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

As noted in paragraph 20, s33 of the Pensions Act 1995 imposed some limitations on the Trustees’ ability to rely on exoneration clauses to limit their liability. The Ombudsman’s conclusions on the scope of s33 are not challenged.

However, it remained possible that the Trustees’ liability in relation to some defaults could be limited or excluded by the exoneration clauses notwithstanding s33 of the Pensions Act 1995. The terms of the exoneration clauses were set out at [594] and [595]. As summarised at [597] those exoneration clauses raised the questions of whether the Trustees’ actions involved “personal conscious bad faith” or “their own wilful neglect or default”. At [598] to [599], the Ombudsman concluded that there was no practical difference between the scope of the two exoneration clauses based on this difference in wording. That conclusion is not challenged.

Moreover at [600], the Ombudsman concluded that “personal conscious bad faith”, “actual fraud” and “wilful default” were synonymous expressions. I express no conclusion on whether that is correct or not since no party to this appeal seeks to argue otherwise. The appellants are prepared to accept for the purposes of this appeal that to the extent they were “dishonest” in the sense set out in Ivey v Genting Casinos Ltd t/a Crockfords [2017] UKSC 67 (Ivey v Genting), they are not entitled to the benefit of the exoneration clauses.

The Ombudsman set out an analysis of the meaning of “dishonesty” at [601] to [611]. I will not summarise that analysis since, in light of the points I have made in paragraphs 71 and 73 above, the focus of the appeal on Ground 3 is on the Ombudsman’s conclusions that the matters he referred to at [615] to [650] involved “dishonesty” in the Ivey v Genting sense. I therefore focus on the Ombudsman’s conclusions in those paragraphs.

In paragraphs [615] to [643], the Ombudsman considered specific investments that had been made. His analysis in these sections followed a similar pattern. First, he considered features of the investments in question and the circumstances in which they were made. Second, he commented on each relevant individual Trustee’s state of mind, and subjective knowledge, when making those investments. Finally, he considered whether an ordinary decent person would believe the Trustees to be behaving dishonestly in the light of his findings on those matters. The Ombudsman’s overall conclusion was that in relation to specific investments (the storage units at Strongbox, 3TC House, POD Estates Limited, Tennyson Property Investment Limited, GBT Partnership Limited, Harper International Consultants Limited, Priority Solutions Limited, and Great Moor Street Bolton) the Individual Trustees had indeed behaved dishonestly.

At [644] and [645], the Ombudsman concluded that Mr McNally behaved dishonestly in relation to the payment of excessive management fees.

At [646] to [650], the Ombudsman concluded that Mr Kaigh, Mr McNally and Brambles behaved dishonestly in relation to the administration of the Schemes.

The Ombudsman’s overall conclusion was that the Trustees’ dishonesty precluded them from taking any benefit from the exoneration clauses.