An investor must bear all the risks of an investment

An EU official took all the risk when she invested her severance package, with the result that the value decreased

An EU official took all the risk when she invested her severance package, with the result that the value decreased. This was held in a judgment delivered by the Court of Appeal on 22 January 2025 in Helen Zammit Camilleri vs CCGM Pension Administrators Limited.  The Court of Appeal was presided by Mr Justice Lawrence Mintoff. This was an appeal from a decision given by the Arbiter for Financial Services on 7 March 2024, where the Arbiter rejected a complaint against the company.

The Court first analysed the facts of the case. The case concerns a pension fund of €54,605.55, which was transferred to the company. The Appellant was employed with the European Parliament until April 2022 afterwhich she found employment with other European Union institutions. The company managing the pension fund informed her that the value of the fund had dwindled to €49,786.14. This provoked the complaint. She asked the Arbiter to order the payment of €57,820.04, which was the value the company had recorded in December 2021.

The Company replied that certain aspects of the complaint were misleading.

The Arbiter held that the company needed clear instructions to liquidate the fund. The instructions were communicated in October 2023. Before this date the Appellant was asking for information on the valuation of the investments, but she did not authorise anything to be done. The investment was for the long term and therefore, there is no evidence that the delay was prejudicial to the investment. The sharp drop in the value of the investment was due to exceptional circumstances in mid-2022, when Euro interest rates undertook an abrupt turn following the severely changed inflationary environment, caused by Russia’s invasion of Ukraine. The downward turn would have taken place irrespective if the investment was kept by the company. The Arbiter ruled against the complaint and dismissed it.

The Appellant then appealed the Arbiter’s ruling and asked the Court of Appeal to revoke the decision and uphold the complaint.

The first ground of appeal was regarding how the Arbiter evaluated the evidence. She argued that there was a clear connection between the loss that the Appellant suffered and the cause of that loss. She claimed that the instructions were in fact given on 15 November 2021 to transfer her pension. This was shown in emails she presented. The title of the emails was “request for the transfer of pension rights”. These emails were sent to the Head of Operations of the company. The Appellant claimed that the Arbiter confused the request for direction on the transfer and the request to see whether the transfer should take place. She showed that she had filled in the relevant documentation and also argued that if there was a request for the value of the investment, this was done before she could ask for the transfer. The information was sent 11 months later. This must be considered as excessive. The Company hit back by saying that the Appellant and the EU institutions did not send any chasers. But a witness from the company testified that the Appellant was not expected to do anything.

The Company also held that the European Parliament had to carry out its own analysis. The bank details for the transfer to take place arrived in October 2023. Furthermore, the company held that the capital which forms part of the investment is always under risk and the transfer would mean a loss because of the limitations of the pension plan.

The Court of Appeal held that the Arbiter was correct when he held that there was no connection between the loss and the delay for the transfer to take place. The Arbiter was also correct to point out that no instructions were given before October 2023. In an email the European Parliament said that there was a possible transfer and asked for information on the investment. There was no evidence that the delay caused the reduction of the value of the investment

The second ground of appeal was that the Arbiter did not consider regulations of the office of the EU. The regulation is that an EU official who is re-employed must pay back her severance grant with a 2.9% interest. Therefore, the Arbiter was wrong when he said that the delay did not prejudice the Appellant.

The Company argued that the Appellant had chosen to invest her severance pay and her pension and as such there was no guarantee that the value will remain the same.

The Court of Appeal agreed and said that the company cannot be held responsible for this. The Appellant took the risk when she invested her severance grant.

Mr Justice Mintoff then moved to reject the appeal and confirm the decision.