The court established that the definition of 'Earnings' in a pension scheme includes fluctuating emoluments as well as basic remuneration, and benefits in kind should also be considered as fluctuating emoluments for retirement calculations.

[1] This is an appeal by Singapore Airlines Ltd ("SA") from the order of Peter Smith J dated 20 January 2011. It raises important points about the meaning of "Earnings" for the purposes of The Singapore Airlines Pension and Life Assurance Scheme ("the Scheme") established by SA for its employees. The expression "Earnings" plays a key role in determining the amount of an employee's pensionable earnings and the amount of his or her contribution to the Scheme. The judge's order was made on a preliminary issue in a claim brought by SA in proceedings against the respondent, Buck Consultants Ltd ("BC") for negligence in the drafting of a revised version of the rules of the Scheme in 2000. We are not concerned with those allegations in those proceedings save to note that the preliminary issue had to be resolved for the purposes of SA's action against BC. However, and this is relevant to an issue as to costs considered below (Issue 4), BC had also been appointed by order of the court to represent the members of the Scheme on the preliminary issue.

[2] The Scheme was established by an interim trust deed made on 28 June 1974. SA is, and at all material times has been, the sole and principal employer for the purposes of the Scheme. The second claimant in the action, Capital Cranfield Pension Trustees Limited, is the Scheme's current trustee ("the Trustee"). From 1997, BC was retained by SA as an actuary pensions administrator and pension benefits consultant. It gave advice on, and drafted documents in relation to the Scheme.

[3] The first rules of the Scheme ("the 1976 rules") were attached to the Definitive Trust Deed ("the Trust Deed") of 1 April 1976. The 1976 rules were expressed to take effect from 1 July 1974. In 1981 amended rules for the Scheme were adopted ("the 1981 rules"). The 1981 rules were expressed to take effect from 6 April 1975, subject to an immaterial exception.

[4] The 1976 rules included the following definition:

"'Salary' means for each Member the annual rate of his basic remuneration from the Employers and London Weighting Allowance (if applicable) excluding any other emoluments."

[5] The 1981 rules used the defined term "Earnings", as opposed to the term "Salary", but continued to employ the phrase "basic remuneration". Much of the argument on this appeal has focused on this important term. For simplicity, I propose to divide the definition of "Earnings" into its three component parts, which I shall call "Limbs". The definition of "Earnings" is as follows:

"[Limb 1] 'Earnings' means for each Member the annual rate of his basic remuneration from the Employers.

[Limb 2] For the purposes of calculating Earnings of an employee who is in receipt of fluctuating emoluments, the annual rate of any such emoluments to be included in his Earnings shall be taken as the average annual amount received over the last three years, or over such shorter period as he has been in receipt of such emoluments.

[Limb 3] For the purposes of calculating Earnings of an employee paid on an hourly basis, remuneration in resp