Chemical manufacturer Colorcon applied to the court to correct the trust deed, which stated the benefits of deferred members should increase at an annual fixed rate of 5%.
The company argued the scheme’s rules had been drafted in 1996 with the intention that benefits would increase in line with limited price indexation (LPI), which follows the retail price index to an upper limit of 5%.
Company representatives and the trustees could not recall any discussions on the issue and had disregarded the rules to increase benefits in line with LPI.
Relevant scheme members who opposed this stance were represented in court, while the trustees were neutral in the case.
The court decided there was convincing proof that Colorcon and the trustees intended benefit increases to rise in line with LPI and therefore the scheme rules should be rewritten.
Nabarro partner Anne-Marie Winton said: “The case is noteworthy as it adds to the fairly short list of successful rectification cases where a court rewrites a trust document so that it reflects the intention of the company and trustees.
“Generally, it is difficult to achieve rectification, not least because evidence of what the employer and trustees mutually intended the trust deed and rules to be may be impossible to track down, or may have been lost in the mists of time, or only exist in their heads.”
