Honda Motor Europe Ltd v Powell

CA: Maurice Kay, Lewison LLJ, Sir Stanley Burnton

This case is an important decision which sets the boundary between construction and rectification as a means of remedying badly drafted documents.  The case concerned a Deed of Adherence by which a new employer adhered to the Honda Group UK Pension Scheme.  It was evident from the factual background that the new employer was to adhere on the basis that its employees would receive different benefits under the Scheme than those provided to the employees of the existing participating employer.  The question for the Court was whether the Deed of Adherence was effective to achieve that result in circumstances where it simply referred to the provision of ‘the benefits of the Scheme’ to the adhering employers’ employees.

The Court of Appeal (the leading judgment was given by Lewison LJ) held that, as a matter of construction, the above wording could not be held to mean that benefits would be provided on the new benefit basis.  It considered that any problem with the Deed of Adherence could not be corrected by way of construction but instead the case was in ‘classic rectification territory’.

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