SPS Technologies Ltd v Moitt & Ors

Rectification of a pension deed requires convincing proof, on the balance of probabilities, of the relevant party’s subjective intention and of an error in the document. Anomalous or illogical benefits may support an inference that an error occurred, but common sense alone is insufficient. Where a unilateral power of amendment is effective without trustee consent, the intention of the party holding that power is decisive, although evidence of a shared trustee intention may reinforce the case. Successive deeds may be rectified where the evidence shows that later instruments were intended to preserve the rights created by an earlier instrument, including rights arising after rectification. Continuity of administration and established practice may be powerful evidence of that intention.

The claimant, principal employer under the SPS Technologies UK Pension Plan, sought summary judgment and rectification of three successive pension instruments: the 1998 Rules, the 1999 Rules and the 2003 Deed. The defendants were the Plan’s trustees and a representative beneficiary appointed to represent beneficiaries who might oppose the relief.

The claimant alleged that Rule 10.3 of the 1998 Rules accidentally removed the actuarial reduction for Transferred Members taking early retirement from deferment at or after age 60. The same wording was carried into the 1999 Rules and was partly reproduced in the 2003 Deed. The central issue was whether the claimant had established the mistake and the intended wording sufficiently to justify serial rectification.

1. Disposition. The claimant obtained summary judgment. The court ordered rectification of the 1998 Rules, the 1999 Rules and the 2003 Deed because the defendants had no real prospect of defending the claim and there was no other compelling reason for trial.
2. Applicable principles. Rectification is a discretionary remedy requiring careful scrutiny. The claimant had to provide convincing proof, on the balance of probabilities, of its subjective intention and of an error in the document. The court applied the principles reviewed in FSHC Group Holdings Ltd v GLAS Trust Corp Ltd [2019] EWCA Civ 1361.
3. Because the amendment power was unilateral and the instruments would have been effective if executed by the claimant alone, only the claimant’s intention was necessary. Trustee evidence could nevertheless add weight where it demonstrated a shared intention.
4. The disparity between active and deferred Transferred Members was striking and inherently illogical. It was not, by itself, enough to justify rectification. The claimant established the necessary error through the drafting history, the absence of any discussion or commercial reason for the disparity, witness evidence, contemporaneous documents, later conduct and the fact that the Plan had consistently been administered on the basis that an actuarial reduction applied.
5. The 1999 Rules were intended to incorporate additional members without changing the early-retirement benefits. The 2003 Deed was intended only to increase future-service discount factors. The evidence therefore showed that both instruments carried forward the original error rather than intentionally creating unreduced pensions from deferment.