Out-Law News | 09 Feb 2016 | 10:43 am | 2 min. read
Last week, the High Court granted an unopposed application by the employer and trustee of the St Modwen Properties pension scheme to correct a mutual mistake in a deed that failed to distinguish between pensionable service falling before and after a given date. The court's summary judgment came days after service provider Hogg Robinson was allowed to make a similar unopposed change.
Pension disputes expert Charlotte Scholes of Pinsent Masons, the law firm behind Out-Law.com, welcomed the court's approach in both cases.
"While we still await the full details of the St Modwen case, it seems a very sensible outcome," she said.
"It comes hot on the heels of the Hogg Robinson case, where the facts of the case fully merited rectification being granted. It's another example of the court's increasingly pragmatic approach to correcting deeds," she said.
Rectification is a process through which a court can amend a document retrospectively in a way which reflects the original intention of the parties. The aim is to place the parties in the position that they would have been in had the mistake not been made. Rectification will only be granted if the document does not express the true intentions of the parties as a result of the mistake, and there is no other way to easily correct the error.
In the St Modwen case, the scheme trustee and sponsoring employer applied to the court to correct a 2001 deed which had been executed to introduce changes required to the scheme rules by the 1995 Pensions Act. A mistake in the deed meant that it did not distinguish between pensionable service before and after the date of the change.
According to a Lawtel report of Mr Justice Rose's decision, which has not yet been officially reported, the employer and trustee were able to supply the court with "various contemporaneous documents" reflecting their intentions and supporting the fact that there had been a mistake in the deed. These included a letter from the administrators to the trustees confirming the change they had agreed with the employer, letters sent to scheme members and extracts from actuarial valuation reports.
The judge agreed with the parties that the documents showed their "common continuing intention" in relation to the change, and that there was an "outward expression of accord", according to the Lawtel report. The scheme had also been administered in a way that corresponded with the agreed changes. He also agreed to allow the scheme to bear the costs of the court application.
The employer in the Hogg Robinson case was also able to provide evidence that "compelling established that a mistake had been made" when drafting the deed, according to a Lawtel report of that case. The company and trustees had agreed to amend the scheme rules to reduce the rate at which annual increases were made to benefits both in payment and in deferment back in 1998, but the administrators had mistakenly drafted the deed to refer to benefits in payment only, according to Lawtel.