Dentons Self Invested Personal Pension · CAS-35397-P6H6

CAS-35397-P6H6

Ombudsman’s Determination Applicant Mr G

Scheme Dentons Self-Invested Personal Pension (the SIPP)

Respondent Dentons Pension Management Limited (Dentons)

Outcome

Complaint summary

Background information, including submissions from the parties Mr G has a SIPP with Dentons which was established in July 2011. Mr G has purchased a number of commercial properties through the SIPP and leases these to third party tenants. Mr G has a property company which acts as the managing agent. Mr G and Denton & Co Trustees Limited (Denton Trustees) act as trustees for the properties.

The SIPP purchased a leasehold property in July 2016 in Eccles Manchester (the Eccles property) and as it was a leasehold property, service charges would automatically apply.

Dentons say that in May 2017 and June 2017 Denton Trustees paid legal costs in relation to a dispute with the landlord of the Eccles property. On 31 July 2017 Denton Trustees received a Statutory Demand from the solicitors acting for the landlord

1 CAS-35397-P6H6 claiming £5,931.65 in unpaid service charges. The Statutory Demand said that failure to pay within 21 days would result in a winding up petition against Denton Trustees being presented to the court. Dentons contacted Mr G regarding the Statutory Demand it had received.

Dentons also contacted the landlord’s solicitor and explained that Denton Trustees had no beneficial interest in the property and merely acted as professional trustee and asked for the demand to be withdrawn. Dentons also say that in the meantime it understood that Mr G was to appoint solicitors to deal with the demand.

Dentons received a reply from the landlord’s solicitor who said that it was not concerned with who the beneficial owners were as Denton Trustees were one of the legal owners and therefore liable.

Dentons say that Denton Trustees act as professional trustee for over 6,000 pension schemes and were not prepared to get involved in litigation when:

• There was a risk that a court could find against Denton Trustees and enforce the wind up of the company.

• An injunction refusal would incur further costs for both parties.

• The potential wind up of Denton Trustees would have a significant impact on the business.

Dentons say to avoid the potential damage it settled the following amounts:

• £5,931.65 to Blackstone solicitors who were acting for the landlord on 5 September on 25 September 2018.

• £2.150.72 to Salford City Council in respect of the rates due on the Eccles property on 14 January 2019.

• The total amount paid inclusive of VAT amounted to £9,698.84.

Dentons subsequently appointed Druces Solicitors (Druces) to act on behalf of Dentons to recover the sums due. Following discussions between Druces and Mr G a payment of £6,941.77 was paid directly by Mr G to the client account of Druces who in turn paid that sum into the account of Denton Trustees on 26 February 2019. Denton Trustees issued a credit note for £2,297.56 plus VAT that is £2,757.07. (£9,698.84 - £6,941.77).

Dentons say no payments have been made to re-imburse Mr G for the above payment because:

• Mr G's company acts as property agent for all the properties within the SIPP and it has yet to receive statements detailing the income and outgoings together with invoices and indeed the net rental income into the pension scheme account over the past few years;

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• Mr G has been advised that no benefit payments whether on death or retirement and indeed in the event of a transfer to another Provider can be dealt with until these details have been provided.

Dentons also say that it is its view that Mr G as trustee, beneficiary and co-owner of the property made little attempt to engage with the freeholder to resolve the situation. Mr G was quite prepared for Dentons to suffer potential costs, a significant loss of business as well as reputational damage.

Dentons also deny that Mr G was ever threatened or harassed by one of its directors and there is no evidence to support such allegations. The allegations are also blatantly discriminatory and in contravention of the 2010 Equality Act. The director’s actions were all in support of his fiduciary duty as co-trustee of the SIPP.

Mr G has provided details of the background to his complaint with the landlord of the Eccles property. This mainly concerns the non-production of an Estate Statement setting out the service charge expenditure as certified by a qualified accountant.

Adjudicator’s Opinion

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

Mr G has provided further information on the service charges levied by the landlord and says these were paid by Denton Trustees without his authority and who acted in breach of trust. The service charges were fraudulent and had been properly disputed. The landlord of the Eccles property had not produced an annual Estate statement certified by a qualified accountant for five years since the inception of the lease in 2016. None of the leaseholders and therefore the trustees had any idea what services had been provided, how much these cost and what their share of expenses were. This continues to this day and is a direct breach of the terms and conditions of the lease and the Landlord and Tenant Act 1954. As the Adjudicator has admitted, Dentons paid the invoices to protect its own business interests and not the interests of the scheme beneficiaries.

Mr G also says that as a result, Dentons breached its fiduciary duty as professional trustee, specifically:-

• It had a higher, primary duty of care to the scheme in question

• It did not act in the best interests of the scheme beneficiaries

• It did not act impartially and did not act prudently, responsibly or honestly

• It knowingly paid invoices from the scheme funds which were fraudulent or suspected of being fraudulent at the time.

The fact that the invoices cannot be verified even to this day proves beyond any reasonable doubt that Dentons breached its fiduciary duty to the scheme beneficiaries.

Mr G also says that Dentons were told several times that the invoices were fraudulent or suspected of being fraudulent, so it had fair warning before it paid them. Dentons ignored the advice from solicitors and the managing agent. Also of note is the fact that the landlord never made a statutory demand on him for the so-called debt.

Mr G would like the Ombudsman to use his powers to put things right. He wants Dentons to pay him £10,748.36 being the amount claimed against him when it tried to make him bankrupt plus substantial damages and legal costs as compensation. 4 CAS-35397-P6H6 Ombudsman’s decision

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Anthony Arter

Pensions Ombudsman 22 November 2021

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