Jacinth Kelly, Millicent Campbell, Claudia Davis, Courtney Miller, Ernel Lewis v Michael Fraser
| Jurisdiction | UK Non-devolved |
| Judge | Lord Sumption |
| Judgment Date | 12 July 2012 |
| Neutral Citation | [2012] UKPC 25 |
| Date | 12 July 2012 |
| Docket Number | Appeal No 0032 of 2011 |
| Court | Privy Council |
[2012] UKPC 25
Lady Hale
Lord Mance
Lord Wilson
Lord Sumption
Lord Carnwath
Appeal No 0032 of 2011
Privy Council
Appellant
R. N. A. Henriques QC
Daniella Gentles
(Instructed by MA Law (Solicitors) LLP)
Respondent
Tiffany Scott
(Instructed by Myers, Fletcher & Gordon)
Heard on 8–9 May 2012
Michael Fraser became President and Chief Executive of the Island Life Insurance Company on 1 February 2000. A month later, on 1 March 2000, he became a member of the Salaried Staff Pension Plan, one of two pension schemes for employees of the company. The other was a separate scheme for non-salaried salesmen known as the Salesman Staff Pension Plan. The Salaried Staff Pension Plan ("the Plan") was operated under the terms of a trust deed dated 11 December 1974 and rules incorporated in the deed, as amended from time to time. Clause 11 of the trust deed vested the management and administration of the Plan in the trustees. Their duty was to exercise discretions vested in them by the deed personally, but they delegated the day to day administration of the Plan to the Employee Benefits Division of the company.
Rule 15 provided:
"The benefits and amounts accrued to a Contributor who has been contributing to any Company pension plan or pension fund other than this Plan and who has been transferred and required to contribute to this Plan, shall be transferred to this Plan in a manner and on the terms and conditions determined by the trustees in their sole discretion and thereafter shall be subject to the terms of this Plan, but if in the judgment of the trustees this is impractical, inadvisable or inexpedient the benefits and amounts accrued to the contributor shall remain in the said other Company pension plan or pension fund."
Mr Fraser had previously been employed by another Jamaican life office, Life of Jamaica Ltd, and had contributed to its pension scheme. At some stage between March and August 2000 he discussed with Mr Clive Masters, the Vice-President responsible for the Employee Benefits Division, the possibility of a transfer of the accrued value of his entitlement under the Life of Jamaica scheme to the Island Life Plan. A letter requesting the transfer was sent to the trustees of the Life of Jamaica scheme on 21 August 2000. For some reason which does not appear from the evidence, the signatories of the letter were two trustees of the Salesman Pension Plan. They signed it as trustees of the "Island Life Pension Plan". On 17 October 2000, the pension administrator of Life of Jamaica Ltd sent a cheque for J$14,722,000 to "the trustees of the Pension Plan for the employees of Island Life Insurance Company Limited", representing Mr Fraser's accrued contributions under his previous employer 's pension scheme. The money was credited to the trustees of the Salaried Staff Pension Plan and invested with the other funds of the Plan.
On 1 December 2000, Mr Masters wrote to Mr Fraser in the following terms:
"Re: Transfer of Pension Contributions
Further to your letter dated October 31 and subsequent discussions, we wish to confirm that the Trustees of the Life of Jamaica Pension Plan have transferred an amount of Fourteen Million Seven Hundred and Twenty-two Thousand Dollars ($14,722,000) to Island Life Salaried Staff Pension Plan…Your total contribution has been invested in our Diversified Investment Fund (DIF) as part of a United States Dollars (US$) denominated asset of the fund. The security purchased by the fund is the GOJ Global Bond 2007 with a maturity date of September 1 2007 and a coupon rate of 12.75%. Interest will be paid semi-annually. The value of your contribution expressed in United States Dollars was $327,074.53 at November 2, 2000 the date that the security was purchased.
Please bear in mind that the DIF is a Jamaican Dollar denominated fund. Therefore, all your contributions, past and current, will be shown on your certificates expressed in Jamaican Dollars.
Our commitment to you and other pension plan clients is tO maximize the returns on the contributions received while preserving the invested capital.
We look forward to serving you. Please call Clive Masters or Mrs L Johnson if you have any question on this matter."
Thereafter, Mr Fraser received periodical statements from the Employee Benefits Division of Island Life recording the accumulated current value of his units in the fund, in which the fund transferred from the Life of Jamaica scheme was included as an additional contribution.
The trial judge found that at the time the trustees of the Plan were not aware of the transfer request addressed to Life of Jamaica Ltd or of the receipt and investment of the transfer funds, or indeed of the correspondence and statements addressed to Mr Fraser on the subject. They were therefore never in a position to approve the transfer or exercise their powers under rule 15 and did not in fact do so.
With effect from 1 January 2003, Island Life merged with Life of Jamaica Ltd, and a large number of its employees were made redundant. As a result, it was resolved on 28 February 2003 to discontinue the Plan and wind it up. A firm of actuaries, Duggan Consulting Ltd, was retained to prepare a valuation with a view to ascertaining the amount of any surplus and determining how it should be distributed. It was in the course of their work that the trustees of the Plan learned about the transfer from Life of Jamaica in 2000. A total surplus of J$65,000,000 was ascertained. The company waived any entitlement to it, and the trustees resolved on the advice of Duggan Consulting to distribute it to contributors in proportion to their benefit entitlements as at 28 February 2003, irrespective of the duration of the period over which those entitlements had accrued. It was also decided that because the transfer from Life of Jamaica in 2000 had not been approved by the trustees, Mr Fraser's share of the surplus should be calculated without regard to any benefit entitlement attributable to it. Accordingly, on 16 April 2004, Mr Fraser was paid a sum representing a gross entitlement before tax of J$29,816,406.17. That sum included J$15,094,406.17 attributable to the appreciation of his units, including the units acquired as a result of the transfer. But his share of the surplus was calculated by reference to the entitlement attributable to his ordinary contributions only. On that footing he was entitled to J$866,688.43 of the surplus. Had the whole of his entitlement been taken into account, he would have received J$6,809,571.00 from the surplus.
The present proceedings were begun by the trustees in October 2006 for a declaration that (in effect) they were entitled to distribute the fund on this basis. Mr Fraser responded by claiming a share of the surplus based on his full entitlement including that part of it which was attributable to the transfer from Life of Jamaica. The trustees have always accepted that the transfer was received and invested in the assets of the Plan. They have not disputed that they could lawfully have approved that. There was at one stage an issue about whether they knew or must be taken as knowing at the time about the transfer, but that has been resolved in their favour by the judge's findings. The sole issue before the Board is whether the trustees are estopped by Mr Masters' letter of 1 December 2000 and the subsequent benefit statements from relying on the fact that they did not approve it. On the footing that they are estopped, the trustees have not argued that they would have been entitled to limit Mr Fraser's share of the surplus in the way they did for some other reason.
Mangatal J found that it was within the usual authority of the company, as the agents of the trustees, to administer the Plan, to communicate to Mr Fraser that the trustees had accepted the Life of Jamaica transfer. The way in which the trustees allowed the company to operate the Plan made it reasonable for Mr Fraser to conclude that Mr Masters had authority to confirm this to him as, on the face of it, he did. The result, as she found, was that Mr Fraser was led to believe by persons having the ostensible authority of the trustees, that the transfer had occurred in a "proper, authorised and seamless fashion." However, she rejected Mr Fraser's claim on the ground that there was no evidence of detrimental reliance. The judge summarised her reasons as follows:
"There is no evidence that had he not been induced to think that his funds were properly in the Pension Plan that he would have earned greater returns on his money if invested elsewhere. Indeed, the evidence is that Mr Fraser was paid an increase in full value of the unit entitlement to the extent that the sum transferred had grown from $14,722,000.00 to $29,816,400.17. The uncontested evidence is that Mr Fraser's transferred funds were invested in the Company's Diversified Investment Fund as part of a United States denominated asset pool of pension fund. The effect of Mr Fraser's evidence is that at the time of transfer he had no expectation of surplus. According to Mr Fraser, at the time when his pension was transferred from LOJ to the Company, (despite the fact that he had previously occupied a Senior Position in LOJ and now in the Company), he did not know that the Pension Plan would be wound up, much less that there would be a surplus in the fund which would increase his entitlement to a larger extent than if he had invested his pension from LOJ elsewhere."
The Court of Appeal (Panton P, Harris J and McIntosh JA) affirmed the judge on the question of authority to make the representation, but overruled her on detriment and gave judgment in favour of Mr Fraser. Panton P dealt with the...
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