A recent English High Court case has provided guidance on the criteria the courts might consider when dealing with applications for rectification of a trust deed or scheme rules. 

Facts

The scheme in question was an occupational pension scheme that provided benefits on a defined benefit basis. The scheme employer sought an order for rectification of the rules of its scheme relating to the annual revaluation of deferred pensions. The scheme’s rules provided for an annual revaluation of 5%. The employer alleged that despite the wording of the scheme rules, the common intention of the employer and trustees when executing the trust deed and rules was that the annual rate of revaluation should be 5% or the rate of increase of the Retail Price Index if it was lower.

Decision

Ultimately, the court found for the employer and consented to the rectification of the scheme rules. In reaching its conclusion the court noted that what was important was the shared common intention between the company and the trustees at the time the trust deed was executed. The court clarified that it was not a requirement that the trustees had expressed an outward expression of joint accord but that, in any event, various documents approved by the trustees provided proof of such accord. This evidence included actuarial valuations, normal retirement quotations, benefit statements and the scheme’s annual reports. On the facts, the court was satisfied that rectification would give effect to the relevant intention and would cure the defect existing in the rules.

Comment

The case is an English decision and is therefore a persuasive authority only but provides an indication of how the Irish courts might treat applications to rectify a scheme’s trust deed or rules.