ML Covered - June 2026

We are pleased to share our latest instalment of ML Covered, our monthly round-up of key events relevant to those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.

High Court clarifies scope of unlawful means conspiracy and directors’ duties

In Lux Films Ltd v Fowler & Andrew Fowler Media Ltd [2026] EWHC 963 (KB), the High Court found in favour of a small media production company whose shareholder and director had secretly diverted clients, confidential information and business opportunities to his own competing venture whilst remaining employed.

Background

 Lux Films Ltd (the Company) was a small UK video production company with three equal shareholders, including Andrew Fowler (the Defendant), who were each also directors and employees of the Company. The Defendant assumed primary responsibility for the Company's day-to-day administration, client liaison, and management of digital systems.

Relations between the directors deteriorated in early 2023, with the Defendant indicating a desire to exit, and then secretly operating a competing video production business through a new company, Andrew Fowler Media Ltd (AFML). The Defendant used the Company's office, equipment, IT systems, junior employees, footage, and testimonials to divert business from one of the Company's most significant clients to AFML. The Company brought claims against the Defendant and AFML for breach of confidence, breach of fiduciary duties, knowing receipt, and unlawful means conspiracy, and obtained interim injunctive relief pending trial.

Shortly before trial, both the Defendant and AFML voluntarily entered into insolvency without notice to the Company in an attempt to automatically stay the proceedings.

Decision

The Court ruled in favour of the Company, finding that there had been a breach of fiduciary and statutory duty by the Defendant director.

The Court held that unlike under criminal law, civil conspiracy can arise between a sole director/shareholder and their company. It was also held that AFML’s liability in knowing receipt was established through the Defendant's own knowledge as its sole controlling mind.

The Court decided that voluntary insolvency does not guarantee a stay of proceedings, especially in circumstances where insolvency appears strategically timed, or where resolving liability would benefit the insolvency proceedings. The Court also concluded that, in the absence of a written contractual notice period, the appropriate implied notice period was six months, having regard to the Defendant's seniority, his significant managerial responsibilities and his integral importance to a small business with no obvious replacement.

The Court rejected the Defendant's argument that his conduct amounted only to permissible "preparatory steps" for future competition, finding that the Defendant had not merely made arrangements for the future, but that he had in fact solicited the Company's clients, performed work through AFML, as well as used the Company's confidential information, staff and resources, and received payment for competing work.

Key takeaways

The decision demonstrates that a sole director of a company can be found liable for civil unlawful means conspiracy, and also provides guidance on the limits of the “preparatory steps” defence available to a departing director, and the length of notice that can be implied for a senior director-employee without a written contract. This decision may also be relevant for cases where Insurers are having to consider the application of a conduct clause in respect of the actions of a sole director of a company. 

To read more, please click here.

Expansion of corporate criminal liability for all crimes committed by senior managers

The Crime and Policing Act 2026 (CPA 2026), which received Royal Assent on 29 April 2026, has reformed the legal test that will be used to determine whether a company can be held criminally liable for the acts of its senior personnel. The changes, which will be introduced from later this month (29 June 2026), should make it easier for prosecuting agencies to establish the criminal liability of a corporate body for the acts of its senior managers.

From 29 June 2026, a company may be liable for the commission of a criminal offence if that offence was committed by a "senior manager" acting within the actual or apparent scope of their authority. 

It is a long-established principle that a corporate, by virtue of its separate legal identity, is capable of being prosecuted for most criminal offences. The position at common law has been that a corporate may be liable for the commission of a criminal offence only if that offence can be attributed to a person who at the relevant time was the "directing mind and will" of that entity. This test has generally been interpreted narrowly, with only the most senior employees of a company, such as its Board, meeting the necessary threshold. This test has been criticised for not reflecting the commercial reality that decision-making and responsibility is often shared between numerous individuals across multiple levels of management.

For a wide range of economic crime offences, the introduction of the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) replaced this test with a new test based on whether or not the individuals involved are "senior managers" of the company. The ECCTA 2023 establishes that where senior managers commit offences whilst acting "within the actual or apparent scope of their authority", that conduct can be attributed to the corporate. "Senior manager" is defined as an individual who plays a significant role in either the making of decisions about how the whole, or a substantial part, of the activities of the company are to be managed or organised, or who actually manages or organises those activities. 

Section 254 of the CPA 2026 substantially mirrors the wording of the "senior manager" test introduced by section 196 of the ECCTA 2023, and will extend the use of the "senior manager" test to all criminal offences.

Key takeaways

The CPA 2026 significantly broadens corporate exposure to criminal liability, with enhanced risks in areas such as environmental, data, health and safety and regulatory offences. The conduct of a company's senior personnel can create liability and serious financial sanctions for companies. Companies should consider assessing which individuals, or groups of individuals, may meet the "senior manager" test and consider whether to implement additional safeguards or targeted training.

To read more, please click here.

Insolvency Service sentences director for Covid loan fraud

The Insolvency Service has recently demonstrated its powers following the sentencing of a property developer and lettings agent for fraudulently obtaining two separate Covid support loans designed to help businesses through the pandemic.

Harjinder Singh was the director of HP Property (International) Ltd. The company was set up in January 2016 and traded as a residential property developer and letting agent. Following the Covid pandemic, the Bounce Back Loan (BBL) Scheme was introduced in May 2020 for companies. Mr Singh claimed £20,000 legitimately under the BBL scheme in May 2020.

Mr Singh then approached a second bank and secured a further £30,000 loan, also under the BBL scheme. However, in order to obtain this second loan, Mr Singh falsely declared that it was his first application under the BBL scheme. In October 2020 Mr Singh then failed to declare the £30,000 loan when he applied for a £95,000 Coronavirus Business Interruption Loan. The Coronavirus Business Interruption Loan was a separate government-backed scheme to help small and medium-sized businesses safeguard against lost revenues and disrupted cashflow during the pandemic.

Under the scheme’s rules, any outstanding BBL had to be repaid using the new funding, meaning that Mr Singh was legally required to disclose it. He disclosed the first £20,000 BBL which was duly repaid as the scheme required, but failed to declare the fraudulent £30,000, allowing him to keep the money.

HP Property (International) Ltd went into compulsory liquidation in November 2021 after the lender of the business interruption loan went to court to recover the money it was owed.

On 12 May 2026, Mr Singh was sentenced to 22 months in prison, suspended for two years. He was also disqualified as a company director for seven years, ordered to complete 200 hours of unpaid work, and 20 days of rehabilitation activities. The Insolvency Service is currently seeking to recover the fraudulently obtained funds under the Proceeds of Crime Act 2002.

Key takeaways

The number of enforcement actions taken by the Insolvency Service remain high, with many being a legacy of abuses of the Covid financial support scheme. From September 2025 to December 2025, the Government launched a voluntary repayment scheme for any improper claims made for financial support during the Covid pandemic. As this case demonstrates, HMRC and other government bodies are now intensifying scrutiny and enforcement efforts across all Covid-related support schemes. All businesses and individuals should ensure they have adequate documentation to evidence that any financial support received was used in accordance with the conditions that the support was provided.

To read more, please click here.

Employment Tribunals in crisis: the Working Right Centre's latest report on the effects of Tribunal delays

The Working Rights Centre’s latest publication highlights the continuing difficulties many workers face in enforcing their rights through the Employment Tribunal system due to significant capacity issues. This comes at a time when employment rights are also set to expand further. 

According to the report, unresolved Employment Tribunal claims reached 65,117 by the end of 2025, the highest level of outstanding claims since records started in 2017. Waiting times have increased, with some complex claims reportedly taking up to 4 years to reach a final hearing. The report argues that these delays undermine workers’ access to fair hearings and compensation, and erode confidence in the legal system, with particularly severe effects for migrant workers, low-income claimants and litigants in person.

The report rejects the notion that workers are becoming more litigious and instead identifies the main causes of crisis as underfunding and a lack of judicial capacity, inefficiencies with current case management systems, lack of affordable legal advice as well as an increase of complex and AI-generated claims.

The report suggests several reforms such as increased resources (including the recruitment of more Judges and increased sitting days); faster handling of weaker claims and penalties for parties who fail to engage; a simplified process and an expansion of early resolution resources, as well as an expansion of the Fair Work Agency's powers.

Employment Tribunal reforms on the horizon?

The Employment Lawyers Association has released a radical manifesto that explores reforming the Employment Tribunals to ensure that they are fit to adequately resolve claims considering the significant strains they are facing. 

Running to 379 pages, the work explores the historic evolution of the Tribunal system, resolving matters outside of the Tribunal process, international comparisons, and the nature of the employment relationship in order to proffer solutions to the issues Tribunals are facing.

The result is to fundamentally reconfigure the management of employment disputes through the Tribunals.  Key recommendations include:

• Requirement for compulsory mediation for all claims.
• Splitting the Tribunal into three "tracks" which will be dependent on the value of the dispute.
• Limiting hearing days and volume of evidence presented.
• Costs consequences for failing to beat offers of settlements.

The proposals are extreme and would reimagine how employment disputes are handled.  With the well cited issues with the current state of affairs, it is clear that something does need to be done to change the status quo, and it will be of continuing interest to see how these proposals are received.

The full book can be accessed online here.    

Legal privilege for internal employer communications 

The recent High Court decision in Aabar Holdings SARL v Glencore plc [2026] EWHC 877 (Comm) (Aabar) provides an important clarification on the scope of legal advice privilege in the context of employer communications in litigation.

As per the Court of Appeal decision in Three Rivers District Council v Bank of England (No 5) [2003] EWCA Civ 474 (Three Rivers (No 5)), only communications between a company's lawyers and employees specifically authorised to seek and receive legal advice, also known as the client group, is afforded the protection of legal advice privilege. Consequently, any internal communications between the client group and employees outside of the client group may be exposed to disclosure.

However, in Aabar, it was that held the Three Rivers (No 5) ruling failed to consider whether communications between the authorised client group themselves could attract privilege even where no lawyer was directly involved. However, the recent case confirmed that inter-client communications between members of the client group could be protected by legal advice privilege where the purpose is to obtain or prepare for legal advice.

Key takeaways 

The decision is particularly relevant for HR and workplace investigations, where internal communications are often created to identify the facts of a case before the instruction of lawyers.

However, employers should be mindful that not all internal discussions will automatically attract legal advice privilege and care, and consideration should take particular care to identify who forms part of the client group for the purposes of obtaining legal advice and ensure communications are clearly connected to that purpose in order to ensure privilege can attach to sensitive documents. This is especially relevant when conducting investigations, grievance processes, disciplinary matters and redundancy consultations.

To read more, please click here and here.

Admissibility of protected conversations 

The Employment Appeal Tribunal (EAT) has held that, in misapplying section 111A of the Employment Rights Act 1996 (the ERA), a Tribunal erred in ruling that evidence of protected conversations, specifically relating to pre-termination negotiations, was inadmissible for all of the Claimant's claims as opposed to solely in respect of unfair dismissal allegations.

Section 111A of the ERA provides that pre-termination negotiations that accord with the ERA are inadmissible as evidence, but only in respect of ordinary unfair dismissal proceedings. However, in Tarbuc v Martello Piling Ltd [2026] EAT 58, the Claimant's claims involved allegations of unlawful deduction of wages and less favourable treatment as a part-time worker as well as unfair dismissal.  The Tribunal at first instance originally concluded that the protected conversations should be omitted from all evidence of the claims.   

The EAT confirmed that the Tribunal misapplied the law.  Although the protected conversations could not be relied on in respect of the unfair dismissal claim they should have been included in respect of the unlawful deductions and less favourable treatment claims.

Key takeaways

The case is a helpful reminder of the uses and limitations of protected conversations and the limited privacy they can afford to an employer attempting to negotiate the termination of an employee's contract.  Care should be taken to properly assess the benefits and risks of the particular matter before determining that protected conversations are the most appropriate course of action to take. 

To read more, please click here.

EAT finds health and safety complaint was not an act of whistleblowing

The EAT has provided a helpful reminder of what employees must disclose to qualify for whistleblowing protection under the Employment Rights Act 1996 (ERA).

Background

 Mrs Capeling worked as a national sales manager for TFX Group Ltd. After her dismissal in September 2022 (said to be for poor performance), she brought Employment Tribunal claims alleging automatic unfair dismissal and detriment because she had made protected disclosures.

The alleged disclosure

 Mrs Capeling raised concerns that the company did not have written contracts in place with certain dispensing appliance contractors. She asserted that this created health and safety risks for end users and that such risks had been, or were likely to be, deliberately concealed.

Tribunal and EAT outcome

The Employment Tribunal found her communications failed to amount to protected disclosures and dismissed her whistleblowing claims. The EAT upheld that decision finding that the disclosures were unexplained and general allegations.  Furthermore, it determined that Mrs Capeling did not have an objectively reasonable belief that the absence of the contracts genuinely created health and safety risks.

Key takeaways 

The case is helpful for employers.  Whistleblowing disputes are frequently brought by employees due to the enhanced compensation they can recover if successful with their claims.  The case is a helpful reminder to critically examine all the components of a whistleblowing claims when defending the claim. 

To read more, please click here.  

Employment Tribunal limitation periods extended

Under recent reforms, the time limit for bringing a number of Employment Tribunal claims is set to extend from 3 months to 6 months from 1 October 2026. We highlight the relevant legislation subject to the change below.

• SI 2026/473 — Employee Study and Training (Procedural Requirements) (Amendment) Regulations 2026 (in force 01 October 2026).
• The Employment Tribunals Extension of Jurisdiction (England and Wales) (Amendment) Order 2026 would amend the 1994 Order
• Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
• Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
• Information and Consultation of Employees Regulations 2004
• Employment Relations Act 1999 (Blacklists) Regulations 2010
• Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015
• Employment Rights Act 1996 (NHS Recruitment – Protected Disclosure) Regulations 2018
• Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022

Key takeaways 

Further extensions to limitation periods are expected to follow under the Employment Rights Act 2025. The longer window for bringing these claims extends the period of potential liability for employers, making it all the more important to maintain clear, consistent document retention practices for matters arising under employment legislation.

House of Commons publishes research paper on "Fire and Rehire" practices

The House of Commons has published a Research Briefing into "fire and rehire" practices in readiness for upcoming changes that will be introduced from the Employment Rights Act 2025 (ERA).

"Fire and rehire" is when an employer terminates employment and offers re-employment on new terms. This ordinarily takes place when parties have failed to agree/vary contractual terms. Although the practice has not been unlawful up to 2026, it carries significant risks because the dismissal element may expose employers to claims for unfair dismissal, wrongful dismissal, and failures in collective consultation obligations.

The House of Commons’ recent research briefing on fire and rehire highlights the growing concern surrounding the practice, particularly following a series of high-profile disputes. The briefing also highlights how significant reform will take effect from January 2027 under the ERA. The legislation provides that, unless an employer is facing genuine financial difficulties affecting the viability of the business, it will be automatically unfair to dismiss or replace an employee in order to impose changes to core contractual terms, referred to as “restricted variations”

These include reductions in pay, changes to pensions, reductions in hours or leave entitlement, and certain alterations to shift patterns.  The reforms represent a major shift in UK employment law and are intended to strengthen protections for workers while limiting the misuse of dismissal and re-engagement practices.

To review the research brief, please click here.

Pension dashboards updates

The Pensions Regulator (TPR) continues to sharpen its focus on industry readiness for pensions dashboards, with the 31 October 2026 connection deadline now fast approaching. Recent publications show a clear shift in emphasis: while matching data has improved across the market, value data, particularly for defined benefit (DB) and hybrid schemes, is now firmly in the spotlight.

TPR has recently published an updated version of its dashboards guidance, alongside new commentary on the introduction of dashboards. TPR's message is practical: schemes should use the remaining time before the connection deadline to ensure they can meet their dashboard duties in a controlled and sustainable way.

Overall, TPR's updated guidance and commentary reinforce that dashboard compliance is not a one-off technical project, it requires ongoing data and operational discipline, and close alignment with administrators and any relevant third-party providers.

TPR also announced a targeted regulatory initiative urging DB and hybrid schemes to act now to get their value data ready for dashboards. The initiative is aimed at improving value data readiness in the DB and hybrid sector ahead of the connection deadline and will examine 240 private sector DB and hybrid schemes, with a specific focus on whether they can provide dashboard-ready value data that is:

• Recent: calculated within the preceding 12 to 13 months.
• Accurate: errors risk members making poor decisions based on incorrect figures.
• Returned quickly enough:
o where values are pre-calculated, they must be returned within seconds; and
o where a fresh calculation is needed, deadlines are three days for Defined Contribution (DC) pensions or ten days in all other cases.

TPR highlights that DB and hybrid schemes often face a particular challenge because, unlike DC and most public service schemes, they do not have an existing obligation to issue annual benefit statements, meaning their value data may be stale unless schemes have proactively built processes to refresh and serve it.

PTL insurers will want to note TPR's regulatory action given the potential to trigger regulatory costs extensions under PTL policies and the risks for further regulatory action if data is not ready by the connection date or inaccurate thereafter – we would suggest questions around dashboard readiness should be in PTL proposal forms.

TPR launches consultation on revised 5-year corporate strategy

TPR has launched a consultation on its refreshed five-year corporate strategy, setting out its vision for a pensions system that delivers security and value, and supports a sustainable income in retirement.

TPR notes that the workplace pensions landscape is evolving quickly, with new models and rapid technological change creating opportunities to improve member outcomes, alongside new and emerging risks. The proposed strategy is structured around six intended member and market outcomes: (i) savings are secure; (ii) better value; (iii) pensions are fair; (iv) well-run schemes; (v) a sustainable and resilient market; and (vi) a seamless and integrated system supporting an end-to-end journey from joining a scheme through to retirement income.

The consultation closes on 8 June 2026. Following feedback, TPR expects to publish its final strategy in July 2026 alongside its corporate plan.

TPR encourages endgame planning 

TPR has urged DB trustees to pivot from deficit recovery to endgame planning as funding levels remain strong.

In its Annual Funding Statement, TPR reported that, as at 31 December 2025, 60% of schemes were in surplus on a buyout basis, rising to 80% on a low dependency basis and 90% on a technical provisions basis. TPR expects trustees and employers to develop clear, well-evidenced long-term strategies, considering options such as run-on, superfund consolidation and buyout. With valuations increasingly used as a strategic tool, TPR highlights the need to show funding and investment plans are deliverable and aligned with member interests.

As buy-out continues to be within the grasp of many schemes and the risks for PTL insurers in the run up to buy-out (particularly around benefit specification exercises), PTL insurers should continue to probe the plans for DB schemes and the approach/timescale to buy-out.

TPR releases AI plan

TPR has published its artificial intelligence (AI) plan, setting out its initial expectations for responsible use of AI in workplace pensions.

TPR recognises AI’s potential to improve administration, decision-making and member engagement, but warns it can also amplify risks, including AI-enabled scams, bias and increased cyber threats. A consistent message is that accountability for outcomes remains with trustees and scheme managers, even where functions are delegated to administrators or other providers. In advance of more detailed guidance later in 2026, TPR expects schemes to put clear governance in place for AI use, test and monitor AI tools on an ongoing basis, identify and control risks (reviewing controls regularly), and take active steps to protect members from AI-driven fraud. TPR also highlights the importance of robust data strategies, high-quality member data and compliance with data protection rules, including in relation to automated decision-making.

To read the AI plan, click here. 

TPO reject estoppel claim despite 22 years of incorrect RPI comms 

In a recent determination, the Pensions Ombudsman (TPO) rejected a member’s attempt to secure pension increases based on an incorrectly communicated 5% RPI cap, despite the trustee having repeated that error for around 22 years.

Background

The case arises from the NatWest Group Pension Fund (the Fund), into which the Royal Bank of Scotland Staff Pension Scheme merged in April 2002. The Complainant joined the staff scheme in 1994, took voluntary redundancy in 2012 (becoming a deferred member), and retired in April 2024.

Under the Fund's governing documentation, increases to pensions in payment were stated to be RPI capped at 3%, subject to the statutory minimum rate of increase introduced by the Pensions Act 1995 for certain pensions in payment from March 1997. However, for approximately 22 years the trustee mistakenly told members that the cap was 5%. The issue was identified in 2018 and corrected.

On 19 March 2020, the trustee emailed the Complainant explaining the mistake and indicating he did not need to take action (the 2020 Email). The Complainant later received a cash equivalent transfer value quotation in June 2020 for £1,217,578, calculated on the correct 3% basis, but he decided not to transfer. In December 2022, he raised an internal dispute, alleging that he had relied on the 5% statements when deciding not to transfer and that the 2020 Email was inadequate.

Decision

TPO followed the lead determination in Mr N (CAS-102084-N1D3) concluding that the Complainant was never entitled to pension increases capped at 5% other than as required by the statutory underpin. On that basis, applying the correct rules did not cause him direct financial loss.

The Complainant’s estoppel by representation argument also failed. TPO agreed there was insufficient evidence that the historic misstatements were the decisive driver of the Complainant’s transfer decisions, noting the absence of contemporaneous evidence of advice and the fact that pre-2020 transfer values were themselves calculated using the incorrect (and therefore higher) 5% assumption. Critically, by the time the Complainant considered the June 2020 quotation, he had already received and read the 2020 Email, and the quotation was calculated on the correct basis, undermining any claim that the mistake caused him to decide not to transfer at that point.

TPO did, however, find maladministration and significant non-financial injustice given the prolonged period of incorrect communications and the proximity to the Complainant’s retirement when accurate information was provided. A payment of £500 was awarded.

Key takeaways

This determination reinforces that member communications can amount to maladministration even where scheme rules ultimately govern benefit entitlement, and even where the member cannot establish direct financial loss. It also highlights that estoppel arguments in pensions complaints remain heavily fact and evidence dependent; members are likely to need clear, contemporaneous proof that the representation was relied on and that the reliance caused detriment, rather than retrospective assertions.

TPO’s treatment of the statutory independent advice regime is also a useful reminder that section 48 Pension Schemes Act 2015 (checking advice to transfer comes from an FCA regulated adviser) applies when a transfer is made, not when a member merely considers a quotation or receives a general correction notice.

To read the full TPO decision, click here.

TPO holds “Nelsonian” knowledge undermines defences to repayment

In a recent decision, TPO refused a complaint about the Teachers’ Pension Scheme (TPS) stopping a widower’s pension following remarriage, and upheld recovery of a significant overpayment.

Background

The Complainant became entitled to a widower’s pension after his wife (a TPS member) died in February 2004. The relevant TPS provisions (under the Teachers’ Pensions Scheme Regulations 1997) stated that a spouse’s pension was not payable “during or after any marriage or period of cohabitation outside marriage”. In practice, the scheme administrator, Teachers’ Pensions, relied on recipients to notify it if they remarried or began cohabiting.

The administrator said it issued Leaflet 450 in 2004, which explained that the pension would stop on remarriage/cohabitation, and from 2004 it sent annual newsletters reminding pensioners to notify changes of circumstances (with warnings that failure “may result in an overpayment… which must be recovered”). In 2014, the administrator introduced an annual “Declaration Form” process for UK-based pensioners, requiring confirmation of status and again warning that entitlement ceased on remarriage/cohabitation.

The Complainant remarried in December 2007, but payments continued until November 2016 when the administrator suspended the pension pending completion of a Declaration Form. When the Complainant returned the form in July 2017 confirming the remarriage date, the administrator stopped the pension and sought repayment of £27,570.02.

The Complainant argued that (i) he had not been properly informed of the rule, (ii) notification procedures were inadequate, (iii) he had told the administrator about the impending marriage in an August 2007 call and/or a December 2007 call, (iv) repayment would be hard given health circumstances and (v) the administrator was time-barred (or should be limited) because it could have discovered the error earlier.

Decision

TPO did not uphold the complaint. On cessation, TPO emphasised the administrator’s duty to pay only the benefits permitted by the scheme regulations and confirmed he could not direct a public service scheme to continue paying a benefit not provided for under its rules.

On recovery, TPO held the administrator could recover the overpayment in repayment on the grounds of unjust enrichment (set-off against future payments not being available because the pension had ceased), subject to any applicable defences. Those defences failed on the facts. Although TPO accepted the Complainant may not have read Leaflet 450 at the time it was sent, the leaflet clearly set out that benefits would cease on remarriage/cohabitation. The newsletters repeatedly highlighted the obligation to notify the administrator and the risk of recoverable overpayments. TPO considered it more likely than not that the Complainant read at least one newsletter (not least because it accompanied his P60) and that this should have put him on notice that remarriage could affect entitlement. The alleged 2007 calls were not supported by contemporaneous evidence and, overall, TPO found the Complainant had not acted in good faith, instead having 'Nelsonian' knowledge of the risk of overpayment.

For similar reasons, estoppel was not available: it was not reasonable to rely on ongoing payment as confirmation of entitlement where the recipient had actual or Nelsonian knowledge of the possible error and did not take adequate steps to notify or verify. Limitation also did not assist. While unjust enrichment claims are generally subject to a six-year limitation period from each payment, TPO accepted the administrator could rely on the “mistake” postponement provisions because the administrator could not, with reasonable diligence, have discovered the error earlier given its reliance on member disclosure; the pre-2014 communications were held to meet the standard reasonably to be expected at the time.

Hardship was not treated as a free-standing legal defence, though the administrator was expected to consider representations when setting repayment terms.

Key takeaways

Where overpayments arise, recovery may proceed in unjust enrichment even when set-off is not possible, unless the recipient establishes a recognised defence. The decision also underlines the importance of good faith: repeated prompts to report life events, combined with a failure to notify, can support a finding of Nelsonian knowledge which undermines the defences of change of position and, often, estoppel. Finally, limitation arguments may not succeed where administrators reasonably rely on recipients to disclose relevant changes, and they can show their communications and verification approach amount to reasonable diligence for the period in question.