Riddington v Electricity Association (1997)
Whether plaintiff member of Electrical Association for Women pension scheme was entitled to supplementary pension from successors of the Electricity Council.
The plaintiff was an employee of the Electrical Association for Women ('EAW') from 1963 until her redundancy in 1987, when she became entitled to a pension under the EAW scheme, of which the plaintiff was appointed trustee in 1986. In this action she sought from the defendants ('EAS' and 'EAL') payment of a supplementary pension (designed to protect against the adverse effect of inflation on her EAW pension) from April 1990 to March 1992, alleging the obligation to pay her such pension to have arisen under or to be evidenced by a letter of understanding sent by the Electricity Council ('EC') to EAW in March 1974 and binding upon the defendants as successors of EC. EAS was the statutory successor of EC's liabilities and EAL was not; it was agreed any relief to be granted was against EAS only, and judgment in the action was to bind 25 other ex-employees of EAW.
(1) The letter of agreement relied upon constituted a legally binding contract between EC and EAW alone. It imposed an obligation on EC to fund the payment of the supplementary pension by EAW, if EAW chose to do so. EAW was enabled not obliged to pay the supplementary pension. Thus when EAW ceased to make ex gratia payments on liquidation, all obligations under the letter agreement were exhausted. There was simply no legal obligation to pay. The plaintiff was not a party to the agreement and at no time had rights under it. (2) There could further be no case based on estoppel; the underwriting by EC of EAW's liabilities on liquidation involved no assumption of responsibility for liabilities under the letter agreement because EAW had no liabilities thereunder. (3) EC and its statutory successor could invoke an estoppel precluding the plaintiff from seeking to set up any such liability because she had acquiesced by silence when the payment had been described in correspondence as 'ex gratia' in reliance upon which EC had purchased annuities.
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20 Mar 1997
John McGhee QC