Parties work together for summary judgment to rectify a pension agreement
In Citifinancial Europe plc v Davidson and others, the High Court made a practical decision to correct inaccurate terms in two pension agreements to reflect what the parties had originally agreed. In doing so, the court endorsed the use of the summary judgment procedure to effect the rectification of the agreements, thereby giving the parties a decision more quickly and cost effectively than might have been the case had the issues proceeded to trial. Walker Morris considers the key issues reviewed by the court and explains the hurdles the claimant had to jump (in this case with the help of the defendants) to gain summary judgment for rectification.
The facts were summarised succinctly in the first paragraph of the judgment by the judge: ‘This is an application for summary judgment for rectification of the provisions of two documents forming part of a pension scheme. The scheme is divided into two sections. One is a “final salary” section under which defined benefits are calculated by reference to salary and length of pensionable services; this section of the scheme closed to new members in 1999 (“the DB Section”). The other section is a “money purchase” section, under which defined contributions are calculated by reference to actual contributions paid by members (“the DC Section”); this section of the scheme was available to both old and new members upon closure of the other section. The reason for having two sections was historical and arose as a result of the amalgamation of two different schemes.’
A replacement scheme document was issued in 2003 and was followed by a deed of amendment in 2004. Unfortunately, the wrong definition of ‘salary’ was mistakenly given to the DC Section despite the parties’ intentions to the contrary…
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