EWJ August 62 2025 web - Journal - Page 55
form of defined contribution benefit: the Member’s
Pension Account provided for a capital sum to be
nominally allocated to a member in the same way as
any other defined contribution arrangement; but a
capital sum is not an annual pension, and so the element that is clearly missing from the drafting under
the literal construction is the requirement that the capital sum is then used to ‘purchase’ an annual pension
in the usual way so as to turn it into a conventional
money purchase benefit [37]. That would have led any
reasonable reader, with a basic understanding of the
purposes of the scheme and its tax approved status,
to conclude that the intention of the drafter was to
provide a conventional money purchase underpin of
a type that was commonly being introduced to defined
benefit schemes at that time, and that the reference to
the requirement to use the Member’s Pension Account
to purchase a pension was either implicit or had been
omitted in error [38].
not to be less than the annual amount of the pension
that could be purchased with the Member’s Pension
Account.
Treatment of confidential opinion
The Judge recorded that he had read the detailed
confidential opinion prepared by counsel for the representative member defendant, setting out their views
as to the merits of the employer’s claim [6], and he
noted that the defendant’s decision not to oppose the
employer’s claim followed careful consideration of that
opinion [50]. The Judge made no reference to the
contents of that opinion, other than to say that it dealt
with the legal issues, the factual background, the way
in which the scheme had been administered in
practice, and the terms of the draft order [50].
There is nothing in the Judge’s judgment to suggest
that the contents of the opinion were to be made public after the hearing. This can be contrasted with the
same Judge’s decision in Saga Group Ltd v Paul,3 an application for summary judgment in a rectification
claim where a similar opinion had been prepared by
the representative member’s counsel, where the Judge
said as follows:4
In my judgment, summary judgment applications of the
present kind should be dealt with in public, with all relevant
information being made freely available. That is consistent
with the open justice principle. It also avoids the difficulties
that so exercised Norris J in The Girls' Day School Trust case
where he indicated that, for the future, it was likely that the
court would insist that all evidence be open to inspection after
judgment. In my view there is no reason why all the evidence,
including the legal advice that has led the representative defendant to take the view that the summary judgment application should go ahead unopposed, should not be made public
at the hearing.
- The second sentence of sub-rule (2) would not
operate to achieve the wider aims and objectives of introducing the underpin: the literal construction would
be wholly inconsistent with what the background documents revealed to have been the objectively ascertained aim of the amendment [39]. In this respect, the
Judge treated as admissible background evidence a
newsletter sent to members at around the time of the
introduction of the underpin, which announced it and
explained its effect: the Judge said that it did not matter whether the newsletter was sent before, or shortly
after, the underpin had been introduced [13].
- The second sentence of sub-rule (2) would, on a
literal construction, operate to produce irrationally
generous benefits [41].
- The benefits payable on a literal constriction would
inevitably exceed the defined benefit limits imposed
by the Inland Revenue, which are admissible as an aid
to construction [42].
Despite that, in a series of subsequent cases Chief
Master Marsh strongly endorsed the practice of keeping the evidence confidential.5 In this case, the Judge
was evidently no longer concerned to reverse that
practice.
The Judge also held that the nature of the correction
required to address that mistake was clear on the face
of the scheme’s provisions: what was missing from the
underpin, as drafted, was the conventional money
purchase concept that the hypothetical pot represented by the Member’s Pension Account should be
used to ‘purchase’ an annual pension [43]. It was also
easily achieved by adding the missing concept of
‘purchase’ as a matter of construction [44].
The Judge noted that the order being sought was not
wider than a correction to the construction of the rule,
and expressly preserved the possibility for other conceptual challenges to past administrative practice on
different grounds, such as grounds specific to an individual member’s circumstances, including any mistakes that may have been made in the calculation of an
individual member’s benefits: the order was not attempting to extinguish any claims or other rights that
members may have, independently of the subjectmatter of the construction application [45].
Conclusion
This is a sensible and pragmatic application of the
corrective construction principle in the pensions context, reflecting the way in which a reasonable reader,
experienced in pensions matters, would have understood the intention of the provision to have been. It is
welcome to see that the Judge was not deterred by the
comment in Britvic plc v Britvic Pensions Ltd,6 cited by
the Judge at [27], that corrective construction should
be confined to cases where something had obviously
gone wrong in a description, a date, a figure, or a calculation, and where the correct description, date, figure, or calculation was obvious from the material
before the Court. As for the Judge’s treatment of the
confidential opinion, it seems that the established
practice of the opinion retaining its confidentiality
after the hearing will continue in the future.
The Judge accordingly ordered that sub-rule (2) was
to be construed as meaning that a member’s Final
Salary Pension was, if necessary, to be increased so as
Published June 2025
This article was published on www.pensionsbarrister.com. Views expressed above are those of the
EXPERT WITNESS JOURNAL
53
AUGUST/SEPT 2025
