Plumbing Mechanical Services Uk Industry Pension Scheme · CAS-39170-Y5Q0

CAS-39170-Y5Q0

Ombudsman’s Determination Applicant Mr S

Scheme Plumbing & Mechanical Services (UK) Industry Pension Scheme (the Scheme)

Respondents Plumbing Pensions (UK) Limited as trustee of the Plumbing and Mechanical Services (UK) Industry Pension Scheme (the Trustee), and Plumbing Pensions (UK) Administration Limited (the Administration Company)

Complaint Summary CAS-39170-Y5Q0

Summary of the Ombudsman’s Determination and reasons

Detailed Determination

Jurisdictional Issues

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Employer Debt Requirements – History

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Employer Debt Requirements – Current Law

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“Condition I is that a debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act but at the applicable time it is excluded from the value of the assets of the scheme because it is unlikely to be recovered without disproportionate cost or within a reasonable time.”

“Schemes which are not eligible schemes

…

2 (2) Except as otherwise provided in paragraphs (4) and (5) of this regulation, an occupational pension scheme which would be an eligible scheme but for this paragraph is not an eligible scheme where, at any time, the trustees or managers of the scheme enter into a legally enforceable agreement with an employer in relation to the scheme the effect of which is to reduce the amount of any debt due to the scheme from that employer under section 75 of the 1995 Act which may be recovered by, or on behalf of, those trustees or managers.”

Material facts

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1 See Report and Financial Statements for Plumbing & Mechanical Services (UK) Industry Pension Scheme for year ended 5 April 2022 2 See Report and Financial Statements – page 7 6 CAS-39170-Y5Q0

“Change of Status

We refer to your telephone call on 28 April 2010 concerning your change from a sole trader to a limited company.

If my understanding of the situation is correct, the whole of the business and its employees are being transferred to the new company.

In these circumstances, we require you to complete a new Deed of Adherence, which is enclosed and should be completed where indicated and returned.

…if the new company accepts the previous employer’s responsibility in relation to the scheme a replacement contracting-out certificate can be obtained under the continuity provisions without surrendering the existing certificate and making a further election for a new certificate.

To do this we require your confirmation…We also require you to sign page 7 of the attached APSS105...” (See Appendix B for the full contents of the April Letter).

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Prescription/Limitation defence

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Failure to comply with the debt legislation and alleged breach of trust

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Misinformation/failure to provide information

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Conflict of interests

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Failure to comply with the debt legislation and alleged breach of trust

Misinformation/failure to provide information

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Conflict of interests

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The First Preliminary Decision

Further submissions on behalf of the Trustee and the Administration Company

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24 CAS-39170-Y5Q0 The Trustee’s position - reliance on the alleged misstatement

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Conclusions

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“Robinson did not lay down any new principle of law, but three matters in particular were clarified. First, the decision explained, as Michael had previously done, that Caparo did not impose a universal tripartite test for the existence of a duty of care, but recommended an incremental approach to novel situations, based on the use of established categories of liability as guides, by analogy, to the existence and scope of a duty of care in cases which fall outside them. The question whether the imposition of a duty of care would be fair, just and reasonable forms part of the assessment of whether such an incremental step ought to be taken. It follows that, in the ordinary run of cases, courts should apply established principles of law, rather than basing their decisions on their assessment of the requirements of public policy.”

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“It is sometimes said that there has to be an assumption of responsibility by the person concerned. That phrase can be misleading in that it can suggest that the professional person must knowingly and deliberately accept responsibility. It is however clear that the test is an objective one… the phrase means simply that the law recognises a duty of care. It is not so much the responsibility is assumed as that it is recognised or imposed by the law.”

3 See discussion in Charlesworth & Percy on Negligence at paragraphs 2-213 to 2-217 4 Customs and Excise Commissioners v Barclays Bank [2006] UKHL 28 at [4]. In this case, which predates Robinson and Poole, Lord Bingham referred to the three different approaches which the courts had used in deciding whether a defendant owed him a duty of care in tort. The three methods could be described as (1) whether the defendant assumed (or is to be treated as having assumed) responsibility for the statement;(2) whether the facts satisfied a threefold test of reasonable foreseeability, of proximity and the imposition of the liability being fair just and reasonable; and (3) whether a finding of liability involved an incremental development of the law from the earlier cases establishing liability for negligence. Lord Bingham also recommended at [8] that the court should concentrate its attention to the detailed circumstances of the particular case and the particular relationship between the parties in the context of their legal and factual situation as a whole. 34 CAS-39170-Y5Q0

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“Much of the argument was directed to establishing that a person giving advice cannot be under any duty to take care unless he has some special skill, competence, qualification or information with regard to the matter on which his advice is sought. But then how much skill or competence must he have?

…We can see no ground for the distinction that a specially skilled man must exercise care but a less skilled man need not do so. We are unable to accept the argument that a duty to take care is the same as a duty to conform to a particular standard of skill. One must assume a reasonable man who has that degree of knowledge and skill which facts known to the enquirer (including statements made by the adviser) entitled him to expect of the adviser, and then enquire whether such a reasonable man could have given the advice which was in fact given if he had exercised reasonable care.

We can see no virtue in a previous holding out…In our judgment when an enquirer consults a businessman in the course of his business and makes it plain to him that he is seeking considered advice and intends to act on it in a particular way, any reasonable businessman would realise that, if he chooses to give advice without any warning or qualification, he is putting himself under a moral obligation to take some care. It appears to us to be well within the principles established by the Hedley Byrne case to regard his action in giving such advice as creating a special relationship between him and the enquirer and to translate his moral obligation into a legal obligation to take such care as is reasonable in the whole circumstances…”

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“For present purposes, I wish also to refer to the nature of the 'special skill' to which Lord Morris referred in his statement of principle. It is, I consider, clear from the facts of Hedley Byrne itself that the expression 'special skill' is to be understood in a broad sense, certainly broad enough to embrace special knowledge. Furthermore Lord Morris himself, when speaking of the provision of a statement in the form of information or advice, referred to the defendant's judgment or skill or ability to make careful inquiry, from which it appears that the principle may apply in a case in which the defendant has access to information and fails to exercise due care (and skill, to the extent that this is relevant) in drawing on that source of information for the purposes of communicating it to another.”

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5 Outram is unusual in that the employer was also the trustee and administrator of the scheme. 39 CAS-39170-Y5Q0

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“Taking these factors into account, and based upon the information available to us, there is no clear evidence that the incorporation, combined with the proposed FAA, will materially adversely impact the covenant offered to the Scheme and we would recommend that the Trustee accepts the FAA.”

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Maladministration (non-financial injustice)

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Anthony Arter CBE

Deputy Pensions Ombudsman 13 October 2023

51 CAS-39170-Y5Q0 Appendix A A summary of Mrs S’ recollection of the telephone conversation with the Administration Manager

“To put into context the relationship between Ms [N] and Mrs S at the office of A. [S] & Son is that our client (Mr [S]) small business ran an In-House Sage Payroll scheme. The details of the employees entered into the Plumbing Pension were input into the Payroll program and pension contributions were calculated every time the payroll was run which in 2010 was weekly. There were weekly, monthly forms and an annual returns sheet to complete by paper and [send] to Plumbing Pensions in Edinburgh.

Over many years there were of course queries and occasionally problems regarding the running of the Pension Scheme through the payroll that Mrs [S] needed to seek advice on and her point of contact at Plumbing Pensions was always Ms [N]. She was the person who dealt with queries from A. [S] & Son unless she was on holiday or otherwise absent. Ms [N] was allocated specifically to A. [S] & Son due to her knowledge of the Plumbing Scheme and our client’s participation in it. Over a period of many years, our client and Ms [N] spoke to each other via telephone and our client was informed and under the impression at all times that Ms [N] represented both the Trustee and the Administrator in those discussions.

Prior to the business going from sole Trader to Limited Company on 1 July 2010, Mrs S made a telephone call to the Administration Manager. She explained to her that the business was changing its legal status from sole trader to Limited Company on 01 July 2010 and asked what implications this would have both financially and practically. the Administration Manager’s reply was that nothing would change save that the name on the paperwork would change from A. S & Son to A. S & Son Ltd from 01 July 2010. Mrs S did query the Pension Scheme Reference Number during the conversation as she thought that if the legal name was changing however slightly then she would be given a new scheme reference number but the Administration Manager assured her that the current scheme reference number would remain unchanged.

As the Administration Manager represented the Trustee and the Administrator, our client reasonably relied on her assurances and at no point did the Administration Manager ask Mrs S to put anything in writing or mention that the business would trigger a section 75 debt by changing its legal status. The conversation came to an end and Mrs S relayed the content of the call to her husband Mr S where [sic] they then considered the matter closed as no action was requested from them.

The reason Mrs S remembers this particular telephone conversation is that the calls to the Administration Manager were usually about the day to day running

52 CAS-39170-Y5Q0 of the Plumbing Scheme through the payroll or end of year problems. In this instance owing to there being so much organisation and preparation in Mr S’ business to implement the change from Sole Trader to Limited Company our client paced [sic] particular attention to detail to facilitate the change on 01 July 2010. The telephone call from Mrs S to the Administration Manager was a crucial part of this preparation.

Our client’s position is that she is entitled to rely on representations made on behalf of the Trustee as there is no requirement or basis of previous dealings that all matters would be set out or should be requested in writing. It is clear from the history of the Trustee’s knowledge of the issues and in particular Section 75, it was aware that section 75 debts were required to be collected under legislation but ignored this deliberately and in particular, [misled] employers about this”.

53 CAS-39170-Y5Q0 Appendix B The April Letter

“28 April 2010

FAO Mrs [S]

***S & Son

Dear Mrs [S]

Change of Status

We refer to your telephone call on 28 April 2010 concerning your change from a sole trader to a limited company.

In these circumstances, we require you to complete a new Deed of Adherence, which is enclosed and should be completed where indicated and returned. We also require you to obtain a new contracting out certificate for the limited company.

If my understanding of the situation is correct, the whole of the business and its employees are being transferred to the new company.

In these circumstances, if the new company accepts the previous employer’s responsibility in relation to the scheme a replacement contracting-out certificate can be obtained under the continuity provisions without surrendering the existing certificate and making a further election for a new certificate.

To do this we require your confirmation in writing that this is the case and I have attached a draft letter, which should be copied into your headed paper and signed and returned to us. We also require you to sign page 7 of the attached APSS105, which we have completed on your behalf”.

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