Ever heard the phrase “omnia praesumuntur rite esse acta”? Me neither, until a Scottish court handed down its judgment in the case of Knight v Sedgwick Noble Lowndes.
It has been known for some time that the Scottish courts generally take a pragmatic approach to the construction of pension plan documentation. For example, in a 2010 case a Scottish court stressed that if the purported exercise of a pension plan’s amendment power is clear and put into written form, there is no need for the court to be unduly restrictive in considering whether the amendment power has been complied with. Contrast this with the approach of the English courts where, generally speaking, fairly robust evidence is required to establish compliance with the requirements of an amendment power.
The Knight case has brought this into focus again. The case concerned whether normal retirement ages had been validly equalised under four defined benefit pension plans before they subsequently transferred into another plan. The specific requirements of the amendment power under each pension plan were different but, generally speaking, amendments were to be evidenced by specified documents such as a written resolution/memorandum. Extensive searches were undertaken in relation to each plan, but the evidence found did not “dot the i’s and cross the t’s” in relation to each amendment power.
The evidence found varied in each case but it included minutes of meetings and announcements to members, plus various other items of correspondence alluding to a decision to equalise benefits. The Scottish court relied on the maxim “omnia praesumuntur rite esse acta” (i.e. the presumption of regularity) in ruling that all four pension plans had been amended to equalise normal retirement ages from the dates on which this purportedly occurred. In other words, the court was comfortable that there was a clear intention to equalise benefits based on contemporaneous evidence, despite the fact that key documents relating to the exercise of the amendment powers had not been found.
Many have applauded this as a “common sense” approach from the Scottish courts. Whilst the “presumption of regularity” is a recognised maxim under English law, reported cases south of the border suggest that it has had only limited application in England to date in the pensions context. It could potentially be of assistance in a situation where there is a formal document in place but some evidence is missing as to its technical completion (such as due notice to directors of a board resolution, or proper delegation of the signatory to a resolution). Whether it will be given greater weight in the future remains to be seen.