The Supreme Court recently ruled that 80 former miners with a disability are to be excluded from substantial pension benefits available to existing employees.* The case provides useful guidance on the circumstances in which the equitable remedy of rectification will be granted.
Rectification is a discretionary equitable remedy which empowers the court to amend an instrument which does not accurately reflect the intention of the parties to it. This case is useful in that it sets down the parameters of the standard of proof by which the remedy is to be assessed. The Supreme Court found that the High Court Judge had erred in applying a standard which approached a criminal standard of proof "beyond reasonable doubt" and that the requisite standard was proof on the "balance of probabilities" of the parties' common intentions.
The backdrop to the case was a deed of amendment to the Tara Mines Pension Plan, executed in 1999 in declining economic circumstances for the company. Amongst the proposals in the amendment were for the elimination of "integration" with the state pension. There would be a new definition in the deed for "pensionable salary" whereby integration in the case of Members whose benefits were being calculated by reference to a specific date would be disapplied. An issue arose whereby a former employee who was in receipt of benefits under an income continuance plan queried why integration was being applied to his pensionable salary.
The employee was advised that the 1999 deed did not reflect the intention of the parties at that time i.e. that integration was to continue to be applied for those in receipt of income protection benefit. An application was made to the High Court to have the deed rectified. This was refused on the basis that the employer failed to provide cogent evidence that it had intended to exclude the former workers from the elimination of integration.
On appeal the Supreme Court held that there was a "unanimity of evidence" that the parties shared intention had been to exclude that category of former employee. Convincing evidence was also furnished that the behaviour of the employer and trustee was consistent with this intention.
The case is useful in its analysis of the circumstances in which a court will allow the remedy of rectification to be granted. It provides a reminder of the standard of proof to be applied in assessing the parties' intentions and that the requisite test is the balance of probabilities of what the parties' mutual intention was, and not a more stringent requirement than this.