provision of notices in garages, which in itself reasonably anticipates that employees will look at notice boards.
44.  Taking all the circumstances together, I am satisfied that if the Claimant had benefited from the Scally provisions, he would still not succeed in his claim against LG, because they had taken reasonable steps to bring any implied contractual term [sic] to his attention.”
8.	In the last sentence it is clear that by “any implied contractual term” the judge meant “any option to transfer the value of the deferred pension”.  
9.	The judge then considered whether there was any duty of care in tort.  He concluded that if there was a duty of care in tort it was co-extensive with the contractual duty.  The judge concluded that it was not fair, just and reasonable to impose a duty of care.  LG was a bus company and not a pension adviser.  It did not assume responsibility to give pension advice.  It provided facilities for the dissemination of information and exercised adequately any duty to act with care and prudence.  Accordingly, the judge dismissed the claim, both in tort and contract.
Significance of letter of 22 December 1994
10.	The judge found that Mr Ibekwe did not receive the letter apparently sent on 22 December 1994.  LG submits that the necessary information had already been conveyed by the letter of 2 November 1994 and that accordingly nothing turns on the failure to communicate this letter.  In my judgment, this letter is an important document because it enclosed the form which Mr Ibekwe had to complete if he wished to exercise the option to transfer his accrued benefits under the LRT pension scheme to the new LG pension scheme.  The letter of 2 November 1994 had advised Mr Ibekwe fully about the transfer option.  However, it had also assured Mr Ibekwe that there was no further action that he needed to take at that stage.  The Scally case does not make it clear how much information an employer must give.  It seems to me that in principle and in the usual case the employer should send sufficient information to enable the employee to understand the options available to him at the time when he requires to have that information.  The term which the Scally case holds is to be implied into a contract of employment does not meet the usual criteria for the implication of terms into a contract but is implied because of the special nature of the contract of employment (see per Lord Bridge, above).  The term implied into this contract by the Scally case is analogous to the duty of an employer to look after the physical well-being of his employee (per Lord Woolf in Spring v Guardian Assurance [1995] 2 AC 296, 353).  It is implied because of the special nature of the relationship of employer and employee, as between whom there exists “the portmanteau general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract envisages” (see Malik v BCCI [1998] AC 20, 35 per Lord Nicholls).  Both that obligation and the Scally implied term can be seen as counterparts to the employee’s duty of co-operation (Chitty on Contracts 28th ed. (1999) Vol.2 para 39-135).  In those circumstances, it is inappropriate to give a formulaic answer to the question:  was the relevant information brought to the employee’s attention?  That question must, in my judgment, be answered by reference to the policy rationale of the implied term.  As Lord Bridge’s speech shows, the aim of the Scally implied term is to help ensure that the employee has effective access to information about benefits to which he is entitled.  Otherwise an employee might be unfairly exploited.  If the employer says to an employee that he is entitled at his option to a certain benefit but that no action needs to be taken at that stage and further information will be sent to him, the employee requires that further information before he can “unlock” the benefit.  In those circumstances, in my judgment, the duty to inform is not fulfilled until that further information is in fact sent to him.
Preliminary issue (1) (duty)
11.	Mr Michael Hartman, for Mr Ibekwe, puts his case in two ways.  The first way is that Mr Ibekwe had a contractual right to have served on him notification that he could exercise his option for the transfer of his existing accrued benefits under the LRT pension scheme to the new LG pension scheme.  He submits that the MEBO was negotiated by trade union representatives and became incorporated into his contract by virtue of the statement of changed conditions.  Mr Hartman accepts that Mr Ibekwe is bound by the changed terms even though Mr Ibekwe did not receive a copy.  
12.	At times in this argument, Mr Hartman put the case on a higher basis.  He said that there was, in fact, a promise on the part of LG to provide all the benefits which had been provided under the old LRT pension scheme.  For this purpose Mr Hartman bases his submission on clause 7.1 of the third schedule of the MEBO agreement dated 2 November 1994 set out in the judge’s judgment.  Mr Hartman further relies on the letter of 2 November 1994 which represented that Mr Ibekwe would not lose any benefits that he had enjoyed under the LRT pension scheme.
13.	In my judgment, it is not open to Mr Hartman to raise on appeal a case which was not pleaded.  The only way in which this case is put into the particulars of claim is on the basis of an implied term or negligence.  Moreover, save for the policy of the trustees of the new LG scheme, the benefits provided under the new scheme were to all intents and purposes the same as those provided under the LRT pension scheme.  Accordingly, paragraph 7 of schedule 3 to the MEBO agreement is not in point.  So far as paragraph 4.5 of that schedule is concerned, there is no evidence that this was negotiated by trade union representatives for the benefit of employees.  This provision was a piece of machinery which LTE and LG agreed for the purpose of communication with employees.  
14.	Mr Russell Bailey, for LG, submits that under clause 4.5 LG simply became the conduit for communications between LTE and its employees and that the question what should be communicated to employees about the transfer of existing pension rights was a matter for LTE and not for LG.  Neither LTE nor the LRT pension fund trustees are parties to these proceedings.  I do not express a view on this submission.  We have not heard full argument on the question whether any duty on LTE’s part survived the termination of the relationship between Mr Ibekwe and LTE.  If it does not survive that termination, and LG does not come under an obligation of its own to comply with the Scally implied term, Mr Ibekwe’s position would be highly vulnerable and anomalous since he would be unable to enforce the term against either his old or his new employer.  
15.	Mr Hartman alternatively puts the case in his second way on the basis of an implied term that the new employer would take reasonable steps to inform him of his right to transfer existing accrued entitlements under the old scheme to the new scheme.  Mr Hartman bases this part of his argument on the Scally case.  If he is wrong in saying that it is an implied term of the contract, he argues that there was an assumption of responsibility for the purposes of a duty of care in tort.  There was very little evidence at trial as to the circumstances which led to employees of LG prior to the MEBO being offered the transfer option.  I am prepared to assume for this purpose that there was either an implied term of the contract of employment or an equivalent duty of care in tort.  Either way, there was no promise by LG to ensure that information was actually communicated to Mr Ibekwe.  All it had to do was to take reasonable steps.  
Preliminary issue (2) (breach)
16.	The judge examined the question of reasonable steps in paragraphs 43 and 44 of his judgment, which I have already set out above.  Mr Hartman’s criticism of these paragraphs is that the judge took no account of Mr Ibekwe’s individual circumstances.  He was absent through ill health and no letter was sent to him by post about the transfer option despite the fact that the evidence showed that he did respond to letters by attending at LG’s premises when asked to do so.  In answer to this, Mr Bailey submits that there was no finding as to why Mr Ibekwe did not receive the statement of changed terms or the letter dated 22 December 1994.  LG adopted the practice of distributing official information with payslips because employees often changed address without informing their employers.  The evidence showed that Mr Ibekwe collected his pay and indeed had copies of his payslips.  But the judge concluded that the usual practice of LG was reasonable in the circumstances, and (by implication) that it had been followed in the case of the documents which Mr Ibekwe did not receive.   Since the usual practice enabled information to be conveyed to Mr Ibekwe in a manner which generally achieved its object, I do not consider that the judge’s conclusion on breach can be impugned.  The same conclusion follows if the duty to take those reasonable steps is based in tort rather than on implied term.
Preliminary issue (3) (causation)
17.	While this issue does not in my judgment arise, submissions were directed to it with which I should deal.  When the trustees of the LRT pension scheme informed Mr Ibekwe that the transfer option was no longer available following his dismissal, Mr Ibekwe elected to receive a deferred pension from the LRT pension scheme which was less than the amount of an ill-health retirement pension.  The judge found at the end of paragraph 26 of his judgment that “the probability is that, if the claimant had been denied the opportunity to accept and to receive a special transfer payment to the LG pension fund, he had suffered economic loss.”  This is not, however, a finding that LG caused this loss as the rejection came from the trustees of the LRT pension fund.  Indeed, the judge made no finding in his judgment on the issues of causation within issue (3) above.  Mr Bailey urges us to make such findings in favour of LG.  However, having regard to the fact that the respondent’s notice does not ask the court to make findings of causation on the ground now relied on, I consider that it would be inappropriate for this court to make any finding to the effect that any loss suffered by Mr Ibekwe was not caused by any act or omission of LG.
18.	In the circumstances, in my judgment, the appeal must be dismissed.
Lord Justice Scott Baker
19.	I agree.
Lord Justice Brooke 
20.	I also agree.

ANNEX

Paragraphs 5 to 31 of judgment of His Honour Judge Bradbury on 5 December 2002

5.	Parallel to the primary negotiations between London Regional Transport and Mokett Limited for the sale of shares in LG, were negotiations between the management of LG and employees’ representatives in relation to terms and conditions of future employment.  The Transport and General Workers Union were involved in those negotiations. The Claimant was a member of the Transport and General Workers Union until early 1995. 

6.	The Claimant suffered a back injury whilst working, on or about 16th October 1994.  He was then away from work from late October 1994 until 25th January 1995, when he was dismissed on medical grounds.  He lives in Brighton. From the time he was off work in October 1994 to his dismissal in January 1995, he visited the Stockwell Garage on some occasions, including occasions to collect pay-slips, or to attend hearings in connection with his future employment.  During this period, immediately before and three months after the sale of the LG shares to Mokett Ltd, a number of circulars or letters were distributed to employees about changes in staff conditions or about pension provision.  No relevant communications were sent directly to employees’ home addresses.  Instead, the Defendant says that letters and documents, usually not individually addressed, were stapled onto payslips, in addition to which general information was posted on staff notice boards within the garage, or, in even more general terms, referred to in a house news letter called “In General”, that was left at locations within the garage.  The Claimant says he received no documents attached to any of his payslips in this period, i.e. between October 1994 and his dismissal, did not see any relevant notices, and did not see the house newspaper.  

7.	The Claimant asserts that the Defendant did owe to him a duty, either as an implied term of his contract of employment, or in tort, to give him information about his occupational pension scheme, and especially in relation to terms which could result in detriment to him, if he himself did not take some positive action in relation to election on pension options.  The Defendants assert that they had no such duty in contract or tort to provide the Claimant with such information. They also assert that, if there did exist a duty, then they have satisfied it by providing information, notices and letters, and by ensuring that employees’ representatives were conversant with pension scheme changes.  

8.	The pension arrangements
London Regional Transport, during negotiations leading up to the sale of LG share to Mokett, stated that those who became employees of Mokett could not continue as contributing members of the LRT Pension Scheme.  In consequence, LG had to set up its own pension scheme.  The employees of LG then paid exactly the same contributions after privatisation as before.  However, employees were asked to exercise an option relating to their accrued benefits under the LRT Pension Scheme.  Employees could either (a) transfer accrued benefits to the LG scheme, (b) leave accrued benefits in the LRT scheme, or (c) transfer accrued benefits into a private scheme.  Part of the pension arrangements involved the availability of an enhanced transfer value if an employee opted for a transfer of accrued rights from the LRT scheme to the LG scheme.  

9.	The thinking behind enhanced transfer values was helpfully set out in a statement from Mr David Robertson, a Pension Adviser in Watson Wyatt LLP.  Mr. Robertson was not called to give evidence, but there is, I believe, nothing contentious in the extracts that I now read.  (I read paragraphs 4 and 6 from his witness statement):

“4.  Employees did transfer their accrued rights to the new scheme. They were able to do so with an enhancement. The enhancement requires some explanation. When a business is transferred on terms where the transferred employees are not able to remain as members of the sellers scheme, the employees become deferred pensioners after completion. They then receive a deferred pension based on service up to completion and salary at completion payable from normal retirement age. The pension would increase over the period from completion to retirement, broadly in line with price inflation.  Prior to the disposal, their pension benefits would have been linked to final salary. Therefore, if they had remained with the original employer, their pension at retirement would have been based upon salary at retirement.   Since wage inflation is expected to rise faster than price inflation, the employees are, to that extent, worse off as a result of leaving the sellers scheme.

6.  It is common practice, however, where there is a bulk pension transfer from the fund of the seller to the fund of the buyer, for the sale agreement to make provision for transfer at enhanced values, i.e. to take into account wage inflation rather than price inflation.  It is a matter for commercial negotiation between vendor and purchaser.  Usually these negotiations are completed and documented in a sale and purchase agreement prior to completion of the deal.  However, administrative reasons generally dictate that such enhanced transfer values are calculated and agreed by the parties’ actuaries after completion.”

10.	During 1994, a framework agreement was discussed and then finalised following meetings between representatives of LG and the Transport and General Workers Union.  The agreement, which was not directly circularised to union members, was dated 12th August 1994, and records that new pension arrangements were being negotiated by a separate group.  

11.	Documents produced in this action have been sparse, and much of the oral evidence about documents and their circulation was, in my judgment, imperfect, imprecise, and unreliable.  It is understandable that oral evidence should be so lacking in quality when eight years have elapsed since relevant events and when proceedings were only issued two years ago.  One set of minutes of the separate group discussing pensions were produced. They were described as “Minutes of the fifth meeting held on 12th October 1994 to discuss the post privatisation pension scheme”, and members present included LG management and TGWU officers.  One TGWU official present was Mr. John Griffiths, who gave evidence orally during this action. The minutes record that facilities would be requested to enable union representatives to explain details of the proposed pension scheme at each garage and, further, that each member of staff would be issued with a personal copy of the “announcement notice”, the benefit structure, and a notice of intention to elect to contract out.   Mr. Griffiths thought that garage meetings would  have been held within a week of 12th October 1994, but was not able to give a date for any meeting that actually took place at Stockwell, and did not himself personally attend such a meeting.

12.	The next document produced was a letter dated 17th October 1994, not individually addressed to staff members. It came from Mr. K.L. Ludeman, who was Managing Director of LG.  I read it in full.

“Dear Colleague, London General Future Pension Arrangements.  London Transport will no longer permit employees of the LBL bus companies to continue in membership of the LRT Pension Fund (LRTPF) after privatisation.

This has been known since the Sales Memorandum was published in March 1994, and negotiations have been proceeding with your Trade Union representatives over the past seven months to decide the benefit structure and arrangements for a new London General Pension Fund (LGPF).  The final package of benefits represents the best that the Company can afford given the intense competition for local bus services in London, and will apply provided the MEBO [Management Employee Buy-Out] bid for London General is successful.

The LGPF will be managed by a Board of Trustees who will be drawn from Company management and from the employees. The process for appointing employee Pension Trustees will be outlined to you after privatisation.

The information enclosed with this letter is important, and I would ask you to give some time to carefully read through it.  The pack contains:-

1.	Announcement Notice.
2.	Summary of the LGPF Benefits.
3.	Notice of Intention to Elect to Contract-Out.
4.	Expression of Wishes Form (MUST BE COMPLETED).

If you have any query regarding any of this information, you should raise the matter with your local Manager.  Information meetings will also be arranged at each garage at which management and trade union representatives will be present.

You will see that an ‘Expression of Wishes Form’ has been included with this package of information. It is very important that you complete this form and return it to your Manager to ensure that the Trustees of the LGPF may be aware of your wishes in the event of your death in service.  It is also important to complete a new form if at any time you decide to change your wishes or levels of apportionment.

You will subsequently receive advice on your entitlements in the LRTPF, and will be entitled to independent professional advice to help you make a decision regarding your LRTPF benefits.  Yours sincerely.”

	It is signed “K.L. Ludeman, Managing Director.”  

13.	The announcement notice reads:  

“London General Future Pension Arrangements. Announcement to employees of London General Transport Services Limited.

Membership of the London Regional Transport Pension Scheme (LRT Scheme) will cease upon privatisation. This announcement details the arrangements which will operate in respect of pension benefits in the new London General Pension Fund (LGPF) provided the MEBO bid is successfully completed later this month.

We have conducted negotiations with your Trade Union representatives regarding the structure of the LGPF, and the parties acknowledge that, in order to remain competitive, the benefits of the Scheme are the best that the Company can afford.

One of the consequences of these discussions is that the new LGPF will operate from the first day of independent trading, currently anticipated to be 22nd October 1994.

All existing members of the LRT Scheme will be considered members of the LGPF from that date, and pension contributions will continue to be deducted from your earnings at the same percentage rate as applied under the LRT scheme.  A summary of the benefits of and the contributions to the LGPF are shown alongside this notice.

IF YOU WISH TO DISCUSS THE CONTINUATION OF DEDUCTION OF YOUR CONTRIBUTIONS, OR IF YOU DO NOT WISH TO BECOME A MEMBER OF THE LGPF FROM THIS TIME, YOU SHOULD INFORM YOUR LOCAL GARAGE MANAGER IN WRITING BY 21ST OCTOBER 1994.

These arrangements will be in place temporarily.  Each eligible member of staff will later receive a personal copy of the benefit summary of the LGPF, together with an application form, which should be completed and returned to your local nominated manager, to indicate whether you wish to continue as an active member of the LGPF.

At the same time, independent pensions advice will be provided by London Transport (LT) to help each member of the LRT Fund decide whether to leave accrued past service benefits in the LRT Fund, to transfer them to the LGPF, or to a personal pension. Alternatively, you could choose to take a refund of contributions if you have less than two years in the LRT Fund, or take an immediate pension.

If, following the distribution of the benefit summary of the LGPF and the garage meetings you decide to leave LGPF, you will be treated as never having joined the fund.  Your contributions will be refunded to you, less an appropriate amount of tax, representing the tax relief you received against these contributions and a deduction equal to the saving you will have received on your National Insurance contributions.”

	That announcement was signed by Mr. Ludeman, Mr. O.L Jackson of the TGWU, Mr. C. Cutler of the TSSA, and Mr. B. Camp of “Craft Alliance”.

14.	The summary of benefits, under 30 different headings running to two and a half pages, may not have been easy for employees not versed in pensions practice to follow.  It made no specific mention of enhanced transfer values.  The date of distribution of that letter from Mr. Ludeman, by attachment to payslips, is uncertain. The Claimant says he never received it, nor any of the attachments, and that he was unaware of any TGWU branch meeting at Stockwell to discuss pensions.  Some check on the known recipients of the letter could have been ascertained by looking at returned forms of employees expressing wishes as to recipients of death benefits, but no evidence about those returned forms was given in this case.

15.	The next document is a circular letter from the Director of Pensions at London Transport Executive. This is dated 2nd November 1994, and again was not individually addressed.  I read paragraphs 2 and 3A and B.

“2.  Privatisation of London General Buses:  Future Pension Arrangements.

Following privatisation, this and next sections are designed to give you an initial and advance outline of the pension effects.

The new company will offer you membership of its own scheme.  They will issue details to you.  You cannot continue in contributory membership of the LT scheme.

3. Privatisation:  Existing Pension Benefits.

For benefits already earned in the LT scheme, you will have various options, i.e. they are not lost.

Full personal details of your own options and figures will be advised to you (hopefully within three months of sale).  This effectively then overtakes and replaces the 1994 statements, as described in part 1 above.

However, for your prior information, I give below a broad outline of the various options that will be available to you.  You can choose one of these options, and you will have the opportunity to discuss them with an independent advisor.

A.	Deferred Pension.
The pension you have earned in the LT scheme will become payable at age 60.  It will be based on your pensionable LT service and on your average pensionable pay over the last twelve months of service.

B.	Transfer.
Under this option you can transfer the value of your deferred pension to the new scheme.  The amount of this transfer value will be calculated on a specially enhanced basis to reflect the circumstances of the sale. It will buy you benefits in the new scheme as determined by them.

The decision to make this transfer is quite separate to your decision to join the new scheme, and transfer will not be made unless you specifically request it.

A similar transfer could alternatively be made to a personal pension with an insurance company.  The transfer value in this case would be on the standard basis only.”

	The document is headed, “Important information for members of the LRT Pension Fund.  No action is required from you at this stage.  Further details will follow as described.  (Non-members should see part 4).”  The letter ends:

“I trust the above is helpful.  Further details will follow as described, until when no further action is needed on your part.”

16.	It is possible that that letter was sent to individual garages by Mr. R.J. Pearce of LG on 8th November 1994, for he sent a memorandum to Base Managers on 8th November 1994, which reads:

“To Operating Managers…”

He then gives a series of references, which includes Stockwell.

“…from Personnel Manager, 8th November 1994, holding letter LRT Pension Fund.

I am enclosing herewith sufficient copies of a holding letter from the LRT Pension Fund, which should be issued this week, together with the payslips, to all members of staff.”

	The Claimant says he never received a copy, and it is not known exactly when and how the letter was distributed.

17.	On 2nd November 1994 the formal agreement for sale between London Regional Transport, Mokett Limited and LG was completed.  Schedule 3 to that agreement dealt with the existing pension fund. In the agreement LRT was described as “the Vendor”, Mokett Limited as “the Purchaser” and LG as “the Company”.  Clause 2.1 of the agreement read:

“The Purchaser shall procure that the Company does everything in its power (and cooperates with the Vendor and trustees of the Pension Fund as requested by them) to ensure that all of its employees cease to be in pensionable service under the Pension Fund with effect from the day before the Pension Transfer Date.”

	Clause 3.2 reads:

“The Purchaser shall procure that such of the Pensionable Employees as have not:
(a)	ceased to be in the employment of the Company;  or
(b)	attained age 65;
at the Pension Transfer Date will be offered membership of the Purchaser’s Scheme with effect on and from the Pension Transfer Date on terms complying with paragraph 7 of this Schedule.”

	Clause 4.5 reads:

“The Purchaser shall procure that the Company does everything in its power (and cooperates with the Vendor and trustees of the Pension Fund as requested by them) to facilitate communication by the Vendor, London Buses Limited or the trustees of the Pension Fund to the Pensionable Employees, including:

(a)	providing information on the Purchaser’s Scheme within two months of Completion;
(b)	passing communications to employees; and
(c)	cooperating to allow presentations at the Company’s premises by an independent pensions adviser nominated by the Vendor or London Buses Limited to give independent advice to employees of the Company.”

This last clause is one upon which Mr. Hartman, counsel acting for the Claimant, has especially relied.  Clause 7.1 reads:

“Subject to receipt of transfer payments by the Purchaser’s Scheme (as envisaged in paragraph 5 of this Schedule) or of shortfall payments (as envisaged in paragraph 6 of this Schedule), the Purchaser shall procure that the Purchaser’s Scheme shall grant to Transferring Employees in respect of their pensionable service in (or credited in) the Pension Fund before the Pension Transfer Date benefits which are, in the opinion of the Vendor’s Actuary, broadly equivalent to and no less valuable overall (on the basis of the Actuarial Assumptions) with the benefits of the Pension Fund (ignoring any benefits attributable to the AVC Fund) applicable to such Transferring Employees.”

18.	The next document produced is a copy of a seven-page statement headed, “Employer:  London General Transport Services Limited.  Statement of changed terms and conditions of employment with London General Transport Services Limited (‘the Company’) effective from 5th November 1994.  For drivers/operators and midibus drivers employed at Stockwell Garage.”  Then there is a space for the individual details of the addressee to be inserted. The name of the Claimant, D. Ibekwe, his grade, employee reference number and date of entry of service is indeed printed on the copy produced to me.  Over the next five pages are printed paragraphs dealing with rates of pay, allowances, hours of work, scheduling conditions, rostering, holidays and the contributory pension fund.  The paragraphs relating to the contributory pension fund, 7.1 and 7.2, read:

“7.1.Upon privatisation of the Company you will have automatically entered the London General Pension Fund unless you were not a member of the LRT Pension Fund or you subsequently opted out of the London General Scheme.

7.2.  Full details of the London General Pension Fund will be made available to you.

A contracting-out certificate will be applied for in respect of the Pension Fund.”

	That whole document is then signed by the Personnel Manager of LG, and there is an area beneath that signature for the employee to acknowledge. The acknowledgement  reads:

“I acknowledge receipt of the changes in my terms and conditions as detailed above.”

	There is then a space for signature, date and address.  The copy supplied to the Court bears no signature. The Claimant says he did not receive this document, and LG are not able to produce a copy with his signature thereon.  The date of distribution of that document is unknown.  It does bear a reference “11/94” in the corner of each page. There are paragraphs in the document, which, by their content, suggest that distribution was intended for November 1994.

19.	An interview note of a meeting on 28th November 1994 between the Claimant and Mr. A.R. Wickham, the Defendants’ Operating Manager at Stockwell Garage, was produced. The note records that the Claimant had been away from work off sick since 23rd October 1994 and is entirely about his sickness and the prospects of working again. No mention at all is made of the distribution of letters and circulars. There is a further similar note dated 5th December 1994.  

20.	The issue of “In General” for December 1994 has been disclosed by the Defendants.  That issue includes a half page with a section giving an anticipated timetable, incorporating a series of dates running from 2nd November 1994 – “Letter on future options” – down to 10th May 1995 – “Transfer arranged” – and ends with these words:  

“Each member will make a decision based on his/her individual circumstances. Employees who have opted out of LRT membership will have been making separate pension arrangements either through a personal pension or State SERPS scheme. In these cases no changes are necessary and provision continues unchanged.”

21.	The next document emanates from the London Regional Transport Pension Fund Trustee Company Limited. It is a copy of a letter addressed to an employee, as it happens, Mr. Pearch, dated 22nd December 1994.  Mr. Pearch is the Personnel Manager for LG.  I am asked, for the Defendants, to infer that a similar letter would have been provided to the Claimant.  The letter starts:

“Dear Mr. Pearch, I am pleased to now advise you of your leaving-service benefits under the LRT Pension Fund, as earned up to 1st November 1994 ( following the Management Buy Out of London General Transport Services Ltd.

You have several options as outlined below and summarised in the attached Form together with appropriate figures. When you have decided which option suits you best, please complete the Form by ticking one box as appropriate and returning it to me;  I shall then make arrangements accordingly.  (Please note that depending on your age/membership as indicated, some of the options in this letter may not apply to you, and so are deleted on the Form).

1.	Transfer Payment.
This is your main option, and a Transfer Payment would be paid to the new London General Pension Fund. This would be calculated on a special basis to reflect the circumstances of the privatisation. Full details of the amount of benefits you would get in the new Scheme is for them to advise you.

This option is of course not available if you have chosen not to join the new London General Pension Fund.

2.	Deferred Pension.
Your other main option is to defer rights with the Fund itself.  In this way your pension already earned will become payable on later retirement at age 60.  It would be increased each year to help protect against inflation.”

	I need not read the remainder of the letter, which contains other paragraphs relating to immediate pension, transfer payment to other schemes, and refund of contributions. The letter concludes:

 “PLEASE NOTE – I must receive your completed option form by 1st May 1995 at the latest.  After this date the Special Transfer Payment to the London General Pension Fund will no longer be available to you.”

22.	The form encloses a letter inviting completion by the employee and return to the London Regional Transport Pension Fund Trustee Company Ltd, inviting the acceptance of one option only.  The form commences:

“To the Secretary of the Pension Fund.

I note your recent advice of my benefit entitlement under the Pension Fund, and I hereby advise you that I wish to receive benefits as indicated below. Please arrange that accordingly.”

	There are then set out seven options, of which option 1 reads:

“Special transfer payment.  I give my consent to a transfer payment relating to and in respect of me from the LRT Pension Fund to the London General Pension Fund.  I understand that I shall be entitled to rights under the London General Pension Fund as described in their announcement which I have read.”

	The other options relate to deferred pensions, immediate pensions – of which there are three varieties – standard transfer payment and refund of contributions.  

23.	The Claimant says he never received this letter, or an option form for completion.  It may not have been provided to any employee until after 17th January 1995, for a note from Mr. Pearch to the Operations Manager of several garages, dated 17th January 1995 reads:

“LRT Pension Fund statement of options.  Please find herewith the LRT Pension Fund Statements for employees at your location, which should be made available for collection with this week’s payslips.  

I am also enclosing a supply of notices to staff on the subject, which I shall be obliged if you will arrange to be posted in all areas of the garage.”

	The notice to which Mr. Pearch refers, to be posted in garages reads:

“London General Transport Services Ltd.  LRT Pension Fund Statement of Options.

As you are aware, following the privatisation of London General, membership of the LRT Pension Fund (LRTPF) ceased and it was agreed that individual statements would be produced for each member detailing their future benefits and options.  

These statements will be available for collection with this week’s payslips, however, they are incomplete in that they do not include details of the main option which is the very special transfer payment that may be paid into the London General Pension Fund. This payment will be calculated on a special basis to reflect the circumstances of privatisation.  

The LGPF actuaries have not yet received the information from the LRTPF to enable full details to be provided of the amount of benefit individual members would get in the LGPF.  Hopefully these details will be available to members by mid February.

Likewise, as soon as the availability of the special transfer benefits are known, arrangements will be made with the independent advisors appointed by LT to set up the Garage Seminars and Pensions Helpline.”

	That is then signed, “R.J. Pearch, Personnel Manager”, and is dated 17th January 1995.

24	On 22nd December 1994, the Claimant and Mr. Wickham had met again at the Stockwell Garage to discuss the Claimant’s medical position. A note prepared by Mr. Roberts, General Manager at Stockwell Garage, made no mention of any pension discussion.  Mr. Roberts then wrote to the Claimant at his home address on 12th January 1995, inviting him to attend a further meeting at Stockwell Garage on 25th January to discuss the Claimant’s future as a bus driver.  In consequence, Mr. Roberts, Mr. Wickham and the Claimant again met on 25th January.  Mr. Roberts’ note concludes:

“Mr. Roberts said that, whilst he accepted that Driver Ibekwe’s account of his condition was truthful, the Company could not carry the driver on its books indefinitely.  He accepted that some progress towards recovery was apparent, but this progress was slow.  It was apparent that Driver Ibekwe would not be in a position to resume his duties in the foreseeable future, and as a result he had no alternative but to terminate Driver Ibekwe’s services on the grounds of medical incapacity.

Driver Ibekwe was advised of his right of appeal against this decision, and an appropriate Notice of Appeal form was issued.”

25.     The dismissal may have been somewhat peremptory, for on 1st February 1995 the Defendants’ medical adviser, Dr. Sharples, wrote, stating inter alia:

“…Mr. Ibekwe might well recover from this episode of back pain in due course, but is more than likely to experience recurrences in the future.  I would recommend that a target of 1st March should be set in which Mr. Ibekwe should return to work fully fit as a driver.  If he is not so, a management decision should be made for his continued employment.”

	However, the decision to dismiss had been taken six days before the date of that letter.

26.	Then Mr. Ramsden, Pension Administration Supervisor of LRT Pension Fund Trustee Company Limited, wrote, on 7th February 1995, to the Claimant.  That letter was addressed to the Claimant at his home address and read:

“Dear Mr. Ibekwe, I have been advised that you have ceased employment with London General.  The options available to you in respect of your membership of the LRT Pension Fund are outlined in the enclosed. Please note that option one, a special transfer payment to the LGB Pension Fund, no longer applies.

When you have decided which option suits you best, please indicate on the attached form and return to this office. 

Please let me know if you require any further information.”

	The format of that letter was in a standard form, with only the words “London General” and “LGB Pension Fund” handwritten.   The probability is that, if the Claimant had been denied the opportunity to accept and to receive a special transfer payment to the LG Pension Fund, he has suffered economic loss. 

27.	Some correspondence then followed between the Claimant and/or his then solicitors to the manager of Stockwell Garage. The Claimant wrote about his sick pay and holiday entitlement, but said nothing about pensions.  He did make reference to a pay and conditions agreement and to a manual on that subject.  His solicitors, in a letter dated 22nd February 1995, referred to a “new contract recently submitted to Mr. Ibekwe for signature”.  In reply, Mr. Pearch, on 15th March, wrote:

“We are not aware that Mr. Ibekwe was asked to sign a new contract of employment.  It is believed you are referring to a written statement of changes to terms and conditions which became effective on 5th November 1994, which we are required to issue on a personal basis to all staff under legislation arising from the Trade Union Reform and Employment Rights Act 1993.  The request to sign was to acknowledge receipt of the document.”

	The solicitors replied on 20th March.  I read the first paragraph and the first numbered paragraph:

“We are grateful to you for your guidance in this matter and would raise the following matters, adopting the numbering used by you in your letter:-

1.	Thank you for the indication.  May we please see the copy notification of changes to Terms and Conditions effective as from 5th November 1994.”

28.      The Claimant says he never instructed those solicitors, not the current solicitors acting for him, that he had received a contract, and he explained his solicitors’ letter of 22nd February 1995 in this way.  I read from his witness statement – the second witness statement that he made – paragraph 9.

“By the time I was sacked, I had not received any notice of changed terms and I told my solicitors I was not in possession of such a document.  In the four weeks between my dismissal and my solicitors’ first letter, I had spoken by telephone with a female former colleague working at Putney (not my garage), who had received notice of changed terms, and she had been asked to sign for them.  I had not seen this notice.  I told my solicitor staff were being forced to accept new terms and conditions, and may well have mentioned that the Defendant had been distributing notice of changed terms for employees to sign.  He must have taken this as meaning that I had once received my own copy, but he knew I did not possess and so could not given him a copy, as on 22nd February 1995 and again on 20th March 1995 he had to write to the Defendant asking for a copy.  If he thought I had such a document, he would have asked me instead.  When I eventually received my own notice of changed terms some time later, it emerged that it was quite different from the notice of changed terms at Putney.”

29.      The Defendants do not contend that they ever wrote personally to the Claimant at his home address.  Mr. Paul Reeves, the Defendants’ Finance Director, said in his statement – paragraph 10 – that the letter of 17th October 1994 was distributed in this way:

“This letter was distributed to employees in the following way.  It was placed in an envelope addressed to the employee in question.  In particular, the envelope had on it the employee’s name and personnel number. The envelope was issued to the employee at the Traffic Office counter of the garage at which the employee worked, together with the employee’s payslips. When the letter of 17th October 1994 was distributed to staff, the Claimant was still attending work.  It was not until 23rd October that the Claimant went off sick.  Issuing letters from the Traffic Office to members of staff was considered to be the normal and a reliable means of sending letters to staff.”

30.     The Claimant says that any payslips for the week incorporating 17th October 1994 would not actually have been distributed until after he had taken sick leave. He says he was always paid a clear week in arrears. 

31.      Mr. Reeves said that the letters from London Regional Transport of 2nd   
           November and 22nd December would have been distributed in the same way as he had described in relation to the letter of 17th October.  He went on in his witness statement to make the following assertions at paragraph 21(f):

“It is not unreasonable to suppose that given the Claimant’s long-term sickness the issue of his ill health benefits would have been uppermost in his mind and that the Claimant would, therefore, have been aware long before he was dismissed on 25th January 1995 that for him to be eligible for any benefits under the London General Pension Fund he would have had to transfer his accrued service benefits to the new scheme.”

	He ended his statement in this way, paragraph 22:

“I would also like to stress that whilst the option to transfer benefits to the London General Pension Fund was the main option for employees, this was not necessarily the best option for everyone, and it was made clear at all times that the decision to transfer would depend on the individual’s circumstances.”

Order; Appeal Dismissed; Appellant do pay respondent’s costs of the appeal to be determined; Community Legal Services Detailed Assessment of Appellant’s publicly funded costs.
(Order does not form part of the approved judgment)