Caldwell (Trustee of the Smith & Wallace & Co 1988 Pension Plan) v The Pensions Regulator

Factual and Procedural Background

The Appellant, acting as the sole trustee of an occupational pension scheme (the Scheme), was issued a penalty notice by the Respondent for failing to prepare and deliver a required Chair's Statement by the statutory deadline. The penalty notice imposed a fine of £500.70. The Appellant challenged the penalty notice before the First-tier Tribunal, questioning the imposition of the penalty and raising procedural and substantive arguments. The Tribunal conducted a hearing and requested further written submissions on specific legal issues before delivering its decision.

Legal Issues Presented

1. Whether the mandatory language of the Governance Regulations precludes consideration of any reasonable excuse for non-compliance with the duty to prepare a Chair's Statement.
2. The scope of the Respondent's discretion, if any, during its review of a penalty notice to consider reasonable excuses for non-compliance.
3. The legal significance of the Appellant's contention regarding the Tribunal's jurisdiction and procedural issues related to the request for the appeal to be heard in Scotland and/or under Scots law.

Arguments of the Parties

Appellant's Arguments

• The Appellant had prior communications with the Respondent's staff but was not informed of the requirement to provide a Chair's Statement.
• Written communications from the Respondent before the submission of the Scheme Return did not mention the Chair's Statement obligation.
• The Scheme Return document suggested that providing a Chair's Statement was optional.
• The Respondent refused to engage on the Appellant’s grievance about the penalty, stating its role was enforcement only.
• Additional written submissions argued there was no requirement for the Chair’s Statement to be in writing, the obligation was inapplicable due to the scheme winding up, the scheme’s small size reduced the knowledge requirement, the extended deadline should be considered, and the Respondent’s failure to notify of the duty before the deadline should excuse non-compliance.

Respondent's Arguments

• The Scheme was not exempt from the Administration Regulations.
• The Appellant, as sole trustee, was fully responsible for compliance with the Chair's Statement requirement.
• The Appellant failed to comply by the statutory deadline.
• The Respondent was legally obliged to impose a penalty between £500 and £2,000.
• The penalty amount of £500.70 reflected the Respondent’s policy of increasing the base penalty by 10p per scheme member.
• On review, the Respondent maintained that the mandatory language of the Regulations allowed no discretion to consider excuses for non-compliance at the penalty imposition stage.
• The Respondent acknowledged a limited discretion to revoke a penalty on review in narrow circumstances, none of which applied here.
• The legislation applies equally in Scotland, England, and Wales; no jurisdictional defect arose from the hearing being held remotely rather than in Scotland.

Table of Precedents Cited

Court's Reasoning and Analysis

The Tribunal analysed the statutory framework mandating trustees to prepare a Chair's Statement and the Respondent's obligation to impose a penalty upon failure to comply. It rejected the Respondent’s strict interpretation that the mandatory language excludes any consideration of reasonable excuses at the penalty imposition stage. The Tribunal reasoned that Parliament could not have intended manifestly unjust outcomes where wholly exceptional circumstances explain non-compliance. However, it concluded that the Appellant’s circumstances did not meet this high threshold of exceptionality. The Tribunal found no error in the Respondent’s refusal to revoke the penalty on review. It also dismissed the Appellant’s jurisdictional and procedural challenges, holding that the relevant legislation applies uniformly across the jurisdictions involved and that no prejudice resulted from the hearing’s location or format. The Tribunal further noted that while it sympathised with the Appellant’s position and criticised the Respondent’s lack of proactive communication, the law compelled dismissal of the appeal.

Holding and Implications

The appeal is dismissed.

The Tribunal upheld the penalty notice imposed on the Appellant for failure to deliver the Chair's Statement by the statutory deadline. The decision confirms that while the legislation mandates penalty imposition for non-compliance, exceptional mitigating circumstances may theoretically be considered, but none were proven in this case. The Respondent’s enforcement powers and the Tribunal’s jurisdiction were affirmed. No new legal precedent was established beyond the application of existing statutory interpretation principles and procedural jurisdiction. The direct effect is that the Appellant must pay the penalty, and the matter is remitted to the Respondent. The Tribunal expressed concern about the Respondent’s approach to communication and education but recognised that this did not affect the legal outcome.