Colorcon Ltd v Huckell & Ors

Rectification is available for pension scheme deeds and rules where the employer and trustees shared a common intention about their legal effect, but the document failed to express it. The claimant must provide convincing proof on the balance of probabilities. An outward expression of accord is an evidential matter rather than an inflexible legal requirement where the trustees admit their relevant common intention. For a collective body of trustees, the material intention is their collective intention. Subsequent documents and conduct may be considered as evidence of the intention at the time of execution. Summary judgment is appropriate where that evidence shows that the defendant has no real prospect of defending the rectification claim and there is no other compelling reason for trial.

Colorcon Ltd sought summary judgment under CPR 24.2 for rectification of the rules of its defined-benefit occupational pension scheme. The 1996 Rules provided for deferred pensions to be revalued at 5 per cent compound, while the claimant contended that the common intention of Colorcon and the trustees had been 5 per cent or the increase in the Retail Price Index, if lower.

The trustees adopted a neutral position. The sixth defendant represented members whose interests opposed rectification but consented to summary judgment after specialist advice. The central issues were whether the parties had a common intention at execution, whether an outward expression of accord was required, and whether the evidence justified final relief without a trial.

1. Rectification principles. Pension scheme trust deeds and rules are amenable to rectification. The claimant had to establish that Colorcon and the trustees shared the same intention as to the meaning or effect of the documents when they were executed, supported by convincing proof on the balance of probabilities. The court applied the principles summarised in Scania v Wager [2007] EWHC 711 (Ch).
2. Outward accord. Following Munt v Beasley [2006] EWCA Civ 370, an outward expression of accord was not a strict legal requirement where the trustees admitted that their state of belief matched that of the employer. In any event, the post-execution scheme documents provided evidential support for the asserted intention.
3. Evidence and collective intention. The relevant intention was the collective intention of the trustees, consistently with AMP v Barker [2000] 71 PBLR. Later events and documents could be considered as evidence of the parties’ intention at execution, as explained in Gallaher v Gallaher Pensions [2005] EWHC 42. The evidence, including scheme booklets, actuarial valuations and the administration of benefits, established the common intention that deferred pensions should receive 5% LPI.
4. Disposition. The proposed rectification would cure the defect in the Rules. The defendants had no real prospect of defending the claim and there was no other compelling reason for trial. Summary judgment was therefore granted and rectification ordered in the proposed form.