Jacinth Kelly, Millicent Campbell, Claudia Davis, Courtney Miller and Ernel Lewis v Michael Fraser (Jamaica)

For estoppel by representation, an employee or agent need not have authority to approve a transaction to have ostensible authority to communicate that the proper decision-maker has approved it, where the principal’s organisation holds that person out for such communications. Detrimental reliance must be proved, but it may be inferred. It need not be financially quantifiable or commensurate with the eventual loss. Loss of a real opportunity to protect one’s interests may suffice. The relevant comparison is between the claimant’s position after relying on the representation and the position that would have resulted if the representation had not been made and the issue had been raised at the time.

The trustees of a pension plan sought a declaration that they had correctly calculated the respondent’s share of a surplus. The respondent’s accrued pension fund from a former employer had been received and invested in the plan, but the trustees had not formally approved the transfer under rule 15. A company officer had represented that the transfer had been duly received and invested, and subsequent benefit statements confirmed that position.

Mangatal J found ostensible authority to make the representation but rejected the estoppel claim for lack of detrimental reliance. The Court of Appeal of Jamaica affirmed the finding on authority but reversed the decision on detriment. The central issue before the Board was whether the trustees were estopped from relying on the absence of formal approval.

Appeal dismissed. The Board advised that the trustees pay Mr Fraser’s costs of the appeal, with an indemnity from the funds of the Plan.

1. Ostensible authority. The letter and subsequent benefit statements unequivocally represented that the necessary approvals for the transfer had been obtained. The Board explained the scope of Armagas Ltd v Mundogas SA (The “Ocean Frost”) [1986] AC 717. That decision concerned an agent who purported to exercise authority which the third party knew he did not generally possess. It did not establish that a person lacking authority to approve a transaction could never have ostensible authority to communicate that the proper authority had approved it. Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd [1985] 2 Lloyd’s Rep 36 and First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194 supported the principle that authority to communicate a decision need not match authority to enter the transaction.
2. Application to the pension plan. Although the trustees were the ultimate source of authority, they had delegated administrative functions to the company. Those functions necessarily included communicating contributors’ entitlements and decisions affecting their contributions. Mr Masters, as the senior officer of the relevant department, had ostensible authority to communicate that the transfer had been accepted. The trustees could not accept and invest the money for some purposes while denying its status for the distribution of the surplus.
3. Detrimental reliance. Detriment is not presumed and must be proved, but it may be inferred from the circumstances. It need not be financial, quantified or commensurate with the relief. The loss of an opportunity to protect one’s interests may constitute detriment where the alternative course offered a real prospect of benefit. The Board applied the principles in Avon County Council v Howlett [1983] 1 WLR 605, Greenwood v Martins Bank Ltd [1933] AC 51, Ogilvie v West Australian Mortgage and Agency Corporation Ltd [1896] AC 257 and Fung Kai Sun v Chan Fui Hing [1951] AC 489.
4. Relevant counterfactual. The correct question was whether Mr Fraser was worse off because he was led to believe that the transfer had been duly invested, compared with the position had he been told the truth and raised the issue then. He would at least have required the position to be regularised. The trustees had no rational basis to reject the transfer under rule 15, since the money had already been received and invested without difficulty. The trial judge had therefore asked the wrong question by comparing the transfer with leaving the pension fund in the former scheme.

• Privy Council: Appeal dismissed. The trustees were ordered to pay the respondent’s costs with an indemnity from the Plan’s funds ([2012] UKPC 25).
• Court of Appeal of Jamaica: Affirmed the trial judge’s finding that the company had ostensible authority to make the representation, but reversed the finding on detrimental reliance and gave judgment for Mr Fraser.
• Trial court: Mangatal J found ostensible authority but rejected the estoppel claim because detrimental reliance had not been established.