How (far) trust law yields to contract law

 Faculty members and graduate students are invited to attend this BCL/MJur Advanced Property and Trusts guest seminar, which will be led by Mr Daniel Schaffer.

The purpose of this seminar is to examine how the Courts (should) deal, in two areas in the employment context, with the interaction between contract and (pension) trust.

First, contract has been used widely in the last twenty years by employers seeking to reduce benefits otherwise payable under the rules of pension trusts, rather than seeking to achieve that objective directly by amending the provisions of the trust. This raises the issue whether and how a trustee is bound by a third party (extrinsic) contract. The issue has huge implications for UK employers with final salary pension schemes. It continues to spawn litigation.

Second, UK employers when they established final salary pension scheme trusts retained significant non-fiduciary discretionary powers to themselves (eg scheme closure, conferral of generous early retirement pensions, amendment) – to retain financial control. Yet the pension scheme is ultimately a mechanism to deliver deferred remuneration. The tension between prioritising business interests over employees’ interests and expectations is tested in this crucible. The principles constraining behaviour of an employer and exercise by an employer of contractual discretions (eg award of bonuses under an employment contract) have been imported by the Courts into the trust domain to inform the constraint of exercise of non-fiduciary powers by employers and non-employers, but not without issues. These issues still need working out.

If you would like to attend, please ask Luke Rostill to provide you with the list of readings and questions.