The Pensions Ombudsman v CMG Pension Trustees Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lady Justice Whipple,Sir Julian Flaux |
| Judgment Date | 01 November 2023 |
| Neutral Citation | [2023] EWCA Civ 1258 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-001913 |
[2023] EWCA Civ 1258
Sir Julian Flaux, CHANCELLOR OF THE HIGH COURT
Lady Justice Asplin
and
Lady Justice Whipple
Case No: CA-2022-001913
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST: PENSIONS (ChD)
Mr Justice Leech
Royal Courts of Justice
Strand, London, WC2A 2LL
Paul Newman KC and Michael Ashdown (instructed by Pensions Ombudsman) for the Appellant
Andrew Short KC and Elizabeth Grace (instructed by Addleshaw Goddard LLP) for the First Respondent
Hearing date: 10 October 2023
Approved Judgment
This judgment was handed down remotely at 12 noon on 1 November 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This appeal is concerned with whether the Pensions Ombudsman is a “competent court” for the purposes of section 91(6) Pensions Act 1995 (“PA 1995”). The question arose in the context of a Part 8 Claim issued by CMG Pension Trustees Limited, the First Respondent to this appeal (the “Trustee”). The Trustee sought the determination of a series of complex questions concerning the construction and effect of the rules of the CMG UK Pension Scheme (the “Scheme”). The Defendant to the Part 8 Claim and the Second Respondent on appeal is the principal employer in respect of the Scheme, CGI IT UK Limited (the “Principal Employer”).
All of the questions were addressed and determined by Leech J in a detailed and comprehensive judgment the citation of which is [2022] EWHC 2130 (Ch). The majority of the questions which the judge was asked to address are irrelevant for the purposes of this appeal.
Background
The judge's interpretation of Rule 5.11 of the Scheme Rules, however, led to the conclusion that some members and beneficiaries of the Scheme had received an overpayment of benefits. It was necessary, therefore, to address the final set of questions posed in the Part 8 Claim. They were concerned with the circumstances in which a member or beneficiary has been paid sums to which he/she is not entitled in accordance with the Scheme Rules and the proper construction of section 91(6) PA 1995 in those circumstances. Section 91(6) is concerned, amongst other things, with set-off against pension benefits. It was accepted that an equitable right of recoupment of overpaid benefits would fall within its terms.
The judge was asked: (i) whether in accordance with section 91(6) PA 1995 the Trustee must obtain an order of a “competent court” before recouping sums allegedly overpaid where there is a dispute with the member about the amount to be recouped or the rate of deduction from future pension payments which should be applied; (ii) whether it was necessary to obtain an order that the person repay the overpayment in question or whether a declaration that there had been an overpayment to a particular extent would be sufficient; and (iii) whether for these purposes and for the purposes of section 91(6) PA 1995, the Office of the Pensions Ombudsman is a “competent court”.
In summary, the judge held that: (i) an order of a competent court is required; (ii) a declaration is sufficient and an order for repayment is not required; and (iii) that the Office of the Pensions Ombudsman is not a “competent court” for the purposes of section 91(6) PA 1995. The answers form part of his Order dated 11 August 2022, in accordance with paragraph 2 of that Order. Neither the Trustee nor the Principal Employer sought permission to appeal the judge's Order.
The Pensions Ombudsman was not a party to the Part 8 Claim. Having been advised that the judge was wrong in law in relation to whether the Office of the Pensions Ombudsman is a “competent court”, he sought permission to appeal in relation to this issue. The Pensions Ombudsman was granted permission to appeal and an extension of time to file an Appellant's Notice by Lewison LJ by an Order sealed on 24 February 2023. Permission was granted on condition that the Pensions Ombudsman pay the Trustee's reasonable costs of resisting the appeal. The Principal Employer has taken no part in this appeal.
The Judge's decision in more detail
The judge decided that, as a matter of law, the equitable right of recoupment did not require a member who had been overpaid to repay anything to the scheme and noted that it was difficult to apply section 91(6) to that equitable right because the section (when read with section 91(5)(f)) makes reference to a “monetary obligation” on the part of the member. He concluded that the phrase “the obligation in question” which appears in section 91(6) itself must be interpreted in a very broad sense as “an obligation to give effect to the charge, lien or set-off” [150] – [151]. He held that it followed that it was unnecessary for the Trustee to obtain a money judgment or an order for payment and that it was “enough for it to satisfy a court of competent jurisdiction that it is entitled to exercise the right”. He went on: “I am satisfied that the requirements of section 91(6) would be met if the Trustee obtained a declaration against Member Y that it was entitled to exercise its right to recoup £1,000 by deducting the sum of £8.33 per month from future instalments of pension beginning immediately.” He also noted that Arnold J had thought the same and referred to the last sentence of [166] in Burgess v BIC UK Ltd [2018] EWHC 785 (Ch), [2018] Pens LR 13 [152].
The judge went on to consider the question of whether the Office of the Pensions Ombudsman is a “competent court” at [153] – [160] of his judgment and concluded at [172] that it was not. He referred to Arnold J's decision in Burgess in which Arnold J had stated at [168] that the determination of the Pensions Ombudsman did not itself constitute “an order of a competent court” because the Ombudsman is not a court. The judge stated that he was not satisfied that the passage from Burgess should be treated as no more than obiter dictum and concluded that it formed part of the ratio of the decision [157] and [158]. He went on to note the divided academic commentary in relation to the Burgess decision [159] but stated that it did not affect his conclusion that Arnold J's decision on this point formed part of the ratio of his decision [160].
At [160], he also decided that he was not satisfied that the decision in Burgess was wrong or that he should refuse to follow it and set out six reasons for his decision. In summary, they were:
(i) Whether a tribunal is to be treated as a court for the purposes of a statute or rule, depends on the context: Watson v Hemingway Design Ltd [2021] ICR 1034 per Bean LJ at [23]. However, the fact that the Divisional Court and the Court of Appeal may have found that an industrial tribunal or an employment tribunal should be treated as a court in other contexts, does not demonstrate that the decision in Burgess is wrong [160(1)];
(ii) The relevant context is the enforcement of trustee rights which have been circumscribed by statute. He went on: “A trustee may not now enforce those rights where there is a dispute without “an order of a competent court”. I have held that in the case of the equitable right of recoupment section 91(6) extends to a declaration that the Trustee is entitled to exercise a self-help remedy. But the sub-section also extends to the enforcement of a charge or lien or other rights of set off. Moreover, the dispute may relate to the question whether the person entitled has been guilty of criminal, negligent or fraudulent conduct or a breach of trust (in the capacity of a trustee).” [160(2)];
(iii) The Pensions Ombudsman only has jurisdiction to investigate a dispute of fact or law if it is referred to him by or on behalf of a potential or actual beneficiary and not at the behest of a trustee: section 146(1A) Pension Schemes Act 1993 (“PSA 1993”). It seems unlikely that Parliament would have extended the power of enforcement in section 91(6) to the Pensions Ombudsman if the Trustee itself had no right to apply for enforcement [160(3)];
(iv) As Arnold J pointed out at [168] in Burgess, the PSA 1993 does not treat the Pensions Ombudsman as a court. Section 150(8) defines “the court” as the County Court in England and Wales. Section 150 confers a number of analogous powers but it does not describe the Pensions Ombudsman as a court as such [160(4)] [160(6)];
(v) Section 151(5) PSA 1993 provides that any determination or direction of the Pensions Ombudsman shall be enforceable in England and Wales “in the county court as if it were a judgment or order of that court”. It follows that the Pensions Ombudsman has no direct powers of enforcement and any determination or direction and any application for committal for breach of a determination or direction or for other enforcement remedies, must be brought in the County Court (sections 150(4) and (5)) [160(5)]; and
(vi) The drafter of section 91(6) would have had the distinction between the judicial functions of the court and the wider powers of investigation of the Pensions Ombudsman as well as the different enforcement regimes in mind and if Parliament had intended to extend section 91(6) to a determination by the Pensions Ombudsman, the sub-section might have been expected to make express provision to that effect.
Grounds of Appeal
There are ten grounds of appeal. They include an alleged failure on the part of the judge to give proper weight to the significance of the need for a “dispute” for the purposes of section 91(6) PA 1995 and the fact that the dispute will have been determined by the Pensions Ombudsman in accordance with his statutory powers.
In their skeleton argument, Mr Newman KC and Mr...
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