McClelland & Others and Unisys New Zealand (HC) 3 September 2001

This case involved a dispute regarding the employers, Unisys' obligation to contribute to the Unisys New Zealand Employees Retirement Income Fund. The Fund was a defined benefit scheme. As a result of the triennial actuarial report on the Fund the trustees required Unisys to top up the Fund by the amount that was required to fund the deficit in the Fund to meet the value of the members' accrued benefits. The trustees and the representatives of Unisys met. Unisys considered proposals to replace the Fund with a new scheme but ultimately responded to the trustees that it did not wish to alter its present rate of contributions, and that the trustees should not require the company to make the calculated deficit. Unisys gave the trustees one month's notice of its intention to terminate its contributions and wind up the plan. Such notices were issued and withdrawn on a monthly basis so that at all times the trustees were under notice of the termination of the Fund but the notice never expired.

The issue arose as to whether the trustees had the power to require Unisys to pay further contributions despite the fact that Unisys had issued a notice of termination.

The Court held that the trustees did have the power to require further contributions after Unisys had issued its first notice. The Court recalled previous cases in particular Cullen and Imperial Tobacco involving the interpretation of superannuation fund trust deeds and decided that Unisys was not prevented from making contributions to the Plan after it had issued the termination notice. This conclusion flowed from the 'simple and direct language of the trust deed'.

It was observed that when interpreting the documents relating to superannuation funds the courts have recognized both the commercial origins of such schemes and the implied obligations of good faith owed by employers to employees. Any interpretation allowing the employer (or the trustees) to act in such a way as to undermine the confidence and trust between an employer and an employee is not to be favoured.

The case serves as a reminder of the court's policy in superannuation cases to interpret the relevant documents in light of their language and purpose.

This is a general summary only and should not be taken as a substitute for specific advice.

For further information please contact Veronique Vervoort, solicitor.
Email: veronique.vervoort@phillipsfox.com

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