In our previous post we considered a recent Scottish case, in which the Court of Session took a more relaxed approach to the formalities required to make amendments to a pension scheme. Moving south of the border, the High Court granted an order recently pursuant to a seldom-used statutory procedure that has been largely neglected (though not without its enthusiasts) for over 30 years.
This was significant because documentary errors of the kind addressed in the case are normally dealt with by a rather more complex and costly court application for rectification.
In the case, the trustees of the pension scheme succeeded in an application under section Section 48  for the re-instatement of a whole sub-rule which had been inadvertently removed from the scheme’s provisions on pension increases during an updating of the scheme’s rules.
Immediately before the new rules took effect, the rules clearly provided for different rates to apply to increases to pension accrued prior to April 1997 and pension accrued thereafter.
The new rules omitted one sub-rule which set out how the different rates for different periods operated. The removal of these words meant the whole increase rule no longer made sense. In such a case, a rectification application would usually be required.
Section 48 however offers trustees an alternative. It permits scheme trustees to rely on the written legal opinion of a barrister of ten years’ qualification, when approved by the Court, and take comfort that no beneficiary of the scheme can claim successfully that the trustees have administered the scheme incorrectly (in respect of the issue in question).
The judge agreed that there had been a mistake in drafting the updated deed and that it was clear exactly what wording needed to be read as reinstated – the very words that had been accidentally removed.
A low cost solution?
It might seem that the trustees succeeded in getting rectification ‘on the cheap’, avoiding the need for the lengthy and expensive procedures normally involved. But that view isn’t quite right.
First, the order only protects the trustees; it doesn’t actually rectify the error or change the drafting in reality, and scheme members are not technically bound by it, though claims against the trustees would fail.
Secondly, Section 48 cannot be used where there is any dispute as to any detail of what is defective, and how that should be put right. Trustees, employers and members seldom share exactly the same position, as one side will most likely be worse or better off than they would have been, in the absence of the error. However in “open and shut” cases like this, trustees might be able to avoid the time and expense of the full court process.
 The Administration of Justice Act 1985
 Re BCA Pension Plan