England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HON MR JUSTICE MACKAY
SITTING IN THE QUEEN'S BENCH DIVISION (MANCHESTER)

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/08/2009

Lord Justice Thomas :

1. The appeal relates to a claim by the appellant to be entitled to payment of an early pension under the Local Government Scheme of which he was a member. The issue is in the end a short one, but it is necessary to refer to the extensive litigation that has continued since the termination of the appellant's employment in 2001.

Employment by the council

2. The appellant, Mr Booth, began his employment with the respondent (the Council) in 1973. In March 1992 he was appointed the Head of Secretarial Services and in 1995 appointed to the post of Member and Electoral Services Manager. Written terms of the conditions of his employment were supplied to him. These expressly referred to the terms of superannuation being covered in an enclosed booklet. It is not necessary to refer to the terms of the booklet because it is common ground that his employment with the Council gave him a right to a pension on the terms set out in the Local Government Pension Scheme Regulations of 1997 (the Pension Regulations) made under the Superannuation Act 1972. The Pension Regulations provide as follows:

"27(1) Where a member leaves a local government employment by reason of being permanently incapable of discharging efficiently the duties of that employment because of ill-health or infirmity of mind or body, he is entitled to an ill-health pension and grant.

31(1) If a member leaves a local government employment … before he is entitled to the immediate payment of retirement benefits …, once he is aged 50 or more he may elect to receive payment of them immediately.

31(2) An election made by a member aged less than 60 is ineffective without the consent of his employing authority or former employing authority (but see paragraph (6)).

31(4) If the sum-

(a) of the member's age in whole years on the date his local government employment ends or the date he elects, if later,

(b) of his total membership in whole years, and

(c) in a case where he elects after his local government employment ends, of the period beginning with the end of that employment and ending with the date he elects,

is less than 85 years, his retirement pension and grant must be reduced by the amounts shown as appropriate in guidance issued by the Government Actuary (but see paragraphs (5) and (6) and regulation 36(5) (GMPs)).

31(6) If a member who has left a local government employment before he is entitled to the immediate payment of retirement benefits … becomes permanently incapable of discharging efficiently the duties of that employment because of ill-health or infirmity of mind or body –

(a) he may elect under paragraph (1) before attaining the age of 50; and

(b) paragraphs (2) and (4) do not apply."

3. The Pension Regulations set out a scheme for resolution of disputes.

97 (1) Any question concerning the rights or liabilities under the Scheme of any person other than a Scheme employer must be decided in the first instance by the person specified in this regulation."

"97(9) Before making a decision as to whether a member may be entitled under regulation 27 or under regulation 31 on the ground of ill-health, the Scheme employer must obtain a certificate from an independent registered medical practitioner as to whether in his opinion the member is permanently incapable of discharging efficiently the duties of the relevant local government employment because of ill-health or infirmity of mind or body."

"100(1) Where there is a disagreement about a matter in relation to the Scheme between a member or an alternative applicant and a Scheme employer, the member or, as the case may be, the alternative applicant ("the complainant") may-"

(a) apply directly to the appropriate appointed person to decide the disagreement, or

(b) apply to the appropriate administering authority for them to refer the disagreement to an appointed person for decision.

……

101(1) A decision on the matters raised by an application under regulation 100 must be issued by the appropriate appointed person-

(a) to the applicant,

(b) to the Scheme employer, and

(c) if the Scheme employer is not the appropriate administering authority, to that authority,

by notice in writing before the expiry of the period of two months beginning with the date the application was received.

……..

102(1) Where an application about a disagreement has been made under regulation 100, an application may be made to the Secretary of State to reconsider the disagreement by the person who applied under regulation 100 or the Scheme employer in question.

(2) The application must set out particulars of the grounds on which it is made, including a statement that the applicant under this regulation wishes the disagreement to be reconsidered by the Secretary of State."

4. Under Part X of the Pensions Scheme Act 1993, the Pensions Ombudsman is entitled to investigate and determine the complaint of a potential beneficiary of a pension scheme as a result of maladministration in connection with the pension scheme; the scheme of which Mr Booth was a member is such a scheme. There are powers to stay court proceedings whilst a dispute is referred and a right of appeal on a point of law to the High Court.
5. In November 1999 Mr Booth advanced a grievance against his manager. It is not necessary to set out details of that but he contended that he had been bullied and in consequence his health deteriorated. He was signed off work from 6 March 2000 by his general practitioner because of work-related stress and depression. It was his contention that, after the medical treatment he had received, arrangements had been made for him to return to work at the beginning of September 2001. However on 31 August 2001 the Council wrote a letter to him dismissing him on grounds of capability. He was just over 50 on the date of his dismissal.

Claims in the Employment Tribunal and before the Pensions Referee

6. On 22 November 2001 Mr Booth commenced a claim in the Employment Tribunal on various bases, including unfair dismissal, discrimination on the grounds of disability, wrongful dismissal and breach of his contract of employment.
7. Whilst this claim was pending, Mr Booth was told on 23 July 2002 by the Council of the benefits to which he was entitled under the pension scheme. This did not give him the additional benefits to which he would be entitled on grounds of ill health under Regulation 27. On 13 December 2002 he complained to the Appointed Referee under Regulation 100 of the Pension Regulations to which we have referred at paragraph 3. The Appointed Referee in correspondence with the Council ascertained the circumstances of Mr Booth's dismissal in January and February 2003. In March 2003, he suggested that an attempt should be made to resolve Mr Booth's pension entitlement. He set out his view of the operation of the scheme and expressed the view that what was needed was a clear medical opinion as to whether Mr Booth was permanently incapable of efficiently discharging the duties of his former employment.
8. Whilst the Council were considering the views of the Appointed Referee, the Employment Tribunal on 6 May 2003 heard his claim that he was a disabled person. Under s.1 of the DDA 1995 a person has a disability for the purposes of the Act:

"if he has a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities."

Schedule 1 to the Act sets out provisions supplementing s.1. Paragraph 2 of the Schedule provides that the effect of impairment is long term if

"(a) it has lasted at least 12 months, (b) the period for which it lasts is likely to be at least 12 months or (c) it is likely to last for the rest of the life of the person affected""

Paragraph 4 of the Schedule makes provision in respect of normal day-to-day activities:

"4(1) An impairment is to be taken to affect the ability of the person concerned to carry out normal day-to-day activities only if it affects one of the following -

(a) mobility;

(b) manual dexterity;

(c) physical co-ordination;

(d) continence;

(e) ability to lift, carry or otherwise move everyday objects;

(f) speech, hearing or eyesight;

(g) memory or ability to concentrate, learn or understand; or

(h) perception of the risk of physical danger."

Paragraph 6 makes provision in respect of the effect of medical treatment:

"6 (1) An impairment which would be likely to have a substantial adverse effect on the ability of the person concerned to carry out normal day-to-day activities, but for the fact that measures are being taken to treat or correct it, is to be treated as having that effect."

9. At the hearing before the Employment Tribunal, Mr Booth relied as giving rise to disability upon his mobility, speech and memory, ability to concentrate, learn or understand and the perception of the risk of personal danger. There were medical reports including those from Dr Black, a psychiatrist, in August 2001 and Dr Ansari, another consultant psychiatrist, in August and September 2002. The Tribunal concluded in its decision dated 25 June 2003 that none of the matters on which he relied amounted collectively to a substantial adverse effect on his ability to carry out his normal day-to-day activities. It considered in detail his evidence in relation to mobility, speech, memory or ability to concentrate, learn or understand and the risk of physical danger. It concluded at paragraph 12:

"In relation to all the matters relied upon by the applicant in relation to mobility, speech, memory, concentration and perception of risk we have looked at these matters separately to determine if there has been a substantial adverse effect. We have also considered all of these matters together and we are not satisfied that even after taking all of these matters cumulatively they can be said to have had a substantial adverse effect on the applicant's ability to carry out normal day-to-day activities."

The Tribunal also concluded that on the evidence from the doctors there had been no mental impairment which had a long-term effect on his ability to carry out normal day-to-day activities. It accordingly determined that he was not a disabled person for the purposes of the DDA 1995. It referred his claim for unfair dismissal to a differently constituted Tribunal

10. After this determination, the Council responded on 11 December 2003 to the Appointed Referee who was considering the claim for Mr Booth's pension that had been made in December 2002. It made clear that it would not carry out any assessment of Mr Booth with a view to early payment of his pension, as it was not aware of any legislative provision that required the Council to carry out such an assessment. The Appointed Referee notified Mr Booth's solicitors of his decision on 23 December 2003 which was set out in a letter of the same date to the Council. Although the Appointed Referee considered he had the power to arrange for Mr Booth to be medically examined, he saw little point in doing so as the Council did not agree with his view of the scheme and would not comply with his decision. He advised Mr Booth that he was unable to assist him further. The decision letter made clear that Mr Both had a right to refer the matter to the Secretary of State under Regulation 102 and then to the Pensions Ombudsman under the Pensions Schemes Act 1993. The Council responded that its concern was with the proceedings before the Employment Tribunal and it had not said it would not comply with the decision of the Appointed Referee, if the Appointed Referee arranged an examination before an approved independent medical examiner. The Appointed Referee responded on 13 January 2004 to say he would not re-open the matter.
11. Mr Booth decided not to appeal to the Secretary of State or to refer the matter to the Pensions Ombudsman, though the Appointed Referee's letter of 13 January 2004 indicated that Mr Booth was considering doing so.
12. Mr Booth pressed ahead with his appeal in respect of the claim under the DDA 1995 to the Employment Appeal Tribunal against the decision of the Employment Tribunal on disability. In a judgment delivered on 21 May 2004, the Employment Appeal Tribunal dismissed his appeal. It concluded that the Employment Tribunal had been entitled to reach the decision it did, observing the more they listened to the evidence, the more convinced they became that the appeal was really about a disagreement with the Employment Tribunal's approach to the facts.
13. Mr Booth's unfair dismissal claim was never determined as it was compromised on terms confidential to the parties. Its only relevance is that s.98(2) of the Employment Rights Act 1996 provides that in determining whether the dismissal is fair, one of the reasons which are admissible reasons for dismissal is a reason

"which relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do."

The claim in the High Court

14. In August 2007, Mr Booth commenced the present claim at the Manchester District Registry of the High Court of Justice, claiming the loss he had suffered by not being granted an immediate or enhanced pension. In his particulars of claim he put forward two distinct parts to the claim:

i) The primary claim pleaded in paragraphs 9 to 12 was that the Council had, at the time of his dismissal in August 2001, acted in breach of contract by reason of its failure to refer Mr Booth to a medical examiner and failed to take other steps, all of which were in breach of contract.

ii) The alternative claim pleaded at paragraph 13 was that the Council had acted in breach of contract in refusing to refer the appellant to a medical examination or assessment in December 2002 or December 2003 and failing to take other steps that would have lead to the payment of an immediate or enhanced pension.

Mr Booth relied upon the report of Dr J F McNamara, a Consultant Occupational Physician who had seen him in October 2006. Dr McNamara concluded that, if Mr Booth had been referred to him he would not have classed him as permanently incapable of work in July/August 2001 as he would then have been guardedly optimistic that he could have been rehabilitated back to his original post. However, since August 2001 Mr Booth had continued to suffer from anxiety and depression. If he had been referred in the autumn of 2001, Dr McNamara believed there was an 80% chance he would have satisfied the criteria for ill health retirement under Regulation 27 of the Pension Regulations and by December 2003 that chance would have been 90%.

15. The Council applied to strike out the claim under CPR Part 3.4 or alternatively for summary judgment under CPR Part 24.2 on the basis that the claim disclosed no reasonable grounds for bringing the claim and was an abuse of the process of the court.
16. That application was heard by Mackay J in Liverpool on 11 April 2008. He dismissed both the primary and the alternative claim. Leave to appeal was refused by Sir Richard Buxton but on an oral application before Mummery LJ, Mr Booth was given permission to appeal in respect of his alternative claim. Thus the only part of the claim before this court on this appeal is the alternative claim.

The appeal to the Court of Appeal

17. It is necessary to describe that alternative claim which formed the sole ground of appeal as set out in amended particulars of claim:

i) The Pension Regulations provided that an employee, having become permanently incapable under Regulation 27(1), was entitled under Regulation 31(6), after leaving a local government employment, to make an election to receive payment of the benefits immediately. If so, he could do so without the consent of the employer under 31(2) or scaling back under 31(4). As Mr Booth was over 50 at the material time and permanently incapable, he was entitled to make this election.

ii) The Council, in breach of contract, failed to allow Mr Booth to take his pension immediately; it also failed to investigate whether he was permanently incapable of performing his duties; it also failed to refer him for assessment with a medical practitioner.

iii) Dr McNamara's report showed that if he had been referred in either December 2002 or December 2003, he would have been awarded permanent ill heath retirement.

18. Mackay J held that the findings of the Employment Tribunal were based on medical evidence to the effect that Mr Booth was not a disabled person within the DDA 1995 in June 2002. That finding was an issue estoppel binding on the parties. The level of disability under the DDA 1995 was lower than that prescribed under Regulation 27. It was therefore impossible for Mr Booth, in the light of that issue estoppel, to satisfy the higher burden of proving he was permanently disabled. As the Tribunal had made that finding, Mr Booth could not successfully contend that the Council remained under a duty to entertain the claim or to procure a medical report to investigate whether he was permanently disabled.
19. It was contended in the argument by Mr Benson QC (who had not appeared below) that:

i) The Appointed Person was correct in his view that the Council should have followed Regulation 97(9) by obtaining an independent medical examination.

ii) Although the Employment Tribunal had determined that Mr Booth was not under a disability within the meaning of the DDA 1995, that finding only established his medical condition as at the date of his dismissal, namely 31 August 2001.

iii) Tests for disability for the purposes of the DDA 1995 and permanent incapacity for the purposes of the Pension Regulations and for s.98 (2) of the Employment Rights Act 1996 were different.

iv) The test for disability under the DDA 1995 was concerned with impairment which adversely affected an ability to carry out normal day-to-day activities. The question of permanent incapability for the purposes of the Pension Regulations was linked to the efficient discharge of the duties of the relevant employment; under the Regulations the question was whether the employee was permanently incapable of discharging the duties of his employment because of ill health. Whilst it was accepted that a permanent incapacity for the purpose of the Pension Regulations would on some occasions also amount to disability under the DDA, that would not always invariably be the case.

v) The type of reason which provided a potentially fair ground for dismissal for the purpose of s.98 of the 1998 Act was one which related to the capability of performing work of the kind which the relevant employee was employed to do.

vi) The Employment Tribunal had only determined that he was not under a disability on 31 August 2001; his claim to a pension depended on his condition 15 months later in December 2002 or 27 months later in December 2003. There was no logical ground for contending that a finding he was not a disabled person on 31 August 2001 necessarily precluded a finding that he was permanently incapable of efficiently discharging the duties of the relevant employment in December 2002 or December 2003. An examination of the medical history showed that there was a change in Mr Booth's condition after August 2001, as was evident from Dr Ansari's report and the conclusions of Dr McNamara as to his diagnosed conditions.

20. In the argument before this court, the Council not only sought to support the grounds which had formed the basis of Mackay J's decision, but to rely on a number of further reasons set out in a Respondent's Notice for upholding the decision. The Council contended that the Regulations provided a scheme for dispute resolution set out in Regulations 99 and following, culminating in an appeal to the Secretary of State and a reference to the ombudsman; that was Mr Booth's remedy and, as he had failed to pursue it, he could not circumvent the statutory scheme by an action in the High Court. There was, in any event, no duty on the Council to protect an employee's economic well being generally or to give advice as to pension rights specifically: Crossley v Faithful and Gould Holdings [2004] EWCA Civ 293. The Council made extensive submissions on the tests for disability under the DDA 1995 (Goodwin v Patent Office [1999] ICR 302) and under the Pension Regulations (Spreadborough v The Pensions Ombudsman [2004] EWHC 27 (Ch).

Conclusion

21. In my view, there are two reasons why this appeal cannot succeed.
22. First, I consider that Mackay J was right substantially for the reasons he gave.

i) The finding of the Employment Tribunal was that Mr Booth was not under a disability under the DDA 1995 at the date of his dismissal in August 2001. The only arguably relevant date after his dismissal for assessing whether under the Pension Regulations he was permanently incapable of discharging the duties of his employment by the Council because of ill-health or infirmity of mind or body was a date anytime between August 2001 and December 2002 when he claimed to be entitled to early payment of a pension.

ii) The date cannot be a time later than that because under Regulation 36 of the Pension Regulations, the date cannot be later than the date of the election.

iii) It is not necessary to consider whether a person who is found not to be under a disability under the DDA will always fail to establish permanent incapacity under the Pension Regulations; there may possibly be circumstances as outlined by Mr Benson QC where that is not so. On the facts of this particular case and the specific matters raised by Mr Booth, the clear evidence before the Tribunal which heard the case on 6 May and 3 June 2003 plainly established on the facts that he was not permanently incapable of discharging the duties of his employment by the Council because of ill-health or infirmity of mind or body between August 2001 and December 2002. That is the inevitable conclusion based on the reports before the Tribunal, including the reports of Dr Ansari and the Tribunal's own conclusion in its decision of 25 June 2003 that "the applicant is not a disabled person". There was ample evidence on which the Tribunal could have reached that view. The nature of the disabilities relied on by Mr Booth - his lack of mobility because of his claustrophobia and fear of meeting new people, his speech, his memory and ability to concentrate and his perception for he risk of physical danger-were such that if they did not result in him being under a disability under the DDA 1995, then he was not permanently incapable of carrying out the duties of his employment.

iv) I accept that the last medical report before the Tribunal was that of Dr Ansari who, as I have set out at paragraph 9 above, saw him in September 2002, but there is nothing to suggest that his condition could have so deteriorated between then and December 2002 to make him permanently incapable by that date. There is nothing in the Report of Dr McNamara which would support such a change in his circumstances.

v) As there is no evidence to establish that he was permanently incapable at the relevant date, it is not necessary to consider whether there was a duty to refer him for an assessment, as even if there was such a duty, there cannot have been any loss.

23. Second, Mr Booth cannot be allowed to continue these proceedings when he had failed to use the dispute resolution machinery provided for the remedy he now claims:

i) Mr Booth's status as an employee of the Council gave him a right under the Pension Regulations to a pension on the terms there set. It was not necessary, in my view, for that right to be incorporated into the contract of employment. For the purposes of its strike out/ summary judgment application alone the Council conceded that the Pension Regulations were incorporated into Mr Booth's contract of employment (on the basis that this may have been a triable issue). I am far from convinced that this would have been a proper concession to have made should these proceedings have gone any further because it was not wholly clear from the contract what incorporation of the Pension regulations meant and because it would probably have been wrong in law. However, the concession does not make a difference to the view I have taken in this second ground, for his right to the pension depended solely on the Pension Regulations and could be obtained solely on the terms of the Pension Regulations.

ii) It was contended that the Council should have followed the procedure under the Regulations by obtaining a report under Regulation 97(9) and then by awarding him a pension under Regulation 27 without any deduction as provided for in Regulation 31.

iii) The Regulations had their specific form of dispute resolution procedure. Mr Booth followed that procedure in initially taking the dispute to the Appointed Referee, but he failed thereafter to pursue that claim under the statutory machinery under the Regulations which governed the matter about which he complained and his right to the pension. In my view that was the remedy he should have pursued and not the action which he brought many years later in the High Court. Parliament specifically provided machinery through the Regulations for the resolution of disputes. It is not possible for a person who has those remedies to attempt to bring an action in the High Court when he has failed to utilise the statutory machinery under the Regulations which create and embody the rights which he seeks to enforce. That dispute resolution machinery gave him an opportunity to challenge the refusal of the council to have a medical assessment and to early payment of an enhanced pension and he had no right to bring those proceedings in the High Court.

24. For these reasons, I would dismiss the appeal.

Mr Justice Mann

25. I agree.

Lord Justice Laws

26. I also agree.