Court proceedings 1

The possible impact of court proceedings which relate to the same subject matter as a complaint or dispute depends on when the proceedings begin.

Court proceedings begun before Ombudsman involvement
Section 146(6) of the Pension Schemes Act 1993 (PSA 1993) provides:

"The Pensions Ombudsman shall not investigate or determine a complaint or dispute -
(a) if before the making of the complaint or the reference of the dispute, proceedings have been begun in any court in respect of the matters which would be the subject of the investigation ..."

In the year ended 31 March 1997, ten cases were regarded as not acceptable for investigation on the above grounds and 26 in the preceding year.

In a lecture to the Association of Pension Lawyers in February 1995 the current Ombudsman observed that there is no explicit definition of "court" for the purposes of s146. He raised the question of whether industrial tribunal (now employment tribunal) proceedings could fall within the section. So far the point has not been considered in any appeals.

Beginning proceedings probably means issuing a writ or an originating summons. This is a fairly simple process and the writ or summons need not be served on the other parties immediately. It is a step which trustees, employers or administrators may wish to take in order to ensure that the case is dealt with by the court rather than by the Ombudsman. The term "pre-emptive strike" is perhaps too emotive a term, but certainly the decision to commence court proceedings may sometimes be partly motivated by a wish to avoid the jurisdiction of the Ombudsman. Jonathan Seres in , 4th edn (FT Law and Tax 1997) observes (at p303) that:

"... if a practitioner is informed that there are circumstances where in all likelihood an application will be made to the Ombudsman, he will need to advise whether the trustees or the employer should first apply to the court to determine a dispute of fact or law in order, s146(6), that the matter be heard in court rather than before the Ombudsman. This might be particularly important where the nature of the complaint relates to matters affecting numerous other members and is more appropriately argued under the full procedures of a court action."

The decisions in and contain similar sentiments in cases involving numerous parties.

Assuming a case is within the Ombudsman's jurisdiction, the lawyers investigating and preparing a court action should ensure that before proceedings are formally begun a party has not lodged a complaint or dispute with the Ombudsman. In appropriate cases it may be worth writing to the Ombudsman explaining that proceedings are about to be issued and requesting that the Ombudsman declines or suspends any investigation relating to the subject matter of the court proceedings. However, in case F00165/66 a complaint was accepted even though related litigation was being considered.

Where court proceedings are discontinued before any resolution is reached, the matter can be dealt with by the Ombudsman (this change was introduced by s53 Child Support, Pensions and Social Security Act 2000).

Court proceedings begun after Ombudsman involvement
This situation is dealt with in s148 of PSA 1993. The section applies where a complaint has been made or a dispute referred to the Ombudsman and any party to the investigation subsequently begins legal proceedings in court against any other party to the investigation "in respect of any of the matters which are the subject of the complaint or dispute." The persons who can be regarded as parties to an investigation for the purposes of s148 are set out in s148(5).

Any party (not just the defendant) may at any time acknowledgement of service and before delivering any pleadings or taking any other step in the proceedings, apply to the court to stay the proceedings. Acknowledgement of service is a minor step in the proceedings; it simply involves completion of a short form which is returned to the court which then sends a copy to the other party. For the rules relating to proceedings begun in Scotland, see s148(3).

The court can only make an order staying the proceedings if it is satisfied that:
(a) there is no sufficient reason why the matter should not be investigated by the Ombudsman; and
(b) the party applying to stay the proceedings was at the time when the proceedings began and still remains ready and willing to do all things necessary to the proper conduct of the investigation. (see s148(4))

Therefore two opportunities for excluding the jurisdiction of the Ombudsman arise through court proceedings. First, the proceedings can be started before a case is referred to the Ombudsman and this takes the subject matter out of his jurisdiction. Second, court proceedings could be started after a case has been referred to the Ombudsman provided that no party successfully applies for a stay on the grounds set out above.