Univar UK Ltd v Smith & Ors

Rectification of pension-scheme rules is available where the parties had a continuing subjective intention as to the benefits, but the instrument mistakenly failed to give it legal effect. In a scheme-amendment case, mutual outward expression of accord is unnecessary if the trustees and employer independently shared the same intention and the amendment was validly approved. Convincing evidence is nevertheless required, commonly including contemporaneous documents showing the intended scope of the consolidation. A mistake as to the legal effect of drafted wording is distinct from a mistake about commercial or fiscal consequences. Descriptive communications about scheme benefits do not create additional contractual or estoppel rights where they are imprecise and subordinate to the governing rules.

Univar sought rectification of the 2008 definitive deed and rules governing its pension scheme. It alleged that the drafting unintentionally changed statutory inflation-linked increases into increases fixed by reference to RPI, and changed deferred-pension revaluation from a statutory one-off calculation to an annual RPI-based calculation.

The representative beneficiary resisted rectification and advanced contractual, power-of-amendment, estoppel, bona fide purchaser and change-of-position arguments for members who had opted out of the final-salary section. A separate construction issue concerned announcements made to former members of the Berk and PLAS schemes. The central questions were whether the 2008 rules recorded the parties’ actual common intention and whether subsequent communications created or preserved additional RPI-based rights.

1. Rectification granted. The 2008 rules were rectified because the Company and trustees intended a consolidation reflecting existing benefits, statutory changes and identified practice, not the material changes introduced by rules 7.1(b) and 7.2. The court found that the rules hardwired RPI and annual revaluation where the earlier regime followed statutory requirements. The relevant subjective intention was established by convincing contemporaneous documentation, especially the benefit summary and comprehensive schedule of changes, together with the evidence of the decision-makers.
2. In a pension-scheme amendment, an outward expression of accord is not a separate requirement. It is sufficient that the employer and trustees independently shared the same intention regarding the amendment, provided the necessary approval requirements were met. The court nevertheless stressed the need for cogent evidence of the actual intentions of both sides. The absence of discussion about an important change may itself support an inference that it was not intended.
3. The mistake concerned the legal effect of the words used, not merely their commercial or fiscal consequences. Negligence by the drafting advisers did not prevent rectification.
4. The opt-out documents created a limited contract under which members who elected to opt out were to be admitted to the money purchase section. Their descriptions of RPI-based revaluation were explanatory and too imprecise to create an independent contractual promise. They did not amount to an exercise of the discretionary power to determine increases because no relevant actuarial advice had been considered and the trustees had not given the required unqualified consent. Estoppel, bona fide purchaser and change-of-position arguments therefore failed.
5. The Berk and PLAS announcements were construed as explanatory of the scheme documentation, not as conferring a freestanding RPI-capped entitlement. The applicable pension increase for service after 1 May 2002 was therefore the same as for other scheme members, subject to the scheme’s governing rules and the separate treatment of notional pensionable service.