MNOPF Trustees Ltd v Bryan Watkins
| Jurisdiction | England & Wales |
| Judge | Mr Martin QC |
| Judgment Date | 11 December 2013 |
| Neutral Citation | [2013] EWHC 4741 (Ch) |
| Docket Number | HC13D04655 |
| Court | Chancery Division |
| Date | 11 December 2013 |
[2013] EWHC 4741 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
Mr John Martin QC (sitting as a Deputy High Court Judge)
HC13D04655
Mr M Furness QC AND Mr J Walmsley appeared on behalf of the Claimant
Mr M Tennet QC appeared on behalf of the Defendant
Approved Judgment
This is the trial of a claim for rectification of the current Trust Deed and rules governing the operation of the Merchant Navy Officers Pension Fund which came into effect in 1999. The claimant is the trustee of the fund and the defendant is a member of the scheme. It is intended that he will be appointed to represent all members whose interests would be adversely affected if the rectification claim which the claimant advances were to succeed.
It will be convenient to deal at the outset with the question of representation. The defendant's solicitors have conducted a consultation exercise over a period of four weeks from 5 November 2013. I am satisfied that that period is sufficient in all the circumstances, including the fact that there may be a small number of persons affected who will have been at sea during that period. The number is likely to be small because, in order to be affected, they will have had to have been in pensionable service prior to 5 April 1978 and still be in service now — which will have the inevitable effect of limiting their numbers.
I have read the responses received from the consultation exercise and I am satisfied that they raise no substantial ground for resisting the claim. Two themes run through them; one is delay and the other is a concern that existing benefits will be removed. As to delay, the problem to which these proceedings are directed arose only in the course of 2012 and the trustee has acted promptly since it did arise. As to the latter, the consultation announcement made clear that if the rectification claim succeeds there will be no effect on existing benefits. All the rectification position would produce if it were to fail would be that there would be an increase over what the members have up until now expected to receive. I have also heard from the defendant's counsel, Mr Tennet, Queen's Counsel, and I am satisfied that he is right in his careful and thorough assessment that no argument can properly be advanced against rectification.
I can now turn to the substance. It is necessary for me to do so in some little detail since the fact that the claim is not opposed does not automatically mean that it must succeed. It is necessary for the claimant to satisfy the court that there is sufficiently compelling evidence that a mistake has been made in that the deed and rules as executed did not or might not have accurately represented the true intention of the claimant at the time.
The MNOPF is an industry-wide multi-employer occupational pension scheme which has two sections called the old section and the new section. The old section provides benefits in respect of contributions paid during service up to 5 April 1978 and the new section provides benefits in respect of service accrued on or after that date. The scheme has always been administered on the basis that in respect of old section benefits (in contrast to the position in respect of new section benefits) there is no guaranteed revaluation of deferred pensions. Instead the claimant may each year, having taken actuarial advice, award a discretionary increase. The approach to which I have just referred is consistent with the relevant statutory requirements.
However, in the course of 2012 it emerged that the policy of giving merely discretionary increases might fall foul of the requirements of Rule 10.1 of the 1999 Deed and Rules. Prior to an amendment made in 1999, with which amendment these proceedings are concerned, Rule 10.1 of the Trust Deed and rules as it appeared in the 1995 iteration of the deed was in the following terms:
"A deferred pension to commence on attainment of Normal Pension Age or earlier retirement permitted under these Rules of an annual amount in the aggregate of;
(i) 1/40th of his Average Revalued Pensionable Salary (proportionately for part of a year) for each year of his Service [a defined term meaning service after 5 April 1978], and
(ii) for his pre 78 Service the pension secured to him at Normal Pension Age by the contributions paid in respect of him to the pre 1978 section.
In respect of those Deferred Pensioners who left service on or after 1 January 1986 and started to draw their pension before 1 April 1990 the part of their Deferred Pension under (i) above that is in excess of the Guaranteed Minimum Pension shall be increased at Normal Pension Age by the appropriate amount as prescribed in the 1993 Act".
There then followed provision for increase at different rates depending upon the date on which the pension came into payment.
The deed and rules were amended in 1999 and as amended Rule 10.1 read as follows:
"10.1.1 A deferred pension to commence on attainment of Normal Pension Age or earlier retirement permitted under these Rules of an annual amount calculated in accordance with Rule 6.0.
10.1.2 In respect of those Deferred Pensioners who left Service on or after 1 January 1986 and started to draw their pension at Normal Pension Age before 1 April 1990 the part of their Deferred Pension under Rule 10.1.1 that is in excess of the GMP shall be increased at Normal Pension Age by the appropriate percentage as prescribed in the 1993 Act."
Subsequent provisions of the rule again applied different rates of increase depending upon when the pension came into payment.
In the version of Rule 10.1 as it appears in the 1995 deed it is clear from the reference to increase to "the part of the deferred pension under (i) above" that it is only the new section benefits which are to be subject to automatic increase. By contrast, the apparent effect of the amendment made in 1999 is that, because of the reference to Rule 6.0 (which defines the entirety of the pension, including the old section benefits), the increase is to apply not merely to new section benefits but also to old section benefits. The claimant says that this was not the intention and that if what it does is to require a revaluation of the old service benefits as well as the new service benefits, it is a mistake.
The claimant is not in these proceedings seeking to have the true construction of the 1999 version of Rule 10.1 determined. What it says instead is that the existence of uncertainty as to its meaning is sufficient to justify the claimant in seeking rectification without incurring the expense of time and money that would be involved in first construing the provision, particularly since that construction exercise will be conducted against the background of what as the claimant said, and I have already indicated I agree, is a strong rectification case. Although at first sight I found it surprising that it is possible to mount a rectification claim in circumstances where the documents sought to be rectified may actually accord with the true intention, the approach is one which is supported by authority and I am happy to follow that authority. The authority to which I refer is in two cases, Walker v...
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