COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE ADMINISTRATIVE COURT
QUEEN'S BENCH DIVISION (MR JUSTICE BURNETT)
Ref no: CO/2343/2008
Strand, London, WC2A 2LL
B e f o r e :
COURT OF APPEAL CIVIL DIVISION
LORD JUSTICE LONGMORE
LADY JUSTICE BLACK
| The Queen On The Application Of The British Gurkha Welfare Society & Others
|- And -
|Ministry Of Defence
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr Rabinder Singh QC and Mr Sam Grodzinski (instructed by Treasury Solicitors) for the Respondent
Hearing date: 27 July 2010
Crown Copyright ©
Lord Justice Maurice Kay :
"Since 1947 [the Gurkhas] have formed an integral part of the British Army … Four [regiments] transferred to the British Army, forming the Brigade of Gurkhas. Gurkhas are recruited from Nepal. All are Nepalese nationals on recruitment and remain so until retirement. Their terms and conditions of service have been different from those of others in the British Army, although there has been a gradual alignment in recent years. Before 1997 the Brigade of Gurkhas was based in the Far East, particularly in Hong Kong. There has also been a long standing arrangement whereby one regiment is based in Brunei. That arrangement continues. Before 1997 Gurkhas did serve from time to time in the United Kingdom at Aldershot but their base remained in Hong Kong. Pay and other conditions reflected the terms available to the Gurkhas serving in the Indian Army. Leave was taken in Nepal, much longer leave than allowed to others in the British Army, and the universal assumption was that Gurkhas would retire to Nepal …
Prior to 1997, pay was much lower than for the rest of the British Army and pension arrangements entirely different. Gurkhas are recruited at the age of 18. Those who do not progress beyond the rank of corporal serve for 15 years. Put simply, the position was that after 15 years such Gurkhas retired and received an immediate pension, payable for life, based on their accrued service. No pension was payable if a Gurkha served fewer than 15 years, although almost all completed that length of service. Those promoted beyond the rank of corporal could serve for longer and received an immediate pension on retirement.
The position for those serving elsewhere in the British Army was that no pension could be paid immediately to soldiers or non-commissioned officers unless they completed 22 years' service. That pension could be deferred to 60. Those who served for less than 22 years accrued pension rights, but no pension could be taken until 60 …
The long established [Gurkha Pension Scheme or GPS] paid out pensions which were generally lower than those available to others who retired from the British Army, albeit that they were available sooner …
The return of Hong Kong to the Republic of China in 1997 gave rise to fundamental changes to the way in which Gurkhas served. The three regiments based in Hong Kong were unable to remain there. In consequence, since 1 July 1997 three Gurkha regiments have been based in the United Kingdom, with one at any time being stationed in Brunei. The immediate impact was that as time passed all Gurkhas spent increasingly large amounts of their time in the United Kingdom and developed contacts and roots here; so too their families.
For some time prior to 1997 Gurkhas stationed temporarily in the United Kingdom had received a supplement to their pay. That arrangement became a permanent fixture for those based in the United Kingdom after 1 July 1997. The supplement brought the Gurkhas' take-home pay up to the level of a soldier of equivalent rank in the British Army. However, it was not treated as pensionable pay. Pension arrangements remained as before. The continuing assumption was that on retirement Gurkhas would return to Nepal … Most of those retiring were in their early 30s and would develop a second career in Nepal. Nevertheless, the pension payable could maintain a reasonable lifestyle, irrespective of whether the person concerned could (as was usual) earn additional money. The evidence suggest that the pension of an ordinary Gurkha in Nepal equated with the pay of a captain in the Nepalese Army."
The GOTT and the 2007 Order
The previous litigation: Purja and Gurung
The present case: the decision of Burnett J
"Mr O'Dempsey is, of course, correct to submit that the change in the Immigration Rules … undermined some of the assumptions supporting the decision of the Court of Appeal in Purja. Those who retired after 1997 with the qualifying service have acquired rights to live in the United Kingdom. The question is whether those changes have affected the reasoning of the Court of Appeal as it applies to the calculation of pension entitlements which accrued before 1 July 1997. In my judgment they do not … For the cohort of claimants who retired before 1 July 1997 none of the assumptions underlying the Court of Appeal's conclusions had changed before the GOTT and the Order came into force. For those who have retired since 1 July 1997 but had served before then, and who have (or are entitled to) settle in the United Kingdom, the assumption that their retirement would be to Nepal no longer holds good. But the reasoning of Sullivan J and the Court of Appeal that historical differences in pay and pensions were justified before that date continue to provide ample justification for the purposes of Article 14 for the distinction drawn by the GOTT and Order between pension accrued before and after 9 July 1997. In the context of nationality a stronger justification is required than in the context of age. That is so even though such discrimination as there is results from a complex historical background and evolution, rather than straightforward discrimination on grounds of nationality. Simon Brown LJ's reasoning [in Purja] remains good, in my view, even given the changed facts which allow those who retired after 1 July 1997 with the requisite service to settle in the United Kingdom. For the reasons which support the rationality of the policy and its proportionality in the context of indirect age discrimination, its rationality and proportionality survive scrutiny under Article 14 through the lens of nationality … The decision withstands scrutiny. Gurkhas with service before 1 July 1997 were in a different position from others serving in the British Army before that date. Such differentiation in pension arrangements reflected that different position. There is clear justification for drawing the distinction between the actuarial and year for year transfer of pension from the GPS to the AFPS for all the reasons already summarised when considering the policy in connection with the argument advanced by reference to age.
There is at the heart of this argument an inconsistency in the approach of the claimants themselves which provides further support for this conclusion. The Gurkha Brigade can only exist in its present form if the Ministry of Defence applies a policy of recruitment that discriminates against all other nationalities other than the Nepalese … Those in the Brigade are also the beneficiaries of treatment denied to others in the British Army which discriminates against those others on grounds of nationality … The claimants appear to regard discrimination on grounds of nationality as justified when it provides benefits but not when it gives rise to disadvantage. It is difficult to see why that should be so, when all the differences, whether now of only historical interest or those continuing to have effect, flow from the unique position of the Gurkha Brigade in the British Army born of its long history of different and special treatment. The claim based on discrimination on grounds of nationality, like that relating to age, fails."
The legal framework
"The enjoyment of the rights and freedoms set forth in this Convention should be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."
"… the European Court of Human Rights allows member states to treat groups unequally in order to 'correct factual inequalities' between them: see Belgian Linguistics Case (No.2) (1968) 1 EHRR 252, 284, para 10. Furthermore, in making decisions about social and economic policy, particularly those concerned with the equitable distribution of public resources, the Strasbourg court allows member states a generous margin of appreciation: see James v United Kingdom (1985) 8 EHRR 123, 142, para 46. In a domestic system which (unlike the Strasbourg court) is concerned with the separation of powers, such decisions are ordinarily recognized by the courts to be matters for the judgment of the elected representatives of the people. The fact that the complaint concerns discrimination on grounds of sex is not in itself a reason for a court to impose its own judgment. Once it is accepted that the older widows were historically an economically disadvantaged class, which merited special treatment but were gradually becoming less disadvantaged, the question of the precise moment at which such special treatment is no longer justified becomes a social and political question within the competence of Parliament."
(1) The pre-1997 group
"I simply cannot recognise the two groups as being in 'an analogous or relatively similar situation', looking at the nature of the Gurkha Brigade as a whole – the basis and circumstances of the Gurkhas' recruitment, service and discharge."
See also Chadwick LJ at paragraphs 84 and 85. Thus, the claim fell at the first hurdle.
(2) The 1997 transitionals
"… it is crucial to understand how occupational pension schemes, contracted out and supplementary, are built up and run. As is clear from the observations of the governments and pension schemes appearing before the court, most of those pension schemes are characterised by their accruing nature. In practice, an employee accrues pension entitlements on the basis his periods of service with the employer concerned. For that purpose, contributions (calculated on the basis of actuarial factors) are periodically paid to a particular pension fund by the employee and/or employer in respect of specific periods of service.
A distinction must be made in this regard between the so-called fixed contribution schemes … and the so-called fixed benefit schemes (also called 'defined-benefit' plans). In the first-mentioned schemes the benefit consists of the capitalised sum of – and is accordingly dependent on – contributions periodically made in the past by its members. In schemes with fixed benefits, on the other hand, the level of benefit is fixed in advance (in the trust deed, constitutive rules, policy conditions or other general conditions) on the basis of the number of years of service, either as a fixed amount or as a percentage of the employee's final salary."
"… in making provision for the future payment of service pensions to servicemen and their widows, national authorities are in principle permitted to set conditions governing entitlement to such pensions and, in particular, to restrict such entitlement to those who are still in service at the time of the introduction of the new provisions, and to fix the level of entitlement by reference to the period of service completed following introduction of the relevant provisions."
Lord Justice Longmore:
Lady Justice Black: