CH-2024-000293 - [2025] EWHC 2980 (Ch)

The appellants seek to challenge the Ombudsman’s conclusions on dishonesty in part because they hope that, if those conclusions are varied, they would be able to rely on the exoneration clauses to a greater extent. The extracts from the exoneration clauses set out at [594] and [595] suggest that, of the appellants, only the Trustees could conceptually benefit from the exoneration clauses. It is not obvious that Brambles would be entitled to rely on those clauses. However, Ground 3 also seeks to challenge the Ombudsman’s conclusions on Brambles’ dishonesty perhaps because, as Ms Pope-Williams explained in her submissions, that finding is professionally damaging.

The appellants focus their challenge on the Ombudsman’s conclusions of dishonesty applying the test in Ivey v Genting. Ms Pope-Williams’s oral submissions proceeded on the basis that the appellants do not need to displace other findings of the Ombudsman on (i) the test of dishonesty based on Fattal v Walbrook Trustees (Jersey) Limited [2010] EWHC 2767, or (ii) on the concept of “wilful default” as explained in cases such as Armitage v Nurse [1997] EWCA Civ 1279.

Moreover, the appellants’ challenge is to the findings of Ivey v Genting dishonesty set out at [615] to [650]. They do not argue that those findings are insufficient to support the Ombudsman’s conclusion on the exoneration clauses. They accept that, if those findings as to dishonesty stand, then the exoneration clauses cannot be relied upon. The appellants’ case is that the findings at [615] to [650] were wrongly made.

Moreover, the appellants’ case that the findings on dishonesty were wrongly made is narrow in scope. They argue that, when the Ombudsman assessed the appellants’ conduct, he held them to too high a standard by failing to acknowledge that the appellants did not have the level of knowledge that a professional trustee would have and instead had a “much lower level of knowledge and experience”.

The appellants say that, in deciding whether they were dishonest, the Ombudsman should have applied the following approach set out at [74] of the judgment of Lord Hughes in Ivey v Genting:

74.

When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.

The Ombudsman has made extensive findings on the subjective question of what the appellants knew or believed. Being a subjective question, those findings do not depend on the appellants’ level of experience in the pensions industry: in short they knew what they knew. Findings on the appellants’ subjective knowledge are not challenged. Therefore, Ground 3 must necessarily be a challenge to the way in which the Ombudsman decided whether, applying the standards of ordinary decent people, the appellants’ conduct was dishonest. An ordinary decent person would be expected to make allowance for any lack of sophistication on the appellants’ part. Therefore, in asserting that the Ombudsman held them to “too high a standard”, the appellants are, in effect, seeking to displace his conclusions as to how much allowance ordinary decent people would have made for their asserted inexperience in the pensions industry. That strikes me as a challenge to a conclusion of fact which is proscribed by s151(4) of the Pension Schemes Act 1993.

I will, therefore, approach Ground 3 in the same way as the challenge to an evaluative factual conclusion that was made in Ground 1. I ask, not whether I agree with the Ombudsman’s conclusion, but whether in reaching it he either (i) reached a conclusion that was not available to him on the evidence, or which was perverse, (ii) ignored relevant considerations or (iii) took into account irrelevant considerations.

It is clear that, in reaching his conclusions at [615] to [650], the Ombudsman was taking into account all relevant considerations, and only relevant considerations. The appellants are not arguing that the Ombudsman failed to have regard at all to their asserted lack of experience. Indeed, at [610], the Ombudsman commented specifically on Mr McNally’s and Mr Kaigh’s experience in being trustees of a pension fund. The appellants’ argument is that, having noted the extent of the individual Trustees’ experience, the Ombudsman reached a conclusion on dishonesty that was not available to him.

Approached in that way, Ground 3 must fail since in every single area in which the Ombudsman made findings of dishonesty there were cogent factual findings that amply support a conclusion that an ordinary decent person would find the conduct dishonest whatever the appellants’ degree of experience in the pensions industry:

Perhaps a factual case could be made to the effect that, given the respondents’ asserted lack of experience in the pensions industry, an ordinary decent person might have made allowance for a lack of realisation as to how “exorbitant” the fees were (see paragraph 87.x)) or how dire the Schemes’ financial positions were (see paragraph 87.xi)). However, the Ombudsman was not bound to accept that factual case and his findings in those paragraphs support a conclusion of dishonesty.

Conscious, no doubt, of the hard-hitting nature of the Ombudsman’s conclusions set out in paragraph 87, at points in her oral submissions, Ms Pope-Williams sought to argue that some of those conclusions were not properly explained or reasoned. However, the respondents have no permission to challenge the Determination on that ground.

Ms Pope-Williams also appeared to argue that the force of the Ombudsman’s factual findings was diminished because they were made without hearing any of the appellants’ evidence tested in cross-examination. That does not form a ground of appeal. In any event, as noted in [613], the Ombudsman invited Mr Kaigh and Mr McNally to attend an oral hearing for cross-examination but they refused to do so. The Determination shows the appellants raising concerns about “bias” on the Ombudsman’s part and some reasons for non-attendance are referred to at [701] to [702]. The appellants have not sought to raise issues of bias in their Grounds of Appeal. Nor have they sought to challenge the Ombudsman’s case-management decisions on the process by which he would consider evidence. I therefore see no reason to look behind the Ombudsman’s hard-hitting conclusions of fact, or to doubt the inference he drew at [613] to the effect that Mr Kaigh and Mr McNally were declining to attend the hearing because they were unable to testify as to the reasonableness of their explanations for the various breaches of trust and maladministration that had taken place.

Also in her oral submissions, Ms Pope-Williams invited the court to go through the Ombudsman’s various findings and determine which were consistent with dishonesty and which were not. As I understood it, the appellants make this request with a view to being relieved of the stigma of some at least of the findings of dishonesty, even if the Ombudsman’s overall conclusion is not set aside. I see no utility in that exercise. The function of this appeal is to determine whether the Ombudsman’s Determination should be set aside or varied on the grounds advanced. The reasons I have set out above lead me to the clear conclusion that the appeal on Ground 3 should fail and I see no point, therefore, in parsing individual findings.

By Ground 4, the appellants seek to argue that Mr G gave consent to a realisation of his investments through the Gilbert Scheme and that this consent should operate to reduce the payments that the appellants must make in respect of the assets of the Gilbert Scheme.

However, Ms Pope-Williams realistically accepted in her submissions that, if Ground 3 failed so that the findings of dishonesty against the appellants stood, the appellants would not be able to establish that Mr G gave the necessary “consent”. Moreover, she accepted that there could be no “contributory negligence” if Mr G was the victim of dishonesty as the Ombudsman found.

Ground 3 has failed and therefore Ground 4 does not need to be considered.

The appellants’ appeals are dismissed on all grounds.

APPENDIX 1 – THE SCHEMES AND THEIR INVESTMENTS