Maladministration - where it is a breach of trust 1

If the Ombudsman finds that maladministration has occurred because of breach of trust, can he provide a remedy which the courts cannot? The answer is no, according to the Vice- Chancellor in [1998] PLR 15. He held:

"In a case in which the maladministration complained of consists of an alleged breach of trust, the Pensions Ombudsman has no power, in my judgment, to direct remedial steps to be taken that are not steps that a court of law could properly have directed to be taken."

This follows the approach taken by Knox J in , who decided in relation to a wrongful payment of surplus to an employer that "... it would not be permissible for the Pensions Ombudsman to require the employer to refund the sums it received unless the court would be in a position to make such an order."

This approach might smack of some High Court superiority complex, but the reasons behind it seem eminently sensible. Knox J provided the following explanation:

"First, it seems to me that there is a real distinction between ordering compensation for inconvenience and distress caused by maladministration as an adjunct to the power to remedy injustice caused by maladministration which, in line with Robert Walker J's decision [in ], I take to be permissible, and requiring the payment of what might well be, and in this case were, very substantial sums by way of payment out from a pension fund, on the other hand. It is trite law that pension funds must operate within the law and it does not seem to me right that there should be a different answer to the question "are you legally liable to repay this sum?" according to the tribunal to which resort is had, so that the answer is:

"If I am sued in court, no, but if a complaint is made to the Pensions Ombudsman, yes."

The injustice through maladministration must in this case consist of the detriment suffered by the payment out itself and is in no sense ancillary as are claims to compensation for inconvenience and distress. My second reason is tied up with the first and is that s.146(6)(a) of the 1993 Act [Pension Schemes Act] prevents the Pensions Ombudsman from investigating a complaint if before the complain is made proceedings have been begun in court in respect of the matters which would be the subject of the investigation. That suggests that the two are intended to be mutually exclusive alternatives and it would be strange if it was contemplated that the alternatives would or might produce different results as to the substance of the dispute. I can well imagine that the two tribunals would be contemplated as having radically different procedures and it may be types of relief, but I would not expect differences on such fundamental matters as whether there was a liability to repay capital sums. Also there would be a possibility of abuse if it were possible to avoid an impending complaint to the Pensions Ombudsman by a well- timed application for the determination of a dispute of fact or law."

Therefore where the maladministration is essentially a breach of a legal duty eg breach of trust, the courts are taking the view that the remedy must not go beyond what a court could order.