Bic Uk Pension Scheme · CAS-52655-W0Z3

CAS-52655-W0Z3

Ombudsman’s Determination Applicant Mr M

Scheme Bic UK Pension Scheme (the Scheme)

Respondent Trustees of the Bic UK Pension Scheme (the Trustees)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

1 The High Court decision on the question of whether the pension increases were validly granted was

reversed by the Court of Appeal in BIC v Burgess [2019] 051 PBLR (026) on 10 May 2019. 2 The final payment will amount to £48.14. 1

Trustees of the Bic UK Pension Scheme CAS-52655-W0Z3

Detailed Determination Material facts

The factual background to Burgess (CA) and the impact of the CMG Decision3 on the question of whether the Ombudsman is a competent court4 is set out in the Pensions Ombudsman’s (the PO) Determination of Mr E’s complaint [CAS-55100-G3W9] (19 April 2024) (the Lead Case). I do not intend to repeat those facts in detail in this Determination.

On 18 February 1991, the then Trustees of the Scheme resolved that pensions in payment would increase in line with the Retail Prices Index (RPI) or 5%, whichever was the lower (the Trustee Resolution). The increase was subsequently applied with effect from 6 April 1992 (the 1992 Improvement). The Scheme had individual trustees, who included the managing director and two directors of BIC UK.

At the time, the rules of the Scheme did not provide for increases to be granted automatically on pensions in excess of the guaranteed minimum pension (the GMP) in respect of pensionable service completed before 6 April 1997. The rules, however, did give the Trustees a discretion to increase pensions in payment if BIC UK agreed and sufficient funds were available.

On 19 March 1992, an announcement (the March 1992 Announcement) was issued for and on behalf of the Trustees. It explained that “all pensions commencing after 6th April 1992 will be increased each year by 5% or the Retail Prices Index, whichever is the lower”. It also explained that “the increase will be applied to the part of the benefit in excess of the Guaranteed Minimum Pension [the Pre 97 Excess]” (the Pre 97 Increases).

Mr M was a member of the Scheme at the time and would have been sent a copy of the March 1992 Announcement. An announcement was also issued in December 1992 (the December 1992 Announcement) which said:

3 The Pensions Ombudsman v CMG Pension Trustees Ltd and CGI IT UK Limited [2022] EWHC 2130 (Ch) 4 for the purposes of section 91(6) of the 1995 Act.

2 CAS-52655-W0Z3 “Pension increases

The way pensions are increased in payment is described in the Explanatory Booklet and an announcement dated 19th March 1992.

The Trustees have power if the company agrees and if sufficient funds are available to provide further increases.

Under these powers all pensions in payment were increased on 6th April 1992 in line with increases in the Retail Prices Index for each year since the pension started to be paid.”

“Your guaranteed minimum pension increases at 6.25% per year compound for each complete tax year between your date of leaving and age 65. A tax year runs from 6 April to the following 5 April.

Your benefits in excess of your guaranteed minimum pension increases at 5% per year compound, or the increase in the Retail Price Index if less between your date of leaving and age 65”.

3 CAS-52655-W0Z3

“The Company has agreed that there should be no deductions, at this time, for the increases already applied, that may not be in accordance with the Scheme rules.”

5 As will be seen in paragraph 29 below, the subsequent Court of Appeal decision in Burgess (CA)

concluded that the Pre 97 Increases had been improperly paid in breach of the Scheme Rules. 4 CAS-52655-W0Z3

6 On 17 April 2018, the High Court originally ruled in Burgess v BIC UK [2018] 054 PBLR (040) (Burgess)

that the increases were validly granted. 5 CAS-52655-W0Z3

7 The Trustees explained that, under the terms of the Proposed Recoupment Plan, recovery would be over

the same period that the overpayments had accrued. 6 CAS-52655-W0Z3

7 CAS-52655-W0Z3

The 1992 Improvement – Mr M’s original submissions

The 1992 Improvement – Mr M’s additional submissions to TPO

8 Information published on Companies House’s website indicates that Mr Hartridge was a managing director

of BIC UK. The judgment in Burgess (CA) indicates that he was also the Chairman of the Trustees. 8 CAS-52655-W0Z3

Change of position

Hardship

Distress and inconvenience

The 1992 Improvement

9 CAS-52655-W0Z3

The Ombudsman’s position on overpayment cases – trust based occupational pension schemes

9 See Catchpole v Alitalia Pension Trustees at [47] to [58] for an example of where an estoppel was held to

give a right to a benefit but noting that this would only be appropriate in unusual circumstances. 10 CAS-52655-W0Z3

10 Arjo Wiggins v Ralph [2009] 079 PBLR – [2009] EWHC 3198 (Ch)- paragraphs 20-23 and section 14B of

the Limitation Act 1980. 11 Trustees of trust based occupational pension schemes governed by English law generally have power to

compromise claims under section 15 of the Trustee Act 1925 subject to the requirements of the Trustee Act 2000 (Schedule 1, paragraph 4). There may also be an express power to compromise claims in the trust deed and rules. 11 CAS-52655-W0Z3

12 Re Musgrave [1916] 2 Ch 417. 13 Burgess v BIC UK [2018] 054 PBLR (040), paragraphs [169] to [172]. 14 In England and Wales this will normally be the County Court. 15 Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited (CA) at paragraphs

153-160. However, it was announced in the King’s speech in July 2024 that the law will be changed so that TPO will be treated as a competent court for the purposes of section 91 of the 1995 Act. Once the new legislation is in force this will reverse this aspect of the CMG decision. 16 Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited at paragraph 56.

12 CAS-52655-W0Z3

Legal analysis and conclusions

13 CAS-52655-W0Z3

Future pension payments

Reduction of pension to correct level going forward

Mr M has argued that the Trustees should not have corrected the pension going forward from 6 July 2020 to the level provided under the Scheme Rules. He claimed this on the basis that the statements given by the Trustees, in particular at the time of his redundancy, mean that they were legally prevented (estopped) from arguing that he was not entitled to the higher pension going forward.

As explained in the section “The Pensions Ombudsman’s position on overpayment cases – trust based schemes”, trustees generally have a duty to pay the correct level of benefits under the scheme. On the discovery of an error, trustees are generally obliged to reduce the pension to the correct level going forward. In very limited circumstances, it may be possible to argue successfully that a member has an entitlement to a promised benefit on the basis of an estoppel.

The requirements for an estoppel by representation claim to succeed have been set out by the courts. It has been said18 that:

“If one had to identify a single factor which a claimant in an estoppel case has to establish in order to obtain some relief from the court it would be unconscionability …”

17 Burgess v BIC [2018] 054 PBLR (040) at paragraph [172] and [178] and Re Robinson [1911] Ch 502. 18 Steria v Hutchinson [2006] 64 PBLR at [91]. 19 Steria v Hutchinson [2006] 64 PBLR (CA) Neuberger LJ at paragraph [92].

14 CAS-52655-W0Z3

“This is not a case where the Trustees could have, but did not, exercise a discretion which it is now too late to exercise. Still less is it a case where an amendment to the Scheme would have been needed to introduce the benefit claimed. Where the exercise of a discretion or of a power of amendment is necessary to give rise to a benefit claimed by way of estoppel, it might be more difficult to say that it would be unconscionable for the Trustees to deny the claim since that would be to impute to them a decision (which they had not in fact made) to exercise their discretion or to amend the scheme in favour of the claimant.”

Past overpayments

General equitable defence to equitable recoupment claim

20 Steria v Hutchinson [2006] 64 PBLR (CA) Neuberger LJ at paragraph [93]. 21 Catchpole v Alitalia Pension Trustees [2010] 076 PBLR. 22 The PO’s Determination of the Lead Case includes a detailed explanation of the legal basis by which the

Ombudsman takes into account the principles underlying the defences to repayment claims, when deciding whether recoupment is equitable for the purposes of Re Musgrave. 15 CAS-52655-W0Z3

Unjust enrichment

Negligent misstatement claim

23 The case referred to analysis in an article by Charles Mitchell and Jessica Hudson - Trustee Recoupment:

A Power Analysis (2021) 35(1) Trust Law International 3 and among other things cited Re Musgrave [1916] 2 Ch 417) which the PO relied on in the Lead Case. 24 Lipkin Gorman (a firm) v Karpale [1991] 2 AC 548 as per Lord Goff at paragraph [580C]. Lord Goff set out

this principle in general terms and the courts have subsequently developed principles about where such a defence applies. 16 CAS-52655-W0Z3 The Recommendations

The communications issued to members concerning the Pre 97 Increases

The underlying principles of change of position by analogy

17 CAS-52655-W0Z3

Unlike the position in relation to an estoppel defence (see paragraph 138 to 139 below) it is not necessary for the member to receive an unequivocal representation of entitlement to the overstated benefit for a change of position defence to be available.

Good faith

Detriment

25 See Webber v Department for Education, Teacher's Pensions [2012] EWHC 4225 (Ch) and Webber v

Department of Education which applied the earlier test in Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm) in a pensions context. 26See for example Abouh Ramah v Abacha [2006] EWHC Civ 1492 Armstrong DLW GmBH v Winningham

Networks Ltd [2012] EWHC 10 (Ch) at [110]. 18 CAS-52655-W0Z3

Causation

The period leading up to the date of the February 2013 Announcement

27 See Scottish Equitable v Derby [2000] PLR 1 (CA) at [33]. 28 Phillip Collins v Davis [2000] 3 All ER case (cited with approval in Scottish Equitable v Derby). 29 National Westminster Bank plc v Somer International UK Limited [2002]. 30 Scottish Equitable v Derby [2001] 3 All ER 818, Harrison J at paragraphs [37]-[41].

19 CAS-52655-W0Z3

20 CAS-52655-W0Z3 The period after the date of issuance of the February 2013 Announcement to May 2019

“The wording, in my view, suggests that the ‘wound had been staunched’, when in fact, as a result of the baked-in increases, the blood continued to flow. Given its importance and implications for the pensioners, the Trustees should have explained this much more clearly and also highlighted the fact that if the Court concluded the increases had not been properly granted, any overpayments which would need to be repaid would extend to both (a) overpayments built up until the date of the February 2013 Announcement and (b) those continuing to build up as a result of “baked in” increases made after 21 CAS-52655-W0Z3 the issue of the February 2013 Announcement. By painting an unclear or over- optimistic description of the situation there was a real risk that the pensioners could be seriously prejudiced”.

22 CAS-52655-W0Z3 The period shortly after the date of issuance of the May 2019 Announcement to the date of issuance of the Notification

“I have considered carefully whether it can be said Mr E ceased to act in good faith by continuing to spend the money on or after May 2019, when the outcome of the Burgess (CA) decision was known. However, the May 2019 Announcement…did not properly explain the implications of the decision. In my view, it was not until March 2020, that it was properly explained to Mr E that he had continued to build up further overpayments after the date of the February 2013 Announcement and that these additional overpayments... would have to be repaid as well as the earlier overpayments”.

The period from the date of issue of the Notification

The underlying principles of estoppel by analogy

31 these principles were applied to the general equitable enquiry I am required to make under Re Musgrave.

23 CAS-52655-W0Z3

Estoppel by representation

The alleged Agreement

Conclusion on whether it is appropriate to deny recoupment under general equitable principles

24 CAS-52655-W0Z3 Laches

either:

“The question for the court in each case is simply whether, having regard to the delay, its extent, the reasons for it and its consequences, it would be inequitable to grant the claimant the relief he seeks.”

32 Burgess v BIC UK [2018] 054 PBLR (040) at paragraphs [173] – [176] and [178]. 33 Lindsay Petroleum Oil & Co v Hurd (1974) LR PC 221 at [66] as approved in Erlanger v New Sombrero

Phosphate Co (1878) 3 App Cases and applied in Re Sharpe [1982] 1 Ch 154 Ch. 34 See Frawley v Neill [2000] CP Reports 20 The Times April 5 1999 and Schulman v Hewson [2002] EWHC

855 (Ch) at [44]). See also J J Harrison (Properties) Ltd v Harrison [2001] 1 BCLC 158 which also adopted the more modern formulation in a systematic way looking at the various factors which may or may not make it equitable to allow a laches defence. See also Patel v Shah [2005] EWCA Civ 157 where the Court of Appeal endorsed the more modern approach that laches does not require an enquiry about whether the circumstances can be fitted into a preconceived formula derived from old cases but a broad approach should be taken to ascertain on whether it is unconscionable for the party to be permitted to assert his beneficial rights. 35 PO Nedlloyd BV v Arab Metals Co [2006] EWCA Civ 1717 applied in Sheffield v Sheffield [2013] EWHC

3927 (Ch) at [100], [106], [119]. 25 CAS-52655-W0Z3

Contract

26 CAS-52655-W0Z3

Directions

Dominic Harris

Pensions Ombudsman 12 December 2025

27 CAS-52655-W0Z3 Appendix 1

Mr M’s current household income and expenditure

Income Monthly Total Annual Total Mr M's State pension £897.40 £10,768.80 Mrs M's State pension £819.12 £9,829.44 Mr M's pension (BIC) pension (net) £282.83 £3,393.96 Mrs M's pension (BIC) pension (net) £284.70 £3,416.40 Mr M's pension (other) pension (net) £232.33 £2,787.96 Mr M's pension (other) pension (net) £17.48 £209.76 TOTAL INCOME £2,533.86 £30,406.32

Expenses Monthly Total Annual Total Holiday - 50th anniversary £202.17 £2,426 Groceries £780 £2,160 Heating - boiler oil £75 £900 Car maintenance - two cars £108.33 £1,300 Car insurance - two cars £39.42 £473 Car - petrol for two cars £260 £60 Car - road side recovery £14.58 £175 Car - road tax £67.92 £815 Life insurance £16.33 £196 Home insurance £36.08 £433 House maintenance £66.67 £800 Boiler - service cost £10 £120 Hairdressing - Mr and Mrs M £63.08 £757 Allotment £3.33 £40 Window cleaner £20 £240 Gardener £10 £120 Mobile phone - two mobile phones £58.17 £698 Internet and TV £5.33 £64 Amazon Prime £9 £108 Computer and printer costs £7.83 £94 Council tax £222 £2,664 Electricity £87.33 £1,048 Water £42.42 £509 General clothing and footwear £26.67 £320 Credit card £25 £300 TOTAL EXPENSES £2,256.67 £27,080

TOTAL INCOME OVER EXPENDITURE £277.19 £3,326.32

28 CAS-52655-W0Z3

Appendix 2

Summary of Transactions

Account One 36 Balance 31 December 2020 £11,225 30 June 2020 £15,661 31 December 2019 £19,007 30 June 2019 £9,943 31 December 2018 £12,606 30 June 2018 £19,483 31 December 2017 £23,734 30 June 2017 £1,615 31 December 2016 £3,561 30 June 2016 £449 01 January 2016 £50

36

Transactions made from Account One that exceed £1,000:- A debit of £1,643 on 1 September 2020 A debit of £1,420 on 13 February 2020 A credit of £2,300 on 11 October 2019 A debit of £10,000 on 7 October 2019 A debit of £2,300 on 5 October 2019 A credit of £13,058 on 3 October 2019 A credit of £10,000 on 2 October 2019 A debit of £1,050 on 11 July 2019 A credit of £1,575 on 8 July 2019 A debit of £1,625 on 27 June 2019 A debit of £3,000 on 22 June 2019 A credit of £2,500 on 28 January 2019 A credit of £1,391 on 11 January 2019 A debit of £5,845 on 17 December 2018 A debit of £4,000 on 8 January 2018 A credit of £22,610 on or around 11 October 2017 A debit of £3,265 on 3 January 2017 A credit of £3,265 on 6 October 2016

29 CAS-52655-W0Z3 Appendix 3

Summary of Transactions

Account Two 37 Period Opening Balance Balance Carried Forward

16 July 2019 -16 April 2020 £519 £794

16 July 2018 -16 July 2019 £407 £519

16 July 2017 -16 July 2018 £2,380 £407

37 Transactions made from Account Two that exceed £1,000:-

A debit of £1,398 on 18 February 2020, in favour of a travel company A cash deposit of £1,400 on 13 February 2020. A cash deposit of £1,000 on 11 July 2019. A debit of £1,524 on 1 July 2019 A cash deposit of £1,825 on 27 June 2019 A cash withdrawal of £2,500 on 5 December 2018 A credit of £2,500 via a funds transfer on 5 December 2018 A debit of £4,060 on 15 January 2018, in favour of a travel company A credit of £4,000 on 8 January 2018 via cheque A debit of £1,600 via a funds transfer on 3 January 2018 A credit of £1,600 via a funds transfer on 29 December 2017 A debit of £1,800 via a funds transfer on 3 November 2017 A credit of £1,800 via a funds transfer on 31 October 2017 A credit of £3,500 via a funds transfer on 16 August 2017 A debit of £3,720 on 17 August 2017 to “[ABC] GLASS [Company]”

30 CAS-52655-W0Z3 Summary of Transactions continued

Account Two

Balance Balance From To Brought Carried Forward Forward

01-Apr-20 16-Apr-20 £264 £794

01-Mar-20 31-Mar-20 £205 £264 01-Feb-20 28-Feb-20 £649 £205 01-Jan-20 31-Jan-20 £608 £649 01-Dec-19 31-Dec-19 £737 £608 01-Nov-19 30-Nov-19 £819 £737 01-Oct-19 31-Oct-19 £785 £819 01-Sep-19 30-Sep-19 £993 £785 01-Aug-19 31-Aug-19 £697 £993 01-Jul-19 31-Jul-19 £1,847 £697 01-Jun-19 30-Jun-19 £638 £1,847 01-May-19 31-May-19 £442 £638 01-Apr-19 30-Apr-19 £575 £442 01-Mar-19 31-Mar-19 £732 £575 01-Feb-19 28-Feb-19 £851 £732 01-Jan-19 31-Jan-19 £732 £851 01-Dec-18 31-Dec-18 £759 £732 01-Nov-18 30-Nov-18 £654 £759 01-Oct-18 31-Oct-18 £692 £654 01-Sep-18 30-Sep-18 £858 £692 01-Aug-18 31-Aug-18 £921 £858 01-Jul-18 31-Jul-18 £789 £921 01-Jun-18 30-Jun-18 £789 £639 01-May-18 31-May-18 (£304) £639 01-Apr-18 30-Apr-18 £1,039 £145 01-Mar-18 31-Mar-18 £1,039 £1,039 01-Feb-18 28-Feb-18 £1,015 £1,039 01-Jan-18 31-Jan-18 £2,787 £1,015 01-Dec-17 31-Dec-17 £1,221 £2,787

31 CAS-52655-W0Z3 Appendix 4

Breakdown of the overpayments

Corrected Pension in Period of Payment Pension Paid Payment Overpayment From To 01/01/1999 31/12/1999 £2,749.32 £2,749.32 £0.00 01/01/2000 31/12/2000 £2,821.34 £2,749.32 £72.02 01/01/2001 31/12/2001 £2,835.82 £2,749.32 £86.50 01/01/2002 31/12/2002 £2,913.16 £2,749.32 £163.84 01/01/2003 31/12/2003 £2,945.41 £2,749.32 £196.09 01/01/2004 31/12/2004 £2,996.02 £2,749.32 £246.70 01/01/2005 31/12/2005 £3,078.68 £2,749.32 £329.36 01/01/2006 31/12/2006 £3,173.15 £2,749.32 £423.83 01/01/2007 31/12/2007 £3,257.50 £2,749.32 £508.18 01/01/2008 31/12/2008 £3,375.58 £2,749.32 £626.26 01/01/2009 31/12/2009 £3,508.85 £2,749.32 £759.53 01/01/2010 31/12/2010 £3,684.30 £2,749.32 £934.98 01/01/2011 31/12/2011 £3,684.30 £2,749.32 £934.98 01/01/2012 31/12/2012 £3,855.42 £2,749.32 £1,106.10 01/01/2013 31/07/2013 £2,361.44 £1,603.77 £757.67 01/01/2013 31/12/2013 £1,686.75 £1,329.47 £357.28 01/08/2013 30/03/2014 £1,012.05 £813.91 £198.14 01/04/2014 30/03/2015 £4,121.71 £3,331.09 £790.62 01/04/2015 30/03/2016 £4,179.77 £3,390.69 £789.08 01/04/2016 30/03/2017 £4,200.43 £3,411.89 £788.54 01/04/2017 30/03/2018 £4,252.49 £3,465.33 £787.16 01/04/2018 30/03/2019 £4,332.14 £3,547.09 £785.05 01/04/2019 30/03/2020 £4,414.18 £3,631.31 £782.87 01/04/2020 30/06/2020 £1,120.44 £925.18 £195.26

TOTAL £12,620.0438

38 The Trustees are seeking to recover the sum of £12,620.

32