Law firm fails to avoid paying £50,000 into SSSPF

The Inner House of the Court of Session has rejected a law firm’s bid to avoid contributing more than £50,000 to the Scottish Solicitors’ Staff Pension Fund £10 million deficit.

Counsel for the fund said the outcome could stop a flood of disputes that might have damaged pension funds.

Pattison & Sim challenged the validity of changes to the pension fund’s rules, some as old as 70 years, claiming the changes had not been correctly implemented and it did not therefore have to contribute towards the deficit, which followed the financial crisis.

Lord Drummond Young said: “If a transaction were open to challenge, possibly long after it was carried out, on the ground that it was impossible to prove that proper procedures had been used, all subsequent dealings that proceeded on the faith of that transaction would also be potentially open to challenge. That would be an intolerable situation, both in the commercial world and elsewhere.”

Counsel for SSSPF, Craig Connal QC, said that had the ruling gone the other way “chaos would have ensued”.

He said: “This is an important ruling as there are a significant number of other cases waiting in the wings which were dependent on this particular challenge. I suspect there are scores, possibly hundreds, of similar ‘problems’ out there involving sums totalling millions.

“If the opposition’s argument had been successful it meant every transaction since 1947 would have been potentially invalid and you can imagine the kind of chaos which would have ensued, particularly in the pensions fund world.”

Mr Connal added: “It would have encouraged a flood of opportunistic disputes over what did or did not happen many years ago. There have been some recent decisions in the English courts which some might view as picky or pedantic and they could have unfortunate consequences, and this ruling could be seen as a bit of a counter-balance to that by the Scottish courts.”

Lord Drummond Young said it was the challenger’s responsibility to establish failings in the fund’s deeds rather than trustees’ to establish that amendments had been properly effected.

He said: “Without such a rule the sensible administration of pension funds, and indeed other long-term contracts and trusts, would be rendered unacceptably difficult.”

Mr Connal said: “It is clear to me that the court is trying to make a point here, that it is not just dealing with the facts in front of it.”