R (Bradley) v Secretary of State for Work and Pensions
| Jurisdiction | England & Wales |
| Judge | Sir John Chadwick,Mr Justice Blackburne,Lord Justice Wall |
| Judgment Date | 07 February 2008 |
| Neutral Citation | [2008] EWCA Civ 36 |
| Docket Number | Case Nos: C1/2007/0554 CO/4927/2006 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 February 2008 |
[2008] EWCA Civ 36
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(MR JUSTICE BEAN)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Wall
Mr Justice Blackburne and
Sir John Chadwick
Case Nos: C1/2007/0554
C1/2007/0556
CO/4927/2006
Mr Philip Sales QC and Mr Daniel Stilitz and Miss Holly Stout (instructed by the Solicitor, Department of Work and Pensions, New Court, 48 Carey Street, London WC2A 2LS) for the Secretary of State for Work and Pensions
Miss Dinah Rose QC and Mr Tom Hickman (instructed by Bindman and Partners, 275 Grays Inn Road, London WC1X 8QB) for the Claimants/Respondents
Mr James Maurici (instructed by Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN) for the Parliamentary Commissioner for Administration
Mr Clive Lewis QC and Mr Ben Hooper (instructed by the Treasury Solicitor, One Kemble Street, London WC2B 4TS) for the Attorney General on behalf of the Speaker of the House of Commons
Hearing dates : 25 th, 26 th and 27 th July 2007
The Report of the Parliamentary Commissioner for Administration entitled “Trusting in the pensions promise: government bodies and the security of final salary occupational pensions” (HC 984) was published on 15 March 2006. As the title suggests, the Report addressed the circumstances in which final salary schemes were wound up underfunded and the role of Government in that regard. The Report was presented to Parliament under section 10(3) of the Parliamentary Commissioner Act 1967.
The Parliamentary Commissioner for Administration (commonly known as “the Parliamentary and Health Service Ombudsman” or, more shortly, as “the Ombudsman”) made three findings of maladministration in her Report. Those findings are summarised at paragraph 5.164 of the Report. The first and third findings are these:
“(i) that official information – about the security that members of final salary occupational pension schemes could expect from the MFR provided by the bodies under investigation – was sometimes inaccurate, often incomplete and therefore potentially misleading, and that this constituted maladministration
(ii) …
(iii) that the decision in 2002 by DWP to approve a change to the MFR basis was taken with maladministration.”
“MFR”, in that context, means the Minimum Funding Requirement introduced under Part I of the Pensions Act 1995. “The bodies under investigation” included the Department of Work and Pensions (“DWP”) and its predecessor, the Department of Social Security (“DSS”). As the Ombudsman found, responsibility within Government for occupational pensions policy and for the framework of law and regulation that relates to final salary schemes had, at all times relevant to her investigation, lain with those Departments.
Having determined that there had been maladministration, the Ombudsman went on to consider whether complainants had suffered injustice as a result. She expressed herself satisfied that complainants and their families had “suffered financial loss, a sense of outrage, and considerable distress, anxiety and uncertainty”: paragraph 5.168 of the Report. She was satisfied, also, that complainants had suffered injustice “through an inability to make informed choices or to take remedial action”: paragraph 5.169. And, further, that that injustice had not been remedied and that there was no intention in Government that it would be remedied: paragraph 5.175. She concluded, at paragraph 5.245, that “injustice – in the forms of a sense of outrage, lost opportunities to make informed choices or to take remedial action, and distress, anxiety and uncertainty – was caused by maladministration”; and, at paragraph 5.246, that the maladministration which she had identified “was a significant contributory factor in the creation of financial losses suffered by individuals”.
On the basis of those findings the Ombudsman made five recommendations. Those recommendations (which are set out at between paragraphs 6.10 and 6.37 of the Report) were made, as she said, to remedy the injustice which she had found to have been caused by maladministration. The first recommendation (at paragraph 6.15) was in these terms:
“I recommend that the Government should consider whether it should make arrangements for the restoration of the core pension and non-core benefits promised to all those whom I have identified above are fully covered by my recommendations – by whichever means is most appropriate, including, if necessary, by payment from public funds, to replace the full amount lost by those individuals.”
The reference, there, to “all those whom I have identified above are fully covered by my recommendations” is to the individuals falling within paragraph 6.9 of the Report.
Those falling within paragraph 6.9 of the Report – and so fully covered by the Ombudsman's recommendations —were those who were members of final salary schemes which commenced wind-up from 6 April 1997 to 31 March 2004 in circumstances where (a) their scheme wound-up with insufficient assets to secure pensions in payment and to pay cash equivalent transfer values in respect of fully accrued pension rights to all non-pensioner members or to secure the full liabilities for each non-pensioner member in other ways, (b) the scheme was not eligible for the pensions compensation scheme (because it had not suffered losses wholly attributable to fraud or other unlawful behaviour) and (c) the individual had suffered an actual financial loss because of a shortfall in the pension promised in respect of the contributions made by him, contracted-out national insurance contributions that were rebated to the scheme or other benefits due (such as survivor benefits and life cover). The first of the two dates (6 April 1997) which defined the period within which a final salary scheme must have commenced wind-up if its members were to be covered by the first recommendation was the date on which the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 1996 (SI 1996/1563) came into force. The second date (31 March 2004) reflected the Ombudsman's view that, in April 2004, the DWP issued guidance on the operation of the Pensions Act 1995 that was “broadly accurate”.
On 16 March 2006 the then Secretary of State for Work and Pensions made a statement in the House of Commons. He informed the House that the Government had reached the view that it could not accept any of the findings of maladministration made in the Report and that it had decided to reject the first four of the Ombudsman's recommendations.
Proceedings for judicial review were commenced in the Administrative Court by the issue of a claim form on 14 June 2006. The applicants were Mr Henry Bradley, Mr Robin Duncan, Mr Andrew Parr and Mr Thomas Waugh. Their individual circumstances were described by Mr Justice Bean at paragraphs [11] to [14] of his judgment, [2007] EWHC 242 (Admin). It is not, I think, necessary to set them out in this judgment. The relief sought in the proceedings, after amendment on 21 September 2006, was an order quashing the decision of the Secretary of State, on behalf of the Government, to reject the Ombudsman's first and third findings and first recommendation, and for the matter to be remitted to the Secretary of State for reconsideration.
By an order made on 21 February 2007 Mr Justice Bean granted the relief sought in relation to the first finding of maladministration (save as to the causation of injustice) and the first recommendation. The Secretary of State appeals (under Court of Appeal reference 2007/0554) from the judge's decision to quash the Secretary of State's rejection of the first finding of maladministration. The judge upheld the Secretary of State's rejection of the Ombudsman's finding that maladministration (the subject of her first finding) had been the cause of injustice; and he dismissed the claim to relief in relation to the third finding of maladministration. He dismissed, also, a claim that the Secretary of State had acted in breach of article 1 of the First Protocol to the European Convention on Human Rights. The applicants appeal (under reference 2007/0556) from those parts of his order. The appeals are brought with the permission of the judge.
The Court has been assisted at the hearing of these appeals by submissions on behalf of the Ombudsman (as interested party) and on behalf of the Attorney General, who intervened in the proceedings on behalf of the Speaker of the House of Commons.
The first issue before the judge – and, to my mind, the principal issue on these appeals —was whether the findings of the Ombudsman were binding on the Secretary of State. The judge summarised the respective contentions at paragraph [47] of his judgment:
“[47] Ms Rose submits that unless subsequently found by a court to be flawed in law or Wednesbury unreasonable, a finding by the Ombudsman that maladministration has occurred and has caused injustice is binding on the public authority against which it is made, either (a) absolutely, or (b) unless it can be objectively shown to be flawed or unreasonable. Mr Sales, for his part, submits that the Defendant is entitled to reject the Ombudsman's findings on the basis of...
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