Aviva Staff Pension Scheme · CAS-53529-P0Z6

CAS-53529-P0Z6

Ombudsman’s Determination Applicant Mr R

Scheme Aviva Staff Pension Scheme (the Scheme)

Respondents Aviva Staff Pension Trustee Limited (the Trustee)

XPS Administration (XPS)

Outcome

Complaint summary

Background information, including submissions from the parties

1 CAS-53529-P0Z6

2 CAS-53529-P0Z6

3 CAS-53529-P0Z6

4 CAS-53529-P0Z6

5 CAS-53529-P0Z6

6 CAS-53529-P0Z6

7 CAS-53529-P0Z6

Adjudicator’s Opinion

8 CAS-53529-P0Z6

9 CAS-53529-P0Z6

10 CAS-53529-P0Z6

The Trustee and XPS accepted the Adjudicator’s Opinion but Mr R did not and the complaint was passed to me to consider. Mr R provided his further comments which do not change the outcome. I note the additional points raised by Mr R but I agree with the Adjudicator’s Opinion.

Mr R’s comments

There is no reference in the Opinion to the fact mitigation is subject to the test of reasonableness. The tone and narrative used by the Adjudicator suggests that his case is being assessed as one of a criminal nature rather than a civil matter. It does not make reference in any way to what would have been considered reasonable action for him to have taken.

That the expenditure must be irreversible is an erroneous and draconian interpretation of mitigation. He is under a duty to act reasonably and must seek not to increase costs upon the Trustee and XPS, which he has done. He does not believe that he has a duty to dispose of assets so as to minimise the Trustee’s and XPS’ potential outlay. The Trustee has made a misstatement and his funds are suitably diminished as a result; the Thai Airlines case supports his position.1 Having considered the correct interpretation of mitigation, it is clear that he is not under the level of duty that the Adjudicator implies.

He agreed with the Adjudicator that his expenditure would be evidenced in the form of redacted bank statements. He was originally requested to provide invoices but these were not available, other than the car purchase in 2018. Clearly when purchasing other items he could not be expected to be aware that a situation might arise in the

1 Thai Airways International Public Company Ltd v KI Holdings Co Ltd [2015] EWHC 1250

11 CAS-53529-P0Z6 future where he would need to provide evidence of purchase. It now appears that having supplied these redacted statements it has "opened a can of worms" and is now being used to avoid the provision of indemnity to him.

He does not accept that the expenditure is reversible. Purchases were made sometime prior to the misstatement being identified. He believes the term reversible refers to a situation where an individual was in a situation to avoid certain expenditure when a final decision or payment is yet to be made.

With reference to the motorcycle restorations; these machines were bequeathed to him by his father, they remain a collection of parts, some new and others original. The projects are awaiting funds to enable completion of the restorations. He doubts the value of these machines has increased greatly. They would have to be disposed of as projects or work in progress. The "higher end car" he purchased was 10 years old at the time of purchase and had covered circa 100,000 miles. Its purchase price was £7,600 which he considers is hardly extravagant.

Monies spent were as a direct result of the Trustee's misstatement. The Trustee had led him to believe that his GMP of £4,049 would commence in June 2021 and he had a pot of money to use up until this date. The action he took was entirely logical and reasonable.

It appears that his claim for damages has failed upon two key issues. Firstly, he has not been able to demonstrate that his financial losses flowed directly from the misstatement. He trusts that the above comments will now rectify that view and suggests that the legal maxim of "Res Ipsa Loquitur"2 would prevail.

Furthermore, he understands that TPO considers that he has failed to mitigate his losses. He would refer to the following well established and accepted legal text.

"The rule of mitigation requires a claimant to take steps to mitigate its losses and avoid taking unreasonable steps that increase its losses. An injured party cannot recover its damages from any loss (wherever caused by breach of contract or breach of duty) which could have been avoided by taking reasonable steps. The claimant is said to have a duty to mitigate, however this is a duty not enforceable by any one, rather it is a recognition that if the claimant fails to do so its damages recovery will be affected by this failure"

He maintains that mitigation is not a legal principle and believes that legal opinion appears to support his view. He acknowledges that case law reflects or mentions it but does not enshrine it as a legal principle.

Bearing in mind that his claim for damages ceased very soon after he first became aware of the misstatement he is not sure how he might have mitigated his losses any

2 Literally ‘the thing speaks for itself’ a doctrine or rule of evidence in tort law that permits an inference or presumption

that a defendant was negligent in an accident injuring the plaintiff on the basis of circumstantial evidence if the accident was of a kind that does not ordinarily occur in the absence of negligence. 12 CAS-53529-P0Z6 further. He is happy to have any items of damages claimed for after first notification of the misstatement removed from the schedule of quantum.

He is of the view that this matter should have been more appropriately dealt with as a loss of expectation. This is the usual measure of damages for a breach of contract. It refers to the innocent party's loss of a bargain, such as the profits that they would have expected to receive had the contract been performed in the stated manner. The aim of these damages is to place the innocent party in the same position as if the contract had been performed.

Ombudsman’s decision While I agree with the Adjudicator that there has been maladministration on the part of the Trustee and XPS, and that the starting point in misinformation cases is that a member is only entitled to the benefits provided by the rules of their pension scheme. However, it might be the case that an applicant can show that the misinformation amounts in law to what is known as a negligent misstatement. In negligent misstatement cases, parties in a close relationship in which one party (perhaps with special skill and knowledge) assumes responsibility towards the other party, may find that the law will impose a duty on the first party to ensure that information it gives to the other party is accurate and reliable. Where the information is inaccurate or unreliable in some material respect, the party assuming a responsibility towards the other party will be in breach of that duty. If the breach causes financial loss to the party who has reasonably relied on the information to their detriment, and that loss is reasonably foreseeable as a consequence of the breach, then the loss is recoverable in damages.

In this case, it appears that the Trustee and XPS assumed responsibility to provide Mr R with accurate information about his pension entitlements but failed, in different ways, to do so. In my view, it is likely that the Trustee and XPS would know that providing incorrect information to Mr R may cause him loss. It also appears that Mr R reasonably relied upon the information provided by the Trustee and XPS in arranging his affairs and that the role of RSA in challenging any of that information was limited. In these circumstances, Mr R may be entitled to damages from either or both parties for any loss he suffered.

These damages would be assessed on what the law describes as a tortious basis. This means that the damages would seek to put Mr R in the position in which he would have been had the incorrect information not be given to him; the damages are not calculated so as to put Mr R in the position in which he would have been had the misinformation been correct. This is an important distinction. Much of Mr R’s complaint focuses on his loss of expectation of the earlier payment of some of his Scheme benefits, but this will not inform the assessment of financial compensation to which Mr R may be entitled as a result of a negligent misstatement. Rather, the question is would Mr R have made different decisions in the absence of the

13 CAS-53529-P0Z6 misinformation? Would he, for instance, have made different financial arrangements than those he actually made?

The burden of proving that Mr R would have made different decisions in the absence of the misinformation (and that these decisions show that a financial loss has been caused by the misinformation) is placed upon Mr R. The standard of proof is on the balance of probabilities. This means that Mr R must prove that it was more likely than not that the misinformation has caused him a financial loss.

In this case, I do not consider that Mr R has supplied sufficient proof that the misinformation provided to him by either the Trustee or XPS has caused him a financial loss. Mr R’s heavily redacted bank statements, and supporting information, show ordinary living expenses which were likely to be incurred even if the misinformation had not been provided to him. To the extent that Mr R acquired capital assets through the spending of his savings, there is no clear evidence from which I could conclude that these acquisitions would not have been made but for the misinformation, nor that the assets acquired lack value such that, taken in the round, Mr R’s net worth has actually decreased.

Mitigation

3 British Westinghouse Electric and Manufacturing Co Ltd v. Underground Electric Railways Co of London Ltd [1912] AC 673. 4 Banco de Portugal v. Waterlow & Sons Ltd. [1932] AC 452 .

14 CAS-53529-P0Z6

I do not uphold Mr R’s complaint.

Anthony Arter CBE

Deputy Pensions Ombudsman 10 April 2024

15