Rectification Revisited: Fresh Guidance On The Role And Types Of Evidence
Cases involving the rectification of pension scheme documents are always of interest. Whilst heard some time ago now (December 2013), the transcript of the High Court's decision in MNOPF Trustees Limited v Bryan Watkins was only recently made available. The decision offers useful guidance as to the Courts' approach in reviewing various forms of evidence used to support an application for rectification.
Claims for rectification
Rectification is an equitable remedy which can only be granted by a Court. To qualify for an award of rectification a party must establish that on the balance of probabilities a legal or factual mistake was made in the drafting of a written scheme document, with the result that the document fails to express the true common intention of the parties.
It is now generally accepted that it is the parties' common intention viewed objectively that must be established. The subjective intentions of the parties themselves are not normally taken into consideration, although interestingly the judge in this case considered that brief consideration of the parties' subjective intentions might serve as a final "cross-check" on the Court's overall decision.
Assuming sufficient evidence can be produced to substantiate the application, there is the further requirement that the mistake for which rectification is sought cannot be easily remedied by alternative means. Where those administering the scheme cannot remedy the mistake by such other means, they are obliged either to apply to Court to seek rectification or alternatively, continue to administer the scheme and award benefits on the assumption that the mistake is in fact correct.
Where a Court exercises its discretion and grants rectification, the scheme document is amended retrospectively so that it reflects the terms that the parties actually intended. Rectification therefore seeks to restore the parties to the position they would have been in had the mistake not been made.
In practice, rectification claims are nearly always brought where a mistake was made resulting in members being awarded benefits that were greater than originally intended. Whilst rectification claims are generally not time-barred, a Court can refuse to grant rectification where a party has been particularly lax in pursuing their claim. Parties seeking rectification are therefore advised to apply for rectification as soon as they become aware it is a possibility.
The case
The MNOPF is an industry-wide...
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