73. Three of the complainants have referred me to a quotation from the judgement of Knox J in Hillsdown Holdings plc v Pensions Ombudsman and others [1997] 1 All ER 862, a case where my predecessor directed the return by Hillsdown of payments of surplus from a pension fund which had been transferred to them.

73.1. The Judge described my predecessor's conclusion as being based on a view that the transfer could be described as the improper use of a power for a purpose other than the use for which the power was granted.

 

73.2. Hillsdown as the employer had power at any time to reduce, suspend or terminate its liability to pay contributions under the scheme Knox J said:

"Clearly the power was given to it for its own benefit and there can be no question of any fiduciary duty being used in relation to the exercise. But where it does seem to me that the obligation of good faith would have applied to restrain Hillsdown's unilateral pursuit of its own interests without a proper regard to those of its employees and retired employees would have been in a combined operation of the power to adhere further employers while at the same time suspending its contributions which would otherwise have been payable in respect of them for the purpose of running down a surplus certified to have arisen ex hypothesi in relation to the service of employees of other employers which were in the FMC scheme before the date at which the surplus was certified.

... it would in my view constitute a breach of the implied obligation of good faith on the one hand to enlarge the class of employers and so bring in large categories of new members and at the same time decline to make contributions in respect of such new members for the purpose of running off a surplus which has arisen in relation to other members at the time at which the surplus was certified. It is one thing for an employer to take a contributions holiday in respect of a category of existing members and quite another to introduce a large class of new members and take a contributions holiday in relation to them so as to accelerate the effect of the contributions holiday in relation to existing members."