Case No: BM40055CH
Neutral Citation Number: [2014] EWHC 4402 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
On appeal from the Pension Protection Fund Ombudsman

Birmingham Civil Justice Centre
Bull Street, Birmingham B4 6DS

Date: 23/12/2014

Before :

HHJ DAVID COOKE
- - - - - - - - - - - - - - - - - - - - -
Between :

	Grenville Holden Hampshire	Appellant	
	- and -		
	The Board of the Pension Protection Fund	Respondent 	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Gerry Facenna and James Bourke (instructed directly) for the Appellant
Nigel Giffin QC (instructed by Stephenson Harwood) for the Respondent 

Hearing date: 6 November 2014 
- - - - - - - - - - - - - - - - - - - - -
Judgment
HHJ David Cooke: 
1.	This hearing was listed to determine certain preliminary issues, directed by consent by Morgan J on 23 June 2014, in Mr. Hampshire's appeal against a decision of the Pensions Protection Fund Ombudsman dated 19 February 2014. Mr. Facenna and Mr. Bourke appeared for Mr. Hampshire, and Mr. Giffin QC for the Board. I am most grateful to all of them for their submissions and in particular the detailed explanation of the operation of the relevant legislation and the background to the case. I summarise that very shortly as follows.
2.	By his decision the Ombudsman dismissed Mr. Hampshire's appeal against the decision of the Respondent ("the Board") to approve, pursuant to s 144 Pensions Act 2004, a valuation of the assets and protected liabilities of the T&N Retirement Benefits Scheme (1989). 
3.	That scheme, which provides benefits for certain employees of the Turner & Newall group of companies, entered into what is referred to as an "assessment period" following the insolvency of the employers, in 2006. The Board is required to undertake a valuation to determine whether the assets of the scheme are sufficient to meet its protected liabilities, ie (broadly) the liabilities of the scheme on the basis that members' benefits are limited to the amount of compensation they would be paid by the Pension Protection Fund ("PPF") if the PPF took responsibility for the scheme (which I will refer to as the PPF compensation level).
4.	If the valuation concludes that the assets are sufficient to meet the protected liabilities, the PPF does not assume responsibility for the scheme, which therefore continues to be administered by its trustees, but on the basis that, broadly, benefits at the PPF compensation level are prioritised over other benefits. If the assets are assessed to be insufficient, the PPF assumes responsibility for the scheme, its assets become vested in the PPF and the PPF becomes directly responsible for paying benefits to members at the PPF compensation level. Thus any shortfall in the assets falls on the PPF.
5.	The valuation therefore depends critically on the level of compensation potentially payable to members by the PPF, which is prescribed by the 2004 Act and secondary legislation. Mr. Hampshire's objection is in substance to the level of compensation prescribed for cases such as his, and in particular that it is subject to a cap. The cap is fixed annually by statutory instrument but in 2006 was £24,487 for a person aged 58, as Mr. Hampshire then was. His pension was already in payment at that date, as he had been made redundant in 1998. His evidence is that in the last year before the scheme entered into assessment his pension was £56,721 pa, which was to be increased at a minimum of 3% pa. Since then, because of the operation of the cap (and to a lesser extent the less favourable indexation provisions applicable to PPF compensation) he has been paid only approximately £20,000 pa. He estimates he is currently receiving about 26% of the pension he should have been entitled to under the scheme rules. 
6.	It is not in dispute that Mr. Hampshire's entitlement has been correctly calculated at the PPF compensation level in accordance with the relevant legislation. Mr. Hampshire's complaint however is that the UK government has fixed the level of that compensation too low. He asserts that in doing so the government was in breach of Directive 80/987/EEC ("the Directive", since superseded by Directive 2008/94/EC but in materially identical terms) which provided by Art 8 that:
“Member States shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of onset of the employer's insolvency in respect of rights conferring on them immediate or prospective entitlement to old age benefits, including survivors' benefits, under supplementary company or inter-company pension schemes outside the national statutory social security schemes”
7.	It is Mr Hampshire's case that in the light of decisions of the CJEU the obligation to take "the necessary measures" can now be seen to impose a requirement that every member of an insolvent employer's pension scheme must receive at least 50% of their contracted benefits, that the Directive is therefore directly effective in UK law and accordingly the Board was in error in approving a valuation for the scheme which did not reflect that level of entitlement for his benefits. It should have either interpreted the UK legislation so as to comply with that minimum requirement or, if that was not possible, disapplied that legislation in favour of the determination by the CJEU.
8.	He is one of a number of former senior employees who consider that the structure of the PPF, and in particular the cap on compensation, operates unfairly in their case, and who have conducted a campaign to have the legislation changed in their favour. He pursues the issue in these proceedings by way of application for a review of the scheme valuation pursuant to section 206ff of the Pensions Act 2004. In an application for such a review, the Board first reconsiders the matter internally, if the applicant is dissatisfied he may require it to be referred to the Board's Reconsideration Committee, and if still dissatisfied he may refer it to the PPF Ombudsman. Mr Hampshire's case has been rejected at all of these levels. He is entitled to appeal on a point of law to the High Court under section 217 of that Act, as he now does.
9.	The preliminary issues directed by Morgan J on 26 June, 2014 were:
i)	whether Article 8 of European Council Directive 80/987/EEC is directly effective; and
ii)	if so, whether it affects the Respondent's duties in deciding whether to approve, under section 144 of the Pensions Act 2004, a valuation obtained pursuant to section 143.
10.	Mr. Giffin argues that these issues were formulated so that the court need not decide at this stage whether the PPF compensation scheme was in fact compliant with the Insolvency Directive. That question, he says, is one which requires an examination of the facts, and is one in which the Secretary of State would be likely to intervene. Mr. Facenna disputes the need for a factual examination, and submits that the court cannot determine whether the Directive has direct effect without first deciding whether the PPF scheme complies with the Directive, or can be construed in a way that complies with it, since it is only if both these questions are answered in the negative that the doctrine of direct effect has any application. One cannot answer the question whether the UK legislation complies with the Directive without deciding what the Directive requires. Nor can it be determined whether the Directive can have direct effect without determining whether it is sufficiently precise and unconditional, which must first entail deciding what it means, or at least whether it has the meaning Mr. Hampshire contends for.
11.	I start then with the central contention on Mr. Hampshire's part, which is that the Insolvency Directive as interpreted by the CJEU imposes a requirement that every employee must be assured of receiving at least 50% of his contractual benefits notwithstanding the insolvency of his employer and that it is not permissible to cap benefits to higher paid employees so that they receive less than that amount.
12.	Neither of these points is in any way apparent from the wording of the Directive itself.  The entitlements of pension scheme members to benefits are complex and both arise and are discharged over very long periods. They may not be fully funded, or even funded at all. The financial liabilities involved in pensions schemes are very large. An employer may make extravagant promises without setting up any sufficient mechanism to pay for them. A national scheme to protect such benefits may therefore  be expected to be complex, and to have to cater for a wide range of circumstances. An obligation on a state to take "the necessary measures to protect the interests" of scheme members must be among the least promising candidates imaginable in the search for precision, unless perhaps it meant an unconditional requirement to guarantee in full whatever benefits the employer had promised.
13.	Mr. Hampshire relies however on two decisions of the CJEU, in Robins and others v Secretary of State for Work and Pensions [2007] 2 CMLR 13 and Hogan and others v Minister for Social and Family Affairs [2013] 3 CMLR 27. Robins was a case against the UK, which considered the legislative predecessor to the PPF regime established by the Pensions Act 2004. The Court held:
i)	Art 8 did not oblige member states themselves to fund the rights to the benefits it protected (para 35). The state may thus establish some other system or scheme for the purpose. The PPF is intended to be such a scheme.
ii)	Art 8 did not require the relevant benefits to be guaranteed in full (para 42, rejecting the opinion of the Advocate General that a full guarantee was required). The Directive was "designed to reconcile the needs of employees with the need for balanced economic and social development" (para 39).
iii)	As to the level of protection required, "neither Article 8 of the Directive nor any other provision therein contains elements which make it possible to establish with any precision the minimum level required in order to protect entitlement to benefits under supplementary pension schemes" (para 56).
iv)	"Nevertheless, having regard to the express wish of the Community legislature, it must be held that provisions of domestic law that may, in certain cases, lead to a guarantee of benefits limited to 20 or 49% of the benefits to which an employee was entitled, that is to say, of less than half of that entitlement, cannot be considered to fall within the definition of the word 'protect' used in Article 8 of the Directive" (para 57).
v)	As to whether the United Kingdom could be liable to pay damages for failure to implement the Directive correctly, it was not sufficient simply that there had been an infringement of Community law, but there must be "a finding of manifest and serious disregard by the state for the limits set on its discretion" (para 75) which was a matter to be determined by the national court:
“78. In the present case the national court will have to take into account the clarity and precision of Article 8 of the Directive with regard to the level of protection required.
79. In that respect, it is to be emphasised that the parties in the main proceedings, the Member States which have submitted observations and the Commission have none of them been able to suggest with precision the minimum degree of protection that in their view is required by the Directive …
80. Furthermore, as held in para 56 above, neither Article 8 of the Directive nor any other provision therein contains anything that makes it possible to establish with any precision the minimum level required in order to protect entitlement to benefits.”
There was thus, as both counsel accept, a very strong indication that the non- compliance found would not lead to liability of the state in damages.
14.	Robins then was a case in which the complainants sought damages from the UK for failure to implement the Directive. It was not contended, as it is in this case, that the Directive was directly enforceable. The court held that it was impossible to determine the minimum level of protection required by the Directive, but that a system which led to such a low level of protection for some members including two of the claimants could not be sufficient.
15.	It is important in my view to understand the nature of the issue that was before the court. The system of protection in the UK prior to the 2004 Act was radically different from the PPF scheme. It required on an insolvency that the assets of the scheme be applied first in paying, in full, benefits of those who had retired and were already drawing their pensions at the date the scheme went into winding up. Only if there were assets remaining would anything be paid towards the benefits of those who had not retired by that date. Thus, any shortfall of the scheme fell first upon those members who had not retired or whose pensions were not in payment. In most schemes, there would be a significant proportion of such active or deferred members, whose benefits might therefore be very severely affected. Their interests were effectively entirely subordinated to those of the pensioner members. This was a system which attracted very considerable criticism, see for example Bradley and others v Secretary of State for Work and Pensions [2007] EWHC 242 (Admin).
16.	These effects were described in paragraphs 28 and 29 of the judgment of the Court. The numbers involved were referred to at paragraph 58, where the Court recorded statistics showing that about 65,000 members of pension schemes suffered a more than 20% loss of benefits, 35,000 of whom had their benefits reduced by more than 50%. Having referred to these figures, the court then said at paragraph 59 "it must therefore be concluded that a system such as that established by the UK legislation does not ensure the protection provided for by the Directive and does not constitute proper implementation of Article 8 thereof."
17.	The figures of 20% and 49% were taken from the evidence of two particular claimants. But it is clear in my view that the court was considering the UK legislative scheme as one that might affect substantial numbers of ordinary members as severely as the two particular claimants in question. It is not, in my view, to be read as a decision that a national scheme must be non-compliant with the Directive merely because it can be shown that two individual members of one scheme would still suffer losses of this extent, whatever their circumstances and whatever might be the reasons why they were not given greater protection.
18.	Nor in my view is it likely that the Court intended by its decision to lay down a rule that provision of security for 50% of contractual benefits would be sufficient compliance with the Directive. It could hardly be supposed, particularly in light of what was said at paras 79 and 80 of the judgment, that the Court intended to stipulate that there was an infringement in the case of the claimant whose benefits were restricted to 49% of the contractual level, but there would have been compliance if that figure was 50%. Thus the Court held that the UK scheme was not sufficient to comply, but did not stipulate any precise percentage of benefits that must be assured in order to achieve compliance.
19.	Furthermore, although the Court recognised that the Directive required a balance between the interests of the employees concerned and "the need for balanced economic and social development" it was not a case that considered a scheme put in place by the state with the express object of making value judgments between different potential categories of claimants. Mr Giffin points out that in adopting the PPF scheme the UK government (were it a party) would say it wished to focus resources on the lower-paid employees and pensioners, both as a matter of political choice and because of a perceived moral hazard if all benefits, however generous, received the same protection. The concern in that regard would be that those effectively in control of an employer and its pension scheme might see an opportunity to award themselves very large promises of benefit from such schemes without ensuring that they were adequately funded, leaving the shortfall to be borne by those contributing to the PPF, or perhaps the state.
20.	Mr. Giffin referred me to ITS v Hope [2009] EWHC 2810 (Ch) in which Henderson J expressed a similar view of Robins, although he expressly declined to make a finding as to whether the PPF scheme with the limitation of the compensation cap was non-compliant with the Directive. In that case, trustees of a scheme sought approval for a proposal to protect the higher paid employees potentially affected by the cap by purchasing annuities for them equivalent to their scheme entitlements before the scheme entered the PPF. The effect would have been that the bulk of the scheme's own assets would have been applied for the benefit of these higher paid employees, leaving a shortfall to be made good by the PPF in paying compensation to those employees not affected by the cap. Not surprisingly, Henderson J held that this would be an improper exercise of discretion by the trustees. He said this, beginning at para 134:
“134.	… I also wish to emphasise that although, for the purpose of testing the Community law argument, I have assumed that the PPF compensation of members in the position of Mr Alcraft and Mr Lear may fall below the level required by Article 8, I express no view on the question whether that assumption is correct. 
139.	I would, however, make the following brief observations: 
(1) First, the pensions considered by the ECJ in Robins were those of two ordinary workers, and were relatively modest in amount. There is no indication that the ECJ had the position of higher earners specifically in mind, let alone earners at the astronomical levels to which the world has now become accustomed in the financial sector.
(2) Secondly, the Insolvency Directive clearly contemplates that, at least in some contexts, liabilities which are to be guaranteed may be capped at a level which is consonant with the social objective of the directive: see Article 4(3) and the recital quoted in paragraph 121(1) above. 
(3) Thirdly, the compensation cap in the PPF was deliberately introduced with a "moral hazard" rationale, and was intended to prevent higher earners from manipulating the schemes of which they were members secure in the knowledge that the PPF would provide them with full compensation: see paragraph 9 of Mr Rubenstein's witness statement, based on statements made by the Department of Work and Pensions ("the DWP") both in correspondence with the senior managers' action group and in discussions with the PPF. 
(4) Fourthly, in Mr Rubenstein's own words, "[t]he cap affects only a relatively small proportion of relatively well paid employees". According to information supplied by the DWP, and on the basis of earnings figures taken from 2006, only 7.3 % of employees have a salary capable of generating a pension above the level of the cap even after 40 years' service, in a scheme where benefits accrue at the rate of one eightieth for each year of pensionable service, and only 18.1% would be capable of generating such a pension where the rate of accrual is one sixtieth. Mr Rubenstein goes on to say that in May 2008 only eight members of schemes which had by then entered the PPF were subject to the cap. I was informed that as at 31 May 2009 the number of members so affected had risen to 33.
In the light of these, and similar, considerations, it seems to me all but inconceivable that the ECJ would hold the existence of a cap on PPF compensation to be incompatible with Article 8, and the real dispute would be about the level at which the cap may legitimately be set, having regard to the social and economic factors referred to in the directive and the degree of latitude afforded to member states by the relative imprecision of its wording…”
21.	Mr. Facenna submits that if the minimum requirements of the Directive were unclear before Robins, they have become clear as a result of the decision in that case, and the CJEU has expressly held this to be the case in Hogan (which was not apparently referred to the Ombudsman, although it had been decided by the time of his decision). In Hogan, the complainants were former employees of an Irish company, Waterford Crystal, and members of a supplementary pension scheme under which, on retirement at normal age, they should have been provided with a pension equal to 2/3 of their "final pensionable salary", ie their actual final salary less the amount of the state pension (judgment, para 16). The supplementary pension was to be provided from a trust fund into which the employee paid contributions by deduction from salary and the employer paid balancing contributions that should have ensured the benefits were funded. However the sole measure introduced by the Irish government to comply with the Directive was a provision that, on insolvency of the employer, the amount of the contributions deducted by the employer, and the employer's own contributions, for the previous 12 months should be paid into the scheme. It appears (para 13) that the scheme funds were the sole source of benefits to the former employees and there was no state or other contribution to the assets of the scheme on insolvency of the employer. Further, any shortfall in the scheme did not even give rise to a debt payable by the employer provable in its insolvency.
22.	It is apparent from the questions referred to the CJEU by the Irish Court that the issue in the case was whether the Irish state had sufficiently complied with the Directive and if not whether the conditions for liability in damages were satisfied (para 21). There was no suggestion that the Directive had any direct effect to entitle the claimants to a particular level of benefit. Among the arguments made by Ireland was the suggestion that account should be taken in assessing the sufficiency of the measures taken of the general severe economic conditions in Ireland at the time.
23.	In considering the passages in the judgment of the Court relied on, it is necessary to have in mind the questions raised by the Irish Court, to which the judgment is addressed. There were seven in all but it will be sufficient to set out the last three:
“21      The High Court, taking the view that interpretation of the provisions of Directive 2008/94 is necessary in order for it to give its decision, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: …
5.      Whether the measures adopted by Ireland … fulfil the obligations imposed by … [D]irective [2008/94] having regard to the social, commercial and economic factors considered by Ireland in the review of pension protection following the decision in Robins and Others … and, in particular, having regard to the “need for balanced economic and social development in the Community” referred to in recital 3 [in the preamble to that] Directive? 
6.      Whether the economic situation … constitutes a sufficiently exceptional situation to justify a lower level of protection of the plaintiffs’ interests than might otherwise have been required and if so, what is that lower level of protection? 
7.      Assuming the answer to Question 2 is no, whether the fact that the measures taken by the State subsequent to the Robins and Others case have not brought about the result that the plaintiffs would receive in excess of 49% of the value of their accrued pension benefits under their occupational pension scheme is in itself a serious breach of the State’s obligations such as to entitle the plaintiffs to damages ([that is to say] without separately showing that the State’s actions subsequent to the Robins and Others judgment amounted to a grave and manifest disregard of the State’s obligations under Article 8 of … [D]irective [2008/94]). ”
24.	In relation to the fifth and sixth questions the Court said this:
“42      In Robins and Others, the Court, in interpreting Article 8 of Council Directive 80/987, now Article 8 of Directive 2008/94, acknowledged that the Member States have considerable latitude in determining both the means and the level of protection of rights to old-age benefits under supplementary occupational pension schemes in the event of the insolvency of the employer, which precludes an obligation to guarantee in full (Robins and Others, paragraphs 36 and 42 to 45). 
43      The Court held however that provisions of domestic law that may lead to a guarantee of benefits under a supplementary occupational pension scheme limited to less than half of the benefits to which an employee was entitled does not fall within the definition of the word ‘protect’ used in Article 8 of Directive 80/987 (Robins and Others, paragraph 57). 
44      That assessment takes account of the need for balanced economic and social development, by taking into consideration, on the one hand, divergent and rather unpredictable developments in the economic situations of the Member States and, on the other, the necessity of ensuring that employees have a minimum guarantee of protection if their employer becomes insolvent owing, for example, to unfavourable developments in economic conditions. 
45      Against that background, it is not the specific nature of the measures adopted by a Member State that determines whether that Member State has correctly fulfilled the obligations laid down in Article 8 of Directive 2008/94, but rather the outcome of those national measures. 
46      Furthermore, the measure mentioned by the national court, which is referred to in paragraph 13 of the present judgment, does not seem, having regard to the information referred to in paragraph 18 of the present judgment, to be capable of guaranteeing the minimum level of protection required by Robins and Others. 
47      Consequently, the answer to the fifth and sixth questions is that Directive 2008/94 must be interpreted as meaning that the measures adopted by Ireland following the judgment in Robins and Others do not fulfil the obligations imposed by that directive and that the economic situation of the Member State concerned does not constitute an exceptional situation capable of justifying a lower level of protection of the interests of employees as regards their entitlement to old-age benefits under a supplementary occupational pension scheme.”
25.	The "information referred to in paragraph 18" of the judgment was actuarial assessments on behalf of the parties to the effect that the level of benefits the claimants would receive from the scheme would be between 16% and 41% of their original entitlements.
26.	In relation to the seventh question the Court said this:
“49      Individuals harmed have a right to reparation against a Member State where three conditions are met: the rule of European Union law infringed must be intended to confer rights on them; the breach of that rule must be sufficiently serious; and there must be a direct causal link between the breach and the loss or damage sustained by the individuals... 
50      The seventh question relates to the second of those conditions. 
51      As soon as the judgment in Robins and Others was delivered, namely on 25 January 2007, the Member States were informed that correct transposition of Article 8 of Directive 2008/94 requires an employee to receive, in the event of the insolvency of his employer, at least half of the old-age benefits arising out of the accrued pension rights for which he has paid contributions under a supplementary occupational pension scheme. 
52      In those circumstances, it must be held that, although the nature and extent of the obligation incumbent on the Member States under Article 8 of Directive 2008/94, which is intended to confer rights on individuals, were clear and specific, at the latest as of 25 January 2007, Ireland had not correctly fulfilled that obligation, which constitutes a sufficiently serious breach of that rule of law in the context of any examination which might be carried out in respect of that Member State’s liability for damage caused to individuals. 
53      Consequently, the answer to the seventh question is that Directive 2008/94 must be interpreted as meaning that the fact that the measures taken by Ireland subsequent to Robins and Others have not brought about the result that the plaintiffs would receive in excess of 49% of the value of their accrued old-age pension benefits under their occupational pension scheme is in itself a serious breach of that Member State’s obligations.”
27.	Mr. Facenna points to paras 51-53 of the judgment, which he submits "could hardly have been clearer". The CJEU has held, he says, that the Directive creates a clear and specific obligation that states must ensure that members of schemes receive at least 50% of their scheme benefits, that this has been clear since Robins and failure to achieve that result is a serious breach of this obligation.
28.	His quotation from these paragraphs in his skeleton argument however omits the final part of para 52, "which constitutes a sufficiently serious breach of that rule of law in the context of any examination which might be carried out in respect of that Member State’s liability for damage caused to individuals." This passage is in my view essential to understanding what the Court was deciding in Hogan, and its omission has led Mr. Facenna to suggest that the decision goes very much further than in my view it does.
29.	It must be borne in mind that in Hogan, as in Robins, the Court was considering an allegation that the state scheme of protection was deficient in that it failed to ensure sufficient protection for a general category of scheme members. In Robins the affected category was all members still in active service, and in Hogan it appears to have been the whole body of scheme members, since all would be dependent only on the assets of the scheme, in circumstances where the state had failed to take measures to ensure that they would be sufficient, or would be supplemented, to provide a proper level of benefit. The Court was not considering a case in which the state had deliberately made a targeted differential provision between different categories of member for particular reasons.
30.	Although the Court at para 44 of Hogan said that the decision in Robins that domestic legislation that may lead to a guarantee of less than half the benefits to which an employee is entitled "takes account of the need for balanced economic and social development" as required by the recitals to the Directive, that cannot in my view be regarded as an assessment that such "taking account" mandates a minimum 50% guarantee in every case. The Court in Robins mentioned this requirement only in the context of its conclusion that the state was not obliged to guarantee full protection of benefits, and not as a basis for any conclusion that a minimum at any particular level was required.
31.	It is true that at para 46 the Court referred to "the minimum level of protection required by Robins" and stated that the national measure "does not seem to be capable of guaranteeing" that level of protection, but it does not state that this minimum level is an assurance of 50% benefits in every individual case. 
32.	The passages most helpful to Mr. Facenna's argument are those in the final section of the judgment. It would certainly be possible to read the statement in para 51 for instance that "correct transposition of [the Directive] requires an employee to receive… at least half of the old age benefits... for which he has paid contributions…" in a literal way as meaning that every single employee must be placed in that position. But that in my view would be to read too much into what is being said. At this point in its judgment, as is made clear in para 50 and at the end of para 52, the court is addressing whether the requirements for a claim in damages against the state are met and in particular whether "the breach [of EU law] is sufficiently serious". It had before it a national system that provided to the generality of members a level of protection as low or lower than that which had been held to be in breach in Robins. The substance of its conclusion was that since the decision in Robins states should have known that such a system could not be compliant and accordingly, not only was there a finding of a breach but that breach was sufficiently serious to attract an award of damages. The court was not considering the question whether it was open to states that provided a generally sufficient level of protection to place limits on that protection in the case of particular classes of employee, and cannot be taken by implication to have made a decision on that point by its choice of language in deciding a different issue.
33.	Had that issue been before the court, like Henderson J I find it almost inconceivable that the Court would hold that it was unlawful per se to impose a cap on protected benefits. To do so would imply that the only proper system of protection was one that ensured a uniform minimum level of guarantee of benefits for every individual by reference to a percentage of those specified by the scheme, irrespective of the absolute level of those benefits. The potential for abuse is obvious. Given that "the need for balanced economic and social development" is a relevant consideration in setting the required level of protection (as the Court said in Robins) it is not obvious why that level should be set only by reference to a percentage of scheme benefits and not for instance partly by reference to absolute levels or maxima.
34.	Thus, as Henderson J also said, the real debate would be likely not to be about whether a cap was permissible at all, but about where it should properly be set. The point was made on behalf of Mr. Hampshire that even if it was felt necessary to guard against abuse by having extremely high levels of benefit, or benefits in favour of the controllers of a company, or benefits that might have been artificially enhanced in anticipation of invoking the support of the PPF, underwritten at the expense of the state or other pensioners, Mr. Hampshire does not fall in to any of those categories since he was no more than a moderate ranking executive in a large group and had been made redundant long before any question of insolvency arose. But that could only avail him in these proceedings if it was sufficiently certain as a result of the CJEU's decisions that wherever a cap was set it would have to be such as not to affect him, which cannot be the case since no such issue was addressed in either case.
35.	I reject therefore the submission that the Directive requires the UK to ensure that every individual employee of every scheme receives a minimum of 50% of his scheme benefits. On that basis, in my judgment, any case for the Directive to have the direct effect of entitling Mr. Hampshire to that level of protection, or of requiring the national legislation to be construed to produce that result, must fail. 
36.	It is common ground that a finding of direct effect requires inter alia that the minimum content of the protection intended to be afforded by EU legislation must be identified with sufficient precision (see Francovich v Italy [1975] ICR 722). This must require that the minimum level of intended benefit to the individual claimant must be identifiable, so that by direct effect he can be provided with that benefit. That simply cannot be the case here unless the Directive requires an identifiable minimum guaranteed benefit for that individual (it would not have been sufficient in my view to have found that the Directive required protection to exceed, by an unspecified and unquantifiable amount, a level that had been determined to be definitely non-compliant). It does not do so in circumstances where there is an undetermined issue whether a cap may be imposed, and if so at what level.
37.	Nor can there be any requirement to construe the UK legislation to achieve the result contended for if that result is not clearly required by the Directive, even with the benefit of the interpretation so far applied by the CJEU.
38.	Having reached that conclusion I do not propose to address Mr. Giffin's other objections to a finding of direct effect, other than to note that they were formidable:
i)	If Hogan had the effect that a guarantee of 50% of benefits was required, how is that to be calculated? Must all benefits (not just the basic pension) be reproduced at 50% rates? At what point is the measurement to be taken? Mr. Hampshire eg was entitled to a minimum 3% indexation of pension benefits, more generous than the PPF compensation provided for. If his compensation started at 50% but fell behind because of a lower rate of indexation, would that be an infringement? All these points would be capable of determination, but were not addressed in Robins or Hogan because they were directed only to the general level of protection for members, and not the detail of provision required for individuals.
ii)	Who is to provide the suggested guarantee? The UK has established the PPF, which is intended to be funded by a levy across all protected schemes, on the basis of the choices made as to the level of protection. It might have chosen a different mechanism if required to secure protection for benefits without financial limit, eg by requiring individual schemes to pay for their own insurance for high value benefits so that the risk did not fall on other participating schemes. Robins makes clear the state is not obliged to provide the required protection by its own guarantee. If it sets up a body (the PPF) to provide protection up to one level, can the Directive have direct effect to impose a greater liability on that body, as distinct from a liability on the state for damages as a result of the deficiency in protection?
39.	In the light of my conclusion as to direct effect, the second of the preliminary issues directed falls away.
40.	Finally, Mr. Facenna invited me if I was against him as to the effect of the decision in Hogan to make a reference to the CJEU, on the basis that it could not be said that the position in EU law was clearly established against his case. In my judgment it is not appropriate to make such a reference for the purpose of resolving these proceedings. It is in my view sufficiently clear that the CJEU was not purporting to determine an issue that was not before it. It is no doubt possible that if the matter came again before that Court it would find that the PPF scheme was not compliant with the Directive, and even possible that it might hold that the Directive had the effect Mr. Hampshire now contends for. But no such finding could affect these proceedings, since there is no reasonable prospect, in my view, that the Court would hold that these matters were already so well established now that they could be directly enforced at the present time. Without such a finding, Mr. Hampshire cannot contend that the Board should not have approved the scheme valuation in accordance with the relevant UK legislation.
41.	It would in principle be open to Mr. Hampshire to seek to bring the matter before the CJEU, by bringing proceedings against the UK government alleging that the PPF scheme is non-compliant with the Directive. For whatever reason (the matter was not canvassed before me) he has not, so far, pursued the matter in that way.
42.	I invite the parties to agree the order resulting. I will list a hearing at which this judgment will be handed down; there need be no attendance if the order is agreed. If not, or there are matters arising that will require more than a 30 minute hearing, the parties should notify my clerk with an agreed time estimate in order that a later hearing can be listed.