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High Court's confidentiality comments could have unintended consequences in pension rectification cases

Out-Law News | 09 Jun 2016 | 10:33 am | 2 min. read

Comments by a High Court judge during a recent application for rectification of a pension trust deed could have "unintended consequences" for future applications, an expert has said.

Mr Justice Norris granted the application by summary judgment without a hearing, given that this was a "plain case" in which an earlier version of the trust deed had been incorrectly executed and there was "no real prospect of a realistic challenge" to his decision. However, he went on to say that future applicants for rectification "must understand that it is likely that the court will insist that after judgment all evidence be open to inspection"; and that if this was not acceptable then the application should be listed for public hearing.

Although the judge's comments on the confidentiality issue did not form part of his judgment, pensions litigation expert Bethan Rundall of Pinsent Masons, the law firm behind Out-Law.com, said that forcing more public hearings in rectification cases could push up the costs of the process.

"While the court's decision to grant rectification by summary judgment without a hearing is undoubtedly a step in the right direction, the judge's comments may have unintended consequences," she said.

"To suggest that hearings would ordinarily be required in future, unless parties agree to lift confidentiality on all evidence, could mean that cases where summary judgment is granted on paper alone remain a real rarity. This will not help to reduce the already high costs of rectification," she said.

Rectification is a process through which a court can amend a trust deed 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 this case, the High Court had been asked to consider a rectification application by the Girls' Day School Trust (GDST), in relation to the deed setting up a new pension scheme as part of a transfer of certain liabilities from the Independent Schools Pension Scheme. An earlier version of the deed had been executed by mistake, instead of a final version which had been agreed by all parties and which included provisions allowing for future amendments to the scheme.

As part of his judgment, Mr Justice Norris listed the principles he was required to take into account before making his decision whether or not to grant the application. In particular, GDST had to be able to show "that it and the trustee had a common, continuing, objectively established intention in respect of the particular matter which by mistake was incorporated into or omitted from or otherwise not correctly reflected in the definitive deed in its executed form: and in the present case that had the definitive deed been executed in its intended form [the trustee] could not have objected to it", he said.

In this case, both parties had agreed that the application should proceed without a public hearing, and the judge ultimately agreed. The court is permitted to grant or refuse an application without a public hearing "if it considers that to do so will save time or expense, and that a hearing is not necessary", the judge said.

However, it was important that any relevant information be made publicly available in cases where there was no public hearing so that ordinary pension scheme members were not "left with any sense (even in relation to the correction of mistakes on technical matters) that there has been some 'deal done in a dark corner'," the judge said.

He ordered that the judgment in this case be made publicly available and provided to all scheme members, and that the order for rectification should not take effect until 42 days after publication.

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