Former Police Officers Overturn Pensions Ombudsman Decision in the High Court for
Today marks another Ellis Hass & Co victory after successfully overturning a pensions ombudsman decision in the High Court for pension misstatements.
Mr Justice Morgan delivered an important judgement in the Chancery Division today, Corsham and Others v Police and Crime Commissioner for Essex and the Chief Constabulary of Essex  EWHC 1776 (Ch) allowing separate appeals on points of law for former police officers from Essex Police and Avon and Somerset against a decision of the Pensions Ombudsman (Mr Anthony Arter) dated 21 August 2018. The 5 former officers had taken up civilian roles within 1 month of their retirement which led to massive tax penalties under the Finance Act 2004.
The appellants suffered a loss represented by the increased amount of the tax payable by them on their lump sums and their annual payments up to the age of 55 as compared with the tax which would have been payable on their annual payments up to the age of 55.
Mr Justice Morgan decided that where a police authority as a pension scheme administrator (now the Police and Crime Commissioner) knew at the time of notifying the officers of their pension entitlement that they had been offered civilian roles ( 2010 and 2011), liability could arise in tort if incorrect statements had been given.
He stated “As to the legal test to be applied in determining whether the Avon and Somerset police authority should be held to be liable in law for its negligent misstatements on which the appellants reasonably relied, I have considered the discussion of the relevant principles in the judgment of Lord Bingham in Customs and Excise Comrs v Barclays Bank plc  1 AC 181 at -. In that passage, Lord Bingham referred to the three different approaches which a court might adopt to determine the question of legal liability for a negligent misstatement which has caused financial loss. The three methods can 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 liability being fair, just and reasonable; and (3) whether a finding of liability involved an incremental development of the law from earlier cases establishing liability for negligence”
“… the police authority actually knew that the appellants were being re-employed shortly after retirement and where the police authority ought to have known the legal position under the 2004 Act, I consider that the police authority did assume a responsibility to the appellants not to make statements which they should have understood were highly misleading and which did foreseeably mislead”
He found that “the appellants did rely on the statements made to them that the lump sums would be tax-free and, further, that they believed those statements to be correct. I also find that the appellants acted reasonably in relying on those statements. I further find that if the appellants had been given the correct information, namely, that they would be liable for substantial tax charges on their lump sums and their annual benefits, they would have postponed the date of their re-employment to avoid the tax liability. The action needed to avoid the tax liability was very limited and would not have had any significant adverse consequences for the appellants and would have released them from the liability to pay substantial sums by way of tax.”
Jeff Zindani of Ellis Hass & Co, Solicitor for the Essex Officers stated “This is a remarkable judgement as it extends the law relating to negligent misstatements into the pensions arena and whilst the decision fell short of a wider extension based upon a general duty to inform ( see Scally v Southern Health Board  1 AC 294) it did accept that the Force assumed responsibility for providing a correct pension statement.
For the officers concerned, this has been an utter nightmare, with one of the officers facing a demand for over £100,000 from the HMRC and potential bankruptcy. There are now officers up and down the country who have been facing the same problems and this decision will now allow them to enjoy their retirement without facing losing their hard-earned pensions”
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