Equitable Life Assurance Society v Hyman: HL 20 Jul 2000

The directors of the Society had calculated the final bonuses to be allocated to policyholders in a manner which was found to be contrary to the terms of the policy. The language of the article conferring the power to declare such bonuses contained no relevant express restriction on the power to do so. The critical question was whether a relevant restriction was to be implied.
Held: Where a life assurance company had issued retirement policies which guaranteed certain returns, the policy holders had a proper and reasonable expectation that those promises would be met. The discretion given to the directors to set the levels of returns must be read to be subject to the prior expectation created, and must be exercised accordingly subject to those expectations.
Lord Steyn emphasised that the test for the implication of a term into a contract is one of strict necessity. The test was a stringent one and the term that the Court was there prepared to imply was ‘essential to give effect to the reasonable expectations of the parties.’ and ‘If a term is to be implied, it could only be a term implied from the language of [the instrument] read in its commercial setting.’ The approach of construction was to ascertain the intention to be imputed to the parties as a consequence of considering the agreement as a whole in that commercial setting.
Lord Steyn observed that the implication of a term was ‘not critically dependent on proof of an actual intention of the parties’ when negotiating the contract.
Lord Slynn of Hadley Lord Steyn Lord Hoffmann Lord Cooke of Thorndon Lord Hobhouse of Woodborough
Times 21-Jul-2000, Gazette 03-Aug-2000, [2000] UKHL 39, [2000] 3 All ER 961, [2000] 3 WLR 529, [2002] 1 AC 408, [2001] Lloyds Rep IR 99, [2000] Pens LR 249, [2000] OPLR 101
House of Lords, House of Lords, Bailii
England and Wales
At CAEquitable Life Assurance Society v Hyman CA 21-Jan-2000
The life company had granted policies to members which had guaranteed certain standards of bonuses. The level of reward became unsupportable and the company imposed terms restricting returns on retirement policies where policy holders sought to . .
At ChDThe Equitable Life Assurance Society v Hyman ChD 9-Sep-1999
Where a mutual life assurance company had allowed some members to acquire reasonable expectations that they would receive certain benefits under their policies, such expectations fell short of a contractual right, and where necessary, the trustees . .

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These lists may be incomplete.
Updated: 03 January 2021; Ref: scu.159073