Briggs v Gleeds (Head Office)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 15 April 2014 |
| Neutral Citation | [2014] EWHC 1178 (Ch) |
| Docket Number | Case No: HC12F02096 |
| Court | Chancery Division |
| Date | 15 April 2014 |
[2014] EWHC 1178 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Justice Newey
Case No: HC12F02096
In the Matter of Gleeds Retirement Benefits Scheme
Mr Keith Rowley QC and Miss Wendy Mathers (instructed by Addleshaw Goddard LLP) for the Claimants
Mr Paul Newman QC and Mr James McCreath (instructed by Wragge & Co LLP) for the First and Second Defendants
Mr Jonathan Evans QC (instructed by Field Fisher Waterhouse LLP) for the Third Defendant
Mr James Clifford (instructed by Osborne Clarke) for the Fourth Defendant
Hearing dates: 4–7 and 10–13 March 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This case concerns a pension scheme ("the Scheme") for employees of partnerships and companies within the Gleeds group. For convenience, I shall refer to the employers simply as "Gleeds" in this judgment.
The issues in the case principally arise from the fact that numerous documents that were described as deeds and meant to be such were not in fact executed in accordance with the Law of Property (Miscellaneous Provisions) Act 1989 ("the 1989 Act"), which came into force on 1 August 1990. Section 1(3) of that Act states:
"An instrument is validly executed as a deed by an individual if, and only if—
(a) it is signed—
(i) by him in the presence of a witness who attests the signature; or
(ii) at his direction and in his presence and the presence of two witnesses who each attest the signature …."
Where, therefore, a document that was intended to take effect as a deed needed to be executed by partners in Gleeds, each partner's signature should have been attested by a witness. In the case of some 30 documents relating to the Scheme, that did not happen. Were that to mean that the documents are all ineffective, the Scheme's deficit on an ongoing basis could be increased by some £45 million.
Basic facts
The Gleeds group provides management and construction consultancy services in both the United Kingdom and elsewhere in the world. Until quite recently, the group traded with clients through three partnerships known as Gleeds (Bristol), Gleeds (London) and Gleeds (Nottingham). Since 2010, these partnerships have been succeeded by another partnership, Gleeds (UK). The most senior partners are also partners in Gleeds (Head Office), a partnership formed in 1970 which sits at the head of the group. Gleeds (Head Office) and Gleeds (UK) are the first and second defendants to the proceedings before me.
The Scheme was established by an interim trust deed dated 8 March 1974 ("the Interim Trust Deed"). A definitive deed ("the 1979 Definitive Deed") was eventually executed on 11 April 1979.
The 1979 Definitive Deed incorporated rules (including supplementary rules). The rules ("the 1979 Rules") provided for members to receive benefits linked to their final salaries without having to make any contributions to the Scheme. At that stage, all whole-time permanent employees within certain age limits were eligible for membership, but in 1987 membership was restricted to whole-time permanent chartered quantity surveyors.
The first document to fall foul of the 1989 Act dates from 6 March 1991. A supplemental trust deed of that date was designed to address issues arising from the decision of the European Court of Justice in Barber v Guardian Royal Exchange [1991] QB 344. The document was stated to be signed, sealed and delivered by each of the then partners of Gleeds, but none of these signatures was witnessed. In contrast, the signatures of the trustees of the Scheme were duly attested.
I refer in this judgment to the document mentioned in the previous paragraph and the various other instruments that did not comply with the 1989 Act as "deeds". That is not, of course, to say that they were true deeds. On the contrary, it is common ground that they were not validly executed as such.
All the documents that failed to satisfy the requirements of the 1989 Act appear to have been prepared by entities in the Aon group (or companies that have been acquired by that group) that provided pension administration and other services. For simplicity, I shall speak in this judgment just of "Aon". It seems fair to infer that the relevant individuals within Aon failed to appreciate that, where a deed was to be executed by partners, their signatures needed to be attested. At all events, the draft documents supplied by Aon made provision for trustees' signatures, but not those of Gleeds' partners, to be witnessed. Thus, the words "in the presence of" were added below the line on which a trustee was to sign, but there was nothing comparable in relation to partners in Gleeds.
On at least a few occasions, Aon seems to have provided a document giving instructions on how deeds were to be completed. One such, which was found in the deeds packet also containing the supplemental trust deed of 6 March 1991, explained that there "should be a witness to each trustee's signature", but did not specifically mention partners. It instead stated, "Two company directors or a director and the secretary should sign along the lines beside the seal". A later version advised, "Two directors or a director and the secretary should sign on behalf of the employer(s) along the lines provided". Such advice was obviously inapposite in the case of a partnership such as Gleeds.
The second defective instrument that I should specifically mention at this stage is a definitive trust deed dated 24 November 1993 ("the 1993 Definitive Deed"). This purported to cancel and replace the 1979 Definitive Deed and Rules in their entirety, subject only to a saving as regards members who had already retired or left Gleeds. I shall address later in this judgment some particular points that arise from the terms of the 1993 Definitive Deed and the rules it sought to introduce ("the 1993 Rules").
Between May 1994 and October 1997, several deeds were "executed" with a view to replacing trustees of the Scheme. None of these, however, satisfied the requirements of the 1989 Act.
A supplemental trust deed dated 20 October 1997 ("the 1997 Supplemental Trust Deed"), which again was not validly executed, was intended to change the Scheme more radically. It provided for the Scheme to have a money purchase section ("the 1997 money purchase section"). Some of the existing members of the Scheme opted to join this and transfer their final salary benefits into it. New members, who were to include employees who were not chartered quantity surveyors, were all allocated to the money purchase section. The 1993 Rules were re-named "Schedule A", while rules for the money purchase section were added as "Schedule B".
Deeds of 31 December 1998 and 11 December 2002 were intended to replace trustees of the Scheme. Neither document, however, complied with the 1989 Act.
Further steps to contain the cost of the Scheme were taken in 2003–2004. On 26 June 2003, the trustees (or those then believed to be the trustees) subscribed to a written resolution ("the 2003 Resolution") that the Scheme was, with the agreement of Gleeds, to be amended with effect from 1 July so as (a) to introduce contributions, at the rate of 5% of annual pensionable salary, for final salary members of the Scheme, (b) to cut the annual accrual rate for final salary members from 1/70 th to 1/80 th of final pensionable salary and (c) to remove "the minimum annual increase to pensions in payment of 4% per annum (subject to Revenue limits) regardless of inflation". The document concluded:
"IT IS CONFIRMED THAT all members have been given written notification of the change a copy of which is attached, the Rules of the Scheme shall be amended accordingly as soon as practicable and this resolution will be noted at the next Trustees' Meeting."
The changes to the Scheme were later reflected in a deed of amendment dated 30 December 2004, but the deed was not executed in accordance with the 1989 Act.
The Scheme's "Principal Employer" was also purportedly changed at this stage. A deed of amendment and novation dated 29 December 2004 provided for Gleeds (Head Office) to become the "Principal Employer" in place of the members of the "local" partnerships (i.e. Gleeds (Bristol), Gleeds (London) and Gleeds (Nottingham)). The deed's execution did not, however, comply with the 1989 Act.
In 2005–2006, again for financial reasons, steps were taken to create a new money purchase section ("the 2005 money purchase section") and to close the Scheme's final salary section to further accrual. The plan was evidently for new members to join the 2005 money purchase section from June 2005. In practice, the establishment of the 2005 money purchase section was documented in a deed of amendment dated 31 May 2006 ("the 2006 Deed of Amendment"). The 2006 Deed of Amendment, which was not executed in accordance with the 1989 Act, also provided for the final salary section to be closed to further accrual. Active members of this section were to be treated as having left the service of Gleeds on 1 June 2006. They were, however, offered the chance to join the 2005 money purchase section, and 100 did so.
In 2008, new rules for the Scheme were purportedly introduced. The rules were not intended to make changes of substance, but as an exercise in consolidation. The deed providing for them did not,...
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