On 15 August 2013, in Konica Minolta Business Solutions (UK) Ltd v Applegate[2013] EWHC 2536 (Ch) the High Court held that an erroneous provision in an occupational pension scheme deed could be rectified, after the scheme’s merger with another scheme resulted in a category of members receiving an unintended windfall.
The applicant pension scheme merged with another pension scheme, whose scheme rules provided that category B members who withdrew from service immediately after a specified qualifying period of pensionable service were entitled to a pension deferred to the normal retirement date (NRD), but with a reduction in the ratio of their completed future service to their potential future service to the NRD. However, following the merger, the rule lacked any ratio reduction. Prior to the drafting of the new rule, the draftsman had been informed of this inconsistency but had failed to correct it.
The applicant pension scheme applied to the court to rectify this erroneous provision, which the defendant beneficiaries opposed. The court considered whether:
- the parties had an objective, common continuing intention on which a rectification order could be based; and
- terms should be imposed on rectification to limit or prevent any future restitutionary claims against members who had benefited from the provision.
The court held that:
- the fact that the error had been pointed out to the draftsman showed objectively that there had been no common intention of the parties to create that extra benefit. Instead, the continuing common benefit was for the rules to replicate the benefits payable under the previous schemes; and
- since it was unknown whether any members had received any benefits under the erroneous provision, there would be liberty to apply to any category B member faced with a claim to repay monies where that claim was wholly dependent on the order for rectification.
