Skip to main content
CLOSE

Charities

Close

Corporate and Commercial

Close

Employment and Immigration

Close

Environmental, Social, and Corporate Governance

Close

Fraud and Investigations

Close

Individuals

Close

Litigation

Close

Planning, Infrastructure and Regeneration

Close

Public Law

Close

Real Estate

Close

Restructuring and Insolvency

Close

Energy

Close

Entrepreneurs

Close

Private Wealth

Close

Real Estate

Close

Tech and Innovation

Close

Transport and Infrastructure

Close
Home / News and Insights / Blogs / Pensions / 8: High Court grants rectification of pension scheme rules

BDB Pitmans recently acted for the trustees in an application to the High Court to change the wording of pension scheme rules drafted over 20 years ago. In Blatchford Limited (formerly Chas A Blatchford and Sons Limited) v Brian Stephen Blatchford (the trustees) and seven others, the High Court agreed to rectify a drafting error that would have cost the company around £10 million if it had been left uncorrected.

In 1996, two amendments were made in error to the provisions of a pensions increase rule in the Chas A Blatchford & Sons Ltd Group Pension Scheme. The effect of the error was to change the limit on pension increases for one category of members so that they would receive increases on pensions in payment at the ‘greater’ of 5% or the increase in RPI, as opposed to the ‘lesser’ under previous rules.

Rectification is an equitable remedy which may be granted by the court where, as the result of a mistake, a document fails to express the intentions of the parties and the mistake cannot easily be corrected by other means. The court will amend the document retrospectively so that it reflects the terms intended by the parties.

The company argued that neither the company nor the trustees intended to make the change but there was no evidence that they had considered the wording. The court set out that the three tests for rectification in these circumstances were whether:

  • the company and trustees had a common subjective intention that there should be no change to the scheme rules;
  • that common intention persisted until the relevant document was executed; and
  • the change made to the scheme conflicted with their continuing common intention that no change should be made.

Given the strength of the evidence in this case, the High Court held that the mistake should be rectified. There was no evidence that the rule change had been given any significant consideration especially as to cost, it amounted to a ‘radical departure’ from previous pension increase provisions, there was no reason why the company and trustees would have wished to increase members’ benefits at a time when they were seeking to control costs and in practice the Scheme was administered as though the original level of pension increases applied.

This is the first published judgment on rectification in a pension context since the test for rectification was clarified in the Court of Appeal decision in FSHC Group Holdings Ltd v GLAS Trust Corporation Limited. The High Court applied the FSHC principle that it is the subjective intention that is relevant and an outward expression of agreement is not required.

Historic errors of this type are common in pension schemes and the High Court decision provides useful guidance on the types of evidence that are persuasive in determining intention – what was not said can often be telling – and the recollection of witnesses can be key.

BDB Pitmans has a huge amount of experience in this area, not just in helping to unravel past errors, but also in ensuring that trustees and employers fully understand and consider the changes they make to schemes and that their common intention is properly and accurately documented.

Related Articles

Our Offices

London
One Bartholomew Close
London
EC1A 7BL

Cambridge
50/60 Station Road
Cambridge
CB1 2JH

Reading
The Anchorage, 34 Bridge Street
Reading RG1 2LU

Southampton
4 Grosvenor Square
Southampton SO15 2BE

 

Reading
The Anchorage, 34 Bridge Street
Reading RG1 2LU

Southampton
4 Grosvenor Square
Southampton SO15 2BE

  • Lexcel
  • CYBER ESSENTIALS PLUS

© BDB Pitmans 2024. One Bartholomew Close, London EC1A 7BL - T +44 (0)345 222 9222

Our Services

Charities chevron
Corporate and Commercial chevron
Employment and Immigration chevron
Environmental, Social, and Corporate Governance chevron
Fraud and Investigations chevron
Individuals chevron
Litigation chevron
Planning, Infrastructure and Regeneration chevron
Public Law chevron
Real Estate chevron
Restructuring and Insolvency chevron

Sectors and Groups

Private Wealth chevron
Real Estate chevron
Transport and Infrastructure chevron