The principles governing the construction of pension trust deeds and rules
Produced in partnership with Jennifer Seaman and Elizabeth Grace of Outer Temple Chambers
The principles governing the construction of pension trust deeds and rules

The following Pensions practice note produced in partnership with Jennifer Seaman and Elizabeth Grace of Outer Temple Chambers provides comprehensive and up to date legal information covering:

  • The principles governing the construction of pension trust deeds and rules
  • The general principles
  • the five principles of construction
  • Principle one—method of interpretation
  • Principle two—relevant background material
  • Principle three—inadmissible background material
  • Principle four—meaning of words versus meaning of document
  • Principle five—corrective interpretation
  • — clarification of principles of construction
  • —a broad interpretation to construction
  • More...

The general principles

In an ideal world the language and provisions of contracts, deeds and other documentation would not be ambiguous, avoiding any misunderstanding or difficulty in their interpretation. However, this is not always the case. This has led the courts to develop methods or principles of construction and interpretation, including the interpretation of scheme deeds and rules in the pensions context.

The principles governing the construction of documents are now well established and not controversial. The courts’ aim is to interpret documents according to ‘common sense’ principles, that is, the courts look at the ordinary and natural meaning of the words used. These principles have been built upon and further developed in a number of significant House of Lords and Supreme Court cases.

General cases include:

  1. Investors Compensation Scheme (ICS) v West Bromwich Building Society

  2. Chartbrook v Persimmon Homes

  3. Rainy Sky v Kookmin Bank

  4. Arnold v Britton

  5. Wood v Capita

Pensions cases include:

  1. Re Courage Group’s Pension Schemes

  2. National Grid v Mayes

  3. Stevens v Bell (British Airways)

  4. Armitage v Staveley Industries

  5. Barnardo’s v Buckinghamshire

ICS v West Bromwich Building Society—the five principles of construction

This is a significant case, often used by the courts as the starting point for interpreting ambiguous provisions in documentation. Lord Hoffmann adopted five principles of construction falling within the following categories:

  1. method of interpretation

  2. relevant background material

  3. inadmissible background material

  4. meaning of

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