PSGS Trust Corporation Ltd v Aon UK & Ors

Factual and Procedural Background

The present case concerns claims brought by the Plaintiff, the current trustee of a pension scheme ("the scheme"), and as assignee of Company A's claims, against the Defendants, who provided professional services including legal, consultancy, actuarial, and administrative services relating to the scheme. The scheme was previously administered by a trustee company ("the Trustee") until September 2015. Company A was the associated or principal employer under the scheme rules and entered administration in April 2015, triggering an assessment period for entry into the Pension Protection Fund.

The Plaintiff alleges that the Defendants owed duties of care to both the Trustee and Company A in their capacities as legal advisers, consultants, actuaries, and administrators. The claims arise from the Defendants' alleged negligence in advising and managing two sets of amendments to the scheme rules: the 2003 Benefit Changes and the 2007 Amendments. These amendments aimed to close the defined benefits (DB) section of the scheme to new members and future accrual respectively, with intended effective dates in 2003 and 2007.

The Plaintiff contends that the Defendants failed to advise that these amendments required formal, prospective deeds or resolutions under the scheme's amendment powers and section 67 of the Pensions Act 1995, and that the amendments were improperly implemented retrospectively. As a result, the scheme has incurred additional liabilities, including costs to rectify underpayments to members. The Plaintiff also alleges the Defendants owed a continuing duty of care up to 2015 to administer the scheme properly and to rectify or warn about these defects.

The Defendants applied for reverse summary judgment seeking dismissal on limitation grounds, asserting that the claims were statute-barred and that the Plaintiff’s case on continuing duty should be struck out. The court was asked to consider the application of section 14A of the Limitation Act 1980 regarding knowledge and limitation periods, and the viability of the continuing duty claim in light of relevant case law.

Legal Issues Presented

1. Whether the Plaintiff’s claims relating to the 2003 Benefit Changes and 2007 Amendments are statute-barred under the Limitation Act 1980, specifically section 14A concerning the knowledge required to trigger limitation periods.
2. Whether the Defendants owed a continuing duty of care to the Plaintiff up to 2015 to administer the scheme in accordance with its rules and to advise on the validity and effectiveness of the scheme amendments after their purported implementation.
3. Whether the Defendants’ application for reverse summary judgment should be granted based on the absence of reasonable prospects of success on limitation grounds.
4. Whether the Plaintiff’s claim of a continuing duty should be struck out as untenable in law, particularly in light of the Court of Appeal’s decision in Capita (Banstead 2011) Limited v RFIB Group Limited.

Arguments of the Parties

Defendants' Arguments

• The claims are statute-barred because the Trustee and Company A had actual or constructive knowledge of the relevant facts well before the limitation periods expired.
• The Trustee and Company A should have known, from various legal advices and documents (including letters from Shoosmiths and Mayer Brown, and opinions provided by the Defendants), that the amendments could only be validly made prospectively by formal deeds or resolutions.
• The Trustee, being a professional trustee with knowledgeable directors, and Company A, as a sophisticated business, should have sought independent legal advice once the risks about retrospective amendments became apparent.
• The continuing duty claim is legally untenable and amounts to a duty to correct earlier negligence, which the Court of Appeal in Capita held does not exist. The Defendants’ retainer ending in 2015 does not give rise to fresh breaches.
• The wording differences in the 2009 Opinion should have put the Trustee on inquiry regarding the validity of retrospective amendments, prompting independent advice.
• Knowledge of individuals acting as Trustee directors who were also employees should be attributed to Company A.

Plaintiff's Arguments

• Section 14A of the Limitation Act 1980 postpones the limitation period because the Trustee and Company A did not have actual or constructive knowledge of the relevant damage until shortly before the claims were issued.
• The Shoosmiths and Mayer Brown advices did not address the mechanics of implementing the amendments or the requirement for prospective deeds, and the Trustee reasonably relied on the Defendants as primary legal advisers to highlight such issues.
• The Trustee was entitled to assume that the Defendants would raise any issues about the validity and effectiveness of the amendments, and there was no reason to seek further independent advice.
• The continuing duty claim is based on the Defendants’ role as administrators and consultants, who owed ongoing duties to administer the scheme properly until 2015 and to advise if earlier amendments were invalid.
• Knowledge of Trustee directors should not be automatically attributed to Company A due to duties of confidence and limited overlap between individuals’ roles.
• The 2009 Opinion related to a separate amendment and did not raise obvious inconsistencies requiring reconsideration of earlier advice.
• The Court should reject the Defendants’ cumulative document argument as it ignores the context and timing of advice and the real-world manner in which documents are considered.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Easyair Ltd v Opal [2009] EWHC 339 (Ch)	Guidance on summary judgment and the burden of proof.	The court adopted the established summary judgment principles from this case without repeating them.
Bridging Loans Limited v Toombs [2017] EWCA Civ 205	Summary judgment may be appropriate in disputes concerning the application of s.14A Limitation Act 1980.	The court acknowledged that on such applications the defendant is entitled to take the claimant’s pleadings at face value.
Haward v Fawcetts [2006] UKHL 9; [2006] 1 WLR 682	Interpretation of s.14A Limitation Act 1980 regarding knowledge and limitation periods.	The court relied on this leading authority to interpret the knowledge required to trigger limitation and the burden of proof on the claimant.
Cole v Scion Limited [2020] EWHC 1022 (Ch)	Summary of the law on s.14A Limitation Act 1980 and knowledge requirements.	The court adopted the summary of the law provided by Nugee J to clarify the burden and nature of knowledge required.
Jacobs v Sesame Ltd [2014] EWCA Civ 1410	Clarification on the burden of proof and nature of knowledge under s.14A.	Referenced in the summary of legal principles regarding limitation and knowledge.
Wilkinson v Ancliff (B.L.T.) Ltd [1984] 1 WLR 1352	Knowledge sufficient to start limitation period need not be full or detailed.	Supported the principle that broad knowledge can trigger limitation.
Gravgaard v Aldridge & Brownlee [2004] EWCA Civ 1529	Objective test for constructive knowledge considering claimant’s characteristics.	The court applied this to assess what knowledge a reasonable person in the position of the Trustee would have acquired.
Webster v Cooper Burnett [2000] PNLR 240	Reasonable persons are expected to read their correspondence.	Accepted that the Trustee should have read and considered correspondence relevant to the case.
Capita (Banstead 2011) Limited v RFIB Group Limited [2015] EWCA Civ 1310	No continuing duty to correct earlier negligence after breach.	The court struck out the claim for continuing duty, holding no fresh breach arises after original negligence.
James Cropper Plc v Aviva Life and Pensions UK Limited [2022] EWHC 1689 (Ch)	Consideration of continuing retainer in pension administration context.	The court found no assistance as the continuing duty issue was not argued and Capita was not cited.

Court's Reasoning and Analysis

The court began by addressing the summary judgment application on limitation grounds under section 14A of the Limitation Act 1980. It accepted the parties’ common ground that the primary limitation period had expired and focused on whether the Plaintiff had an arguable case that the limitation period was postponed due to lack of requisite knowledge.

In analysing the 2003 Benefit Changes, the court considered the Shoosmiths letter and the context in which it was received. It found it arguable that the Trustee did not understand this advice to address the formal implementation steps or the need for prospective amendments, and reasonably relied on the Defendants as primary legal advisers to highlight such issues. The court rejected the Defendants’ submission that the Trustee should have sought further independent advice, given the Defendants’ role and the absence of an independent trigger of loss.

Regarding Company A, the court found it arguable that knowledge of Trustee directors who were also employees should not be automatically attributed to Company A. It rejected the Defendants’ argument that Company A would have had the same knowledge as the Trustee, emphasizing statutory requirements for attribution of constructive knowledge.

For the 2007 Amendments, the court found it arguable that the Mayer Brown advice addressed only the principle of agreement and not the mechanics of implementation, which were managed by the Defendants. The Trustee reasonably relied on the Defendants to raise any issues about validity and effectiveness. The court also found it arguable that the Trustee would not have revisited the Mayer Brown advice after receiving the Defendants’ opinions and acting on their advice to treat the amendments as effective from the intended date.

The court further considered the 2009 Opinion and concluded that it related to separate amendments and did not provide an obvious trigger to revisit earlier advice or seek further independent advice. It rejected the Defendants’ cumulative document argument as artificial and ignoring context, emphasizing the real-world manner in which documents are considered and forgotten.

On the continuing duty claim, the court relied on the Court of Appeal’s decision in Capita, which held that there is no continuing duty to discover and correct earlier negligence once the original breach has occurred. The court found that the Plaintiff’s claim for a continuing duty to advise on the validity of past amendments up to 2015 was untenable in law and struck out that part of the claim. It noted that the Plaintiff’s arguments about the scope of duties and expert evidence did not overcome this principle.

Holding and Implications

The court refused the Defendants’ application for reverse summary judgment on limitation grounds, holding that the Plaintiff has an arguable case under section 14A of the Limitation Act 1980 that the limitation period was postponed due to lack of requisite knowledge.

The court granted the Defendants’ application to strike out the Plaintiff’s claim based on a continuing duty to administer the scheme and advise on the validity of the amendments after their purported implementation, concluding that no such continuing duty exists as a matter of law.

The direct effect of this decision is that the Plaintiff’s claims will proceed to trial on the limitation issues, while the continuing duty claim is dismissed. No new legal precedent was established, as the court followed established authority, particularly the Court of Appeal’s ruling in Capita.