The High Court has ruled that the six-year time limitation for bringing a case does not apply in a pension scam dating back to 2012, but the scams victim had to defend herself against suggestions that she deliberately concealed her knowledge of it by deleting emails. Are time limitations a regular problem in pension scams cases? 

 

Deborah Giddens transferred nearly £130,000 out of her Royal Mail pension to invest £90,000 in what was said to be a truffle plantation, offered by Viceroy Jones New Tech Ltd, a firm controlled by George R. Frost, one of the defendants. The other defendants are his brother Brian Frost and the Frost Partnership. In 2018, VJNT was ordered to wind up, alongside four linked firms, after investigations by the Insolvency Service. 

 

The truffle plantation scheme was a £9m scam affecting about 100 investors who had access to their pensions. Investors were told their savings were funding tree saplings inoculated with truffle spores, but no harvesting or cultivation ever took place. Investors’ funds were paid into third-party offshore bank accounts initially, and significant commissions were paid to unregulated advisers, as well as to George and Brian Frost.  

 

 

The Frosts alleged that Mrs Giddens had deliberately deleted her emails from before 2016 to conceal her knowledge of the scam. They also argued that she should have made further inquiries about the investment as soon as she made it in 2012, or when she received login details for Government Gateway in 2013, or otherwise when she did log into Government Gateway in 2014. The defence also suggested that Mrs Giddens was a party to the scam, as she received a £36,000 cash lump sum from her pension before the age of 55. 

 

Mrs Giddens disputed the allegation of deliberately deleting emails, saying the deletion was accidental. There was also confusion about the cash payment, as the investment amount was registered as the full transfer amount; when she became aware of it being unauthorised, she reported it to HMRC. To prove her statement that she did not know the investment was a scam until late 2016, Mrs Giddens provided an email exchange from November that year. In it she wrote to George Frost that she had “come across some disturbing information regarding the management co that were assigned to my investment”. 

 

Judge Russen said he was “left feeling puzzled” as to how so many emails can be deleted accidentally and noted that the court had received no expert advice on this point, but he did conclude that Mrs Giddens’ account was “not untrue” and that time limitations did not apply. 

 

 

The case is the first court decision about whether time limitations apply in a pension scams case that he has come across, said head of litigation at law firm Sackers, Peter Murphy. 

 

Limitations do not generally tend to be a major issue in scams cases, however, he noted. “Once you’ve found someone who has money and owed a duty of care to the member, then yes, limitation might become an issue, but it tends not to be the most common issue, nor the issue... that I would necessarily expect to be the key issue in these cases going forward,” Murphy said. This is despite pension scams cases often remaining undiscovered for many years. The law as it stands is “pretty flexible” in ensuring that valid cases can be prosecuted and there is enough time, he said.  

 

Because of exceptions for cases involving ‘deliberate concealment’ among others – normally a feature of fraud – pension scams cases usually only set the clock ticking from when a victim becomes aware that something is not right.  

 

Even so, time limitations can still become a problem. While victims might not necessarily have “a slam dunk case”, they might just know enough about the scam that for legal purposes it starts time running, said Murphy.  

 

However, not everyone who has lost money takes action straight away. “People might be thinking, ‘I’m really unhappy but a bit embarrassed’ or, ‘I don’t want to spend money on lawyers’, but later on down the tracks, because... they read something in the news, they are emboldened to take steps and perhaps regret they didn’t take action earlier,” he said. Depending on the extent of their earlier knowledge, they might be out of time at that point. 

 

Retrieving assets is usually very difficult; key individuals often have no money and insurance or have left the country, he noted, so cases tend to be made against more peripheral companies, which tend to be legitimate and covered, although they might not even know they were involved in a scam. 

 

For Murphy, the new red flags regulations are a promising development, but “the extent to which it’s ultimately successful is still to be seen”. There might also be teething issues, and he said it adds a burden on trustees of a transferring scheme. "But at least it’s the right thing, to be continuing to focus on eliminating or at least reducing scams,” because of the importance of building trust in the pensions system, he said. 

 

 

Time barring has affected some pension scam cases, mainly in qualifying for compensation for loss but not so much in court cases so far, said Margaret Snowdon, who chairs the Pension Scams Industry Group. 

 

She said that in most cases, the date at which someone becomes aware they are invested in a scam is “easier to determine because it is usually associated with a clear trigger event”. 

 

All cases are unique, said Snowdon, but added that there was still a bias against victims: “It is always surprising to me how authorities continue to suspect that those who are lured into a scam are somehow implicated in it. There is also an assumption that scam victims should have been checking their investments regularly, despite the fact that most people do not, and thereby are somewhat negligent.” 

 

She said the truffles fraud also shows how complicated scams are, “with layers of people and companies involved, all distancing themselves from blame”. 

 

 

Snowdon said it was of concern that people suspecting they might have been scammed does not always lead to quick action: “Many people can’t believe it is really happening to them and don’t know what to do next.” 

 

The Money and Pensions Service is due to build victim support, and she said she hopes this will become available nationwide soon. 

 

For Snowdon, it is also “disappointing to note” that Mrs Giddens had to pay a tax penalty for her £36,000 unauthorised cash payment from the pension before she was 55, “having self-reported to HMRC, while the scammers may end up slipping through the net”. 

 

Margaret Snowdon

Georgina Stewart

Ben Fairhead

David James

Tommy Burns