Outram v Academy Plastics Ltd

An employer is not generally liable in tort for failing to volunteer pension advice intended to prevent economic loss. Where the alleged duty is not inherent in the employment contract, the tort duty cannot stand independently of it. A pension-scheme trustee likewise owes no general duty to advise a beneficiary or prospective member about scheme rights. The recognised approaches to economic-loss duties—foreseeability, proximity and fairness; assumption of responsibility; and incremental development—did not support imposing such a duty on an employer that neither held itself out as a pension adviser nor was asked for advice. The issue was sufficiently clear for summary disposal on the pleaded facts, and an early strike-out did not infringe Article 6.

The claimant, widow and personal representative of David Outram, alleged that Academy Plastics Ltd should have advised him to apply to rejoin its pension scheme when he was re-employed in 1995. He had left the scheme in 1994, did not rejoin, and later resigned through ill health. His estate received only the return of contributions. The claim pleaded a fiduciary relationship, a tortious duty of care and negligence, but no contractual duty, negligent misrepresentation or request for advice. Judge Simmons, sitting at Watford County Court, struck out the claim on 19 October 1999. The appeal concerned whether the company, as employer and trustee, owed the pleaded duty and whether the issue could properly be determined summarily.

The appeal was dismissed unanimously, with costs subject to a section 18 order. Lord Justice Tuckey gave the principal reasons. Lord Justice Chadwick agreed on the contractual and trustee analysis, and Lord Justice Peter Gibson agreed for the reasons in both judgments.

1. Contractual basis. Following Scally v S.H.S.S. Board [1992] 1 AC 294, a duty of this kind cannot be derived independently from tort if it is not inherent in the express or implied employment contract. The pleaded claim expressly disclaimed any contractual duty. Any tort duty would therefore be coextensive with the contractual duty, which could not be relied upon. The overlap between contract and tort in employment cases, discussed in Spring v Guardian Assurance Plc [1995] 2 AC 296, did not alter that conclusion.
2. Trustee capacity. As trustee, the company owed no general duty to advise the deceased as beneficiary about accrued pension rights, and still less any duty to advise a potential applicant whether to rejoin the scheme. The reasoning in Hawkesley v May [1956] 1 QB 304, Hamar v The Pensions Ombudsman [1996] PLR 1 and NHS Pension Agency v Beechinor and The Pensions Ombudsman [1997] PLR 99 supported that conclusion.
3. General tort principles. The claim concerned pure economic loss caused by a pure omission. The three parallel approaches identified in BCCI v Price Waterhouse [No.2] [1998] PNLR 564 produced the same result. Foreseeability and proximity could be assumed, but it was not fair, just and reasonable to require a plastics manufacturer to volunteer specialist pension advice. There was no assumption of responsibility, and re-employment alone did not amount to an assumption to give advice of the alleged kind. The incremental approach was unsupported by any analogous authority.
4. Strike out. The court assumed that the pleaded facts were true, but the claim was bound to fail as a matter of law and was not fact-sensitive. The alleged close relationship with a company director did not assist because no assumption of responsibility by him was pleaded. Adopting Kent v Griffiths (CA 3 February 2000), the court held that deciding a clear preliminary legal issue and ending proceedings with no real prospect of success did not contravene Article 6.

Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): dismissed the appeal from the strike-out decision, with costs subject to a section 18 order. Neutral citation: [2000] EWCA Civ 141.
• Watford County Court: Judge Simmons struck out the claim on 19 October 1999 on the basis that it disclosed no reasonable cause of action.