ARG Realisations 2016 Ltd ((in Administration)) and Another v Stuart
| Jurisdiction | England & Wales |
| Judge | Master Linwood |
| Judgment Date | 14 March 2019 |
| Neutral Citation | [2019] EWHC 1265 (Ch) |
| Court | Chancery Division |
| Date | 14 March 2019 |
| Docket Number | Case No: PE-2018-000012 |
[2019] EWHC 1265 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
DEPUTY Master Linwood
Case No: PE-2018-000012
Mr Tidmarsh QC appeared on behalf of the Claimant
Mr Robinson appeared on behalf of the Defendant
THE DEPUTY MASTER: This is my judgment on the disposal hearing of a Part 8 claim brought by the claimants represented by Mr Tidmarsh QC. The defendant, Mr Fraser, is represented by Mr Robinson.
Introduction
The rectification sought by the claimants concerns revaluation provisions applicable to members of what was the Austin Reed Group Pension Scheme when it, plus a scheme for employees of a newly acquired company Country Casuals Limited, were amalgamated in 2003.
The members affected are what are known as deferred members in that they left pensionable service prior to January 1991. Under the supplemental definitive trust deed and rules dated 31 March 2003, rule 11.3 is headed “ increases in deferred benefits.” Paragraph 11.3.1, the crucial subparagraph states “ this rule applies to all deferred benefits payable by the scheme.” Increases were to be calculated at the rate of 5 per cent per annum or RPI, if lower.
The effect was that the members concerned were entitled to a revaluation of all of their deferred benefits at the rate I have mentioned. Under the predecessor to the 2003 deed and rules: namely, a trust deed and rules dated 11 November 1996, members were not entitled to any such revaluation on their deferred benefits in respect of pre 1 January 1985 service.
This change could cost the scheme approximately £2 million. The current trustee and principal employer asked for an order for rectification on the basis that this change was never intended and was made by mistake.
The parties and procedural issues
First, the first claimant, ARG Realisations 2016 Limited, was the principal employer under the scheme but went into administration in April 2016. The second claimant, Open Trustees Limited, was appointed sole trustee in June 2016 following ARG entering into administration. That administration triggered an assessment period for the purpose of the Pension Protection Fund, whereafter the scheme was transferred to the PPF in the sense of its property rights and liabilities and Open Trustee was discharged from its pensions obligations.
At the outset of the hearing, in view of the transfer of the PPF's assumption of responsibility for the scheme, I approved a substitution of PPF for Open Trustee who no longer have any interest in this claim pursuant to CPR 19.2(4)(a). I have read PPF's written consent and no objection is made by Mr Fraser so I made an order with immediate effect.
Secondly, with further regard to Mr Fraser, he is a deferred member of the scheme in that he has accrued pensionable service within it between July 1978 and October 1979 plus pensionable service with another merged pension scheme. He will be detrimentally affected if an order for rectification is made as presently written under the 2003 deed and rules, he is entitled to revaluation of all of his deferred benefits as opposed to none under the 1996 deed.
I was asked at the outset of the hearing to make a representation order applicable to Mr Fraser to represent all members and beneficiaries of the scheme in whose interest it would be to argue against rectification. Mr Fraser, in his witness statement of 14 December 2018, confirms he agrees to that appointment on the basis that his costs are met. I should add that all those members who will be affected by rectification have been notified and none have objected.
The procedural background.
The claim was issued on 3 August 2018. The relief sought has changed slightly, as I will come to. By application notice issued on 19 December 2018, the claimants asked for the two orders as to representation I mention above together with an order disposing of the claim, including summary judgment.
At the hearing, Mr Tidmarsh said he wished to proceed by disposal as opposed to summary judgment. Either way, this application is not defended.
The factual issue
Rule 14 of the 1996 deed and rules provided for revaluation for deferred members by providing for deferred pensions to be increased in the period between the member leaving pensionable service and the pension coming into payment but only by such amount as was necessary to comply with the Pension Schemes Act 1993.
The relevant part of the 1993 Act provided for revaluation by using the final salary method. This meant where a member left service before 1991, there could be no increase in that member's pension attributable to service before 1 January 1985.
The effect of the 1996 deed and rules was to permit revaluation only if the member left pensionable service after 1 January 1991. The 2003 deed and rules gave all the deferred members the right to revalue, as I have mentioned. The impact is helpfully set out in a table at paragraph 29 of the first witness statement of Mr Haslet which, in any effective version of this judgment, I reproduce below.
The law.
| Pre 1991 leavers | Post 1991 leavers | ||||
| Members who left pensionable service on or before 31 December 1985 | Members who left pensionable service between 1 January 1986 and 31 December 1990 | Members who left pensionable service between 1 January 1991 and 30 March 2003 | Members who left pensionable service between 31 March 2003 and 5 April 2009 | Members who left pensionable service on or after 6 April 2009 | |
| Statutory | Nothing | 5% LPI on post 1 January 1985 pension | 5% LPI on all pension | 5% LPI on all pension | 5% LPI on pre 6 April 2009 pension 2.5% LPI on post 6 April 2009 pension |
| 2003 Deed and Rules | 5% LPI on all pension | 5% LPI on all pension | 5% LPI on all pension | 5% LPI on all pension | 5% LPI on all pension |
The principles are agreed and are set out in detail in the most helpful skeletons of Mr Tidmarsh and Mr Robinson. I therefore shall deal with the law quite briefly.
HHJ Hodge QC, sitting as a judge of the High Court in Saga Group Ltd & Anor v Paul [2016] EWHC 2344 Chancery, at paragraph 32 said:
“There is no question that pension scheme documents can be rectified on the basis of the principles which ordinarily apply to the rectification of other documents. Those principles are set out by the Court of Appeal in Daventry District Council v Daventry District Housing Ltd. At paragraph 80, Etherton LJ speaking with express agreement of Lord Neuberger of Abbotsbury MR said the relevant principles are as follows: ‘“It must be shown: (1) the parties had a common continuing intention whether or not amounting to an agreement in respect of a particular matter in the instrument to be rectified; (2) that agreement should exist at the time of execution of the instrument sought to be rectified; (3) such common and continuing intention to be established objectively, that is to say by reference to what an objective observer would have though the intentions of the parties were to be; and (4) by mistake, the instrument did not reflect that common intention.”’
Further, at paragraph 33, as in this application:
“ First where (as here) the document that it is sought to rectify is not a contract, that is to say an agreement between two or more parties, but is rather a...
To continue reading
Request your trial