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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Blatchford Ltd v Blatchford & Ors [2019] EWHC 2743 (Ch) (24 October 2019) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2019/2743.html Cite as: [2019] EWHC 2743 (Ch), [2020] Pens LR 5 |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
BUSINESS LIST (ChD)
PENSIONS
In the matter of the Chas A Blatchford & Sons Limited Group Pension Scheme ("the Scheme")
London EC4A 1NL |
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B e f o r e :
____________________
BLATCHFORD LIMITED (formerly Chas A Blatchford & Sons Limited) |
Claimant |
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- and - |
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BRIAN STEPHEN BLATCHFORD PETER ALAN LEWIS RICHARD PRIBORSKY KEVIN BYRNE PAUL JAMESON ZOE STEPHENS-TRUMAN MIR SAEED ZAHEDI (as Trustees of the Scheme: "the Trustees") ALAN TANNER (as "the Representative Beneficiary") |
Defendants |
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Thomas Robinson (instructed by BDM Pitmans LLP for the Trustees
David E Grant (instructed by Pinsent Masons LLP) for the Representative Beneficiary
Hearing date: 18 September 2019
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Crown Copyright ©
Chief Master Marsh:
Scheme History
"Rule 39 Payment of pensions and lump sum benefits
[…]
39.6 Any pension … payable to a Member … shall be reviewed annually by the Trustees and shall be increased on the Anniversary Date by:
39.6.1 in the case of a pension for or in respect of a Category A Member or a Category B Member eight and a half per cent (8½%) per annum
39.6.2 in the case of a pension for or in respect of a Category C Member five per cent (5%) per annum
39.6.3 in the case of a pension for or in respect of a Category D Member (other than a pension payable under Rule 18) the greater of five per cent (5%) per annum and the increase in the Retail Index in respect of that part of the pension which exceeds the Guaranteed Minimum Pension and which relates to Pensionable Service after 6th April 1991, and
39.6.4 in the case of a pension in respect of a Category D Member payable under Rule 18 the greater of five per cent (5%) per annum and the increase in the Retail Index if less" [emphasis added]
(1) Category A, B and C members were entitled to a fixed increase that is not related to RPI. The increase was not subject to either a collar or a cap.
(2) There was a significant increase in the benefit attributable to Category D members. Under the 1992 Announcement they were entitled to the lesser of 5% or RPI. This was transformed in the 1996 Rules into an entitlement to a minimum 5% increase. What had been a cap of 5% was changed into a collar of 5%. In periods of high inflation, Category D members would receive increases at the rate of RPI but in periods of low inflation they would receive increases of not less than 5%.
(3) By contrast, Category A, B and C members remained entitled only to a fixed increase. It follows that in a period of high price inflation, Category D members might be entitled to a greater increase than employees who were regarded as being key to the business.
"(C) The Principal Employer and the Trustees agree that Rules 39.6.3 and 39.6.4 of the 1996 Definitive Deed do not correctly reflect the common intention of the Principal Employer and the Trustees when adopting the 1996 Definitive Deed nor the past and present practice of the Plan. The Principal Employer and the Trustees accordingly now wish to confirm and rectify Rules 39.6.3 and 39.6.4 of the 1996 Definitive Deed in the manner specified in this Deed.
…
OPERATIVE PROVISIONS
1. The Principal Employer and the Trustees declare that with effect from the date of the 1996 Definitive Deed and by way of rectification and clarification Rules 39.6.3 and 39.6.4 as they currently appear in the 1996 Deed shall be construed as if the word "greater" in each case were replaced by the word "lesser"."
Rectification as an alternative to construction
The law
"For all these reasons, we are unable to accept that the objective test of rectification for common mistake articulated in Lord Hoffmann's obiter remarks in the Chartbrook case correctly states the law. We consider that we are bound by authority, which also accords with sound legal principle and policy, to hold that, before a written contract may be rectified on the basis of a common mistake, it is necessary to show either (1) that the document fails to give effect to a prior concluded contract or (2) that, when they executed the document, the parties had a common intention in respect of a particular matter which, by mistake, the document did not accurately record. In the latter case it is necessary to show not only that each party to the contract had the same actual intention with regard to the relevant matter, but also that there was an "outward expression of accord" – meaning that, as a result of communication between them, the parties understood each other to share that intention."
(1) The Employer and Trustees intended to make a particular amendment but the intended change was incorrectly reduced to writing;
(2) The Employer and the Trustees did not intend to make the amendment so that they did not address their minds at all to the relevant words.
"… it seems to me that there will be cases, particularly in a pensions context, where it will be permissible to allow rectification when one can say by implication perfectly clearly that the parties did not intend by the Deed they entered into, to effect a particular change, even though they had not stated outwardly to each other (or indeed at all) that they did not intend to effect that change, simply because the change was not in any form discussed."
(1) Did the Company and Trustees have a common intention for there to be no change to the relevant part of the Scheme? It is their subjective intention that is considered.
(2) Did that common intention persist up to the execution of the relevant instrument.
(3) Was a change made to the Scheme that conflicts with their continuing common intention that no change should be made.
(1) There is a need for convincing proof on the balance of probabilities of the common continuing intention of the Company and the Trustees.
(2) It is legitimate to have regard to what happens after the deed is executed in order to ascertain the intention at the time of execution.
The witnesses
(1) Stephen Blatchford who was a director of the Company and a trustee of the Scheme throughout the material period. He is clear that had a decision been taken at any time significantly to improve the benefits payable to Category D employees he would have known about it; and he is clear that no such decision was taken by the Company.
(2) Sandra Bishop was the Company's Personnel Manager. She provided administrative support to the trustees from April 1992 and was appointed a trustee on 22 February 1996. The first meeting of the trustees she attended as a trustee took place on 24 May 1996 when a draft of the 1996 Rules was reviewed.
(3) Kenneth Bisset joined the Company on 1 March 1996 and was appointed its Finance Director and Company Secretary on 29 March 1996. He was appointed a trustee on 24 May 1996 with effect from 29 March 1996.
(4) Lisa Gillespie was the solicitor at Eversheds who provided legal services to the Trustees in connection with the preparation of the 1996 Rules.
The representative defendant
"The role of those acting for the representative beneficiary is to satisfy themselves, both legally and evidentially, that the requirements for the rectification sought are met. There is a need in carrying out that role for the investigation to be carried out with rigour, because the representative beneficiary is in effect acting on behalf of a significant number of members.
…
… once those investigations and enquiries have been made, it seems to me that, whether in response to a Part 8 claim or in response to a summary judgment application made under Part 24 in relation to a Part 7 claim, if those acting for the representative beneficiary have reached the clear and definite view that the representative beneficiary does not, on behalf of those whose interests lie in opposing rectification, have a realistic prospect of defending the claim and that there is no other compelling reason for the matter to go to trial, then it is proper and indeed right for them not to continue to defend the claim. Each case will, of course, depend on its own particular circumstances, and there will be cases in which it is necessary for a more nuanced approach to be taken. There may, for example, be cases in which, because of a significant gap in documentation, for example as to the intentions of a significant number of those who executed the relevant Trust Rules or other deed, it is reasonable and appropriate for the matter to be defended so that it goes to trial so that questions can be asked of those who are available to give evidence. There may be other cases in which, because the application has been made so long after the mistake has come to light, there is a prospect of an equitable defence such as laches being raised. Those are likely to be exceptional cases, but of course each case is potentially different and may require a different approach."
The evidence
(1) The clear hierarchy of benefit under the Scheme between Category A to D members.
(2) The announcement in 1992 of a change to the benefit for Category D members and the implementation of that change.
(3) The change in 1992 retained the hierarchy between members.
(4) The benefit for Category D members under the 1992 announcement was a cap, not a collar.
(1) The manner in which the Scheme was changed in 1992 was consistent with the hierarchy of benefit between Category A to D employees. However, the drafting of Rule 39.6.3 amounted to a radical change which was inconsistent with the previous structure. It therefore called for an explanation.
(2) There was no reason why the Company and the Trustees would have wished to substantially increase the benefits of the Scheme to Category D Members at a time when the Company was concerned about the overall cost of the scheme.
(3) There is no evidence that either Rule was given any consideration by the Company or the Trustees and there was no assessment of the costs of the change that was made.
(4) The wording of Rule 39.6.4 was at best internally inconsistent. On one view it was nonsensical.
(5) The administration of the Scheme took no account of the changes indicated by Rule 39.6.3 and possibly by Rule 39.6.4.
Note 1 Unkindly characterised in some quarters as ‘correctification’. [Back] Note 2 In this case it is the Employer which has power with the consent of the trustees but nothing turns on the difference. [Back] Note 3 See the remarks of Edward Bartley-Jones QC in Konica Minolta Business Solutions (UK) Ltd v Applegate (No2) [2013] EWHC 2536 (Ch) [38]; cited with approval by Henry Carr J in FSHC Group Holdings Ltd v Barclays Bank Plc [2018] EWHC 1558 (Ch). [Back]