While courts in England & Wales have often been unsympathetic when it comes correcting formal defects in documentation, in the recent pensions case of Ballard & Ors v Buzzard, a High Court Judge applied the principles of rectification to give effect to the intention of the parties.
The trustees and the employer of a pension scheme brought proceedings to determine the validity of amendments to the governing provisions of the scheme. The scheme's rules on amendment powers required all the trustees to "declare any such alteration or addition…in writing". The scheme had five trustees, one of which was also the principal employer. However, the signature blocks for the amendment documents in question did not allow all trustees to sign in that capacity. Instead, the signature blocks provided for one signature “for and on behalf of the Principal Employer” and four signatories against the word “Trustee”.
Evidence was accepted that there was an error in the signature blocks, which should have provided execution blocks for each of the five trustees as well as an additional execution block for the principal employer. Even so, the Judge acknowledged the difficulty of construing a signature given in one capacity as also being given in another capacity, and so concluded that the error could not be corrected as a matter of construction.
However, another solution emerged during the course of the hearing: that is, it would be open to the court to order rectification of the signature blocks to reflect the intention of the principal employer to give his signature both in his capacity as the principal employer and in his capacity as a trustee. The Judge concluded that the trustees, including the principal employer, provided compelling evidence that the principal employer supported the changes made by the amendment documents, that he intended for the amendment documents to be signed by each of the trustees and that he understood that he was one of the trustees. This amounted to persuasive evidence that, when giving his signature against the signature block for principal employer, the principal employer did not intend to exclude "the obvious point" that he also intended to give his signature in his capacity as a trustee. Therefore, rectification of the signature blocks was ordered.
Fortunately, in this case, a little judicial pragmatism was able to validate amendments that did not conform to strict letter of the scheme's rules. However, costly litigation would have been unnecessary had such simple errors in the signatures blocks not existed in the first place. The Judge therefore concluded that the case was as a "cautionary tale" that should be taken to heart by pension trustees and their advisors.
If you would like to discuss anything raised in this blog in more detail, please get in touch with a member of the pensions team or your usual Brodies contact.
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