Hogan Lovells

Key Dates

Colart International Holdings Limited v Colart Pension Trustees Limited and another [2019] EWHC 3081 (Ch).

Judgment date: 16 September 2019.


Summary

The High Court has granted rectification of a trust deed and rules which unintentionally awarded annual increases of the lower of RPI and 5% to all defined benefit (DB) pensions, including GMPs.

The scheme was established in 2000 by a first definitive trust deed and rules. Some members had accrued GMPs held in the scheme in relation to pre-1997 pensionable service (presumably in one or more other schemes).

Rectification was sought of a provision in the second trust deed and rules, dated 25 July 2002. The principal change made by the 2002 deed was the introduction of a defined contribution (DC) section for new joiners. The 2002 deed was structured so as to have "common rules" applicable to both DB and DC sections, plus separate "DB rules" and "DC rules" applicable to each section. The power of amendment in the scheme rules was exercisable by the principal employer, with the consent of the trustee.

In drafting the 2002 deed, the words "in excess of a Member's GMP" were appropriately removed from the common pension increase rule but were not inserted in the increase provision of the DB rules. Master Teverson was satisfied that the omission was due to a drafting error.

Master Teverson followed the Court of Appeal's judgment in FSHC Group Holdings Limited v GLAS Trust Corporation Limited that for rectification to be granted in such a case it was not necessary to show that the employer and the trustee had a common intention as a result of a communication with each other. In reaching this decision, he took into account that:



Date Accessed: 28/05/2022