Pensions Action Group

Notes on the Judicial Review

Dr Ros Altmann
10th February 2007

Overall, I do not feel that the Government put in a strong case and I cannot believe that the judge won’t find in our favour on at least one of the first three of our claims.  

The legal team is also optimistic. 

I hope, at least, that he will rule that the Government behaved unlawfully in rejecting the findings of the Parliamentary Ombudsman and that it must reconsider its position in light of the fact that it IS guilty of maladministration and is responsible for causing grave injustice that must be remedied.   I also got the impression that he would not take too long to give his verdict, but we have to wait and see.


The Judicial Review lasted three whole days and even then we did not manage to present our case orally on all the issues, but relied on the submitted papers for the Human Rights Act claim and for the analysis of the 2002 decision to change the MFR.

The first thing on Wednesday morning was an intervention on behalf of the Speaker of the House of Commons, who registered his concern about the use of information from the PASC debate and asked that neither party should not in any way include any criticisms of the proceedings from a Parliamentary Committee in their case.  This is all unprecedented legal territory and he was citing Article 9 of the Bill of Rights from 1689 or something and after much legal mumbo jumbo our case started properly.

John comments that the intervention did us no harm at all: the court was at least told that the main parts of our case were matters for the Court, which undermined the Government’s argument that accountability for rejection of an Ombudsman report can only take place in the political arena.

Dinah Rose Q.C. presented our claim against the Government for the next day and a half.  There are four strands to our case – I am summarising and probably not being legally precise, but this is how I understand our arguments.

1. That the Secretary of State has acted unlawfully in rejecting the findings of the Parliamentary Ombudsman.  It is clear that the Government does not have to comply fully with any recommendations, (indeed the Ombudsman does not even have to make recommendations and did not do so in some reports, such as inherited SERPS) but it is not envisaged in any of the legal precedents or the 1967 Act itself that a Government would actually reject the findings.  Unless the Government Judicially Reviews the Ombudsman’s findings, it is not entitled to simply ‘disagree’ with her. This argument was put in two ways: first, that the 1967 Act is similar to the 1974 Local Government Act (which established the local government ombudsmen) and under the latter regime the Court of Appeal has said the findings are binding; second, the Ombudsman regime is similar to those in the planning and immigration contexts where an independent body is appointed to establish the facts and, once they have done so, their view becomes the only rational one. 

2. That the Secretary of State has also therefore acted unlawfully in rejecting both the findings and the first recommendation of the Ombudsman, because if he cannot reject the findings then clearly the rejection of the recommendation must be reconsidered, since it was rejected on the wrong premise.

3. Even if a Government might be able to reject the findings of the Ombudsman in certain circumstances, we claim that in this case, the reasons given for the rejection of her findings are so irrational and unreasonable that in any case this rejection is unlawful.

4. We claim that the Government has also broken Article 1 of the First Protocol of the European Convention on Human Rights, because by changing the law in 1997 it failed to protect people’s property rights properly and also is trying to confiscate members’ AVCs if they want to try to get their state pension rights back.

Dinah Rose Q.C. went through the relevant case law that we are relying on to demonstrate that Government is not entitled to reject the findings of the Parliamentary Ombudsman.  There is a great deal of established evidence about the powers of Ombudsmen and she also went through the provisions of the 1967 Act which first established the office of the Parliamentary Ombudsman (it was introduced by a Labour Government by the way!)  Of course, because no Government before now has ever rejected both the findings and the recommendations of its own Ombudsman, this case is unprecedented, so we had to rely on interpretations of other similar, but not exactly identical cases and of the original Act, in support of our claim.  She made a very persuasive case.

She also went briefly through the facts of what has happened to each of the four claimants and explained how they relied on the information given to them by the Government, which led them to believe that their pensions were completely safe and their retirement income was assured.  Then she explained that they had lost most or all of their pensions when their scheme had wound up, three of them when their companies went bust, but the fourth when his employer simply decided to wind up the scheme.  She highlighted the inadequacies of the MFR and how members and trustees were misled by official information and even by misleading information from the Regulator – OPRA.  She spent time also showing that the 1997 OPRA Guide was wrong and even the 1999 OPRA guide to the MFR, which did contain one sentence that might be considered correct, was, in totality also misleading because it clearly suggested that if your scheme was 100% funded on the MFR it would have enough assets to pay all its liabilities and that if it was, for example, 90% funded, it would be able to pay 90% of pensions and so on.  Of course, as she pointed out, this 1999 MFR guide was never sent to scheme members and, indeed, it was not even sent to all trustees.   Nor did it contain anything that highlighted the error in the 1997 MFR guide for trustees.  In particular, Bob Duncan – a member nominated trustee of his scheme and Amicus union convener - only received the 1997 Guide and never had the 1999 OPRA booklet, so he relied on the wrong information from the Regulator to reassure all members of the BUSM scheme that their pensions were safe, even if the scheme wound up.

She explained how the Secretary of State’s assertions that nobody was entitled to be misled by official information, given the circumstances of the time, were simply not rational.  It was obvious that people may have been misled and that they had not been given the full information they needed to assess the security of their pensions, because the official information had not told them the one most important question they should ask their trustees.  Even after warnings from its own and other actuaries that members and trustees did not know the risks that even schemes fully funded on the MFR entailed for non-pensioners if their scheme wound up, the DWP did not change its official leaflets to tell members that they might not get their full pension if their scheme wound up and that they needed to ask how wind up might affect them individually.

Towards the end of the second day, Thursday, the Government’s defence barrister – Philip Sales Q.C. – began his submissions on behalf of the Secretary of State.  His case could be summarised as follows:

1. The local government and parliamentary ombudsman schemes are fundamentally different. It is wrong to separate the findings from the recommendations in the Parliamentary Ombudsman’s report and the whole report has to be considered together. Clearly recommendations cannot be binding.  Because of that, it is clear that Parliament does not expect the report as a whole to be binding on Government and, if the report constitutes both the findings AND the recommendations, then the Government must be able to reject the findings.

2. The Ombudsman regime is not similar to those in the planning and immigration contexts where an independent body is appointed to establish the facts because she does not hear oral evidence like a judge, where there is an opportunity for cross examination. The Ombudsman’s investigation is not a comparable way of testing what happened to the claimants or what actually occurred.  Mr. Sales suggested that the Parliamentary Ombudsman does not conduct adversarial interviews with the complainants and does not even meet them herself, so her judgment of what happened to them may be flawed.  He said the Government had not had the opportunity to test the claimants itself, so it should not be bound by the Ombudsman’s opinion!  (Again, this is such an insult to the Ombudsman that I could hardly believe what was being said).

3. The Secretary of State is just as entitled as the Parliamentary Ombudsman to have his own view on what constitutes maladministration and there is room for two views of whether it has occurred or not, both of which are rational.  There is no definition of maladministration in the 1967 Act and therefore the Minister is perfectly at liberty to disagree with the Ombudsman. 

4. Just because the DWP did not stick to its own standards and guidelines, does not mean it is guilty of maladministration.  That is something far more serious.  Indeed, Mr. Sales said that these internal guidelines were really just ‘aspirations’ of ‘best practice’ but failing to meet them is not something so terrible.  He also said, after questioning from the Judge, that even if the DWPs actions fell below ‘reasonable standards’ it would still not be guilty of maladministration, unless the Secretary of State thought so!  (This statement nearly made me fall off my seat.)

5. By accepting her recommendation, this would be a huge public spending commitment and the Courts should not be expected to interfere in matters of public expenditure, so they should not give a judgement on the report. What happens next is exclusively a matter for Parliament.
So many aspects of the Defence case seemed to me to be outrageous.  Mr. Sales said that people who felt they had lost out due to maladministration should have complained to the DWP using its own Departmental scheme for maladministration!  Well, excuse me, but the DWP has refused to admit it is guilty of maladministration, so how can anyone achieve satisfaction that way?  Not only that, but the suggestion here is that only the DWP itself can assess properly whether it is guilty of maladministration – and that the verdict of the Ombudsman does not count.  Indeed, this argument is undermined – as Dinah Rose pointed out - by the fact that, if people do complain to the DWP scheme and are not satisfied with the outcome, they can complain then to the Parliamentary Ombudsman!  So even the DWP admits in its guidance that the Ombudsman is a higher authority on maladministration than the Minister. 

To suggest that the Secretary of State can judge his own department’s behaviour at least as well as the Ombudsman is effectively saying Ministers can be their own judge and jury and that a 16 month independent investigation,  collecting mountains of evidence, conducting detailed interviews and assessing all the facts from an impartial standpoint is not going to come to a better conclusion than a Minister who was not even there at the relevant time and has not looked impartially at the situation.  In essence, what is going on here, in my view, is that the Ombudsman has kept trying to explain to the DWP that its information  misled people, but the DWP keeps saying it did not and that nobody was meant to rely on the materials or assurances.   (My comment: Well, the fact is that they did and the DWP should have recognised at the time that they would!)

Then Mr. Sales tried to argue that the official information leaflets were not deficient because they were just general introductory guides and could not be expected to cover matters such as the MFR and wind-up.  He said the MFR and wind-up were dealt with in other materials which should have been read and these should have corrected any misleading impressions they had.  In particular he relied for this on two things. 

Firstly, the 1999 OPRA MFR Guide (remember this is the one which we have argued was also misleading and which was not sent to all trustees.   Bob Duncan never received a copy.  In fact only 40,000 copies of this guide were printed, but about 160,000 copies of the incorrect 1997 guide were sent out). 
Secondly, he said the 2000 Consultation document sent to the actuarial profession and members of the pensions industry, also explained the inadequacies of the MFR, so members must have known about this and can’t say they were misled.  Again, this line of argument is quite astonishing.  The 1999 MFR guide was not even mentioned in the DSS/DWPs own introductory leaflets.  Readers were just told to read their scheme information or other DSS/DWP guides, or FSA  materials (which, as you know, contained the reassurances about final salary pensions being ‘guaranteed’).  In other words, the defence was arguing that, as long as the information sent to the professionals in the pensions industry was right, the fact that the information sent to the general public was not correct does not matter and this is not maladministration.  (I could not believe my ears and I felt the judge was pretty unimpressed too!)

It would take me far too long to go through everything, but I hope I have captured the gist of the arguments put forward.    One final thing that was just unbelievable was that, at 2pm on the final afternoon, right at the end of the case, the Defence submitted a several page document which criticised the four claimants’ statements and suggested that they had not been telling the truth and their version of events could not have been right!  This was the most unbelievable aspect of all the startling things that happened in this case.  Having had these four Witness Statements since last June, having never once complained about them or even commented on them, not in their Skeleton argument or even at the beginning of the case, they suddenly produced a document which pulled their evidence to pieces.  I do not have a copy but Bindmans do.  I gave them my copy with my comments on it, but we asked the judge not to accept the document as it had been produced so late and we had had no chance to consider it.  The judge said he would accept it, but not take too much notice of it!  I hope that is what happens and cannot believe they felt able to submit such a document at the end of the case.

John Halford (our solicitor) comments that it is very unlikely this document will carry weight with the judge because he said that it should have been included in the Government’s arguments weeks ago, he recognised we could not practically respond and said in terms that the lawyers should not worry about trying to do so over the weekend.

Overall, I do not feel that the Government put in a strong case and I cannot believe that the judge won’t find in our favour on at least one of the first three of our claims.  The Human Rights point was not discussed in court at all, by either side really, so the judge will look at that one purely on the papers and I have no idea what he might say on that, though John comments that this is not the strongest limb of our case and so the decision not to prioritize it in court was certainly the right one.

I hope the judge will rule that the Government behaved unlawfully in rejecting the findings of the Parliamentary Ombudsman and that it must reconsider its position in light of the fact that it IS guilty of maladministration and is responsible for causing grave injustice that must be remedied.  I also felt that he would not take too long to give his verdict, but we will have to wait and see.

I think the lawyers did an excellent job in presenting our legal arguments and hope that Dinah Rose, John Halford and Tom Hickman will be rewarded for their efforts with a positive verdict and that all those who have waited so long for justice will soon receive the outcome they so much deserve!

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