Field Fisher Waterhouse wins significant victory in High Court pensions case
12 December 2007
Field Fisher Waterhouse LLP gained a victory in the High Court
this week, in a case worth over £1.5 million in pensions benefits
for members of a scheme sponsored by Siemens Building Technologies.
The judgment will have significant implications for pensions
schemes, making it much harder to correct errors in Trust Deeds
& Rules entitling scheme members to more than had been
intended.
Field Fisher Waterhouse acted for the representative
beneficiary, David Hamilton, who represented the affected members
of the scheme.
The case, Smithson v Hamilton, concerned a drafting error in the
Trust Deed & Rules of the scheme. The error provided that those
who had left the employer were able to retire at 60 rather than 65
without any reduction in their pension entitlement. Siemens sought
to correct this mistake as potentially this would involve pensions
scheme members claiming extra benefits totalling between £1.5m and
£1.9m.
Over the past few years a number of judgments in similar cases
involving drafting mistakes have encouraged advisers to believe
that the reversal of such errors by employers and trustees could be
easily achieved under the "Rule in Hastings-Bass". The decision in
this case however, ruled against this developing trend. The Judge,
Sir Andrew Park, in the High Court said that the trend was in
danger of going too far and becoming, "rectification by the back
door". The Court ruled that it was not an acceptable way to
proceed. Rectification requires a high standard of evidence as to
the specific intentions of the parties.
In addition to resulting in no change to the current Trust Deed
& Rules and extra payouts to some of the Siemens’ scheme
members, the ruling will have significant implications for pensions
schemes more generally. These complex documents can contain
drafting errors and following this judgment it will be far harder
to get them reversed.
Field Fisher Waterhouse pensions partners David Gallagher and Belinda Benney and
commercial litigation partner Simon
Moore acted on the case.
David Gallagher said:
"This result is likely to cause a great deal of concern to
advisers in the pensions industry. Errors in complex Trust Deeds
& Rules documents are often found and can be costly to
draftsmen and their insurers. The Judge in this case has put a halt
to the developing line of case law that allowed employers to
correct mistakes retrospectively by sidestepping the strict tests
put in place to protect scheme members. It will be much harder to
do this from now on."
Nicolas Stallworthy of Outer Temple Chambers was Counsel for
representative beneficiary, David Hamilton.
Wragges acted for the trustees and Siemens Building Technologies
and Paul Newman was Counsel.
For further press information please contact Louise Eckersley or Scarlett Yianni.