Press Release from Bindmans
7th February 2008
“IRRATIONAL”: UNANIMOUS COURT OF APPEAL’S VERDICT ON PENSION MINISTERS’ DEFIANCE OF OMBUDSMAN REPORT
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Three Court of Appeal judges today became the latest to condemn the unprecedented stance taken by Work and Pensions Ministers to reject a Parliamentary Ombudsman report that found maladministration and injustice in the treatment of up to 125,000 occupational pension scheme members. They had believed government assurances that their pensions were safe, whatever happened to the sponsoring employer, which the Ombudsman concluded were “inaccurate and misleading”.
Giving the Court’s lead judgement, Lord Justice Chadwick commented:
“in the circumstances of this case, it was irrational for the Secretary of State to reject the Ombudsman’s finding”.
adding that maladministration identified by the Ombudsman had directly caused:
“a sense of outrage, distress, anxiety and uncertainty… the loss of opportunities to make informed choices or to take remedial action and the distortion of the reality facing scheme members”
Lord Justice Wall agreed, commenting:
“Nobody reading the papers in this case could have anything but the utmost sympathy for the plight of the complainants, all of whom, it seemed to me, were decent, hardworking people who, through no fault of their own, had been – or were at serious risk of being - deprived of that for which they had worked throughout their lives, namely a modestly comfortable retirement.”
The solicitor representing the pensions campaigners that brought the test case, John Halford of Bindman and Partners, said today:
“The Court of Appeal is the latest independent body to conclude that Pensions Ministers have been wilfully blind to the failings of their Department and the multiple injustices that thousands of working people have suffered as a direct result. Though recent improvements in the Financial Assistance Scheme will be of some help to them, justice still demands acceptance of responsibility, an apology and redress of the outrage and distress caused. Instead of offering those things, we understand the Minister is to Appeal to the House of Lords. The Ombudsman’s 200 page report, condemnation by Parliament’s Public Administration Select Committee, the High Court and now three appeal Judges is apparently insufficient to persuade Mr Purnell that he just might be wrong.”
Dr Ros Altmann who has campaigned for justice alongside the scheme members said:
“It is now 6 – nil against the DWP. How many verdicts will it take to make the Government see sense? Its decision to appeal again merely reinforces the four Judge's verdicts that the Government's decisions in this matter are irrational. For the past few years, it has tried, unsuccessfully, to wear us down and even tried to bully the victims into submission, by threatening to bankrupt them if they lost the case. Enough is enough!”
On 14 March 2006 the Ombudsman ruled that the Department for Work and Pensions had acted maladministratively by failing to warn pension scheme members that they had no more than a 50% chance of recovering their pensions if the sponsoring company became insolvent or wound up its scheme before they had retired. The then Minister, John Hutton, responded the following day, rejecting the Ombudsman’s findings and recommendations that pensions be restored.
But in the first judicial review test case of its kind, three of those who complained to the Ombudsman – Henry Bradley, Andrew Parr and Rob Duncan - argued that the Minister’s reasons for snubbing the Ombudsman were irrational and that he should have accepted maladministration had occurred before rejecting her recommendations that lost pensions should be restored, distress compensated for and apologies made. They also argued that the Minister had no power to act as judge in his own cause and that once the Ombudsman had ruled there was maladministration by his Department’s officials, he was legally bound to accept that.
In February last year, Mr Justice Bean allowed the campaigners’ judicial review and in a scathing judgement held that “no reasonable Secretary of State could rationally disagree” with the Ombudsman’s conclusion that the Department’s information about pension security had been “inaccurate and misleading”. In response the Department made significant improvements to its Financial Assistance Scheme, but maintained that there was no maladministration, nor any injustice caused to the pension scheme members affected. In the Court of Appeal, where the case was heard in July, its legal team sought to portray the Ombudsman herself as “irrational” and “unfair”.
The Minister’s appeal was today rejected by the Court of Appeal, which upheld Mr Justice Bean’s conclusions on the irrationality of rejecting the Ombudsman’s key findings, and allowed the campaigners’ appeal on the basis that it was wrong to conclude maladministration had not caused a “sense of outrage, distress, anxiety and uncertainty” along with the loss of opportunities to make informed choices or to take remedial action and “distortion of the reality facing scheme members”.
The campaigners’ legal team have been told that the Minister will seek permission to appeal the judgement to the House of Lords, arguing that he should be allowed to have a “bona fide difference of view” with the Ombudsman, rather than be obliged to give “cogent” and “rational” reasons for rejecting her findings which were conspicuously absent in this case in the Court of Appeal’s view. If this further appeal is rejected, the Minister will be forced to consider the Ombudsman’s outstanding recommendations: that pensions scheme members and trustees should receive an apology and that non-financial losses, such as distress, should be addressed with consolatory payments.