Act: Sellar QC, Cunningham; Head of Legal and Administrative Services , The City of Edinburgh Council

Alt: Lord Davidson of Glen Clova QC, Munro; Dundas & Wilson CS (for the second defenders and respondents)

8 March 2013

Introduction

[1] The reclaimers are the administering authority of the Lothian Pension Fund ("the Fund"). This is one of a number of funds forming part of the local government pension schemes in Scotland. For many years the legislation governing local government pension schemes throughout the United Kingdom has permitted employees of certain specified bodies, principally bodies providing services in the nature of public services, to be admitted to membership of the schemes. Such bodies are known as "admission bodies" and the agreements in terms of which their employees become members of a local government scheme are known as "admission agreements". The responsible administering authority may admit the employees of admission bodies to participate in the main pension fund maintained by it. However, the relevant legislation in Scotland also confers a power on administering authorities to segregate the employees of one or more admission bodies and to constitute a separate fund for them known as an "admission agreement fund". Where such a fund is established, the admission body in question is referred to in the legislation as a "transferred body". It was common ground between the parties that in or about June 1971 the first defenders entered into an admission agreement with the pursuers' statutory predecessors and that pursuant to that agreement the first defenders and their employees participated in the Fund until 31 July 2002 ("the relevant date") when, by reason of a transfer and management agreement between the first and second defenders, the 18 people employed by the first defenders as at that date had their employment transferred to the second defenders and their pension entitlement was transferred out of the Fund into the Strathclyde Pension Fund. At no stage between June 1971 and 31 July 2002 were the first defenders a "transferred body" because the relevant contributions from their employees and from them towards their employees' pensions were paid into the Fund and no separate admission agreement fund was created.

[2] Although the pension entitlement of existing employees of the first defenders at the relevant date was transferred from the Fund to the Strathclyde Pension Fund, no such transfer was made of the pension entitlement of those former employees of the first defenders, who had left their employment prior to that date. The liability for pension payments in respect of those former employees remained a liability of the Fund and there is a deficit in the Fund as far as the entitlement of those employees is concerned.

[3] The precise terms of the admission agreement between the first defenders and the pursuers or its statutory predecessors are unknown because the original agreement has been lost and no copy exists. It was common ground between the parties that the rights and obligations of the parties fell to be determined by reference to the legislation in force when the first defenders ceased to participate in the Fund on the relevant date, namely the Local Government Pension Scheme (Scotland) Regulations 1998 (SI 1998/366) as amended ("the 1998 regulations"). The second defenders and respondents accept that they have inherited any liability attaching to the first defenders in respect of their former employees which may arise in terms of the 1998 regulations. The determination of whether any such liability exists depends upon a proper construction of the 1998 regulations at the relevant date and was the issue which the Lord Ordinary determined in favour of the respondents. It was also the issue which was the principal focus of the reclaiming motion.

The regulatory framework
[4] The relevant provisions of the 1998 regulations as at the relevant date are as follows:

"4. - Agreements to enable employees of non-Scheme employers to be members ("admission agreements")

(1) An administering authority may make an admission agreement with any admission body.

(2) An admission agreement is an agreement that all or any specified class of the admission body's employees may be members.

(3) These are admission bodies-

(a) a body which provides a public service in the United Kingdom otherwise than for the purposes of gain and which either -

(i) has sufficient links with a Scheme employer for the body and the Scheme employer to be regarded as having a community of interest, whether because the operations of the admission body are dependent on the operations of the Scheme employer or otherwise; or

(ii) is approved by the Scottish Ministers for the purpose of admission to the Scheme;

....

(8) An admission agreement must terminate if the admission body ceases to be such a body.

....

(13) Any question which may arise between the administering authority and any other party to an admission agreement relating to the construction of the agreement or to the rights and obligations under that agreement shall be referred in writing for determination to the Scottish Ministers.

(15) These Regulations apply to employment with an admission body in which the employee is an active member in the same way as if the body were a Scheme employer

....

74. - Admission agreement funds

(1) An administering authority who have made an admission agreement may establish a further pension fund (an 'admission agreement fund') in addition to the fund maintained under regulation 73 ("the main fund").

(2) Immediately after an authority establishes an admission agreement fund they must give the Secretary of State notice in writing that they have done so.

(3) The notice must specify the admission bodies whose employees are eligible for benefits from the admission agreement fund ("the transferred bodies").

(4) Where an admission agreement fund is established, assets of such value as an actuary appointed by the appropriate administering authority determines to be appropriate must be transferred from the main fund to the admission agreement fund.

(5) When valuations under regulation 76 of both the main fund and the admission fund are first obtained after the admission agreement fund is established, the administering authority must obtain a transfer statement from the actuary appointed by them.

(6) The transfer statement must specify whether in the actuary's opinion there is a need for further assets to be transferred from the main fund to the admission agreement fund, and, if so, the value of those assets.

(7) Where the transfer statement specifies that the assets of a specified value need to be transferred, the administering authority must arrange for assets of that value to be transferred as soon as is reasonably practicable.

(8) Where an admission agreement fund is established, the liabilities of the main fund as respects membership in employment with the transferred bodies become liabilities of the admission agreement fund.

76. - Actuarial valuations and certificates

(1) Each administering authority must obtain-

(a) an actuarial valuation of the assets and liabilities of each of their pension funds as at 31^st March in 1999 and in every third year afterwards;

(b) a report by an actuary; and

(c) a rates and adjustments certificate.

(2) Each of these documents must be obtained before the first anniversary of the date ("the valuation date") as at which the valuation is made or such later date as the Secretary of State may agree.

(3) A rates and adjustments certificate is a certificate specifying-

(a) the common rate of employer's contribution; and

(b) any individual adjustments,

for each year of the period of three years beginning with 1^st April in the year following that in which the valuation date falls.

(4) The common rate of employer's contribution is the amount which in the actuary's opinion should be paid to the fund by all bodies whose employees contribute to it so as to secure its solvency, expressed as a percentage of the pay of their employees who are active members.

(5) The actuary must have regard-

(a) to the existing and prospective liabilities of the fund arising from circumstances common to all those bodies; and

(b) to the desirability of maintaining as nearly constant a rate as possible.

(6) An individual adjustment is any percentage or amount by which in the actuary's opinion contributions at the common rate should in the case of a particular body be increased or reduced by reason of any circumstances peculiar to that body.

(7) A rates and adjustments certificate must contain a statement as to the assumptions on which the certificate is given in respects-

(a) the number of members who will become entitled to payment of pensions under provision of the Scheme; and

(b) the amount of the liabilities arising in respect of such members,

during the period covered by the certificate.

(8) A report under paragraph (1)(b) must contain a statement as to the demographic assumptions used in making the valuation, showing how they relate to the events which have actually occurred in relation to members of the Scheme since the last valuation.

(9) The authority must provide the actuary preparing a valuation or a rates and adjustments certificate with the consolidated revenue account of the fund and such other information as he requests.

(10) The authority must send copies of any valuation, report or certificate under this regulation or revision under regulation 77 to-

(a) the Secretary of State;

(b) each body with employees who contribute to the fund in question; and

(c) any other body which is or may become liable to make payments to that fund.

(11) They must also send the Secretary of State-

(a) a copy of the consolidated revenue account with which the actuary was provided under paragraph (9); and

(b) a summary of the assets of the fund at the valuation date (unless such a summary is contained in the report)

77.- Special circumstances where revised actuarial valuations and certificates must be obtained

(1) When obtaining a transfer statement under regulation 74(5) an administering authority must also obtain from the actuary a rates and adjustments certificate for the admission agreement fund for each remaining year of the period covered by the most recent such certificate for their main fund.

(2) Where an admission agreement ceases to have effect, the administering authority who made it must obtain-

(a) an actuarial valuation as at the date it ceases of the liabilities of the fund in respect of current and former employees of the admission body which is ceasing to be a transferred body; and

(b) a revision of any rates and adjustments certificate for any fund which is affected, showing the revised contributions due from that admission body and any other admission body in respect of which revised contributions are due.

(2A) However, where it is not possible for any reason to obtain revised contributions from the outgoing admission body, or from an insurer or any other person providing a guarantee or indemnity on behalf of that admission body, the administering authority may obtain a further revision of any rates and adjustments certificate for the fund, showing the revised contributions due from each employing authority who contributes to that fund.

(2B) An administering authority may obtain from the fund actuary a certificate specifying, in the case of an admission body, the percentage or amount by which, in the actuary's opinion-

(a) the contribution at the common rate should be adjusted; or

(b) any prior individual adjustment should be increased or reduced,

with a view to providing that the value of the assets of the fund in respect of current and former employees of that admission body is neither materially more nor materially less than the anticipated liabilities of the fund in respect of those employees at the date that the admission agreement is to end.

...."

Decision of the Lord Ordinary
[5] The Lord Ordinary accepted the submissions on behalf of the second defenders that regulation 77(2) of the 1998 regulations only arose where an admission body ceased to be a transferred body on the cessation of an admission agreement and that it should not be construed as having a general application to any admission agreement. He also rejected the submission on behalf of the pursuers that if he so construed regulation 77(2), the reference in it to a "transferred body" represented a drafting error which should be rectified by the court. The decision of the Lord Ordinary depended upon a construction of regulation 77 in the context of the regulations as a whole, from which he concluded that he could not be satisfied that there had been a drafting error. Moreover, even if there had been such an error he was not persuaded that this would be an appropriate case for the court to exercise its "rectifying jurisdiction". In light of that decision it was unnecessary for the Lord Ordinary to determine the second issue before him namely whether the 1998 regulations permitted the pursuers in 2010 to obtain a revision of the rates and adjustments certificate for the years ending 31 March 2001, 2002 and 2003 as a result of the first defenders ceasing to be an admission body on the relevant date. The Lord Ordinary nevertheless indicated that he would have decided that issue in favour of the defenders had it been necessary for him to do so.

Submissions for the reclaimers
[6] The first ground of appeal alleged that the Lord Ordinary erred in failing to conclude that the reference in regulation 77(2) to "a transferred body" was a drafting error and that, correctly interpreted, it must mean "an admission body".

[7] In support of this ground of appeal, in written and oral submissions senior counsel for the reclaimers criticised the opinion of the Lord Ordinary in a number of respects. He had erred, it was submitted, in considering the intended purpose of the 1998 regulations (paragraph [42]) whereas the correct approach was to interpret the purpose of the specific provision, namely regulation 77(2). The overall purpose of the regulations was not helpful to the interpretation of that provision and did not favour one interpretation over the other. The Lord Ordinary should have interpreted the purpose of that regulation in the context of the regulations as a whole. A second criticism was that the Lord Ordinary had failed to give any rational explanation as to why the regulations should have omitted to address the general situation in which an employer ceased to be an admission body. The absence of a rational explanation for attributing the literal meaning to the reference to a "transferred body" illustrates that the use of that expression, as opposed to an "admission body", was a manifest error in the drafting of the regulation. It was submitted that the Lord Ordinary had erred at paragraph [41] of his opinion by equiparating the words "admission agreement ceases to have effect" in regulation 77(2) with an admission agreement fund ceasing to have effect. The legislative history of the regulations, which was outlined by counsel at paragraph 10 of their written submissions, and the terms of the equivalent English regulations confirmed that the reference to "transferred body" was a drafting error. In all the circumstances it was submitted that the Lord Ordinary had erred and that his decision in relation to the first issue should be reversed.

[8] The second issue in the reclaiming motion depended upon the success of the first issue. Assuming that the reclaimers were successful in that regard, counsel acknowledged that it was necessary to persuade the court that the Lord Ordinary had also erred in his determination of the second issue. Regulations 77(2) and 78 were expressed in clear terms. They did not impose any time limit upon the administering authority obtaining the relevant certificate from the actuary and no time limit could be implied. There was no obligation upon an admission body to notify the administering body of its decision to cease membership. Accordingly, in the absence of such a provision there was no commencement date for any such time limit. In any event cessation might occur immediately prior to the end of the current three year period and it would be absurd to imply that the necessary valuation could be completed within a few days. The Lord Ordinary had also erred in concluding that the first defenders had no obligation to make payment to the reclaimers in terms of regulation 78 because the first defenders had ceased to be an employing authority prior to the date upon which the cessation valuation was carried out. Equally, it was submitted, the Lord Ordinary had erred in concluding that a revised certificate must be issued before the end of the period covered by the triennial valuation. In these circumstances we were invited to allow the reclaiming motion.

Submissions on behalf of the respondents
[9] Counsel for the respondents also submitted a note of argument and senior counsel supplemented the written note of argument by oral submissions. He submitted that it was clear from the authorities that, before they could succeed on the first ground of appeal, the reclaimers must demonstrate to a standard of near certainty that something had obviously gone wrong with the legislative language. In contrast there was no burden on the respondents to establish that the language simply meant what it said or to explain why the literal meaning should be preferred. The reclaimers had been unable to discharge the burden upon them and the Lord Ordinary had been correct in reaching the conclusion which he did for the reasons summarised at paragraph [15] of his opinion and accepted by him at paragraph [43]. The Lord Ordinary concluded that he could not be abundantly sure that there was any error in drafting of regulation 77(2).

[10] Moreover even if he had been persuaded that there was an obvious drafting error it was clear that he would have been reluctant to alter the wording of regulation 77(2) in the manner suggested by the reclaimers because it could not be assumed that the amendment proposed by the reclaimers was what Parliament intended. Whereas regulation 77(2) referred to "the liabilities of the fund in respect of current and former employees of an admission body which is ceasing to be a transferred body", the English regulations, as originally enacted, referred to the "liabilities of each admission body" (emphasis added). In 2000 that formulation was replaced with a reference to the "liabilities of the admission body" (emphasis added). Various formulations had been used each of which meant something different from the others. In these circumstances the Lord Ordinary had been correct to conclude that the proposed amendment would have the appearance of judicial legislation.

[11] There was no obligation upon the Lord Ordinary to explain why the literal meaning of the regulation should be preferred. Nevertheless, the Lord Ordinary noted that the consequence of the literal reading of the regulation might have been that the cost of maintaining the solvency of the fund had to be borne by those who continued to participate in it as employing authorities and active members. While that might appear to be unfair, any unfairness arose from the terms of the legislation. Before the legislation regulating local government pension schemes in Scotland and England was comprehensively overhauled in 2008 the legislature had failed to correct what the reclaimers described as an unworkable and irrational regime if a literal interpretation were given to regulation 77(2). Such failure suggested the lack of any practical difficulties in operating the scheme during the 10 years after the promulgation of the regulations.

[12] In so far as the reclaimers relied upon certain pre‑legislative material, the respondents had undertaken further research, from which it appeared that the Scottish Office Pensions Agency did not intend to adopt the original reference in the English regulations to "a transferred body" and that the decision to include such a reference occurred between 23 January and 20 February 1998 in the knowledge that an equivalent amendment to the English regulations had been rejected. The reasons for that decision remain obscure. However the legislative history did not assist the reclaimer; if it was of any assistance, it tended to support the respondents' position.

[13] If the reclaimers were successful in their second ground of appeal, the effect would be that an administering authority could review a rates and adjustment certificate for a triennial period long after it had expired and impose a liability on a former participating employer even where that employer no longer had any employees or where, as in this case, the employer had ceased to exist by the time the administering authority sought to impose such a liability upon it. The power to revalue an employer's liability to a fund and to impose a different rate of contribution must be understood within the framework of successive triennial valuations.

Discussion
[14] Regulation 4 of the 1998 regulations entitles an administering authority of a local government pension scheme to enter into agreements, known as admission agreements, permitting all or any specified class of employees of an admission body to be members of the pension scheme. Admission bodies are defined in regulation 4(3) and essentially include bodies providing services in the nature of public services. As Lord Davidson of Glen Clova submitted, one would expect an admission agreement to regulate the relationship between the parties to it and, in particular, to make provision for the cessation of such an agreement.

[15] In this case the admission agreement was concluded between a statutory predecessor of the reclaimers and the first defenders in or about June 1971 and we were advised that no copy of the agreement is any longer in existence. What is known about the agreement is the approximate date upon which it was concluded between the parties to it and that it permitted some, if not all, of the first defenders' employees to be members of the pension scheme administered by the statutory predecessors of the reclaimers and, subsequently, the reclaimers themselves. The contributions from the first defenders and their employees were paid into and pensions were paid out of the main fund administered by the reclaimers and their predecessors. Neither the reclaimers nor their statutory predecessors established an admission agreement fund in terms of regulation 74 for the benefit of the employees of the first defenders. Accordingly the first defenders were not "transferred bodies", the term applied to admission bodies whose funds are maintained separately in an admission agreement fund (regulations 74(3) and (8)). While the consequences of the termination of the agreement may well have been specified in the 1971 document, the terms of any such provision are no longer available. For that reason the reclaimers have relied solely upon the terms of the 1998 regulations in support of their claim against the respondents.

[16] The loss of the agreement has had the unfortunate consequence of the parties resorting to litigation, whereas the regulations envisage that any question between parties to an admission agreement relating to its construction or to the rights and obligations under the agreement would be referred in writing to the Scottish Ministers for their determination (regulation 4(13)). Thus, in the present case, if the admission agreement had remained in existence the question of any liability by the respondents to the reclaimers arising from the termination of the admission agreement would have been determined by the Scottish Ministers. In the context of superannuation arrangements between two publicly funded bodies it is understandable why the Scottish Parliament included such a provision in the regulations. It is more appropriate that Scottish Ministers should determine the extent to which either public body should bear any expense arising from the termination of such an agreement and there is the additional advantage that this method of resolution avoids additional expenditure of public funds on litigation. Before the commencement of the reclaiming motion we drew the attention of counsel to regulation 4(13) and enquired whether consideration had been given to referring the dispute to the Scottish Ministers. After adjournment we were advised that the matter had been considered but regulation 4(13) was not considered to be applicable because this case concerned the proper construction of the regulations and it was considered inappropriate for ministers to adjudicate upon that issue. We have reservations about the exclusion of the ministers' jurisdiction to determine the dispute because of the need to construe the regulations. We anticipate that the determination of some disputes concerning respective rights and liabilities under an admission agreement might well involve ministers in construing relevant regulations as well as the agreement itself. However, as we were not favoured with any detailed submissions on this issue, we shall refrain from expressing any concluded view about the proper forum for the determination of disputes of this nature.

[17] This reclaiming motion can only succeed if we sustain both of the grounds of appeal advanced on behalf of the reclaimers. The primary argument requires the court to conclude that regulation 77(2) contains a manifest error in its drafting and that we should delete the reference in it to "a transferred body" and substitute therefor "an admission body." Before considering the regulation in its context, it might be of assistance to refer to the observations of Lord Nicholls of Birkenhead in Inco Europe Limited v First Choice Distribution [2000] 1 WLR 586 at 592 concerning the role of the court in such circumstances. He stated:

"It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretive function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross's admirable opuscule, Statutory Interpretation, 3^rd ed. (1995), pp 93-105. He comments at p103:

'In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role. '

This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: see per Lord Diplock in Jones v Wrotham Park Settled Estates [1980] AC 74, 105-106. In the present case these three conditions are fulfilled.

Sometimes even when then these conditions are met, the court may find itself inhibited from interpreting the statutory provision in accordance with what it is satisfied was the underlying intention of Parliament. The alteration in language may be too far‑reaching. In Western Bank Ltd. v Schindler [1977] Ch. 1, 18, Scarman LJ observed that the insertion must not be too big, or too much at variance with the language used by the legislature. Or the subject matter may call for a strict interpretation of the statutory language, as in penal legislation."

In Scottish Water v Clydecare Limited 2003 SC 330 the court agreed with these observations and stated that the circumstances in which rectification of a statutory provision will be appropriate are likely to be very rare (340E) and that it was necessary to expect from the party seeking rectification "highly persuasive reasons why it is to be supposed that a fundamental error of draftsmanship has occurred in the legislation under consideration" (341E-F). In determining the issue in this case we shall adopt a similar approach from which it will be apparent that there is an obligation upon the reclaimers to provide us with highly persuasive reasons that there has been an obvious error in draftmanship. Moreover, as Mr Sellar frankly accepted, if the court is in any doubt on the matter, the reclaimers are bound to fail.

[18] The starting point for our consideration has to be the regulations themselves. We have already referred to the provision in regulations 4 and 74 permitting the reclaimers as an administering authority to make admission agreements and to create admission agreement funds in addition to the main fund maintained under regulation 73 (74(1)). While the main fund and any admission agreement funds remain under the control of the administering body, they are to be administered separately from each other. Where an admission agreement fund has been established, the administering authority must transfer from the main fund to the admission agreement fund assets of a value determined by an actuary appointed by the administering authority (74(4)). When the main fund and the admission fund are valued at the first triennial valuation after the creation of the admission agreement fund the administering authority must obtain a transfer statement from the actuary appointed by them and must arrange to transfer further assets from the main fund to the admission agreement fund, if it is the actuary's opinion that there should be such a transfer, according to his valuation of the assets to be transferred (74(5)-(7)). Once an admission agreement fund has been established the liabilities of the main fund in respect of members employed by the transferred bodies become liabilities of the admission agreement fund (74(8)). The statutory scheme relating to transferred bodies, the technical phrase used in regulation 74(3) for admission bodies whose employees are eligible for benefits from an admission agreement fund, envisages transfers of assets from the main fund to the admission agreement fund in the early stages of the creation of that fund but there is no provision for any reciprocal transfer to the main fund. Moreover, by their very nature we would anticipate that an admission agreement fund would provide benefits for relatively few employees compared with the number of employees eligible to benefit from the main fund, even although an admission agreement fund could include more than one transferred body.

[19] Regulation 76 requires each administering authority to obtain an actuarial valuation of the assets and liabilities of each of their pension funds as at 31 March 1999 and thereafter triennially. In addition they must obtain a report by an actuary and a rates and adjustments certificate and these documents must all be obtained before the first anniversary of the valuation date unless the Secretary of State agrees to a later date. The rates and adjustments certificate must specify the common rates of employer's contribution being the amount estimated by the actuary to be paid by all bodies whose employees contribute to it to secure the solvency of the fund. In addition the certificate should specify any individual adjustment to vary the common rate to reflect the individual circumstances of a particular body. Copies of any valuation report or certificate must be sent inter alia to anybody whose employees contribute to the fund. The effect of these provisions is that by means of triennial valuations it is possible to secure the solvency of the funds administered by local authorities such as the reclaimers by adjusting the annual contributions to be paid in each of the three succeeding years by employers whose employees contribute to it. Separate valuations, reports and certificates will be required for each fund administered by the local authority.

[20] Regulation 77 is concerned with the special circumstances where revised actuarial valuations and certificates must be obtained. Regulation 77(1) clearly refers to an admission agreement fund and requires the administering authority to obtain from the actuary a rates and adjustments certificate for the admission agreement fund for each remaining year of the period covered by the most recent certificate for their main fund. The effect of this provision is to bring the admission agreement fund into line with the main fund as far as triennial valuations is concerned, except that at such valuation dates separate valuations, reports and certificates will be provided for the main fund and each admission agreement fund administered by the local authority. Regulation 77(2) envisages an admission agreement ceasing to have effect but the issue for our determination is whether this regulation is confined to admission agreements affecting transferred bodies, i.e. where there is a separate admission agreement fund, or whether, as was submitted on behalf of the reclaimers, it is of general application to the cessation of any admission agreement. It was accepted on behalf of the reclaimers that a literal construction of regulation 77(2) did restrict its application to transferred bodies and we must, therefore, ask ourselves whether such a restriction was an obvious drafting error.

[21] An admission agreement involving a transferred body might cease to have effect in different ways. It would cease to have effect if the administering authority and the transferred body agreed that the transferred body should no longer participate in an admission agreement fund but should be a member of the main fund. It might also cease to have effect if the transferred body decided to transfer to another fund administered by a different local authority or by a private pension provider. In either event the impact on the admission agreement fund could be significant because admission agreement funds by their nature will involve fewer members than the main fund. The revision of rates and adjustments certificate referred to in 77(2)(b) relates to the affected fund, namely the admission agreement fund referred to in regulation 77(2)(a). The reference to revised contributions being due from the admission body is obviously a reference to the transferred body and the reference to any other admission body is a reference to such a body which is also a member of the admission agreement fund. It should be borne in mind that a separate admission agreement fund could include different admission bodies if the administering authority wished to exclude more than one admission body from participation in the main fund. In such an eventuality it would not be necessary to create a separate admission agreement fund for each such admission body, although the administering authority could decide to do so. The revised rates and adjustments certificate requires to identify the revised contributions to the admission fund which are due from the transferred body and from any other admission body. The reference in regulation 77(2)(b) to "any other admission body in respect of which revised contributions are due" must mean another transferred body because the only fund which is affected by the cessation of an admission agreement where there is an admission agreement fund is that fund. As we have already observed where an administering authority administers a main fund and one or more admission agreement funds, these funds are to be independent of each other. Regulation 77(2A) is, in our view, consistent with this interpretation of 77(2). It is clearly related to the consequences of the actuarial valuation and the revised rates and adjustments certificate for the admission agreement fund. That is evident from the initial word "However", which links this provision to regulation 77(2)(b). More significantly it is clear from the terms of this provision that it is concerned with the situation where it is not possible to obtain the revised contributions from the transferred body which is leaving the admission agreement.

[22] We have considered whether the omission from the regulations of any equivalent provisions for admission bodies ceasing to be members of the main fund is anomalous and clearly indicative of a drafting error. The employers, whose employees were eligible to benefit from the main fund administered by the reclaimers as at 31 March 1999, are listed in Appendix E to the rates and adjustments certificate for the three years commencing 1 April 2000 (Appendix 18/14/2-6). The number of employers exceeds 120 and some of them, by their very nature, would employ hundreds of employees at that date. They include four local authorities and nine universities or colleges of tertiary education.

[23] We are not persuaded that on the face of the regulations there is any obvious error in restricting the provisions of regulation 77(2) to transferred bodies. There could well be policy considerations favouring special treatment for such smaller funds which might have been perceived as less likely than the main fund to be able to absorb the adjustments at the triennial review flowing from the cessation of an admission agreement. The economic climate in 1998 might have encouraged Parliament to conclude that, in the context of a fund with thousands of members, it was not unreasonable to expect existing members to absorb any liabilities in respect of former employees who had contributed to that fund, even where their former employers had terminated their admission agreement. In any event the legislature might well have anticipated that an admission agreement would have made provision for the cessation of that agreement. In the context of an admission agreement fund with much fewer participants than the main fund it is understandable that Parliament might well have considered that it merited special consideration.

[24] The legislative history outlined by counsel for the reclaimers and supplemented by counsel for the respondents is more favourable to the respondents than to the reclaimers. From that outline it appears that consideration was given to amending the draft regulations to include a reference to transferred bodies in regulation 77(2). Initially it was not intended to follow the English regulations by incorporating such a reference when an amendment to that effect was proposed to those regulations. However, it was included in the Scottish regulations after it was known that the proposed amendment to the English regulations had been abandoned and that the equivalent English regulations did not include such a provision. We do not place much reliance on this history except that it seems to indicate that the reference to a transferred body was a conscious decision after some deliberation, which is not suggestive of a drafting error.

[25] In all the circumstances we are not persuaded that there is an obvious drafting error in regulation 77(2) and we shall accordingly reject the submissions in support of the first issue.

[26] Even if we had concluded that there was an obvious drafting error we would not have acceded to the suggestion that we should substitute "an admission body" for "a transferred body" as we are unable to quantify the implications for administering authorities of such a change. We also agree with the observations of the Lord Ordinary at paragraph [45] of his opinion where he expressed the view that any perceived injustice occasioned by the alleged error was a matter for Parliament to resolve. We are reinforced in that view by the provisions of regulation 4(13) which would normally result in a determination of any dispute by the Scottish Ministers where an admission agreement was in existence.

[27] Having regard to the decision which we have reached in respect of the first issue, it is unnecessary for us to determine the second issue. Had it been necessary to decide this issue we would also have rejected the submissions on behalf of the reclaimers. In this case the purported actuarial valuation and revision of rates and adjustments certificate under regulation 77(2) was prepared many years after the admission agreement ceased to have effect. While no time limit is specified within regulation 77(2) it can be inferred that the administering authority must obtain the valuation and revision of rates and adjustments certificate within a reasonable time after the agreement ceases to have effect or the administering authority is advised of the cessation of the agreement, whichever is later. In the context of the regulations which provide for triennial valuations of pension funds, a three year period would be a reasonable period within which to require the administering authority to obtain the necessary valuations and certificates. Appendix 11 is a letter dated 29 October 2004 from an assistant pensions manager of the reclaimers addressed to an acting director of the first defenders in which the reclaimers' employee acknowledges confirmation of the cessation of the admission agreement between the first defenders and the reclaimers. The actuarial report is dated 1 July 2010 (appendix 13). Parliament cannot have intended that administering authorities should proceed to obtain such reports on an extended timescale of six years in the context of regulations which required triennial reports to be provided.

Decision
[28] We shall accordingly refuse the reclaiming motion.