BCA Pension Trustees Ltd, Re

In construing pension scheme rules, the court applies ordinary principles of contractual interpretation. Earlier executed scheme documents may be used as relevant background to a later consolidation. Where the language contains a clear mistake and the intended correction is clear, the court may correct the document by construction, even by reading words back into it, if that is necessary to make the existing provision work.

This power is limited. It does not permit the court to rewrite a document, add an entire independent clause, or cure an omission where the document otherwise operates coherently. An order under section 48 of the Administration of Justice Act 1985 authorises trustees to act on the court’s construction and protects them against breach of trust claims, but does not bind beneficiaries. Members should ordinarily be notified where the order affects benefit levels.

BCA Pension Trustees Limited, the sole trustee of the BCA Pension Plan, applied under section 48 of the Administration of Justice Act 1985. During consolidation of the Plan’s rules, wording identifying which pension rights attracted two different annual increase rates had been omitted.

The trustee sought authority to administer the Plan by reading the omitted wording back into Rule 22.1. It also sought directions concerning notification to members and potential beneficiaries. The central issues were whether the consolidated rule could be corrected by construction, the scope and effect of section 48, and the appropriate publicity for the order.

1. Construction and correction. The same principles apply to pension scheme documents as to other documents. The question is what meaning a reasonable reader, equipped with the relevant background, would give the consolidated rules. Earlier executed scheme documents and the 2005 deed were admissible background.
2. Rule 22 was unintelligible as to which pension or part of a pension attracted the rate in Rule 22.2 and which attracted the flat rate in Rule 22.3. The rules did not confer an option on members to select the more favourable rate.
3. The court could read the omitted wording into Rule 22.1 because the mistake and the required correction were clear. The correction made the existing rules workable; it did not create a new contractual provision. This was consistent with the limits identified in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 and Cherry Tree Investments Ltd v Landmain Ltd [2013] Ch 305.
4. Section 48. The trustee’s counsel satisfied the statutory qualification requirement, and the court authorised the trustee to administer the Plan on the corrected construction. The order did not bind members or potential beneficiaries, who remained free to contend for another construction. It protected the trustee against breach of trust claims arising from administration in accordance with the order.
5. The order was not made conditional on notice or on liberty to apply. However, because it directly affected benefit levels, members should ordinarily be told of the order and reasons unless compelling contrary reasons existed. Notification by the trustee’s next circular was approved, subject to specified access to the judgment, order and non-confidential evidence.