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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> SPS Technologies Ltd v Moitt & Ors [2020] EWHC 2421 (Ch) (11 September 2020) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2020/2421.html Cite as: [2021] Pens LR 6, [2020] EWHC 2421 (Ch) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
BUSINESS LIST (ChD)
PENSIONS
London EC4A 1NL |
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B e f o r e :
____________________
SPS TECHNOLOGIES LIMITED |
Claimant |
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- and - |
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(1) PHILLEX LOVESTER ![]() (2) ![]() (3) STEPHEN TACHOUET (4) SALIM SIDAT |
Defendants |
____________________
David E. Grant (instructed by Allen & Overy LLP) for the 1st to 3rd Defendants
Keith Bryant QC (instructed by Stephenson Harwood LLP) for the 4th Defendant
Hearing dates: 25 February 2020
____________________
Crown Copyright ©
Chief Master Marsh:
(1) The Definitive Deed and Rules dated 30 March 1998 ("the 1998 Rules").
(2) The Definitive Deed and Rules dated 17 December 1999 ("the 1999 Rules").
(3) The Deed of Amendment dated 5 June 2003 ("the 2003 Deed").
The parties
"Rectification is a potent remedy because it allows the courts to rewrite the contract."
And at 16-002
"Rectification is a discretionary remedy, "which must be cautiously watched and jealously guarded".[1]
The error
"10.3 If a Deferred Pensioner retires after attaining age 50 but before Normal Pension Date he may (with the consent of both the Principal Employer and the Trustees) elect to receive an immediate Pension except the consent of the Principal Employer and the Trustees will not be required to a Transferred Member receiving an immediate pension after age 60. This will be calculated on the same basis as the deferred Pension but subject to such reduction as the Trustees (acting on the advice of the Actuary) decide having regard to his age. With regard to Transferred Members this reduction will have regard to the period which his actual retirement precedes age 60 only."
"The [Company] may at any time by deed alter, amend, extend, modify or add to all or any of the provisions of the Definitive Deed or the Rules. Any alteration, amendment, extension, modification or addition may have retrospective effect."
Name Capacity 1998 D & R
Company Trustee1999 D & R
Company Trustee2003 Deed
Company Trustee2003 Deed
Company Trustee2003 Deed
Company Trustee2003 Deed
Company TrusteeJulian Bird Company signatory & Trustee x x x x x x Michael Kirk Company signatory & Trustee x x x x Peter Lisburn Company signatory & Trustee x Philip Baker Trustee x x x Phillex Moitt
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Trustee x x x Colin Emeny Trustee x x Steven Billington Trustee x x Caroline Harris Draughtswoman at Edge Ellison Drafted Drafted No longer involved No longer involved No longer involved No longer involved Anna Smith Adviser at Coopers & Lybrand Involved No longer involved No longer involved No longer involved No longer involved No longer involved Mark Packham Actuary at Coopers & Lybrand Involved Involved Involved Involved Involved Involved
(1) It is apparent that the evidence of Mr Bird is central to the claimant's case since he was involved on behalf of the principal employer and as a trustee in respect of the 1998 and 1999 Rules and the 2003 Deed.
(2) Mr Kirk is also an important witness due to his involvement in dual capacities with the 1998 and 1999 Rules.
(3) The court has been provided with evidence from the draftsperson, Caroline Harris, in respect of the 1998 and 1999 Rules.
(4) There is also evidence from the actuary at Coopers & Lybrand, Mr Packham, in respect of all three documents and Ms Smith who was involved in the 1998 Rules.
The law
"… it seems to me that there will be cases, particularly in a pensions context, where it will be permissible to allow rectification when one can say by implication perfectly clearly that the parties did not intend by the Deed they entered into, to effect a particular change, even though they had not stated outwardly to each other (or indeed at all) that they did not intend to effect that change, simply because the change was not in any form discussed."
"How, then can it be said that the [subsequent deed] should be rectified when the Trust Company cannot demonstrate that the relevant individuals had a positive intention that there should be a right to early retirement without consent between ages 60 and 63, the onus being on it to establish the intention necessary for rectification? The answer to that is that a different intention may be sufficient. Thus, if it were clear that the intention was that the [subsequent deed] should reflect the entitlement which members of the C Plan had as a matter of law, it would follow that the [subsequent deed] ought also to reflect those rights; if the [earlier deed] were subject to a valid claim for rectification, then the [subsequent deed] ought to reflect that claim and themselves be rectified to give effect to the intention. In contrast, if it were clear that the intention was that the [subsequent deed] should do no more than reflect, in new language, the provisions of the [earlier deed] continuing the substance of those provisions as they stood at the time of the [subsequent deed], a claim to rectify the [subsequent deed] would fail.…".
(1) Until the decision of the Court of Appeal in FSHC there was some doubt about whether in the case of common intention mistake the intention was to be assessed objectively or subjectively in light of Lord Hoffmann's obiter dicta in Chartbrook v Persimmon [2009] UKHL 38. The law is now settled and only the subjective intention of the parties matters. That was the approach adopted by the Deputy High Court judge in MNOPF and I respectfully agree. I can see no reason why the nature of the intention that the court must ascertain should vary between unilateral and bilateral transactions.
(2) In the same way as with bilateral transactions, there is a need for the claimant to provide convincing proof, on the balance of probabilities, of the intention of the claimant: Joscelyne v Nissen [1970] 2 QB 70.
(3) In the case of a collective body such as a group of trustees or a committee of a board it is their collective intention which is relevant: see AMP (UK) Ltd v Barker [2001] Pens LR 77 at [67].
(4) "The task in hand is to identify in relation to the transaction the person or person who actually approved the nature and terms of the transaction, not the person or person upon whose authority the transaction was entered." Per Norris J in Girls Day School Trust v GDST Pension Trustees Ltd [2016] EWHC 1254 (Ch) at [10].
The 1998 Rules
"16. Under the 1992 Deed & Rules:
(a) provision was made for members to take an early retirement pension only directly from pensionable service under Rule 5.3 (no express provision being made under Rule 9.3 for early retirement from deferment), but only with the consent of the Company (save in cases of incapacity);
(b) under Rule 5.3.2, such an early retirement pension was subject to an actuarial reduction of ¼% per month for each month between the date of his retirement and the member's NPD (or such other percentage calculated on a basis certified as reasonable by an Actuary having regard to the period between the date the first instalment of pension falls due and the NPD);
(c) provided that:
i a Transferred Member who had previously been a member of the T J Brooks Pension Plan or the Alexander Socket Screws Pension Plan would have no actuarial reduction applied to his or her early retirement pension if such early retirement was at the request of his or her employer; and
ii. a female Transferred Member was entitled to draw her early retirement pension from age 60 onwards without any actuarial reduction to the proportion of her pension derived from pensionable service prior to 01.05.91."
"1. The purpose of the project is to update the Plan's existing Trust Deed and Rules to take account of legislative, best practice and benefit changes since 1992.
…
4. We would suggest that the first draft of this document be reviewed by Messrs Coopers & Lybrand, your actuaries and consultants. This should help iron out any technical issues and allow us to identify any points of principle which have to be considered by the trustees."
"… at age 60 onwards, such pensions were subject to an actuarial reduction under Rule 9 save:
i. for female Transferred Members, in relation to pension in respect of pensionable service before 01.05.91;
ii. for male Transferred Members, in relation to pension in respect of pensionable service between 01.05.90 and 01.05.91; and
iii. for Transferred Members who had previously been members of the T J Brooks Pension Plan or the Alexander Socket Screws Pension Plan, if such early retirement was at the request of his or her employer;".
"… the total disapplication of the actuarial reduction to the early retirement pension of Transferred Members on early retirement at age 60 onwards from deferment was inconsistent with:
i. the instructions given to Edge Ellison by Ms Smith in her letters dated 13.11.96 and 22.11.96 (as set out in paragraphs 33-34 & 36-37 above);
ii. the interest in providing more generous pension on early retirement directly from pensionable service than on early retirement from deferment (see e.g. paragraphs 35, 51 & 53-54 above);
iii the terms of the Edge Ellison Report recording what was intended by the Company and the Trustees in relation to Rules 9 and 10.3 (as set out in paragraphs 42 to 45 above);
iv. the terms of the insert notices dated April 1998 issued to Transferred Members by the Company (see paragraphs 64-69 above); and
v. the summary of the Plan's early retirement benefits at Appendix C to PwC's Pension Counsellor report on 30.09.98 which nowhere indicated that Rule 10.3 entirely disapplied the actuarial reduction to Transferred Members' early retirement pension on early retirement from age 60 onwards from deferment (see paragraphs 70-73 above);".
"(f) the fact that so structuring the Plan's early retirement pension provisions would be inherently illogical structurally, as Transferred Members in pensionable service could simply terminate their pensionable service and become deferred members in order to evade the actuarial reduction to early retirement pension otherwise applicable under Rule 9.2;
(g) the lack of any commercial reason for the Company to provide more generous benefits to deferred Transferred Members, especially in circumstances in which the Plan's funding position was deteriorating and a resumption of Company contributions was contemplated (see e.g. paragraphs 50 & 71 above);
(h) the absence of any evidence that the Company (or the Trustees) intended that the actuarial reduction to the pension of Transferred Members should be entirely disapplied on early retirement at age 60 onwards from deferment; and
(i) the fact that at all material times between the execution of the 1998 Deed & Rules and the discovery of the error in Rule 10.3 in 2009, the Plan has been administered (amongst others, by the Company) on the basis that under Rule 10.3 an actuarial reduction applied to Transferred Members' early retirement pension at age 60 onwards taken from deferment in the same way as applied to Transferred Members' early retirement pension at age 60 onwards taken directly from pensionable service (under Rule 9)."
"With regards to Transferred Members, this reduction will have regard to the period by which actual retirement precedes age 60:
10.3.1 in the case of a female Transferred Member, for Pension in respect of Pensionable Service before 1st May 1991; and
10.3.2 in the case of a male Transferred Member, for Pension in respect of Pensionable Service between 1st May 1990 and 1st May 1991."
The 1999 Rules
(1) Mr Kirk, who was one of the Company's signatories and decision-makers in relation to the 1999 Rules (and the 1998 Rules), took early retirement on 9 April 2000 aged 62 directly from pensionable service. He was a Transferred Member, having previously been a member of the T J Brooks Pension Plan. Upon his early retirement, his pension was actuarially reduced (save in respect of pensionable service between 1 May 1990 and 1 May 1991).
(2) If Mr Kirk had intended and understood that Rule 10.3 permitted him to evade any actuarial reduction to his pension by the simple expedient of leaving pensionable service to become a deferred member and then drawing his early retirement pension from deferment, he would have done so.
(1) On 18 January 2001 PwC provided its actuarial valuation of the Plan as at 5 April 2000. Page 19 of Appendix II (which summarised the Plan's benefits) detailed the actuarial reduction to the pension of Transferred Members taking early retirement directly from pensionable service at age 60 onwards, in terms reflecting Rule 9 of the 1999 Deed & Rules. However, on page 22, where the Appendix deals with the description of the deferred pension of Transferred Members who had left pensionable service, it makes no reference to the actuarial reduction to a pension on early retirement at age 60 onwards from deferment being disapplied.
(2) On 23 August 2002 PwC provided its actuarial valuation of the Plan as at 5 April 2002. Appendix A (which summarised the Plan's benefits) described the benefits for Transferred Members in similar terms to Appendix II of the actuarial valuation of the Plan produced in January 2001.
(3) Such a favourable early retirement benefit for Transferred Members would have been identified in these Appendices to PwC's valuations if it had been understood and appreciated, because it would have had a potentially significant impact on the funding position of the Plan.
(1) On 20 May 2003 Mr Bird sought advice from Ms Nita Champaneri of Hammonds (as Edge Ellison had become) about the early retirement of Mr Colin Emeny, who was a director of the Company (and a Trustee), at the end of June 2003 at the age of 61.5. Mr Emeny was a Transferred Member who was a former member of the Alexander Socket Screws Pension Plan. It is clear from the record of the conversation that Mr Bird did not appreciate that Mr Emeny was entitled to take early retirement without any actuarial reduction, in accordance with Rule 10.3.
(2) If the Company (and Mr Bird as its representative) had understood and intended that Rule 10.3 of the 1999 Deed & Rules entitled Transferred Members at age 60 onwards to take an early retirement pension from deferment without any actuarial reduction, Mr Bird would have had no need or reason to request advice, because after the termination of his employment Mr Emeny would have been entitled to take an early retirement pension without any actuarial reduction from deferment under Rule 10.3.
The 2003 Deed
"consider amending the early retirement factors in respect of future service benefits for both active and deferred members to reduce the strain on the funding of the Plan caused by early retirements."
"5.2 The current early retirement factors are shown in Appendix III. Note that for certain periods of service and for certain members an early retirement reduction factor is only applied if retirement is before age 60. The table in Appendix III takes this into account. …
5.4 The Trustees may wish to consider amending the early retirement factors in respect of future service benefits for deferred members. If cost-neutral factors (which result in no funding strain) were adopted, the reduction factors would be approximately 53% at age 55 and 72% at age 60. This would result in early retirement benefits approximately 10% to 20% lower than those currently provided." (emphases added).
(i) for female Transferred Members, in respect of pensionable service before 01.05.91; and
(ii) for male Transferred Members, in respect of pensionable service between 01.05.90 and 01.05.91.
(1) Rule 9.2.1 was replaced with a new rule which increased the early retirement discount factor from 0.25% to 0.5% in respect of pensionable service from 1 July 2003;
(2) a provision was added at the end of Rule 9.2.3 so that in the case of a female Transferred Member taking early retirement before age 60, the newly increased early retirement discount factor specified in Rule 9.2.1 would only apply in respect of pensionable service before 1 May 1991 in relation to each month by which her retirement precedes her 60th birthday;
(3) an equivalent provision was added at the end of Rule 9.2.4 so that in the case of a male Transferred Member taking early retirement before age 60, the newly increased early retirement discount factor specified in Rule 9.2.1 would only apply in respect of pensionable service between 1 May 1990 and 1 May 1991 in relation to each month by which his retirement precedes his 60th birthday.
"This will be calculated on the same basis as the deferred Pension but shall be reduced as follows:
(i) in relation to Pensionable Service up to and including 30 June 2003, as the Trustees (acting on the advice of the Actuary) decide having regard to his age at retirement; and
(ii) in relation to Pensionable Service on or after 1 July 2003 by ½% per month by which his retirement precedes his Normal Pension Date or by such other amount certified as reasonable by the Actuary having regard to his age at retirement.
With regards to Transferred Members or Swift Levick Members who were active members of the Swift Levick Plan on 30 June 1991 such reduction in relation to Pensionable Service up to and including 30 June 2003 will have regard to the period by which his actual retirement precedes age 60. With regard to Pensionable Service on and after 1 July 2003 such reduction shall be 1/2% per month in respect of each month his retirement precedes his Normal Pension Date or by such other amount certified as reasonable by the Actuary having regard to his age at retirement." [emphasis added]
Conclusion
Julian Bird – was the Group Financial Controller up to January 1999 when he was appointed Group Finance Director. He was a trustee of the Plan from January 1999.
Philip Baker – was a trustee and signatory of the 1998, 1999 and 2003 Deeds and is a Transferred Member.
Steven Billington – was a Business Controller at Smith Levick Magnets Ltd in 1997 and later Finance Director. He was appointed a trustee on 7 April 1999 and was a signatory to the 1999 and 2003 Deeds.
Colin Emeny – is a Transferred Member and was a director of the claimant. He was appointed a trustee of the Plan in 2002 but prior to that date has regularly attended meetings of the trustees. He was a signatory to the 2003 Deed.
Caroline Harris – was the senior legal assistant at Edge Ellison (later Hammonds Suddards Edge) with the main conduct of drafting the 1998 and 1999 Deeds. She was supervised by Robert Gravill who was a partner with the firm.
Michael Kirk – is a Transferred Member of the Plan and was Managing Director of the claimant and chairman of the trustees. He was a signatory to the 1998 and 1999 Deeds.
Peter Lisburn – is a Transferred Member of the Plan and was Company Secretary of the claimant until 1999, a trustee from the inception of the Plan in 1988 and a signatory to the 1998 Deed. He was also a member of the drafting committee for both the 1998 and 199 Deeds.
Phillex Moitt – is a current trustee and the first defendant. He was a signatory to the 1998, 1999 and 2003 Deeds.
Mark Packham – was employed by Coopers & Lybrand (later PwC) and was the Plan actuary from 1998 to 2002.
Anna Smith – was a Senior manager with Coopers & Lybrand (later PwC) between 1994 and 2000 and part of the drafting sub-committee for the 1998 Deed.
Note 1 Whiteside v Whiteside [1950] Ch 65 at 71 per Evershed LJ [Back]