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Board of Management of the Bank of New Zealand Officers' Provident Association v McDonald [2002] NZCA 77; (2002) 1 NZSC 40,570 (23 April 2002)

Last Updated: 16 December 2011



IN THE COURT OF APPEAL OF NEW ZEALAND
CA244/01


BETWEEN
THE BOARD OF MANAGEMENT OF THE BANK OF NEW ZEALAND OFFICERS’ PROVIDENT ASSOCIATION


Appellant


AND
T K McDONALD & OTHERS


First Respondents


AND
BANK OF NEW ZEALAND


Second Respondent

Hearing:
27 March 2002


Coram:
Gault J
Keith J
Blanchard J


Appearances:
B A Scott and E A France for Appellant
A R Galbraith QC and D J Cooper for Bank of New Zealand
W M Wilson QC for the Directors


Judgment:
23 April 2002

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

Introduction

[1] This appeal concerns whether in particular circumstances the Bank of New Zealand Officers’ Provident Association (the Association) has power to amend its rules in a manner which would enable it to pay benefits not only to current officers of the Bank of New Zealand (the Bank) but also to certain persons who ceased to be officers on or after 1 November 1995. The provident fund of the Association (the fund) is very substantially in surplus. All parties agree that the Association’s rules (the rules) require the surplus to be eliminated so as to bring the fund back into equilibrium so far as possible in accordance with actuarial forecasts. But the Board of Management of the Association (the Board) and the Bank are in dispute over the way in which this ought to be achieved and, in particular, whether the effect of amendments to the rules can be backdated for this purpose. This is the second time in which a move by the Association to this end has been brought to this Court: see Board of Management of the Bank of New Zealand Officers’ Provident Association v Bank of New Zealand (1999) 1 NZSC 40,462 in which the Court dismissed an appeal from a High Court judgment in favour of the Bank concerning the way in which the Association was making distributions of its investment earnings. The Court confirmed that there was no authority in the rules for distributions to pensioners based on an actual asset earning rate.

Factual background

[2] Over 100 years ago the Bank established a retirement benefit scheme for its employees, known as “officers”. The original association was replaced and incorporated by the Bank of New Zealand Officers’ Guarantee and Provident Association Act 1900 which brought its business and affairs under the management of the Board and provided a set of rules for the Association. The objects stated in those rules included the maintenance of a provident fund to be applied for the benefit of full members of the Association. The members consisted of the persons who were formerly on the staff of the Bank but were now pensioners and such other persons who were then or might at any time thereafter be placed on the staff. Members were divided into three classes, namely full members (contributing to both the provident fund and a guarantee fund intended to provide an indemnity to the Bank for losses through or on account of the “unfaithfulness or dishonesty” of any member), members contributing to the guarantee fund only and pensioners (r6). Membership continued only so long as the member continued to be an officer in the employ of the Bank or in receipt of a pension from the Association (r9). The provident fund was required to be applied for the benefit of full members, primarily to provide them with pensions (r25). A member in receipt of a pension who engaged in any other (i.e. competitive) banking service without the consent of the directors of the Bank, or was guilty of gross misconduct, forfeited his pension, subject to the discretion of the Board, with the sanction of the directors of the Bank (the directors).
[3] The 1900 Act was repealed and replaced by the Bank of New Zealand Officers’ Provident Association Act 1971. By this time it seems the guarantee fund had been discontinued. The preamble to the 1971 Act recited that the 1900 Act had incorporated the Association “for the purpose, inter alia, of providing pensions and allowances for officers of the Bank of New Zealand” and that it was desirable, having regard to modern conditions, to extend the powers of the Association to enable it to utilise its funds to better advantage “for the benefit of its members and their dependants”. The Act continues the Association (s3) under the control and management of a Board of Management (s4). Section 5 sets out the Association’s powers and s6 contains its ability to make contracts. Section 7 provides as follows:

7 Rules

(1) The rules for the conduct and management of the business and affairs of the Association shall consist of the rules in force at the passing of this Act, with such additions, alterations, and amendments as may from time to time be made in accordance with those rules.

(2) Any copy of the rules sealed with the seal of the Association shall, in the absence of proof to the contrary, be evidence that they were duly made and are the rules for the time being in force.

The 1990 rules

[4] As from 1 August 1990 the Association was substantially restructured by changes to its rules. No question has been raised concerning the validity of the current rules. Prior to 1990 the rules provided for a traditional defined benefit scheme. Benefits took the form of pensions. The 1990 amendments defined that scheme as Division 1 and closed that scheme to new members. A cash accumulation benefit scheme was constituted (Division 2) for new members. Benefits under Division 2 take the form of lump sum payments. Division 1 members could elect to transfer to Division 2. There is now only one remaining Division 1 member and, as at 31 October 2001, 312 Division 1 pensioners. In contrast, there are 3039 Division 2 members. Between 1995 and 2000, 2533 members left the Association but the number of Division 2 members is now on the rise as a result of the Bank’s encouragement to employees to join.
[5] Although there are still two schemes, there is only one unallocated fund. The rules have three parts. There are common rules covering both schemes (prefixed by the letter C) and rules which apply to members of each division only. The whole of the assets of the Association belong to the fund and are to be applied in payment of pensions and other allowances and benefits in terms of the rules (Rule C3.2.1). On a winding-up or partial termination no part of the assets can revert to the employer bank without the prior written consent of the Government Actuary (Rule C1.6).
[6] The rules presently contain the following definitions:

Member – means a Division 1 Member or a Division 2 Member

Division 1 Member – means an employee who is a Member of the Provident Fund in accordance with these Rules on 1 August 1990 and who does not elect to become a Division 2 Member.

Division 2 Member – means a Qualifying Employee as defined in Rule 2.1 who has elected to join Division 2 of the Provident Fund in accordance with these Rules and who has not elected to withdraw from the Division.

Pensioner – means a retired Member who is entitled to a pension under the Division 1 Rules and includes a former Member entitled to a deferred pension from the Association.

Provident Fund or Fund – means the Provident Fund maintained by the Association for the benefit of its Members and their dependants in terms of these Rules which comprises all moneys that the Bank has contributed and shall contribute to the Provident Fund and all contributions and other payments made by Members of the Association pursuant to these Rules and all assets transferred to the Provident Fund from the Guarantee Fund and all other assets and investments for the time being and from time to time representing any of the foregoing and the resulting income therefrom and the accumulations thereof and the proceeds of the investment of any moneys.

Directors – means the Board of Directors of the Bank.


[7] Rule C1.2 states the object of the Association which is

...to maintain a Provident Fund for the benefit of Members and Pensioners of the Association and their dependants.

[8] Rule C1.5.1 provides for alteration of the Rules:

C1.5.1 Except as provided for in Rule C1.5.2 the Board may vary these Rules:

(a) In respect of the rules relating to Division 1 Members (including the Common Rules which relate to such Members) with the sanction of the Directors and the assent of a majority of votes of Division 1 Members at a ballot reasonable notice of which, together with particulars of the proposed alterations, shall have previously been given to them; and
(b) In respect of the Rules relating to Division 2 Members and the Common Rules which do not relate to Division 1 Members with the sanction of the Directors.

The sanction of the Directors referred to in subclauses (a) and (b) above shall not be withheld unless in the opinion of the Directors the proposed alterations would prejudicially affect the Provident Fund or the best interests of the Association. No variation shall be made which could adversely affect any Member’s or Pensioner’s interest in the Provident Fund already accrued at the date of variation without the written consent of that Member or Pensioner or which would be in breach of the Superannuation Schemes Act 1989.

[9] The Board consists of eight persons comprising the chief executive of the Bank (or nominee), two appointees of the directors, a person appointed by the chief executive and four members elected by the members.
[10] Rule C2.3 provides for periodical investigations by an actuary and is the source of the requirement that the Board must ensure the equilibrium of the fund:

C2.3 PERIODICAL INVESTIGATIONS BY ACTUARY

The Board shall as often as the Directors require but not less frequently than once in each three years, cause an investigation to be made by the Actuary into the state of affairs of the Fund. For purposes of such investigation the Board shall provide the Actuary with all necessary records and facilities including as far as possible such information based on expert opinion as will enable the Actuary to deduce the probable future earning rate of the Fund and probable future rate of salary increases. The Board shall take whatever action for ensuring the equilibrium of the Fund as in its opinion is rendered necessary by the Actuary’s report and/or recommendations. A copy of the Actuary’s report shall be furnished to the New Zealand Government Actuary.

Fund out of equilibrium

[11] The fund was in deficit in the 1970s and the Bank consequently made a series of special contributions until 1988 when substantial increases in the market value of investments had resulted in a large surplus which peaked at $278.6 million in 1989. The surplus reduced to $107 million by 1995 as a consequence of the share market crash, the payment of improved benefits and the 1990 restructuring. Thereafter the surplus rose again to $129 million in 2000. An updating affidavit filed in this Court shows that it has since declined to $104.5 million as at 31 October 2001. This is the equivalent of 37% of the assets and 58% of the liabilities. The surplus has arisen because the earnings derived by the fund from its investments have generally tended to exceed the Bank’s contribution holiday (i.e. the level at which the Bank would have contributed if there had been no surplus).
[12] The Board made a proposal on 28 November 2000 to alter the rules for the purpose of restoring equilibrium. It proposed that the alteration should have effect as from 1 November 1995 (“as if it had been included in these rules with effect on and from 1 November 1995”) and that the allocations from the surplus should be paid to persons who were members of the Association from that date until 31 October 2015. The way in which this was proposed to be done was to create “equilibrium benefits” consisting of the difference between the assets and liabilities of the fund at the end of each financial year (from and including the year ended 31 October 1996), on the one hand, and a nominated sum fixed in relation to each such year, on the other hand. That difference is proposed to be allocated as to one-third in equal amounts to all members who were members on the last day of the financial year in question. One-third would be allocated to members in proportion to their assessed benefits (for Division 2 members the total of their contributions and benefits) and the final one-third to members in proportion to their contributions in the financial year in question.
[13] Members have no accrued vested rights in the surplus. In achieving equilibrium the Board has seen it as equitable to treat the members who left on or after 1 November 1995 on the same basis as current members in relation to their membership during the years in question. Because of the Bank’s challenges to the Board’s policy relating to distributions from the surplus, earnings from the surplus have been held in escrow since 1 November 1995.
[14] The Board does not wish to postpone the achievement of equilibrium beyond 2015. On that basis, excluding the former members would, in the view of the Board, create a windfall for present and future members. The Bank agrees that it is appropriate to run down the surplus over a 15 year period but does not agree that the commencement of the period should effectively be backdated. It has been actively encouraging an increase in membership as a means of eliminating the surplus and wishes to confine additional benefits to present and future members.
[15] The point of contention is that under the Board’s proposal persons who were members in financial years ending 31 October 1996 to 31 October 2000 but who ceased to be members prior to the rule change would receive equilibrium benefits related to their membership, assessed benefits and contributions in the financial years prior to the time they ceased membership. The Association has estimated that the effect of its proposal would be to allocate or pay to current or former members in respect of periods prior to 31 October 2000 approximately $43 million. Of that amount, approximately $16.3 million would be attributable to former members. The Bank has objected that, if adopted, the amendments will have a retrospective effect which is beyond the rule making powers of the Board.
[16] It should be mentioned too that the Board also proposes an increase in Division 1 pensions.
[17] The Board has sought from the High Court a declaration that it is acting lawfully in proposing the alterations to the rules. As refined at the hearing in the High Court, the questions which Williams J was asked to answer were:
[18] The Court is concerned with the general principle, not with the detail of the Board’s proposal. In this connection we note that the Board has made various alternative proposals lest it be concluded by the Court that the backdating involved in the original proposal is impermissible.

The High Court judgment

[19] In his judgment delivered in the High Court at Auckland on 28 September 2001 Williams J said that the absence of an express power to backdate the effectiveness of rule amendments was a strong indicator that the framers of the rules did not intend that alterations with retroactive effect could be validly adopted. The intention of the rules was that the fund be maintained for members and their dependants. Former members are not mentioned. The existence of the surplus is not a new problem. Rule C2.3 has required its elimination since at least 1990. Any attempt to backdate would be likely to create unfairness, depending on the date chosen, to some of those who made decisions based on the rules as they were at the date their decision was taken. The growth in the surplus since 1995 has largely occurred because the fund’s earnings have exceeded the Bank’s contribution holiday and has not arisen through increased members’ contributions, which might justify adoption of rule alterations with effect from 1 November 1995 to acknowledge such a factor. The Judge said that there are “practical reasons” against a backdating, including the paying of benefits to persons who are no longer members and may no longer be employees. Some may have joined and left since 1995. Some entitlements may have been terminated by death.
[20] Although dismissing the Board’s application and answering the first of the questions in the negative, Williams J said that his decision might not preclude the Board from altering the rules for current and future members so as to amend their qualifications and thus their future benefits “even if those altered qualifications recognise service, remuneration or other factors in the past”. It is no doubt in response to this remark that further draft amendments have now been put forward.

Submissions for appellant

[21] Mr Scott submitted that the Board had power to amend the rules with effect from 1 November 1995. The only express limitation on its power of amendment was that consent was needed in terms of Rule C1.5.1 if there would be an effect on members’ accrued benefits or on the fund or if the best interests of the Association would be prejudicially affected. The proposed amendments were in furtherance of the fund’s object, namely the maintenance of the fund for the benefit of members, and in compliance with the duty to restore the fund to equilibrium. In determining to use the surplus to improve benefits to members the Board had an obligation to ensure that the distribution as between members was fair and equitable. The Judge had wrongly circumscribed the power by reference to the date of the enactment, rather than (as the rules do) by the nature of the amendments and their impact. The earlier commencement date has no adverse impact on anyone. No existing legal entitlements are taken away. Members have no vested rights in the surplus.
[22] Mr Scott accepted that the rules, being made under the 1971 Act, constitute an enactment for the purposes of s7 of the Interpretation Act 1999 (“An enactment does not have retrospective effect”) but, he said, this principle focuses on the substantive nature of the change, not merely upon the temporal element of the backdating. It protects only legal rights and interests that exist or have already vested or accrued. It does not protect general interests or expectations. The amendments proposed by the appellant are beneficial only: members get more - none get less.
[23] It was further submitted that former members of Division 2 remain lawful objects of the Association in terms of the 1971 Act and the rules. The Act contemplates employment with the Bank as being determinative of an entitlement to benefit under the scheme. The fundamental object is to benefit employees in respect of the period of their membership. Nobody will receive any benefit which is not so related. The benefits will be calculated by reference to periods of membership (after 1 November 1995) and will reflect the extent of participation in the scheme during periods when it had a substantial surplus. Counsel said that the current rules are not decisive since the proposal is to amend them as permitted by the statute and the rules themselves.
[24] Alternatively, it was submitted, the Board has since 1995, when it was obliged to suspend its challenged policy of declaring an earnings rate which had the effect of distributing part of the earnings on surplus assets, been in breach of its duty – under subordinate legislation – to bring the fund into equilibrium. Because of the size of the surplus, that could be done only by amending the rules. The Board therefore had a duty to make such an amendment, although it had a discretion as to the manner in which it did so. That duty was owed to the (now) former members and was not extinguished by their departure. Mr Scott submitted that the Board is permitted to remedy its breach, whether that is regarded as a breach of a statutory duty or a breach of trust, by benefiting persons who were members at the time when the power of amendment ought to have been exercised. The Court should not interfere in the Board’s exercise of discretion.

Submissions for respondent

[25] For the Bank, Mr Galbraith QC submitted that the rules are subordinate legislation and should not be interpreted to confer a power of retrospective amendment, no such intention being indicated by the rules in general or Rule C1.5.1 in particular. The amendments have an impact on persons who have become members after the year to which a benefit payment will be backdated in accordance with the proposals and there is therefore retrospective effect (on the expectations of such persons). The amendments purport to take effect as if made on 1 November 1995, thereby creating the fiction that the rules “were in the past something that they were not”. The Board’s approach was said to be back to front, starting with a presumption in favour of retrospective amendment and then asking if there was anything in the rules to rebut that presumption. The Court must have regard to the power of amendment, not to the alleged desirability of the proposal and the argument in favour of fairness between members and former members.
[26] Counsel for the Bank however placed his greater emphasis on the fact that the proposed amendments purported to give the Board a power to make payments to persons who are no longer members. The proposal therefore is not within the objects of the Association as stated in Rule C1.2 – the maintenance of a provident fund for the benefit of members and pensioners of the Association and their dependants. Members, as defined in the rules, do not include former members, except to the extent that they qualify as pensioners. Mr Galbraith said that the Association is concerned only with employees who are currently members contributing to the fund.
[27] Existing and future members will, it was submitted, be prejudicially affected because they have an interest in the possibility of future benefit improvements. That interest extends to any excess assets and is injuriously affected by any amendment which reduces the level of the excess. The interest of members of a superannuation fund was said to extend beyond their accrued entitlements.
[28] Mr Wilson QC appeared to represent the directors but made no separate submissions.

Retrospective effect?

[29] As both counsel were content to proceed on the basis that the rules are subordinate legislation, we will deal with the matter on that basis although we should not be taken to have necessarily accepted that view. The position is complicated by the way in which the rules in force under the 1900 Act and originally found in a schedule to that Act were carried forward under the 1971 Act without being scheduled and have been extensively amended in 1990. But, even if it should be the case that the rules are not of a legislative character, the same approach to the question of their retrospectivity would be taken, as is demonstrated by some of the cases to be mentioned.
[30] The basis of the law’s strong disposition against allowing legislation or the exercise of legislative power (or, we would add, other exercises of power) retrospective operation is “no more than simple fairness” (L’Office Cherifien Des Phosphates v Yamashita-Shinnihon Steamship Co. Ltd [1994] 1 AC 486, 525). The law frowns on backdated exercises of power because of their potential adverse effects, not because of their temporal reach. A statute, or as in this case subordinate legislation, is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already passed (Yew Bon Tew v Kenderaan Bas Mara [1983] AC 553, 558). But the proposed changes to the rules are not properly to be regarded as having any of these effects and so are not retrospective. It is true that the amendments will enable the Association to pay equilibrium benefits relating to past years but they will not interfere with any vested rights in the surplus, for the members have no more than an expectation or hope of benefit from that source. The surplus is no more than an actuarial valuation (Wrightson Ltd v Fletcher Challenge Nominees Ltd, Privy Council Appeal No.34 of 2000, 3 May 2001, para 28). As no current member can point to any sum which he or she will lose, and all will gain something definite, the effect of the amendments is benign.
[31] The cases cited by Mr Galbraith in support of his argument that the amendments will have retrospective effect are, in contrast, examples of situations in which vested rights were being varied in an adverse way by the backdating of the exercise of a power. In James Miller Holdings Limited v Graham (1978) 3 ACLR 604 there was a rule requiring the superannuation fund to be closed three months after receipt of a notice of intention from the employer to discontinue payment of premiums. Receivers were appointed by the employer. A notice was given by them on 23 December purporting to close the fund as from 9 December. The receivers then executed an amendment to the deed purporting to authorise such a closure. If it took effect on 9 December rather than three months after the notice, there would have been a considerable difference for some members because those leaving their employment prior to such closure would receive much larger benefits. In these circumstances the Court held that the amendment would have retrospective effect and was contrary to an express proviso in the deed that no amendment, deletion or addition should detrimentally affect or derogate from benefits already secured without the consent of affected members, which had not been given. It would have deprived each member of the right to receive a benefit if he or she left within the three months. Secondly, it would enable the company to cease paying contributions three months earlier than otherwise. The amendment was therefore held to be ineffective because of its retrospective effect.
[32] Mr Galbraith’s second case was Craddock v Crowhen (1995) 1 NZSC 40,331 in which Tipping J held that the power to terminate a superannuation scheme could not be exercised retrospectively so as to allow the trustees to distribute a surplus to members who had already left the scheme. The Judge pointed out that all payments in and payments out made after a backdated effective date would be “damnified”. There was no express provision for what should then happen in respect of such payments. Tipping J considered that it could not have been intended that there would then be a complete re-accounting at the earlier date. There would clearly have been an adverse effect on those who had received payments in the interim. No such consequence will follow in the present case which is concerned with unallocated moneys.
[33] The third case relied upon for the respondents was Taranaki Electric Power Board v Stratford Borough Council [1956] NZLR 756 in which the orthodox view was taken that a statutory power to set a price for the supply of electricity could not be backdated in the absence of clear language authorising interference retrospectively with the purchaser’s contractual rights.
[34] None of these cases is comparable to the present case where no existing right of any person in relation to the surplus is being varied since neither any individual member nor the Bank has a vested right therein. The amendment will have no affect upon any payment already made or accrued due. It will not result in any unfairness to current and future members. Indeed, given that the Board has been delayed since 1995 by litigation concerning its powers, it would seem fairer that the changes should now be backdated.

Benefiting former members

[35] The ultimate source of the rule-making power is the 1971 Act. Section 7 provides that the rules consist of those in force at the passing of that Act with such additions, alterations and amendments as may from time to time be made in accordance with those rules. The rules set out in the schedule to the 1900 Act required the provident fund to be applied for the benefit of full members, primarily by providing pensions for “full members who may be superannuated or disabled”. It was provided that membership continued whilst the member was an officer in the employ of the Bank or in receipt of a pension. Pensioners constituted a class of members who were not current officers.
[36] It therefore seems clear to us that when in its preamble the 1971 Act referred to the purpose of providing pensions and allowances for “officers”, that expression must have been intended to include former officers. Although the Act speaks only of pensions or allowances, it has never been questioned that payments can be made by way of lump sum related to service and contributions and that the rules may allow for this. We see no reason why, if the rules so permit or are amended to enable it, a lump sum payment of this character cannot be made to an officer after cessation of the employment in respect of his or her period of service with the Bank. Indeed, it is not to be expected that any lump sum payment of such character will ordinarily be made until after the employment has ended. It must then follow that a payment can be made at a later time in circumstances not involving any impermissible retrospectivity (i.e. the disturbance of other persons’ rights) provided that it is made in respect of the former officer’s period of service, or part thereof.
[37] It was suggested in argument for the respondents that the present rules defined membership in terms of Division 1 and Division 2 and that the power of alteration (Rule C1.5.1) does not enable any variation except in respect of the rules relating to members of a particular division. So, it was said, no amendment can be made enabling benefits to be paid to someone who is not currently a member of one of the divisions. We think, however, that to read Rule C1.5.1 in that way would, for the reasons we have given, be inconsistent with the general purpose of the 1971 Act and that the reference in Rule C1.5.1 to the divisions is for the purpose only of categorisation and specifying the necessary consents and is not intended as a definition of membership. If it did have that function, amendments might not be able to be made in respect of pensioners. Similarly, the object of the Association, in Rule C1.2, must be read as including within “Members” those who were members/employees at the time to which the benefits paid are related.
[38] Williams J saw practical difficulties which might arise. We do not share that view but, in any event, the Court is not asked to do more than consider the matter in general principle and we have not examined the detail of the Board’s proposals.

Obligation of the directors of the bank

[39] The judgment below determined that when exercising their power to grant or withhold sanction under Rule C1.5.1, the directors are acting in their capacity as directors of the Bank and not in their personal capacities, and are exercising a power conferred by the rules of the Association and not by the Bank’s constitution. Both sides accept that view and no appeal has been brought to challenge it.
[40] Mr Scott sought on behalf of the Board nonetheless to challenge William J’s obiter expression of his opinion concerning how the Board ought to undertake its role. The respondents objected that there has been no appeal in respect of that aspect of the case. Mr Galbraith and Mr Wilson advised the Court that their clients fully accept that, except as recorded in the formal sealed judgment, nothing in paras [80] and [81] of the High Court judgment is binding on the parties (i.e. forms part of the ratio of the decision). We ourselves take the view that it is preferable not to attempt any exposition on the relevant duties of the directors in a factual vacuum and we decline to enter upon the matters which Mr Scott sought to raise.

The meaning of “Provident Fund”

[41] In a separate proceeding to which this appeal relates the Bank sought a declaration, inter alia, that the phrase “Provident Fund” used in the second sentence of Rule C1.5.1 has the meaning given to it in Rule C1.1 (see para [6] above). Williams J agreed, not surprisingly, but proceeded to express views concerning a matter not raised by the Bank’s pleading, namely as to the meaning of the phrase “prejudicially affect” in Rules C1.5.1. The formal order of the Court on this question is in the following terms:

The phrase “Provident Fund” or “Fund” used in Rule C1.5.1 has the meaning in Rule C1.1 and is also to be regarded as:

(a) the sum total of all the monies maintained by the Association in the Fund and held for the benefit of members and dependants;
(b) the Fund as affected by amendments proposed having fiscal effect and in particular whether those amendments are likely to prejudicially affect the Fund’s ability to provide the present and future benefits as far as they can be foreseen and meet the expectations of those with an interest in the Fund.
[42] The Board appeals against the findings made by the Judge concerning the task of the Directors under Rule C1.5.1. It has proposed a different form of declaration. The Bank has cross-appealed against the order saying that there is no justification for adding any gloss to the defined meaning.
[43] It is common ground that “Provident Fund” or “Fund” is defined in Rule C1.1. The Bank was therefore entitled to the declaration it sought, although that does not appear to be of any particular advantage. As the relief sought was not related to the interpretation of the second sentence of Rule C1.5.1 or to the obligations of the directors thereunder, the Bank’s cross-appeal must succeed. The Bank was also entitled to object to the Board’s attempt to have the Court give an opinion – necessarily and inadvisably, we think, in the abstract – on the obligation of the directors. For this reason we indicated during the hearing that we proposed to dismiss the Board’s appeal on this question.

Result

[44] The Board’s appeal is allowed in part. The first order made in the High Court is quashed. There will be a declaration that the Board is empowered to alter its rules in the manner proposed with effect on and from 1 November 1995. The Board’s appeal is otherwise dismissed.
[45] The Bank’s cross-appeal is allowed. There will be a declaration that the phrase “Provident Fund” used in the second sentence of Rule C1.5.1 has the meaning given to it in Rule C1.1.
[46] The Bank must pay the Board’s costs on the appeal in the sum of $5,000 together with its reasonable disbursements which, in the absence of agreement, are to be fixed by the Registrar. There will be no costs on the cross-appeal.

Solicitors:
Chapman Tripp Sheffield Young, Wellington for Appellant
Bell Gully, Wellington for Respondents

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