England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE HADDON-CAVE
[2017] EWHC 2835 (QB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		02/10/2018

Lord Justice Henderson:

Introduction

1. This appeal involves a short question of construction of the Police (Injury Benefit) Regulations 2006, S.I. 2006 No.932 ("the 2006 Regulations"), which provide (among other things) for the making of an injury award to a person who ceases to be a member of a police force and is permanently disabled as a result of an injury received through no fault of his own in the execution of his duty (defined in regulation 11(1) of the 2006 Regulations as the "relevant injury"). Such an injury award has two components, calculated in accordance with detailed provisions set out in schedule 3 to the 2006 Regulations. The first component is a lump sum gratuity, calculated as a specified percentage of the person's average pensionable pay. The second component, with which this case is primarily concerned, is an injury pension, paid weekly, which takes the form of a "minimum income guarantee" expressed as a specified percentage of the person's average pensionable pay.
2. An injury award payable under the 2006 Regulations is separate from any pension or pension-related benefits to which the person in question (whom I will call the "police officer") may be or become entitled under the police occupational pension scheme, which was governed at the material times by the Police Pensions Act 1976 and the Police Pensions Regulations 1987 ("the 1987 Pensions Regulations"). Nevertheless, the police officer's pensionable pay and average pensionable pay are calculated for the purposes of an injury award under the 2006 Regulations in the same way as if it were an award payable under the 1987 Pensions Regulations: see regulations 4(1) and (2) of the 2006 Regulations. Furthermore, the amount of an injury pension, where the relevant injury was received during a period of service as a regular police officer, must be reduced by three-quarters of any other pension calculated by reference to Schedule B to the 1987 Pensions Regulations. Credit must thus be given, for example, for 75% of any ordinary pension or accelerated ill-health pension to which the police officer may be entitled under the occupational scheme.
3. Similarly, an injury award payable under the 2006 Regulations is separate from any social security benefits to which the police officer may be entitled, but in the case of certain "additional benefits", described in paragraph 7 of schedule 3, they must be deducted, in full, from the weekly payment of injury pension made to the police officer. The additional benefits which have to be deducted in this way are, for the most part, ones which relate directly to the relevant injury. In short, they comprise: (a) any industrial injuries benefit under section 94 of the Social Security Contributions and Benefits Act 1992 ("SSCBA 1992") in respect of the relevant injury; (b) any reduced earnings allowance under section 94 of that Act in respect of the relevant injury; (c) any incapacity benefit under section 30A of that Act; and (d) any severe disablement allowance under sections 68 and 69 thereof.
4. The precise way in which these additional benefits are to be taken into account is provided for by sub-paragraphs 7(1) and (2) of schedule 3, as follows:

"7(1) The amount of the injury pension in respect of any week, calculated as aforesaid, shall be reduced on account of any such additional benefit as is mentioned in sub-paragraph (3) to which the person concerned is entitled in respect of the same week and, subject to sub-paragraph (2), the said reduction shall be of an amount equal to that of the additional benefit or, in the case of benefit mentioned in sub-paragraph (3)(a) or (b), of so much thereof as is there mentioned.

(2) Where the provisions governing scales of additional benefits have changed after the person concerned ceased to be a member of a police force, the amount of the reduction in respect of any week on account of a particular benefit shall not exceed the amount which would have been the amount thereof in respect of that week had those provisions not changed…"

It can be seen, therefore, that the basic rule is for deduction of an amount equal to the full amount of the additional benefit on a weekly basis, but this rule is subject to the proviso in sub-paragraph (2) which applies "[w]here the provisions governing scales of additional benefits have changed after the person concerned ceased to be a member of a police force". In those circumstances, the amount of the weekly reduction in the amount of the injury pension is not to exceed the amount which would have applied if those provisions had not changed. It is the construction of this proviso, and its application to the circumstances of the two appellants, with which this case is concerned.

5. The first appellant, Mr Evans, served as a police officer with the South Wales Police Force for 29 years. He was injured in the course of his duties, and was required by the Chief Constable to retire on 25 June 1999 as a result of his injuries. The second appellant, Mr Ashcroft, also served as a police officer in the same Force for 26 years. He too was injured in the course of his duties, and was required to retire on 6 June 1999 as a result of his injuries. In addition to their police pensions, each appellant applied for, and was awarded, a police injury pension under the predecessor provisions to the 2006 Regulations, which were then contained, in materially the same terms, in the 1987 Pensions Regulations.
6. As Haddon-Cave J explained in the judgment under appeal ( [2017] EWHC 2835 (QB) ) at [8], the level of police injury pension paid depends upon the degree of injury and the impact which it has on the police officer's earnings capacity. He annexed to his judgment the "banding" Table which is now set out in paragraph 3 of schedule 7 to the 2006 Regulations, and was previously contained in the 1987 Pensions Regulations. The Table distinguishes between four degrees of disability, which calibrate the amount of gratuity and pension paid depending on the police officer's length of service, the highest levels of award being paid to those who, like Mr Evans and Mr Ashcroft, had accrued 25 or more years' service. The bands were as follows:

(1) Band 1: 25% or less (slight disablement);

(2) Band 2: more than 25% but not more than 50% (minor disablement);

(3) Band 3: more than 50% but not more than 75% (major disablement); and

(4) Band 4: more than 75% (very severe disablement).

7. The Police Authority determined that Mr Evans had a 40% degree of disablement, which therefore fell within Band 2 and in view of his length of service entitled him to a minimum income guarantee equal to 70% of his average pensionable pay. The Authority determined that Mr Ashcroft had an 80% degree of disablement, and therefore fell within Band 4, entitling him to a minimum income guarantee at the maximum level of 85% of his average pensionable pay.
8. As a result of the same injuries, each appellant also became entitled to "additional" social security benefits for which credit would have to be given under what is now paragraph 7(1) of schedule 3 to the 2006 Regulations. They both became entitled to receive incapacity benefit. Mr Ashcroft also became entitled to industrial injuries benefit under section 94 of SSCBA 1992, consisting of a disablement pension under section 103 paid weekly. This disablement pension is referred to in the judgment below, and in the parties' statements of case, as "Industrial Injuries Disablement Benefit" or "IIDB". In 2013, Mr Ashcroft ceased to receive incapacity benefit and became entitled instead to employment and support allowance ("ESA").
9. As the judge went on to say at [12] to [13], and as I will need to explain in a little more detail later in this judgment, both the injury pensions received by the appellants, and their deductible social security benefits (i.e. incapacity benefit and IIDB), have been increased annually since 1999 in line with inflation. Subject to a complication concerning the tax year 2009/10, to which I will also have to return, the rates of annual increase applicable to the police pensions and the relevant social security benefits have in fact been the same, because of a statutory mechanism which links them. Common sense would therefore suggest that the weekly deductions to be made from the police pensions payable to Mr Evans and Mr Ashcroft should have increased year by year, reflecting the increased amount of the pensions which they were entitled to receive on the one hand, and the increased amount of the relevant additional benefits to be deducted under paragraph 7(1) on the other hand. But that is not the result for which the appellants now contend. Their case is that the deductions to be made from their weekly payments of injury pension are, in effect, frozen at the levels which applied when they retired in 1999, because the annual uprating of the relevant additional benefits in line with inflation amounts to a change in the provisions governing the scales of those benefits within the meaning of paragraph 7(2), and thus triggers the operation of the proviso contained in that sub-paragraph.
10. The respondent Chief Constable is the police pension authority for the purposes of the 2006 Regulations. Under the 1987 Pensions Regulations, the relevant authority was the South Wales Police Authority. Neither the Chief Constable, nor his predecessor, have ever calculated the weekly amount of police pension on the basis for which the appellants now contend, but have instead deducted the full weekly amounts of the additional benefits as increased from year to year. It follows, if the appellants are correct, that their police pensions have been underpaid on an annually increasing basis, ever since the dates when their additional benefits were first increased in line with inflation following their retirement. The practical significance of the point is increased by the fact that injury pension payments are exempt from income tax, whereas incapacity benefit is not.
11. It will also be appreciated that, although this is not strictly a test case, the question is one of general application to police officers in receipt of police pensions. There is no suggestion that any police authorities have adopted the construction of paragraph 7 for which the appellants contend, so our decision is in practice likely to be determinative of any similar claims brought under the 2006 Regulations.
12. When the present claims were first formulated in April 2016, the appellants sought repayment of all the alleged underpayments dating back to 1999. They averred that the Chief Constable had no limitation defence, because the underpayments arose by reason of mistakes in the interpretation of the relevant legislation of which they had been unaware until, at the earliest, 2011. By the time the appellants served their reply in August 2016, however, it had rightly become common ground: (a) that the defendant was entitled to raise a limitation defence; (b) that no mistake-based extension of the limitation period was possible, in view of the decision of the Supreme Court in Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2012] UKSC 19, [2012] 2 AC 337; and (c) that the claims were accordingly confined to the period of six years prior to the issue of proceedings.
13. The Chief Constable was also asked to agree that a preliminary issue should be tried before a High Court judge, in terms which were subsequently agreed and incorporated in a court order dated 16 December 2016, as follows:

"Do the provisions of paragraphs 7(1) and (2) of Schedule 3 to the Police (Injury Benefit) Regulations 2006 entitle a Chief Constable to deduct the full sums of Incapacity Benefit (IB) and Industrial Injuries Disablement Benefit (IIDB) from the injury pension paid to a former police officer in weeks in a year after the year in which the former police officer retired where the amounts of IB and IIDB have been increased by an Annual Uprating Order made under section 150 of the Social Security Administration Act 1992 and accordingly the levels of IB and IIDB payable to the former officer have increased?"

14. The issue thus formulated was tried before Haddon-Cave J on 8 June and 30 October 2017, and he handed down his reserved judgment on 16 November 2017. The parties were represented, as they have been before us, by David Lock QC for the claimants (now appellants), and by Jason Beer QC for the defendant Chief Constable. For the detailed reasons given in his judgment, and reflected in his order dated 13 November 2017, the judge answered the agreed question in the affirmative and accordingly dismissed the claim, but granted permission to appeal to this court.

Relevant statutory provisions

(1) The 2006 Regulations

15. I have already referred to most of the relevant provisions of the 2006 Regulations, which are materially the same as those which previously governed police injury pensions contained in the 1987 Pensions Regulations.
16. The basic entitlement to a police officer's injury award is conferred by regulation 11, as follows:

"Police officer's injury award

11(1) This regulation applies to a person who ceases or has ceased to be a member of a police force and is permanently disabled as a result of an injury received without his own default in the execution of his duty (in Schedule 3 referred to as the "relevant injury").

(2) A person to whom this regulation applies shall be entitled to a gratuity and, in addition, to an injury pension, in both cases calculated in accordance with Schedule 3; but payment of an injury pension shall be subject to the provisions of paragraph 5 of that Schedule and, where the person concerned ceased to serve before becoming disabled, no payment shall be made on account of the pension in respect of any period before he became disabled."

17. Schedule 3 contains the detailed provisions which govern calculation of the two elements of a police officer's injury award (i.e. the gratuity and the injury pension), by reference to the Table set out in paragraph 3. The opening words of paragraph 3 state that:

"An injury pension shall be calculated by reference to the person's degree of disablement, his average pensionable pay and the period in years of his pensionable service, and, subject to the following paragraphs, shall be –

(a) in the case of a police officer all of whose service by virtue of which his pensionable service is reckonable was full-time, of the amount of his minimum income guarantee specified as appropriate to his degree of disablement in column (3), (4), (5) or (6) of the following Table…"

I have already described the four bands of disablement set out in the Table, ranging from slight to very severe. The four columns referred to in paragraph 3(a) denote different periods of service, ranging from less than 5 years to 25 or more years. The minimum income guarantee ranges from 15% (for a police officer with slight disablement and less than 5 years' service) to a maximum of 85%, which applies to all cases of very severe disablement, whatever the length of service.

18. Paragraph 6 of schedule 3 is the provision which requires the amount of an injury pension to be reduced by three-quarters of any other pension calculated by reference to schedule B to the 1987 Pensions Regulations: see paragraph [2] above.
19. I have already set out the provisions of paragraph 7(1) and (2), upon which this appeal principally turns. I have also briefly described the four main types of "additional benefits" to which those sub-paragraphs apply. Paragraph 7(3) states that:

"The following benefits are the additional benefits referred to in this paragraph –

(a) any industrial injuries benefit under section 94 of [SSCBA 1992] in respect of the relevant injury or so much of any such pension as relates to that injury…

(b) any reduced earnings allowance under section 94 of that Act in respect of the relevant injury or so much of any such allowance as relates to that injury;

(c) until the first day after his retirement which is not, or is deemed not to be, a day of incapacity for work within the meaning of section 30A, or, as the case may be, a day on which he is incapable of work within the meaning of sections 68 and 69, of that Act –

(i) any incapacity benefit under section 30A of that Act,

(ii) any severe disablement allowance under sections 68 and 69, including, in each case, any increase under any provision of Part 4 of that Act (dependants)."

20. The only other provision of the 2006 Regulations to which it is necessary to refer is regulation 29, which we were told has the effect, when read in conjunction with other provisions to which we were not taken, of increasing an award of an injury pension in line with inflation in the same way as a corresponding pension within the meaning of the Pensions (Increase) Act 1971 would from time to time be increased. Thus an injury pension awarded under the 2006 Regulations (or their predecessor) has at all material times been linked to the same inflationary escalator as other police and public sector pensions to which the 1971 Act applies.

(2) Incapacity benefit and industrial injuries benefit

21. Incapacity benefit was introduced by the Social Security (Incapacity for Work) Act 1994. The conditions of entitlement to the benefit are set out in section 30A of SSCBA 1992. In broad terms, provided the relevant conditions are satisfied, a person is entitled to short-term incapacity benefit for periods of up to 364 days, and to long-term incapacity benefit for any longer period of incapacity for work while he remains under pensionable age. The rates at which the benefit is payable are prescribed by section 30B. By virtue of section 30B(6), the weekly rate of long-term incapacity benefit is that specified in Schedule 4, Part I, paragraph 2A. Reference to the relevant schedule shows a figure for the weekly rate as set out in the most recent annual uprating order, as to which see below at [23] to [26].
22. Entitlement to industrial injuries benefit is set out in section 94 of SSCBA 1992. By virtue of section 94(1), it is "payable where an employed earner suffers personal injury caused… by accident arising out of and in the course of his employment, being employed earner's employment." The main industrial injuries benefit consists of "disablement benefit" payable in accordance with sections 103 to 105. The minimum threshold for payment of "disablement pension" under section 103 is that the assessed extent of the resulting disablement must amount to not less than 14%; sections 104 and 105 then provide for increases where constant attendance is needed or where the disablement is exceptionally severe. By virtue of section 103(7), where disablement pension is payable for a period, "it shall be paid at the appropriate weekly rate specified in Schedule 4, Part V, paragraph 1". The relevant paragraph in the schedule contains a table showing different weekly amounts for different degrees of disablement, together with various increases of the weekly rate as applicable, including for cases where constant attendance is needed or the disablement is exceptionally severe. The weekly figures shown are again those specified in the most recent uprating order.

(3) The annual uprating of social security benefits

23. Part X of the Social Security Administration Act 1992 ("the 1992 Administration Act") is headed "Review and alteration of benefits". Section 150(1) of this Act obliges the Secretary of State to review in each tax year the sums specified in various provisions of SSCBA 1992, including Schedule 4:

"… in order to determine whether they have retained their value in relation to the general level of prices obtaining in Great Britain estimated in such manner as the Secretary of State thinks fit."

24. Section 150(2) then sets out what the Secretary of State must do if it appears to him that there has been a rise in the general level of prices:

"Where it appears to the Secretary of State that the general level of prices is greater at the end of the period under review than it was at the beginning of that period, he shall lay before Parliament the draft of an uprating order –

(a) which increases each of the sums to which subsection (3) below applies by a percentage not less than the percentage by which the general level of prices is greater at the end of the period than it was at the beginning;…"

Both incapacity benefit and industrial injuries benefit fall within section 150(3), so the requirement for a draft order to be laid before Parliament is mandatory in any case where the general level of prices has increased. The amount of the increase must be no less than the percentage rise in the general level of prices, although the Secretary of State retains a discretion to decide on a higher rate of increase.

25. By virtue of section 150(8), the draft order laid before Parliament must be accompanied by a report by the Government Actuary (or his Deputy) giving his opinion on the likely effect on the National Insurance Fund of such parts of the order as relate to the sums payable out of that fund. If the draft order is approved by a resolution of each House, the Secretary of State shall make the order in the form of the draft. The relevant increases come into effect in the week beginning with the first Monday in the tax year, or on such earlier date in April as may be specified in the order: see subsection (10). Section 189(8) of the 1992 Administration Act further provides that an order under section 150 shall not be made without the consent of the Treasury.
26. Uprating orders made under section 150 are drawn up in the form of statutory instruments, and entitled "The Social Security Benefits Up-rating Order" for the relevant year. Thus, for example, article 3(1) of the 2015 Up-rating Order provided that the sums set out in schedule 4 to SSCBA 1992 should be increased to the amounts set out in schedule 1 to the Order. The relevant increases to incapacity benefit and to IIDB may then be found in the relevant parts of schedule 1, and the tables in Schedule 4 to SSCBA 1992 are amended accordingly.
27. Since the regulations which governed injury benefit when the appellants retired in 1999 were the 1987 Pensions Regulations, and since the provisions of paragraph 7 of schedule 3 to the 2006 Regulations were materially the same as their 1987 predecessors, it is material to know whether, in 1987, a provision for the annual uprating of social security benefits was already in force. The answer is that such a system was indeed in place. Materially similar provisions were contained in sections 124 to 126 of the Social Security Act 1975. Thus it was the case in 1987, as it is today, that the additional benefits to be deducted from an injury pension were subject to annual increases made by uprating orders.

(4) The statutory link between increases in public sector pensions and increases in social security benefits

28. As the judge rightly mentioned, it is also material to note that there is an express statutory link between the rates of increase applied to mainstream social security benefits under section 150 of the 1992 Administration Act and the rates applied to public sector pensions, including the injury pension with which we are concerned. The nature of the link was explained by Elias LJ, sitting with McCombe and Sales JJ as they then were, in the Divisional Court in judicial review proceedings brought to test the lawfulness of the alteration in the basis upon which public service pensions are adjusted to take account of inflation from the retail price index to the consumer price index, with effect from April 2011: see R (The Staff Side of the Police Negotiating Board and others) v Secretary of State for Work and Pensions and others [2011] EWHC 3175 (Admin).
29. As part of the background to the change, the court explained at [28] that:

"Public service pensions, including those for the civil service, police, the NHS and local government, may be increased in accordance with the rules established under the Pensions (Increase) Act 1971. That Act creates a link between public sector pensions and certain state benefits. The effect is that when benefits are increased to take account of the rise in prices that same rate is used to increase public service pensions."

30. The court then explained, at [29] to [37], how the mechanism works. After setting out the relevant provisions of section 150 of the 1992 Administration Act, the court said at [34]:

"Where an up-rating order is made under section 150 of the 1992 Act, section 59(1) of the Social Security Pensions Act 1975 then requires the Treasury to make an order applying the same up-rating percentage used for the additional state pension (which is listed at section 150(1)(c) of the 1992 Act) to what are described as official state pensions, as defined in the Pensions (Increase) Act 1971, which include the relevant pension schemes in issue in this case."

31. The court then quoted the relevant wording in section 59(1) of the 1975 Act:

"Where by virtue of section 150(1) of the Administration Act a direction is given that the sums mentioned in section 150(1)(c) of that Act are to be increased by a specified percentage the Minister for the Civil Service shall by order provide that the annual rate of an official pension may... be increased … by the same percentage as that specified in the direction."

Since 1981, the relevant power has been exercisable by the Treasury instead of the Minister for the Civil Service. By virtue of section 59(6) of the 1975 Act, an order made under that section has to be made by statutory instrument and shall be laid before both Houses of Parliament after being made.

32. It can thus be seen that, in accordance with statutory machinery which has been in place since at least 1975, the same annual rates of increase have in principle applied both to any injury pension awarded to a police officer and to any "additional benefits" (including incapacity benefit and industrial injuries benefit) which may fall to be deducted from that pension.

The judges's reasoning

33. At [15] to [17] of his judgment, the judge recorded the main submissions made to him by the parties on the construction of paragraph 7(2). On behalf of the claimants, Mr Lock QC submitted that the words "the provisions governing scales of additional benefits" refer to the annual uprating order made by the Secretary of State as part of the annual uprating of social security benefits. The "scales of additional benefits" are the actual amounts of the additional benefits payable in any particular year, and the deductions for both incapacity benefit and IIDB were first fixed at the level of benefit payable when the claimants ceased to be police officers in 1999. The subsequent change in scale rates as a result of the 2000 Up-rating Order triggered paragraph 7(2), with the consequence that all the deductions of higher amounts since 1999 were unlawful. The purpose of paragraph 7, submitted Mr Lock, was simplicity. The level of deduction is fixed at the same original figure for as long as the former officer is paid that particular welfare benefit. In relation to Mr Evans, the level of deduction for his incapacity benefit was fixed in 1999 and should have remained the same to date. In the case of Mr Ashcroft, the level of deduction for both his incapacity benefit and his IIDB was fixed in 1999 and should have remained the same until he ceased to be entitled to those benefits (in 2013 and 2015 respectively).
34. On behalf of the Chief Constable, Mr Beer QC submitted that the words "the provisions governing scales of additional benefits" referred to the statutory framework governing the uprating of benefits contained in section 150 of the 1992 Administration Act. He submitted that the deductions for incapacity benefit and IIDB were intended to reflect the sums actually received by the claimants by way of social security benefits, and that the Chief Constable had lawfully deducted the full amounts of those benefits which the claimants had received weekly since 1999.
35. Having set out the background and the relevant statutory provisions, the judge began his analysis at [26] of the judgment. He considered the question of construction under four sub-headings, beginning with the plain ordinary meaning of the statutory language. In his view, the answer to the case "depends primarily upon a careful reading and the plain ordinary meaning of the words of paragraphs 7(1) and 7(2) of the 2006 Regulations."(ibid).
36. The judge continued, at [27]:

"… As set out above, the issue in this case boils down to the following question: whether the words in paragraph 7(2) "… the provisions governing scales of additional benefits…" refer (a) to the statutory provisions for the uprating of social security benefits contained in section 150 of the Social Security Administration Act 1992 (as the Defendant contends), or merely (b) to the annual up-rating order made pursuant to those provisions (as the Claimants contend).

28. The word "provisions" in paragraph 7(2) is a general term. If it stood alone, it may be said to be potentially ambiguous: i.e. it could arguably refer to statutory provisions contained either in an Act of Parliament or the provisions of any subordinate legislation made thereunder (c.f. section 14A of the Interpretation Act 1978). However, the term does not stand alone: it is part of the phrase "… the provisions governing scales of additional benefits…" in paragraph 7(2). In my view, the adjective "governing" demonstrates that the "provisions" being referred to are the statutory provisions in section 150 which sets out the framework and procedure for the uprating of social security benefits. It is these overarching provisions in section 150 which can properly be said to "govern" scales of additional benefits. The same cannot be said of uprating orders themselves. These are merely the product or result of the framework and procedure laid down by section 150 to be followed by the Secretary of State when uprating.

29. Even if annual uprating orders can, as a matter of language, loosely be said to "govern" scales of additional benefits (i.e. in the limited sense of laying down what increases there should be in benefits in any given year taking into account price inflation and other factors), relatively-speaking it is the primary statutory provisions of section 150 which "govern" scales of additional benefits, not the subordinate legislative products flowing therefrom. The outcome of the procedure is to be distinguished from the provisions governing the procedure itself."

37. The judge found further support for this view, at [30], in the use of the definite article in the phrase "the provisions governing scales of additional benefits". The annual uprating orders were not "the" provisions which governed scales of additional benefits, but "merely the exercise of the powers derived from the primary (governing) provisions". Conversely, the claimants' construction would only properly work if one ignored the words "the provisions governing" and simply read paragraph 7(2) as referring to "scales of additional benefits".
38. For these reasons, the judge considered that the plain ordinary meaning of the words of paragraph 7(2) favoured the defendant's construction.
39. Secondly, the judge considered that the claimants' construction would lead to over or double compensation in respect of the same injury. The purpose of paragraphs 7(1) and (2) was to ensure like-for-like deductions, i.e. the level of deductions was to match the level of the weekly benefits received. In a situation where both police injury pensions and social security benefits were subject to regular annual increases, it would make no sense to "freeze" the deduction for benefits by reference to a notional figure payable nearly 18 years ago, while ignoring the annual increases in benefits actually paid since then, as well as the annual increases in the injury pension itself: see the judgment at [33] and [34]. The judge then briefly referred to the unchallenged evidence of Stephen Lewis, the Head of Exchequer Services of South Wales Police, which explained how this approach would lead to an increasing and substantial element of enhanced recovery by each claimant in circumstances where there was no clear policy reason for such enhancement. As the judge put it, at [35]:

"On the Claimants' construction, the deductions allowed would be significantly out of kilter with the benefits received over the past nearly two decades and, in effect, allow the Claimants a windfall."

40. The judge's third point was that the defendant's construction was consistent with the apparent implicit purpose or rationale of paragraph 7(2), which was "to provide a measure of protection for retired police officers against wholesale changes in the legislative regime governing scales of social security benefits": see the judgement at [36]. As the judge then explained:

"At the inception of an award of a police injury pension, the recipient should be entitled to plan his or her financial future in the faith that the legislative regime governing scales of social security benefits would remain basically the same."

41. Finally, while recognising that this was "not, of course, determinative", the judge recorded at [38] that the defendant's construction was consistent with the Government's own guidance on injury pensions, as well as the manner in which the benefit deductions have always been operated in practice since 1987.
42. Having reserved his judgment at the conclusion of the original hearing on 8 June 2017, the judge on 31 July 2017 circulated his draft judgment to counsel for typographical corrections in the usual way. The draft judgment found in favour of the Chief Constable on the construction of paragraph 7(2) for the reasons which I have quoted or summarised above. Mr Lock's reaction to the draft judgment was to seek exceptional permission to raise a further legal argument on behalf of the claimants, relying on the fact that extensive amendments had, in fact, been made to section 150 of the 1992 Administration Act since 1999, two of which were said to have a significant bearing on the case and to show that the Chief Constable's construction was wrong. In due course, Mr Beer served a written response, which did not object to the judge considering the further legal argument but submitted that it made no difference to his original conclusions. In the event, the judge fixed a further hearing for oral argument on the point, which took place on 30 October 2017. Thereafter, the judge handed down his judgment in its final form on 16 November 2017. The judge dealt with the further argument at some length, reciting Mr Lock's further point and Mr Beer's response to it, before undertaking a further analysis of his own at [54] to [64].
43. It is unnecessary to refer in any detail to Mr Lock's further argument as it was presented to the judge, because it has now been overtaken by an agreement between the parties which I will explain when I come on to deal with the second ground of appeal. It is enough to note that the main focus of the argument was on an amendment to section 150 of the 1992 Administration Act effected by section 23 of the Welfare Reform Act 2009, the purpose of which was to enable the Government to decide to introduce an uprating order in the tax year 2009/10 even though the general level of prices at the end of the period under review was no greater than it had been at the beginning of the period. Apart from that specific change, which (as I shall explain) is now agreed to have triggered paragraph 7(2) although to a very limited extent, Mr Lock sought to bolster his original arguments more generally by arguing that the machinery of section 150 involves a complex discretionary decision-making process on the part of the Chief Constable once "changes" are made to section 150. The practical and conceptual difficulties to which this would give rise, said Mr Lock, were such as to show that Parliament could not have intended the word "provisions" in paragraph 7(2) to refer to the statutory mechanism under section 150.
44. The judge rejected Mr Lock's further submissions, for eight main reasons which he elaborated in the final section of his judgment. I need not refer to all of those reasons at this stage, but I will set out the final steps in the judge's reasoning:

"61. …When Parliament enacted the 2006 Regulations it knew, or is to be taken as knowing, that the injury pensions provided for under it would be increased at the same level of increase that would be applied to the benefits that any pensioner officers would receive. However, the effect of the Claimants' construction is that, on the one hand Parliament introduced a mechanism which provided for the deduction of such benefits by paragraph 7(1), but on the other hand Parliament immediately defeated that essential mechanism by dis-applying it by paragraph 7(2) if the benefits increased (as they were bound to do). This makes little sense and would be a strange way to legislate in circumstances where Parliament can be taken to have understood and anticipated that benefits would be increased when it enacted the 2006 Regulations.

62. In my judgment, it is clear that benefit increases were likely to be matched by pension increases so that they did not get out of step with each other; and Parliament enacted paragraph 7(2) to protect officers so that if the measure of increase in pension payments changed in the future to a level lower than that set out in section 150(2) then the deduction would only be that which fell to made before the amendment.

63. Seventh, the Claimants' construction could have been achieved by a simple provision that said that a fixed deduction falls to be made from an officer's injury pension that is set at the level of retirement benefits to which he was entitled in the year of his retirement.

64. Eighth, and finally, Mr Lock QC's new point fails to meet or address the three imperatives of statutory interpretation which I have referred to and analysed above which are in my view determinative in this case, namely, (a) the text is the primary indication of Parliament's intended meaning, (b) the consequences of a particular construction would lead to over-recovery, and (c) the need to achieve a purposive construction (see paragraphs 26-40 above)."

45. Accordingly, the judge declined to alter his original conclusion that the defendant's construction of paragraph 7(2) was correct.

Grounds of appeal

46. There are two grounds of appeal:

(1) The first (ground 1) is that the judge erred in finding that the words "the provisions" governing scales of additional benefits in paragraphs 7(1) and (2) of schedule 3 to the 2006 Regulations referred to section 150 of the 1992 Administration Act, whereas he ought to have found that they referred to the annual uprating orders under section 150 of that Act; and

(2) The second (ground 2), is that if, contrary to ground 1, the words "the provisions" do refer to section 150 of that Act, the judge ought to have found that the provisions had been changed and thus the maximum level of deductions permitted under the 2006 Regulations was fixed at the date of the change to the wording of section 150.

Ground 1: the construction of paragraph 7(2) of schedule 3 to the 2006 Regulations

47. The formulation of ground 1, and Mr Lock's skeleton argument in support of the appeal, reflect the way in which the case was argued for the appellants before the judge. Thus, Mr Lock argued that each annual uprating order was not itself a "scale" of benefits, but was rather a provision which enabled a scale of benefits to be drawn up. He repeated his submission below that the purpose of the statutory words was to create simplicity, with the result that the same deduction would be made for each year in which a relevant welfare benefit was paid to a disabled former police officer. By contrast, the Chief Constable's construction, if properly applied, was both illogical and unworkable. The basic reason for this, said Mr Lock, is that section 150 involves a large measure of discretionary decision making by the Secretary of State. The level of price inflation is the lowest amount by which welfare benefits can be increased, but the Secretary of State always has power to recommend a higher level of increase. Once changes have been made to section 150, the Secretary of State is then obliged to operate the new statutory mechanism, and again has discretion to increase benefits from their new level by more than the rate of inflation. But the wording of paragraph 7(2) would also require a Chief Constable to carry out what Mr Lock termed a "parallel processing exercise", in order to ensure that the level of deduction "shall not exceed the amount which would have been the amount thereof in respect of that week had those provisions not changed". This wording requires the Chief Constable to speculate what level of deduction would have arisen if the wording of section 150 had not changed. However, the exercise is impossible to perform because the Chief Constable cannot know what level of deduction would have been made had the provisions remained unchanged, since that level of deduction would always have depended on a discretionary decision making process which never took place. Furthermore, the Chief Constable will be paying injury pensions to many former officers, each of whom retired at a different date and had relevant benefits awarded at different times. The Chief Constable would thus have to investigate "multiple different scenarios", on a basis that was both hypothetical and speculative.
48. Although these submissions were not abandoned by Mr Lock, the thrust of his oral submissions to us was rather different. His preferred formulation, if I understood it correctly, was now that the scales of additional benefits referred to in paragraph 7(2) were not those contained in the annual uprating orders, but rather those contained in the relevant tables in Schedule 4 to SSCBA 1992. The relevant question thus becomes whether the annual uprating orders changed the governing scales of benefits set out in Schedule 4. If the question is formulated in that way, says Mr Lock, the answer is clear: they did. Each uprating order led to the substitution of a new, increased figure for the relevant benefit in Schedule 4 to SSCBA 1992. Accordingly, the proviso in paragraph 7(2) was triggered.
49. Whichever way the argument is formulated, however, it seems to me equally unconvincing. Sub-paragraphs 7(1) and (2) of schedule 3 to the 2006 Regulations need to be construed together, in a way which produces a coherent and sensible result in the context of the legislative scheme governing police injury pensions. That legislative scheme has been materially unchanged since at least 1987. Salient features of it include the following:

(a) an injury pension operates as a minimum income guarantee expressed as a percentage of the police officer's pensionable pay;

(b) once the relevant percentage of average pensionable pay has been ascertained from the Table in paragraph 3 of schedule 3, the maximum amount of the injury pension is fixed at that level, but subject to the deductions specified in paragraphs 6 and 7;

(c) paragraph 6 requires the deduction of 75% of any other pension calculated by reference to Schedule B to the 1987 Pensions Regulations;

(d) paragraph 7(1) also requires deduction of the full weekly amount of any additional benefits referred to in paragraph 7(3), or of so much of those benefits as is attributable to the relevant injury, but subject to the proviso in paragraph 7(2); and

(e) the same provision for the annual uprating of benefits in line with price inflation applies to the injury pension itself, to any other pensions which have to be taken into account under paragraph 6, and to any other additional benefits which have to be taken into account under paragraph 7.

50. Against this background, Parliament cannot sensibly have intended that the effect of the proviso in paragraph 7(2) should be to freeze the amounts that have to be deducted in respect of additional benefits at their levels in the police officer's year of retirement. The effect of such a construction would be to frustrate the clear purpose of paragraph 7(1) which is that the full amount of weekly additional benefits should be deducted. If those amounts are then frozen at their levels in the year of retirement, the value of the injury pension in real terms will increase to the extent that the deductions fail to keep pace with inflation, even though the value of the pension itself is uprated annually. The only justification advanced by Mr Lock for such a strange result is simplicity, but this was no more than a bare assertion unsupported by any admissible aids to construction, or indeed by any material at all. Nor is there anything complex or difficult about making weekly deductions of additional benefits at their prevailing rates from time to time. That is what one would naturally expect, in the absence of any clear direction to the contrary.
51. Is such a clear direction to the contrary to be found in the wording of paragraph 7(2)? In my judgment, obviously not. The words "the provisions governing scales of additional benefits" are in my opinion naturally read as referring both to the relevant provisions of SSCBA 1992, which set out the conditions which have to be satisfied for entitlement to the relevant benefits and how their amount is to be calculated, and to the provisions for annual uprating of those benefits contained in section 150 of the 1992 Administration Act. Taken together, those are "the provisions" – I agree with the judge that the definite article is important – which govern scales of additional benefits at the date of the police officer's retirement. The proviso in paragraph 7(2) will therefore only be triggered if there is a change in that governing statutory framework, and even then only if the effect of the change is to make the deduction higher than it would have been but for the change.
52. Neither the operation of the annual uprating machinery by the Secretary of State, nor the annual uprating orders themselves, involve any changes in the statutory framework. On the contrary, as the judge rightly recognised, they merely represent the operation and outcome of the statutory machinery itself. To interpret the wording of paragraph 7(2) in this way seems to me to accord with the natural meaning of the language used, and does not require any kind of strained construction. If there were any doubt about the matter – which in my view there is not – it would be removed by the purposive considerations to which the judge also rightly had regard. The Chief Constable's construction produces a coherent and rational result, whereas the appellants' construction produces a windfall benefit for retired officers in receipt of injury pensions which will become increasingly valuable as years go by, assuming price inflation to continue, and which is entirely at odds with the basic requirement in paragraph 7(1) that the full amount of additional benefits should be deducted.
53. Nor am I impressed by Mr Lock's submissions that the operation of sub-paragraphs 7(1) and (2) in accordance with what I would regard as their natural meaning is likely to give rise to any difficulties of a conceptual or practical nature, let alone to difficulties which are so grave that they should persuade the court to adopt the contrary construction. Once it is recognised that neither the machinery in section 150, nor the annual uprating orders themselves, trigger the proviso in paragraph 7(2), there should be no difficulty in making the weekly deductions at the rates which prevail from year to year. If there is a change in the provisions which govern the scales of additional benefits, as there is now accepted to have been in 2009/10, the change will only be material if it would lead to deductions of a higher amount than would have applied in the absence of the change. That involves a counter-factual inquiry, but it is an inquiry explicitly required by the wording of the proviso itself. Furthermore, the fact that the parties were rapidly able to reach agreement on the financial consequences of the change in 2009/10 is itself a good indication that the exercise should not normally involve any undue difficulty.
54. For all these reasons, therefore, I would dismiss the first ground of appeal, including the modified version of it advanced by Mr Lock in his oral submissions.

Ground 2: has the proviso in paragraph 7(2) of schedule 3 been activated?

55. I can deal with ground 2 briefly, because it is now the subject of an agreement between the parties, and the objections previously raised by the Chief Constable as to whether we should entertain ground 2 at all are no longer pursued. It will be appreciated that ground 2 only arises on the assumption that (as I have now held) ground 1 is determined in favour of the Chief Constable.
56. On that footing, it is now common ground that there has been only one occasion since the appellants retired in 1999 when the proviso in paragraph 7(2) was triggered in relation to the additional benefits which fall to be deducted from their injury pensions. That occasion, as I have already indicated, was when section 23 of the Welfare Reform Act 2009 introduced a temporary modification of section 150 of the 1992 Administration Act, in relation to the review of benefit levels which was required in the tax year ending 5 April 2010. The effect of the modification was to include a new subsection (2A), which enabled the Secretary of State by order to uprate social security benefits even if the general level of prices had not increased during the review period. This new power applied for a single year only.
57. The new subsection (2A) of section 150 provided that:

"Where it appears to the Secretary of State that the general level of prices is no greater at the end of the period under review that it was at the beginning of that period, the Secretary of State may, if the Secretary of State considers it appropriate having regard to the national economic situation and any other matters which the Secretary of State considers relevant, lay before Parliament the draft of an up-rating order –

(a) which increases by such a percentage or percentages as the Secretary of State thinks fit any of the sums mentioned in subsection (1); and

(b) stating the amount of any sums which are mentioned in subsection (1) but which the order does not increase."

Consequential amendments were made to the remainder of section 150, which confined the operation of the new subsection (2A) to the review under section 150(1) in the tax year ending 5 April 2010, which would then take effect in the ensuing financial year (nothing turns for present purposes on the distinction between tax years and financial years).

58. In due course, the Secretary of State conducted the review required by section 150(1) in the 2009/10 tax year. As the 2010 Up-rating Order subsequently noted, "it appeared to the Secretary of State that the general level of prices was no greater at the end of the period under review than it was at the beginning of the period". Accordingly, the Secretary of State would have had no jurisdiction under section 150 in its unamended form to propose the making of any annual increase in social security benefits, but on 15 March 2010 the Secretary of State used the power in the new subsection (2A) in order to increase the level of benefits as subsequently set out in the 2010 Up-rating Order. In particular, the Order provided that the weekly amount of long term incapacity benefit specified in schedule 4 to SSCBA 1992 should be increased by £1.60 from £89.80 to £91.40 per week, with effect from 12 April 2010. In a similar way, changes were made to relevant elements of industrial injury benefit, including the IIDB payable to Mr Ashcroft. The benefits in question were then paid at the increased levels in the 2010/11 tax year, and their full amounts were deducted by the Chief Constable in calculating the weekly amounts of injury pension payable to the appellants.
59. It is now agreed (and, if it were not, I would hold) that the introduction of the new subsection (2A) in 2009/10 did represent a change in the provisions governing scales of additional benefits within the meaning of paragraph 7(2). The change represented a significant alteration to the statutory framework governing the scales of additional benefits which had been in place since the appellants retired in 1999, and it had the effect of increasing the deductible amount of those benefits in 2010/11 to a higher amount than would otherwise have applied, because in the absence of the new subsection the levels of additional benefits in 2010/11 would necessarily have remained the same as they were in the previous tax year. It follows that the increases in the relevant benefits to which the appellants became entitled at any time from 12 April 2010 to 14 April 2011 arising from the 2010 Up-rating Order should not have led to any increase in the deductions applicable to their injury pensions during that period, and to the extent that these increased deductions were made by the Chief Constable, they were unlawful by reason of the proviso in paragraph 7(2).
60. Furthermore, there has been a knock-on effect in subsequent years, because the subsequent review conducted by the Secretary of State was based on the increased levels of benefit payable in 2010/11, and when the 2011 Up-rating Order came to be made it increased the amount of additional benefits by 3.1% from 14 April 2011; and in later years the same process was repeated, taking the benefits payable in the previous year as the starting point.
61. It follows, and is also now agreed, that the deductible levels of additional benefits from the tax year 2010/11 onwards need to be recalculated as if the increases in the 2010/11 tax year made pursuant to the new subsection (2A) had never been implemented, and as if the base levels for subsequent increases had been correspondingly lower. This should in principle be a straightforward arithmetical exercise, and it is no longer suggested that it will give rise to any conceptual or practical problems. The exercise needs to be performed, so far as Mr Evans is concerned, until he ceased to be entitled to receive incapacity benefit on 24 October 2014; and in the case of Mr Ashcroft, until he ceased to be entitled to receive incapacity benefit on 29 April 2013, and for as long as he either has received or continues to receive IIDB.
62. In the circumstances, I would allow the second ground of appeal to the very limited extent which I have indicated.

Overall conclusion

63. If the other members of the court agree, I would dismiss the appeal save to the limited extent now agreed between the parties.

Coulson LJ:

64. I agree.

Lady Arden of Heswell:

65. I also agree.