Arjo Wiggins Ltd v Ralph

The Pensions Ombudsman has jurisdiction to investigate and determine a complaint even where the comparable court action would be statute barred. Regulation 5 of the Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996 is clear authority for the Ombudsman to investigate and determine stale complaints, including complaints involving legal rights.

It does not, however, authorise the Ombudsman to disregard a valid limitation defence when determining the legal substance of the dispute. The Ombudsman must apply established legal principles and cannot award substantive relief which a court could not grant. This restriction does not apply to pure maladministration causing injustice without infringement of legal rights, because such a complaint is not actionable in court.

Mr Ralph transferred his occupational pension after receiving advice from his employer’s pensions department. More than twenty years later he complained that the advice had been negligent and that he would otherwise have remained in the employer’s defined-benefit scheme.

The Pensions Ombudsman upheld the complaint and directed Arjo Wiggins Ltd to restore Mr Ralph to the scheme or provide equivalent benefits. Arjo Wiggins appealed, arguing that the Ombudsman lacked jurisdiction, or alternatively should not investigate or award relief, because a comparable court action would have been statute barred. It also challenged the Ombudsman’s factual conclusions about the advice and the likely counterfactual outcome.

1. Jurisdiction. The appeal succeeded on the limitation issue. The Pensions Ombudsman may investigate and determine a complaint or dispute even where the corresponding court action would be dismissed as statute barred. Regulation 5 of the Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996 applies to complaints and disputes alike and contains its own time-limit scheme. Regulation 5(2) postpones time where the complainant was unaware of the relevant act or omission, and regulation 5(3) permits a further period where it was reasonable not to complain earlier.
2. Meaning of regulation 5(2). The reference to unawareness of the act or omission does not mean unawareness that the act or omission caused loss. The wording is straightforward and cannot be expanded by analogy with section 14A of the Limitation Act 1980.
3. Effect of limitation. The Ombudsman may investigate a complaint that would be statute barred in court and may use his statutory powers in relation to it. But he must give effect to a valid limitation defence when determining a dispute involving legal rights. The statutory power to direct steps under section 151(2) of the Pension Schemes Act 1993 does not permit him to grant substantive relief which a court could not grant. This follows the principle that pension funds must operate within the law and that the substantive answer should not depend on whether the matter is decided by a court or the Ombudsman.
4. Pure maladministration. Where injustice results from pure maladministration without infringement of legal rights, no court limitation period applies. The Ombudsman may therefore grant appropriate relief, although the staleness of the complaint may affect the exercise of discretion.
5. Particular criticisms. The Ombudsman was entitled to treat the employer’s communications as advice rather than mere information, and the court should give considerable weight to his specialist assessment of pension documents. His acceptance of Mr Ralph’s evidence about what he would have done was a factual conclusion, not an error of law which the court could correct on appeal.
6. The appeal was allowed to the extent that the Ombudsman had no power to award substantive relief where a valid limitation defence would have defeated the corresponding court action. The form of the consequential order was left for further submissions.

• High Court (Chancery Division): The appeal from the Pensions Ombudsman was allowed on the limitation and substantive-relief issue. The court also rejected the factual and legal challenges to the Ombudsman’s reasoning.