In our April e-bulletin article, "A Question of Political Judgement? - Judicial Review and the Ombudsman", we covered the High Court's ruling in this case, which relates to the Ombudsman's report to Parliament on the treatment of workers who had (unwisely as it turned out) invested in occupational pension schemes in light of Government encouragement. The report found that the Government had been guilty of maladministration in publishing material containing inaccurate and misleading information about the level of financial security conferred by such pension schemes. It also recommended that the Government should consider whether to make arrangements to make good the losses suffered by the relevant workers, including via payments from public funds.

The Government rejected both the Ombudsman's findings – in particular the finding as to maladministration – and her recommendations. A sample group of the affected workers raised judicial review proceedings challenging Government's position and, in February 2007, Mr Justice Bean quashed the Government's rejection decision and directed it to re-consider matters afresh.

In its judgement last month, the Court of Appeal upheld the decision of the High Court following an appeal by the Secretary of State for Work and Pensions. However, in doing so, the Court of Appeal made it clear that the duties of the Secretary of State in the face of findings by the UK Parliamentary Ombudsman are substantially less onerous than those of local authorities in similar circumstances.

In his decision at first instance, Mr Justice Bean had applied the Court of Appeal's decision in Eastleigh ([1988] 1 QB 855), according to which a local authority is bound "loyally to accept" the findings of the local government ombudsman (LGO) (meaning in effect that, unless steps are taken to quash those findings by way of judicial review, the relevant local authority must treat them as correct). In his judgement, he found that that it would have been anomalous to treat the findings of the Parliamentary Ombudsman differently in law.

However, Sir John Chadwick (who delivered the leading opinion for the Court of Appeal) declined to agree with this analysis. According to him, it was implicit in the regime established by the Parliamentary Commissioner Act 1967 (which set up the Ombudsman) that Ministers were to be answerable to Parliament (not to the courts) for their responses to the findings of the Ombudsman. This meant that, on condition that there was a bona fide and rational difference of view between the Minister and the Ombudsman, then the Minister would be in a position not to accept the relevant findings. In his concurring judgement, Lord Justice Wall, distinguished that situation from that of local authorities faced with adverse LGO's findings. In those cases, as he put it, "the citizen who has invoked [the LGO's] […] assistance has - in law – no substantive remedy against the local authority concerned if that authority rejects the LGO’s conclusion. It is true that the citizen could apply for judicial review of the local authority’s decision not to implement the LGO’s findings, but the system, as I understand it, depends upon the convention that local authorities will be bound by the findings of the LGO. It must follow inexorably that if a local authority wishes to avoid findings of maladministration made by a LGO, it must apply for judicial review to quash the decision".

Importantly, Sir John's judgement makes it clear that the Secretary of State was not entitled to reject the Ombudsman’s finding, "merely because he preferred another view which could not be characterised as irrational". As he continued, "it is not enough that the Secretary of State has reached his own view on rational grounds: it is necessary that his decision to reject the Ombudsman’s findings in favour of his own view is, itself, not irrational having regard to the legislative intention which underlies 1967 Act: he must have a reason (other than simply a preference for his own view) for rejecting a finding which the Ombudsman has made after an investigation under the powers conferred by the Act" (emphasis added).

Usefully, Sir John also took the opportunity to place his judgement within the context of its post-Eastleigh case law. In particular, he pointed to the decisions in Powergen ([1997] EWCA Civ 2280) and Danaei ([1997] EWCA Civ 2704) as providing a foundation for his approach and suggested that the following principles, derived from those cases, apply where Ministers or others are called upon to respond in the context of prior findings of fact by someone (e.g. the Ombudsman) exercising an adjudicative function:-

  1. The decision maker whose decision is under challenge is entitled to exercise his own discretion as to whether he should regard himself as bound by a finding of fact made by an adjudicative tribunal in a related context.
  2. A decision to reject a finding of fact made by an adjudicative tribunal in a related context can be challenged on Wednesbury grounds.
  3. In particular, the challenge can be advanced on the basis that the decision to reject the finding of fact was irrational.
  4. In determining whether the decision to reject the finding of fact was irrational the court will have regard to the circumstances in which, and the statutory scheme within which, the finding of fact was made by the adjudicative tribunal.
  5. In particular, the court will have regard to the nature of the fact found, the basis on which the finding was made (e.g. on oral testimony tested by cross-examination, or purely on the documents), the form of the proceedings before the tribunal (e.g. adversarial and in public, or investigative with no opportunity for cross-examination), and the role of the tribunal within the statutory scheme.

At the end of the day, the Court of Appeal found (as had the High Court) that the Minister had erred in law by rejecting the Ombudsman's findings as to maladministration in this case, albeit that this was due to his irrational approach in rejecting them, rather than a breach of his duty loyally to accept them