In the Matter of Gleeds Retirement Benefits Scheme v Gleeds (Head Office) (2014)
Members of a pension scheme were not estopped from disputing that defective deeds, which had been intended to make changes to the scheme, were validly executed. The court also confirmed that it was possible for an estoppel by representation to be based on a representation purely of law.
The court was required to determine various issues in relation to a pension scheme operated by the defendants (G), who provided management and construction consultancy services.
The scheme had been established in 1974. In 1987 membership of the scheme was restricted to whole-time permanently employed chartered surveyors. From 1991 30 documents which were described as deeds and were intended to make changes to the scheme were executed, but the signatures of the partners who executed them were not attested by witnesses contrary to the Law of Property (Miscellaneous Provisions) Act 1989 s.1(3). All of those documents had been drafted for G by a group (X) that provided pension administration and other services. The documents included a 1997 supplemental deed, a 2003 written resolution and a 2006 deed of amendment. The instant proceedings were brought by the claimants on behalf of the trustees of the scheme.
G submitted that (1) by supplying the draft deeds, X had impliedly represented to them that the law was such that execution in the manner indicated in the drafts would suffice and, by relying on that representation, an estoppel by representation had arisen precluding the trustees and members of the scheme from challenging the way in which the deeds were executed; (2) even if the terms of the supplemental deed, resolution and deed of amendment were not otherwise effective, they gave rise to an extrinsic contract so that members of the scheme were bound to accept pension benefits on the basis of the terms of those documents; (3) members of the scheme were precluded by estoppel by convention from disputing that they had accrued benefits on the basis of those same three documents.
(1) It was hard to see why the mere fact that a statement was purely concerned with law should invariably mean that it could not give rise to an estoppel by representation. In light of Kleinwort Benson Ltd v Lincoln City Council  2 A.C. 349, the traditional rule that an estoppel by representation had to be founded on a representation as to existing fact and that one of pure law could not suffice had been superseded, and so it was possible for an estoppel by representation to be based on a representation of law, Kleinwort Benson followed. Estoppel could not be invoked where a document did not even appear on its face to comply with the Act and, at any rate, it could not be so invoked in the circumstances of the instant case, Shah v Shah  EWCA Civ 527,  Q.B. 35 considered. In any event, it could not be said on the evidence that X had made representations on the trustees' behalf to G in relation to the execution of the defective deeds, or that the trustees had taken responsibility for the preparation of the deeds so that any representations X had impliedly made in connection with the documents could be properly attributed to the trustees. In those circumstances, the members of the scheme could not be estopped from denying that the defective deeds were validly executed (see paras 33-35, 43, 51-52 of judgment). (2) It was possible in principle for a member of a pension scheme to become contractually bound to accept benefits less than those to which he would otherwise have been entitled under the rules of the scheme. However, in relation to the supplemental deed and resolution in the instant case, neither existing members of the scheme nor new entrants had contracted with G to accept benefits under the terms of those documents. In signing forms agreeing to the terms of those documents, members had sought to exercise their existing rights under the scheme and not either to accept or to make any contractual offer. Conversely, 103 existing members who had signed and returned a letter agreeing to accept the terms of the deed of amendment had bound themselves to accept benefits in accordance with the terms of that document (paras 130, 150, 159, 177). (3) No relevant estoppel by convention had arisen in the instant case. There had been no more than passive acceptance from the members of the scheme in relation to the three documents: existing members were told that the changes were taking place to the scheme, not asked to agree to them, and new entrants were simply enrolled in the scheme in the form that it was understood to have at that time. It had not been established that G had relied on any assumption shared between themselves and X; rather, G would have acted on the basis of views that they would have arrived at independently of members on the strength of professional advice (paras 183-185). (4) In the circumstances, none of the defective deeds that had intended to establish "money purchase sections" in the scheme, require members to make contributions, reduce the rate of accrual, cut the rate of pension increases, and close the scheme to further accrual, took effect as intended (para.187). (5) The court otherwise construed specific provisions in certain of the defective deeds and considered the position of those members of the scheme who were not chartered quantity surveyors (paras 58-59, 66, 69, 85-86, 97-99, 101-102, 108-110, 128).
LTL 22/4/2014 :  EWHC 1178 (Ch)