Smithson & Ors v Hamilton

The rule in Hastings-Bass cannot substitute for rectification where a pension rule contains drafting errors. It permits setting aside a trustee act, not rewriting an instrument. The principle concerns trustees’ fiduciary responsibilities, not an employer’s scheme design. Trustees need not identify errors primarily affecting the employer rather than scheme members. Equitable mistake relief did not extend to nullifying this contractual pension rule. Both claim and counterclaim were dismissed.

The participating employers and trustees sought to remove or invalidate rule 3.5.2.1 of a pension scheme. The rule allowed deferred members aged 60 or over to draw preserved pensions without actuarial reduction, creating substantial additional employer liabilities.

The claim relied on Hastings-Bass and, alternatively, equitable relief for mistake. The representative deferred member counterclaimed that the 1992 Definitive Deed and Rules, or alternatively the equalised normal retirement age of 65, were void or liable to be set aside.

1. Claim dismissed. Rule 3.5.2.1 contained a drafting mistake, but the intended correction required different wording. Rectification, not setting aside, was the appropriate remedy.
2. Hastings-Bass could not be used to set aside the rule and replace it through an undertaking. That would amount to rectification by the back door.
3. The scheme’s design and contents were substantially the employer’s responsibility. The trustees had fiduciary responsibilities, but were not required to detect an error which benefited members and primarily increased the employer’s liabilities.
4. Equitable mistake relief did not apply. Following Great Peace Shipping, the mistake did not satisfy the common-law standard in Bell v Lever Brothers.
5. The counterclaim failed. The Definitive Deed and Rules were validly executed by PFPL and all six trustees. The choice of age 65 as the equalised normal retirement age was valid.
6. Both the claim and counterclaim were dismissed.