England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE PENSIONS OMBUDSMAN

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/04/2012

Mr Justice Warren :

Introduction

1. This is an appeal against a determination of the Deputy Pensions Ombudsman, Jane Irvine, given on 15 July 2011 ("the Determination"). The Appellant ("Mr Hughes") made two complaints in his application to the Pensions Ombudsman dated 12 November 2010. The complaints related to the administration of the pension scheme of which Mr Hughes was, and remains, a member, the Woolworths Group Pension Scheme ("the Scheme") of which the Respondent, W. G. Pension Trustee Ltd ("the Trustee") is the trustee. His complaints were made against both the Trustee and his employer Woolworths plc (now in liquidation) ("the Company"). The first complaint was to the effect that he was not permitted to accrue further benefits during his period of sickness absence from his employment. The second complaint was in effect that he was not properly considered for an ill-heath pension; there was a failure to pursue an ill-health retirement application. The Deputy Pension Ombudsman ("the DPO") upheld Mr Hughes' first complaint but rejected his second complaint. There is no appeal from the determination of the first complaint, but Mr Hughes appeals against the determination of the second complaint. An appeal lies, on a point of law only, under section 151(4) Pension Schemes Act 1993. Mr Hughes therefore has to establish that the DPO made an error of law in her decision.
2. Mr Hughes was an employee of the Company until the end of December 2008 or early January 2009. He had not actually worked for some time having been on sickness absence since December 2004. The DPO recorded, in [1] of the Determination that Mr Hughes was employed from 1976 to 2008.
3. The Company went into administration on 27 November 2008. It is now in liquidation. Although it was a respondent to the complaint to the Pensions Ombudsman, it has not been joined as a respondent to the appeal. The liquidators have informed the Trustee's solicitors that the Company does not have the resources to participate in the appeal and that, if joined, it would not take any active part.
4. Following the commencement of the administration of the Company, the Scheme entered into an assessment period within section 132 Pensions Act 2004 as from the commencement of the administration. The Board of the Pension Protection Fund ("the Board") thus became involved with the Scheme for the first time as from that date.

The relevant provisions of the Scheme

5. The Scheme is governed by a Trust Deed and Rules dated 4 March 2008. It is a conventional final salary balance of cost scheme.
6. Rule 4 is headed "Evidence of Health". Rule 4.1 obliges a person to provide to the Trustee evidence of health "if so requested when becoming a Member or at any later time when his Salary is to be increased….". This is not a general obligation to provide evidence of health whenever the Trustee might ask for it.
7. Rule 8 provides for the immediate payment of a pension upon retirement from Service at Normal Retirement Date; the pension is based on the Member's Final Salary and his period of Service. Where a Member retires before Normal Retirement Date, Rule 9 gives the Member the right to elect for an immediate pension calculated as for Rule 8 but "reduced to take account of the earlier date of payment". Rule 10 deals with the case where early retirement is due to Incapacity and is designed to protect the Member, to a greater or lesser extent depending on the extent of the Incapacity, from the reduction which would otherwise occur under Rule 9. "Service" means "any service as an employee" of the Company or any other participating company. And "Normal Retirement Date" means, in the case of Mr Hughes, the last day of the month in which he attains the age of 60. Mr Hughes, it can be seen, left Service before Normal Retirement Date.
8. Rule 10.1 provides as follows:

"A Member who retires from Service before Normal Retirement Date due to Incapacity shall be entitled to an immediate pension calculated as in Rule 8 (normal retirement). Such pension may be increased by such amount as the Trustees may think fit having regard to the degree of the Member's loss of future earning capacity but it shall not exceed the amount of pension which the Member would have received if he had remained in Service with unchanged Final Salary until Normal Retirement Date and had then been retired."

Rules 10.2 and 10.3 go on to provide for the Trustee to increase or decrease the Member's pension during payment if his incapacity becomes worse or he is able to earn more income but nothing turns on them for the purposes of the present appeal.

9. "Incapacity" is a defined term which means:

"….ill health or disability which prevents (and will continue to prevent) the Member from following his normal or similar employment. The decision of the Trustee shall be final as to whether a Member is suffering from Incapacity. Their decision must be supported by evidence from a registered medical practitioner but subject to this the Trustees shall be entitled to such medical evidence as they think fit."

10. Rule 13(2) makes provision for a Member entitled to a deferred pension from Normal Retirement Date to take an unreduced early pension in some cases: a Member may:

"with the consent of the Trustees and when suffering from such incapacity as, in the opinion of the Trustees, seriously impairs his future earnings capacity, elect instead to receive an immediate pension calculated as in Rule 8….."

11. Rule 24 deals with when a Member who is absent from work is treated as leaving Service. It applies to Mr Hughes since he was a Member in Service who was absent from work but not on Family Leave (another defined term). So far as relevant, it provides as follows:

"The Member shall be treated as leaving Service when he ceases to receive remuneration from his Employer or on such later date as his Employer may determine…… Any such period of Service during which the Member receives remuneration from his Employer or during which the Member's absence is, in the opinion of the Trustees, due to illness or injury shall count as Pensionable Service. Any other such period of Service shall not count as Pensionable Service unless and to the extent only that the Member pays contributions….in respect of the period, calculated as if the Member's Salary during the period were at the rate which, in the opinion of the Employer, would have applied but for the Member's absence from work."

The relevant facts

12. The facts are dealt within [6] to [23] of the Determination. I need to refer to them in a little detail:

i) From about 2007, Mr Hughes was in discussion, through his solicitors, with the Company regarding his possible early retirement. During the course of the discussions, he was provided with quotations for the pension which he would beentitled to receive upon early retirement. The value of the pension was less than Mr Hughes had been expecting because his period of sickness absence had not been treated as Pensionable Service. I interpose here in my recital of the findings of fact to mention the issue of the proper treatment of sickness absence was the subject matter of the first complaint made by Mr Hughes to the Pensions Ombudsman. It was resolved in his favour.

ii) Mr Hughes was due to meet his manager in October 2007, but that meeting was cancelled and his solicitors asked that forms for ill health retirement be sent to him. The Company sent two forms for completion, one by Mr Hughes and one by his GP. A third form was completed by his line-manager on 15 October 2007.

iii) The Company's solicitor later informed Mr Hughes' solicitors that the Scheme rules required all applications for ill health retirement to be seen by a medical advisor appointed by the Trustee or an alternative doctor nominated by the applicant.

iv) In January 2008, Mr Hughes saw a consultant psychiatrist, Dr Harris, who then wrote to his GP. The letter outlines Mr Hughes' medical history and current treatment, but did not comment on his likely prognosis or ability to return to work.

v) In March 2008, Mr Hughes was asked to provide consent for the Company to obtain a medical report. He refused. His manager then wrote to him asking him to reconsider. She explained that the reports they had previously obtained were several months old and that up-to-date information was needed. His manager mentioned that, in July 2007, Mr Hughes' GP had been unable to see a time when he would return to work. She said that, if this was the case, and unless Mr Hughes applied for ill health retirement, the Company would have to consider what to do about his ongoing employment. Mr Hughes discussed his pensionable service and ill-health with the Company and Aon (the Scheme administrators) during March 2008. In April 2008, he obtained a copy of the Scheme's Trust Deed and Rules and further discussions ensued over the period April to September 2008 concerning his pensionable service.

vi) In May 2008, Mr Hughes was awarded a renewal of his Incapacity Benefit (that is to say, a social security benefit, not a scheme benefit) which is due to be reviewed in 2013.

vii) In August 2008, the Company wrote to Mr Hughes saying that it wished to assess the likelihood of a return to work and proposed to ask Hancock Occupational Health Services to undertake the assessment because Mr Hughes had previously expressed unhappiness with BUPA. Neither the letter, nor the accompanying list of questions which the Company proposed to ask the medical adviser, specifically mentioned ill health retirement.

viii) In October 2008, Mr Hughes was seen by Dr Hancock. Mr Hughes says that he was unaware that this was for the purpose of ill health retirement. Following the consultation, he withdrew his consent to the provision of the report by Dr Hancock to the Company. He says that, when he saw Dr Hancock, he was concerned that the referral had been improperly arranged and that the doctor had been given inaccurate information, which might have had an impact on his employment position. This was why he was unwilling for the report to be submitted.

13. As to v), Mr Hughes says that it is inaccurate. The inaccuracy was pointed out to the DPO by his solicitor in response to the Initial Determination which she had sent out. He said and maintains that he did not refuse to provide consent for the Company to obtain a medical report in March 2008. The situation was left that the respective solicitors would put together a joint letter of referral but that was never developed and, in the end, the Company proceeded with the medical referral itself. I do not need to go into whether there was any evidence on which the DPO could have reached that finding of fact which she did in the face of that clear statement on behalf of Mr Hughes, since nothing turns on whether Mr Hughes refused consent in March or whether it was at the time when he saw Dr Hancock in October. But what is to be noted is that the refusal was in relation to the obtaining of a report by the Company, not by the Trustee.
14. As to vii), Mr Hughes' solicitor stated in his response to the Interim Determination that disclosure given to Mr Hughes by the various medical advisers following a request under the Data Protection Act made it clear that the consultation with Dr Hancock was intended by the Company and the Trustee to be undertaken for the purposes of an ill health early retirement application. Reference was made to a comment from a Dr Wilcox of Inter Health to Dr Hancock dated 19 June 2008 to demonstrate that the issue of ill health early retirement was in the forefront of the minds of the examining doctors and the Scheme's Pension Manager at the time.
15. Mr Hughes' case before the DPO, as recorded by her in [15] of the Determination was that:

i) If the Company and the Trustee had not taken the incorrect approach to his pensionable service, his application for ill health retirement would have been submitted and processed at the beginning of 2008 (and thus, I add, well before the Company went into administration).

ii) Alternatively, he should have been treated as having an extant application for ill health early retirement prior to the Scheme entering the assessment period and the Trustee should have progressed this within the statutory period.

iii) If he had been aware that the referral to Dr Hancock related to ill health retirement, he would have allowed it to be submitted.

16. The DPO recorded at [16] of the Determination that it was further argued on his behalf that the Trustee could have granted him an ill health retirement pension from deferred status under Rule 13(2). It was also argued that Mr Hughes believed that once a pension was in payment it would be "set in stone" and his concerns about pensionable service (ie the first ground of the complaint to the Pensions Ombudsman) would remain unaddressed.
17. Later, at [23] of the Determination, the DPO recorded that the Trustee, in contrast, submitted that for the purposes of an application under Rule 10, the evidence of a doctor would have been required. Mr Hughes was told that his health would have to be assessed by Dr Hancock but he did not consent to the doctor providing a report. The Trustee pointed out that, shortly after this, the Company went into administration at a time when Mr Hughes was still in service. The Trustee acknowledged that there had been discussions about the possibility of an incapacity pension, but says that there never was an actual application made to the Trustee. It argued, in any case, that there could not have been such an application because Mr Hughes had not retired from service – he was still in service until he was made redundant during the course of the administration of the Company. The Trustee also said that, even if Mr Hughes did retire due to Incapacity, he would be subject to section 140(5) of the Pensions Act 2004. It said that the Board would ignore any ill health pension granted as a result of an application made after the start of the assessment period, in the present case 27 November 2008. It also referred to section 138 on the basis of which it said that it is not able to pay any benefit in excess of the compensation which the Board would pay.
18. That paragraph ([23]) of the Determination repeats paragraphs 21 of the Interim Determination. In relation to that, Mr Hughes' solicitors had commented that (a) it was clear from the evidence that Mr Hughes was totally unaware that the assessment by Dr Hancock would have any bearing on the ill health early retirement application but (b) internal documentation subsequently disclosed to Mr Hughes made it clear that within the Pension Scheme administration the issue of ill health early retirement was under discussion for several months prior to the termination of his employment.

The DPO's conclusions

19. The DPO set out her reasoning and conclusions in [24] to [36] of the Determination. Her discussion of the second ground of complaint starts at [29]. She made the following, perfectly correct, important observations:

i) The definition of Incapacity requires the Trustee to come to a decision as to whether the Member is suffering from Incapacity "which is a finding of fact". I add only that that finding of fact can be reached, as required by the definition of "Incapacity" only if supported by some evidence from a registered medical practitioner. But it is up to the Trustee to decide what evidence it requires so that it would not necessarily be bound to follow the opinion of a doctor in a report submitted by Mr Hughes as part of an application for an ill health early retirement pension.

ii) There is no requirement in Rule 10.1 for Mr Hughes to make an application for ill health retirement before retiring nor is there any discretion as to whether he should receive an immediate pension if he retired due to Incapacity: the only discretion is whether the pension should be increased.

20. As to ii), I would like to enlarge slightly. First, it is correct to say that no application is required by the Rules. But obviously the Trustee will not know of a Member's state of health unless the Member provides the relevant information. It cannot be the duty of the Trustee to enquire into the state of health of every Member upon his or her retirement in order to see if an early retirement pension should be paid. In practice the Company would be likely to know of any health issue and the Trustee would no doubt be informed. In the present case, it is clear that the Company and the Trustee knew that there was a serious question about Mr Hughes' health: he had, after all, been off work for a long period and the question of his continuing ill-health was subject to review in the context of his continuing employment.
21. Secondly, scheme rules do, sometimes, provide for a member to retire with the consent of the employer or the trustees (or both) on grounds of ill-health and for an unreduced pension (or even one based on full prospective service) then to become payable. Under such schemes, there will, of course, be a period of consultation and, if consent is given, the member can then retire and become entitled to an unreduced pension. But that is not the structure of the Rules in the present case. There is no provision, whether in Rule 10 or elsewhere, which enables a Member to apply in advance of leaving service for a determination whether he is, in the opinion of the Trustee, suffering from an Incapacity nor any provision that he may retire with an ill health early retirement pension if the Trustee gives its prior consent. Rather, the matter is to be judged, formally, once the retirement had taken place. If a member who is suffering from Incapacity retires, and if he does so due to that Incapacity, he is entitled to early payment of his pension, the amount of which will depend on the extent of the Incapacity. Formally, therefore, the matter is to be addressed by the Trustee once the member has retired, the question being whether the retirement was due to Incapacity.
22. That is not to say, however, that in practice the matter cannot, or should not, be addressed in advance. A member may well wish to know in advance whether or not he will be awarded an ill health pension were he to retire and, if so, the amount, if any, of the increase over the ordinary Rule 8 pension which he might expect to receive. He might satisfy the Company and the Trustee that, if he were to retire at that time, he would be entitled to an ill health pension and the Trustee might be prepared to inform him of the amount of any increase that they would award. In the absence of some special factor, it is to be expected that, if the member in fact retired, the Trustee would provide the pension which the member was expecting.
23. Indeed, this was essentially recognised at least by the Company. Thus, various forms were sent out as recorded in paragraph 11(ii) above. These three forms all contained headings relating to an application for an early health retirement pensions. Clearly no-one involved saw anything odd about these forms being sent out before Mr Hughes had actually retired. I should say a little more about these forms. Form A was to be completed by the Mr Hughes' line manager. The Form states that it was to be forwarded by the manager to the Employee Relations Advisor/Human Resources Adviser (ie within the Company) to be forwarded to the Trustee together with Form B and Form C (copy to be kept on file). Form A was in fact completed by the line manager. Section A of Form B was to be completed by Mr Hughes and Section B by the Company but only then was the form to be forwarded to the Trustee. Although Mr Hughes completed Section A, the form was not submitted to the Company which accordingly did not itself complete Section B. Form C was a form for a medical report which was completed by Mr Hughes' GP and is dated 15 January 2008. Form C must have been sent by the GP to the Company. There is nothing to suggest that Forms A and/or C were sent to the Trustee.
24. Quite what position the Trustee takes in relation to Rule 10 is not entirely clear. Mr Joseph Goldsmith, who appears for the Trustee, submits in his skeleton argument that the primary obligation on the Trustee under Rule 10 is to consider whether or not a person who has retired from Service before Normal Retirement Date did so "due to Incapacity". That, I do not question, is the primary obligation. But he goes on to say that the obligations imposed by Rule 10 arise if, but only if, the member in question in fact takes early retirement; it imposes no obligations upon the Trustee in relation to whether or not the Member should or could retire before Normal Retirement Date. It is true that Rule 10 does not expressly provide an obligation on the Trustee to deal prospectively with an application by a member still in service for an ill health pension. But suppose that a member, Mr Hughes for example, had actually made an application for an ill health early retirement pension while still an active member. The Trustee would be right, no doubt, to say that a formal decision could not be made until the member had actually retired. But they might well be willing to express a strong provisional view, even going so far as to say that, absent a change of circumstance, they would award a pension of a specified amount. Or they might, I suppose, simply refuse to give an indication; I say nothing about whether or not that would be an un-trustee like thing to do or whether a member would have any ground for complaint.
25. At this point I should note that, in his complaint to the Pensions Ombudsman, Mr Hughes referred to a letter from Mr Edwards of the Trustee dated 22 December 2008. Mr Edwards referred to the dispute as being long running and mainly with the Company rather than the Trustee. Whatever may have been the position in the past, the dispute by this stage clearly was, or included, a dispute between Mr Hughes and the Trustee (not just a dispute between Mr Hughes and the Company) and that, no doubt, was why it was being dealt with by the Internal Dispute Resolution Procedure in relation to the Scheme. Mr Edwards made certain points in three numbered paragraphs, the first two of which are to the following effect:

i) In order to consider an application for an ill health pension, the Trustee required a medical report from a Scheme appointed medical advisers. The case could not be moved forward because Mr Hughes had not been willing to allow Inter Health to have Dr Hancock's report. The medical reports which were sent showed that Mr Hughes was incapable of working at the time and the Trustee required further advice as to whether the medical condition was likely to be long term.

ii) An ill health pension could be awarded only after taking account of the medical evidence. Without this, the Trustee could not and would not consider any application.

26. The letter then stated:

"….Therefore, based on the above facts, I have to reject the application for further consideration of your ill health pension, as insufficient medical evidence has been supplied."

27. There is not a hint in any this that the Trustee had no function to perform in relation to the provision of an ill health early retirement pension prior to Mr Hughes' actual retirement. And, indeed, Mr Edwards appears to have been proceeding on the footing that Mr Hughes had in fact made an application but that the medical evidence was not good enough so that the application was being refused. The DPO did not mention this letter in the Determination.
28. Before leaving that letter, there is one other aspect of it which I need to mention. Mr Edwards referred to the administration of the Company and the application by Deloittes "for the Scheme to be placed into the Pension Protection Fund". He stated that, assuming that the Scheme did go into the Pension Protection Fund, Mr Hughes would cease to be in pensionable service as from 27 November 2008 and would no longer be potentially eligible for an ill-health pension. Mr Edwards has since acknowledged, in a letter dated 13 April 2009, that he was incorrect to say that Mr Hughes' ill health application could not be progressed due to the Scheme being in an assessment period. What the Board states is that "if an application is made before the assessment period, the award must be completed, ie a decision made, within 6 months after the assessment date". By this time it was far too late for a renewed application and Mr Edwards' position was that Mr Hughes' previous application had been rejected, a proposition which is of course inconsistent with the Trustee's current position that no application was ever made.
29. Returning to the Rules, I do not go into what is necessary for a member to "retire" within the meaning of Rules 8 to 10. Not every person who leaves Service can be said to "retire". But some things are clear. Thus it is clear, at one end of the scale, that a man who attains 65 and leaves service in the ordinary way is a person who "retires" and is able to draw his pension, even if he moves into full-time employment with another employer and cannot be said to have retired altogether from active employment. Asked if he had retired, such a persons would correctly say "Well I have retired from Woolworths, but I have no intention of retiring altogether until I am much older". It is also clear, at the other end of the scale, that an employee aged 35 who is discharged for misconduct does not retire. One question, therefore, is whether or not the termination of Mr Hughes' employment was in circumstances under which he can be said to have "retired" for the purposes of Rule 10.
30. The DPO's decision in relation to that question is found at [30] of the Determination. She said this:

"As it turned out, Mr Hughes' employment ceased because Woolworths went into administration. Whilst the courts have found that it would not be right for an employer to deprive a member, who wishes to leave employment by reason of ill health, of a pension he would otherwise have been entitled to by dismissing him, [fn Harris v Lord Shuttleworth [1994] PLR 47] I do not find this to be the case here. Rather, it is the case that Mr Hughes' potential retirement was overtaken by events elsewhere. In the circumstances, the Trustee could not come to the conclusion that he had retired due to Incapacity."

31. In Harris v Lord Shuttleworth, the employee, who was aged 45, was dismissed after absences on account of illness for substantial periods during her 10 years' service. The employment had come to an end as a result of the incapacity. The court construed the phrase "retirement from the service….by reason of incapacity" as a whole with the result that even a dismissal, when made as a result of the incapacity, was a retirement within the meaning of the relevant rule. In the present case, the position is entirely different. Mr Hughes' employment did not cease because of his Incapacity; it ceased because, in the course of the administration of the Company, Mr Hughes was made redundant.
32. Although in [1] of the Determination, the DPO stated that Mr Hughes' was made redundant in 2008, she did not place a precise date on that. In [30] of the Determination, she stated that Mr Hughes' employment ceased because the Company went into administration. That is, no doubt, correct, but what she does not say is that the employment ceased as of the date when the Company went into administration. Indeed, the contemporary correspondence, which is not disputed, shows that the employment continued for some weeks after that date. Thus, on 31 December 2008, the joint administrators wrote to all employees reporting that no sale of the business had been possible and that they were unable to make any further sums available to pay wages after 31 December 2008. They wrote: "You are accordingly redundant with immediate effect". It was no doubt on that basis that Mr Hughes himself, in his original complaint to the Pensions Ombudsman, stated that his employment continued until 31 December 2008 when he was made redundant. Clearly, the DPO had this date in mind when, in resolving the first ground of complaint in Mr Hughes' favour, she directed, in [37] of the Determination, that this benefits should be calculated on the basis that all of his service from December 2004 to the date his employment was terminated was pensionable in accordance with Rule 24.
33. There is a slight glitch I should mention. An undated letter to Mr Hughes from Deloittes (acting for the joint administrators) confirmed the period of his employment to be 8 March 1974 to 5 January 2009. The reason given for leaving services was "Redundancy". I do not think anything turns on whether the employment terminated on 31 December 2008 or 5 January 2009. The important point is that Mr Hughes had not in fact left service, let alone retired, before being made redundant. Moreover, as far as one can tell, he was not alone in being made redundant as can be seen from the terms of the 31 December 2008 letter. There is nothing at all to suggest that he was in any way singled out for redundancy whether by reason of ill health or otherwise.
34. Accordingly, Mr Hughes did not retire when his employment terminated. He was made redundant and his redundancy had nothing whatsoever to do with his health. This case is, as I have said, entirely different from Harris v Lord Shuttleworth: there is nothing in the present case which should lead the court to construe Rule 10 as applying to a member who is made redundant for reasons unconnected with Incapacity. This is all the more so in the case of Mr Hughes where, as far as one can tell, his redundancy was one of many imposed following the failure by the joint administrators to sell the business.
35. In my judgement, therefore, the DPO was entirely correct in her conclusion found in [30] of the Determination and in her reasoning in arriving at that conclusion.
36. The DPO went on to consider the question which she identified at [31] of the Determination "as to whether there was unnecessary delay in dealing with Mr Hughes' potential retirement". She went on to state that:

i) "negotiations" concerning possible retirement on the grounds of ill health had begun in early 2007 but these were between Mr Hughes and Woolworths (and their respective solicitors).

ii) "At that stage, there was no involvement of the Trustee, nor would I necessarily expect there to be". Strictly, she stated, the decision for the Trustee arises when the member leaves Service, and although there would be nothing improper in it being involved at an early stage to ensure prompt payment of any benefits. I agree with that. The DPO concluded that there was no maladministration on the part of the Trustee in not being involved in these negotiations.

37. Whether Mr Hughes drew the distinction between the Company and the Trustee which the DPO focused on may be rather doubtful. But as I read the Determination, the DPO, in referring to "these negotiations" is referring back to the negotiations between Mr Hughes and the Company "in early 2007" and "At that stage". So she did not, in [31] of the Determination, have anything to say about the Trustee's subsequent role.
38. At [32] of the Determination, the DPO referred to the protracted nature of the negotiations stating that Mr Hughes had to accept at least some responsibility for this. She referred to Mr Hughes' argument that, if the correct approach had been taken by the Trustee to his pensionable service under Rule 24 (ie the subject matter of the first ground of complaint), his application for ill health retirement would have been dealt with prior to the commencement of the assessment period. She understood the point that he disagreed with the calculation (because it did not credit the full period of his service) but concluded that this was not a bar to progressing his ill health retirement. As she observed, he had received the forms and could have taken the necessary steps to return these whilst continuing his dispute regarding his pensionable service; and although Rule 10 did not call for an application, the forms were a necessary part of the administration process to ensure that steps such as medical assessment were taken . It is impossible to find fault with any of that save to qualify the necessity for the forms as part of the administration process; rather, I would say, some sort of administration process was clearly called for and the forms, and the route for submission of an application to the Trustee, were entirely appropriate.
39. Then, critically, at [33] of the Determination, the DPO considered that, if Mr Hughes had been concerned that an application for ill health early retirement would interfere with his claim for a review of his period of pensionable service:

"he could have sought clarification. I do not find that Mr Hughes' belief that his pension would be "set in stone" arises from maladministration or misrepresentation by Woolworths and/or the Trustee".

I will return to that later.

40. It is common ground that Mr Hughes did not in fact return his own application form. Presumably the form completed by the line manager was placed in the hands of the Company HR department, and the same goes for the form completed by the GP. The DPO stated in [34] of the Determination that that, coupled with Mr Hughes' reluctance (for good reason or bad I would add) effectively delayed the process of considering him for ill health early retirement. That, it seems to me, is a conclusion which I could not possibly interfere with on this appeal even if I had any doubt about it, which I do not. She went on, in [34] and [35], as follows:

"34……. I can understand Mr Hughes' concerns to ensure that the medical reports were obtained in the proper manner, but he must have been aware that such reports would be necessary; particularly, since he had obtained a copy of the trust deed and rules. If it was not clear to him whether specific medical reports would be used solely to determine his future employment of ill health retirement or both, Mr Hughes could have sought clarification at the time. Mr Hughes has focussed on Dr Hancock's report and argues that it was clear to him that this was being obtained for the purposes of assessing future employment. However, Mr Hughes' reluctance to engage with the process of obtaining up to date medical reports pre-dates Dr Hancock's involvement. The correspondence I have seen indicates that Woolworths were making appropriate efforts to accommodate Mr Hughes' concerns, but this inevitably delayed the whole process.

35. Ill health retirement had been put forward as an option and Woolworths were clearly willing to consider it. I do not find that any maladministration on the part of Woolworths or the Trustee contributed to the delay in considering Mr Hughes for ill health retirement. I do not uphold this part of Mr Hughes' complaint."

The Appellant's case

41. Mr Hughes' submissions are to be found in writing in his own skeleton argument effectively forming his grounds of appeal dated 8 August 2011 and in the skeleton argument of his counsel, Mr Andrew Buchan, from whom I have also received helpful oral submissions.
42. In his own written submission, Mr Hughes takes two related points. The first is that his complaint was that the Trustee had failed to deal with his ill health retirement pension at all whereas the DPO identified the issue in [24] of the Determination as being whether he should have been considered for ill health retirement at an earlier date. How, he asks, could the DPO come to a correct conclusion if she addressed the wrong question? His second point is that regardless of what happened before 27 November 2008, and regardless of whose fault it was that there was a lack of progress, the matter could have been, and should have been, completed within the following 6 months. That period reflects the (non-statutory) period within which the Board expects outstanding applications for ill health pensions to be resolved.
43. I think that these criticisms of Mr Hughes' are not fair to the DPO. She dealt with the ill health early retirement pension in [29] to [35] of the Determination. She considered the period up to the end of 2008 when Mr Hughes was made redundant. Rightly or wrongly (something I will come to in due course), she concluded that, up to the end of 2008, neither the Company nor the Trustee were guilty of maladministration and in doing so effectively rejected Mr Hughes' submission that they should have done something by then to ensure that Mr Hughes obtained an ill health pension. After the end of 2008 (or perhaps after 5 January 2009) it was too late because Mr Hughes had been made redundant and nothing could be done to turn his redundancy into a retirement for the purposes of Rule 10. It was not, I read her as saying, the failure to deal with the matter within 6 months which causes Mr Hughes' problem; rather it was the failure to reach a conclusion before he was made redundant which caused it.
44. Mr Buchan's submissions (derived from his skeleton argument and oral submissions) are as follows. He refers to the concerns which Mr Hughes expressed in his complaint about the decision communicated by Mr Edwards in his letter dated 22 December 2008 which (I am afraid I will be going over some by now familiar territory again) put briefly were:

i) Had the Company and the Trustee not taken the incorrect and entrenched decision with regard to pension accrual, then the application for ill health retirement would have been submitted and processed in the early part of 2008.

ii) Mr Hughes was not aware that his appointment in October 2008 with Dr Hancock was in any sense to deal with ill health early retirement. Had he been aware that the medical report was required for the purposes of an application for that benefit then he would have allowed it to be submitted.

iii) Mr Hughes therefore considered that the Trustee had acted improperly in not considering an ill health application on the basis of the information they had and/or in not specifically requesting medical evidence for the purposes of an ill health application.

iv) Mr Edwards' comment that, as the Scheme was in an assessment period, Mr Hughes was no longer potentially eligible for an ill health pension, was entirely wrong.

45. The Trustee's response (from Mr Edwards again) to the complaint is found in a letter dated 25 February 2011. Mr Buchan relies on a paragraph of that letter which dealt with the provision, or rather non-provision, of Dr Hancock's report. Mr Edwards stated that, in case there had been any misunderstanding, the Trustee would be glad to revisit the issue. If Mr Hughes would consent to Dr Hancock's evidence and reports being disclosed and used by the Trustee, then the Trustee would make a decision under Rule 24. This paragraph, however, was in the section of the letter headed "Treatment of service as non-pensionable" and was clearly directed at the first complaint.
46. It was not directed at the second matter of complaint which was dealt with under a separate heading "Award of incapacity pension" where the Trustee's position was made clear, namely:

i) For an application under Rule 10, the Trustee would have needed evidence from a doctor chosen by the Trustee. The Company would also have needed medical evidence before making a decision about terminating Mr Hughes' employment. Mr Hughes was told that his health would have to be assessed by Dr Hancock, but did not agree to the disclosure of the report. That aspect, of course, was dealt with by the paragraph of the letter on which Mr Buchan relies. I would add that it may not have been necessary to involve the Company at all. Mr Hughes could always have terminated his own contract of employment and I see no reason why that could not be seen as a retirement due to Incapacity if the Trustee had indicated that it would provide a pension under Rule 10 if he in fact resigned.

ii) Mr Edwards pointed out that the Company went into administration shortly after Dr Hancock's examination when Mr Hughes was still in service. Mr Edwards accepted that there had been discussion about the possibility of an incapacity pension being paid, but there was no application before the Trustee. He also raised, as far as I can see for the first time, the point that there could not have been an application since Mr Hughes had not "retired from Service".

iii) Mr Hughes had left Service as a result of the administration of the Company and the entry of the Scheme into the assessment period. This could not be characterised as "retiring from Service due to Incapacity". In my view, the entry of the Scheme into an assessment period has nothing to do with this point. It was the redundancy, in the course of the administration, which precluded Mr Hughes' leaving Service from being a retirement. The redundancy was, however, the result of the administration so that, in a sense, what Mr Edwards said was not far off the mark.

47. As to the second of those points, I have already explained how I view the operation of Rule 10. Rule 10 does not itself say anything about an application being made. But clearly a decision to award a pension under that Rule can be made, formally, only once the member has retired. Equally, an application can be made prior to retirement and an informal decision-in-principle be made by the Trustee prior to retirement. Of course, if such a decision were made in principle it would not fall to be implemented unless and until retirement took place. Thus, suppose that the Trustee had determined on 30 December 2010 that it would provide a pension under Rule 10, and that Mr Hughes had not actually retired before he was made redundant on the next day, it would not then be open to the Trustee to provide that pension because Mr Hughes would not have retired from Service before Normal retirement Date due to Incapacity.
48. I need to return to the part of the letter from Mr Edwards dealing with the period of Pensionable Service. In that section, he referred to the Stage 1 IDRP response dated 18 November 2008 from Elisabeth Browning. He wrote:

"Ms Browning went on to say that, if Mr Hughes wanted the Trustee to reach a decision about that [the relevant period of absence being due to "illness or injury"], he would probably have to be examined by a doctor chosen by the Trustee.

The doctor chosen by the Trustee for this purpose was Dr Hancock. Mr Hughes had attended an appointment with Dr Hancock but, as I understand it, chose to discontinue the doctor's examination, and furthermore did not consent to the results being disclosed to the Trustee."

49. Mr Buchan suggests that Mr Edwards has made an important error here. Mr Hughes had indeed attended an appointment. But that was on 9 October, well before Ms Browning's response, and was, so far as Mr Hughes was concerned, nothing to do with his application for an ill health early retirement pension. No reference was even made, Mr Buchan says, to an arrangement of an appointment with Dr Hancock, or indeed any other doctor, following the response of 18 November 2008. The error, if such it be, is important according to Mr Buchan because it may have confused the DPO, leading her to think that Mr Hughes had refused an appointment after 18 November 2008; and that may have detracted from Mr Hughes' point that he had never understood the 9 October 2008 appointment to be anything to do with pensions. And as Dr Hancock himself noted in his letter dated 13 October 2008 to the Company, Mr Hughes had attended "for occupational health assessment".
50. Further, although it was pointed out to the DPO that Mr Hughes did not in March 2008 refuse consent to the provision of a medical report, the DPO failed to remove the statement in her Interim Determination (repeated in [10] of the Determination) that he did refuse consent at that time. There was no evidence, so far as I am aware, to support the conclusion reached by the DPO; it is not easy, I consider, to understand why she did not amend this paragraph in the Determination itself.
51. Next, and more importantly, Mr Buchan submits that the maladministration which was found to exist in relation to Rule 24 fed into the application for an ill health early retirement pension. If the Company and the Trustees had not taken an improper view in relation to Rule 24, then the application under Rule 10 would have been considered and progressed much earlier. The DPO rejected that suggestion in [32] to [35] of the Determination as explained in more detail at paragraphs 38 to 40 above.
52. Mr Buchan next identifies four issues which he says the DPO needed to decide by asking and answering these questions:

i) Did the maladministration, if any, in relation to Rule 24 feed into the maladministration (if any) in relation to the application for an ill health early retirement pension? In other words, what was the cause of the delay?

ii) Did Mr Hughes supply sufficient evidence of Incapacity to the Trustee? If not,

a) Had Mr Hughes failed to supply evidence under Rule 4.1 in that he had deliberately or negligently failed to reveal it (Rule 4.2(2))?

b) Alternatively, was it the impression of Mr Hughes that the appointment with Dr Hancock was for "…sickness absence generally"?

iii) Had the Trustee misled Mr Hughes in the letter dated 22 December 2008 to the effect that it was too late for him to submit any further evidence when in fact he had 6 months from the commencement of the assessment period?

iv) Could the Trustee have granted Mr Hughes an ill heath pension from deferred status under Rule 13(2)?

53. I have already mentioned in paragraph 36 above the question which the DPO identified in [31] of the Determination namely whether there was unnecessary delay in dealing with Mr Hughes' potential retirement. Mr Buchan submits that the DPO incorrectly asked herself the wrong question. I do not understand why he says that. One of Mr Hughes' complaints is the Trustee's alleged maladministration in relation to the Rule 24 issue fed into the timetable for dealing with the ill health early retirement issue: Mr Hughes did not make an application because of his concerns about the impact it would have on the Rule 24 issue. On his own case, there was delay in dealing with the ill health early retirement pension issue, delay for which he would place the responsibility entirely on the Trustee because of its attitude to the Rule 24 issue. But whoever was to blame, if anyone can be said to be at fault at all, it was surely highly pertinent for the DPO to ask herself whether there was any unnecessary delay. If there was no such delay, the Trustee could not have been guilty of maladministration on account of delay. And that is so whether, as the Trustee contends, a decision was made rejecting Mr Hughes' application or whether, as Mr Hughes appears to contend, there was no decision at all. In using the word "application", I do not refer to a formal application under the Scheme since, as I have explained, there is no provision in the Scheme for making a formal application for an ill health early retirement pension under Rule 10 prior to actual retirement.
54. The DPO's answer to her own question was that she did not find any maladministration on the part of the Company or the Trustee which contributed to the delay in considering Mr Hughes for ill health retirement. The exact words she used are set out in paragraph 40 above. Mr Buchan says that the DPO appears to be dealing with the first issue identified in paragraph 52 above, with which I agree. He accepts that insofar as it is a finding of fact, there is no appeal but he complains that no reasons were given by the DPO "as to why she considered that the Appellant wouldn't have dealt with the IHR application earlier, [even if] had he not been worried about the Rule 24 issue". The quoted words are the way in which Mr Buchan put the point; the words in square brackets are my addition to make clear what it is that, as I understand it, Mr Buchan is saying. He submits that this is a mistake of law.
55. The next complaint is that the DPO, in asking herself only that question, has ignored the second and third issues identified in paragraph 52 above. These failures were mistakes of law.
56. In relation to both of those alleged failures, Mr Buchan submits that the DPO was under a duty to provide adequate reasons dealing with the substantial points raised by Mr Hughes: see for example Poyser and Mills Arbitration [1964] 2 QB 467, which she failed to do. That is why he says there are errors of law.
57. In my judgment, these criticisms of the DPO are not justified. She addressed fairly and squarely the submission that, had the correct approach been taken to Rule 24, Mr Hughes' application for ill health retirement would have been dealt with prior to the Scheme entering the assessment period. But as she pointed out at [32] of the Determination, he could have taken the necessary steps to submit the forms with which he had been provided. And at [33] she pointed out that he could have sought clarification about the impact of an application for ill health retirement on his Rule 24 dispute if he had concerns. There is certainly nothing in the papers referred to by the DPO, or which I have seen, that he ever did so. She also concluded that Mr Hughes' belief that his pension would be "set in stone" did not arise from any maladministration or misrepresentation by the Company or Trustee. That finding is of some significance because it shows that Mr Hughes' concerns had not been generated by the Company or the Trustee or anything which they had said. Then at [34] she referred to the obtaining of medical reports, about which I shall say a little more in a moment.
58. It was, however, no part of the DPO's reasoning that she considered that Mr Hughes would not have dealt with the ill health application earlier even if had he not been worried about the Rule 24 issue. Indeed, as a matter of fact, it may have been that he would have dealt with it earlier if the Rule 24 issue had been resolved in, say, early 2008. But it does not follow that the dispute in relation to Rule 24 meant that the Company or the Trustee were guilty of maladministration in any way in their conduct in relation to the ill health retirement issue. Accordingly, the DPO cannot be criticised for failing to give an explanation for something which was no part of her reasoning and may not even have been her view.
59. I should explain a little more why I do not see that consideration as part of her reasoning. In this context, it is appropriate to note that the dispute over Rule 24 was a perfectly genuine dispute. There is no suggestion that the Company or the Trustee were acting improperly so as to prevent or delay Mr Hughes in obtaining that which was his right. As it turns out, they got things wrong. But so far as the Company and the Trustee were concerned, there is nothing in the material which has been brought to my attention to suggest that they had any idea that Mr Hughes had a concern that, were he to proceed with an ill health retirement application, he would compromise his stance in relation to the Rule 24 issue. (I interpose to say here that there is actually no evidence that that was even Mr Hughes' own position at the time: rather, what he says is that, had the Rule 24 issue been dealt with at an early stage, he can now say, in retrospect, that he would have applied for ill health retirement, but that is something different. I do not however consider that anything actually turns on this distinction.) Had he raised that point, they would have been able to allay his concerns because the two points were entirely separate.
60. It is just because they were entirely separate points that it is inadmissible, in my judgment, to view the way in which the ill health issue was addressed by the Company and the Trustee, and the time it took to for them to take any decision about ill health retirement, as matters themselves constituting maladministration. There is no finding by the DPO that the Company and the Trustee were acting in any way improperly or inadequately in relation to the question of ill health retirement. There is no finding – and so far as I am aware it has never been suggested – that the Trustee was in breach of trust in the way it dealt with the ill health retirement issue. The Company and the Trustee cannot, in my view, be held guilty of maladministration when, unknown to them, Mr Hughes was declining to make a relevant request for ill health retirement because of the Rule 24 issue.
61. The alternative approach (and the one I think the DPO was addressing in [32] of the Determination) is this:

i) The Trustee's incorrect approach to Rule 24 was maladministration.

ii) One consequence of that maladministration was that Mr Hughes failed to act in a way in which he would otherwise have acted namely to apply for ill hearth retirement.

iii) His failure to act resulted in his being unable now to claim ill health retirement by reason of which he has suffered loss.

iv) He should be able to recover that loss as a consequence of the original act of maladministration.

62. I reject this line of argument. In relation to step i), it is not clear that the Company and the Trustee have been guilty of maladministration at all. The jurisdiction of the Pensions Ombudsman is two-fold. It is to investigate complaints by a complainant who alleges he has sustained injustice in consequence of maladministration in connection with any act of omission of the trustees. It is also to investigate and determine any dispute of fact or law which arises between certain people, which would include the dispute in relation to Rule 24 between Mr Hughes and on the one hand and the Company and the Trustee on the other. It is not clear from the Determination or the other papers which jurisdiction the DPO thought she was exercising.
63. I would have thought that the case was more properly to be viewed, in relation to the Rule 24 issue, as one to be dealt with as a dispute of fact or law rather than injustice caused by maladministration. If that is correct, then the DPO could only have provided a remedy to correct the errors of fact and/or law which subsisted in relation to the Rule 24 issue: that is to say, to do precisely what she actually did in her directions in [37] of the Determination. She could not have given a wider remedy to compensate Mr Hughes in relation to his failure to apply for ill health retirement even though his decision not to do so might have been based on the concerns which I have already discussed. In this context, see in particular the decision of Laddie J in Re the matter of the CCA Stationery Ltd Pension and Assurance Scheme [2003] EWHC 2989 (Ch) at [75]-[80] (citing Hillsdown Holding plc v Pensions Ombudsman [1997] 1 All ER 862 (Knox J), Edge v Pensions Ombudsman [1998] Ch 512 (Sir Richard Scott V-C at first instance) and Wakelin v Read [2000] PLR 319) which shows that where the complaint relates to a matter which would give rise to a legal remedy in the Court, the Pensions Ombudsman cannot grant a remedy which the Court could not grant (although this is not to say that some measure of compensation cannot be given for inconvenience). The Court could not, it seems to me, have granted a remedy in relation to the early retirement issue unless the failure to address it earlier by the Company and the Trustee was itself maladministration.
64. But if the error in relation to the Rule 24 issue on the part of the Company and the Trustee was properly to be viewed as falling within the first head of jurisdiction (injustice sustained in consequence of maladministration), then the analysis is slightly different. The purpose of a remedy in respect of maladministration is to correct any injustice which the complainant has suffered in consequence. In other words, Mr Hughes is to be compensated for any injustice which he has suffered as a result of the Company and the Trustee taking an incorrect, but nonetheless bona fide, position in relation to Rule 24. Although it is unfortunate, at the least, from Mr Hughes' perspective that he has lost the opportunity to obtain an ill health pension because the Company went into administration and he was made redundant, that lost opportunity is not, in my view, properly to be categorised as an injustice sustained as a consequence of the incorrect position which the Company and the Trustee took in relation to Rule 24. There are two elements to this: there has to be injustice and it has to be sustained in consequence of maladministration. The two limbs inform each other. In the present case, I consider that the DPO was entitled to conclude that Mr Hughes' belief that his pension would be "set in stone" did not arise from any maladministration. Putting that in the context of the jurisdiction in relation to maladministration, the failure to apply for an ill health pension was not an injustice sustained by Mr Hughes in consequence of any maladministration in connection with Rule 24.
65. As to the issue over the medical evidence, it seems to me that this is somewhat peripheral although a great deal has been said about it by Mr Buchan. So far as concerns the Rule 24 dispute, Mr Hughes' complaint was upheld and what should or should not have been provided by Mr Hughes and whether he was or was not in any sense at fault is water under the bridge. So far as the ill health retirement question is concerned, the fact of the matter is that Mr Hughes did not even make an application for ill health retirement: by that I mean not simply that he did not make a formal request for a pension under Rule 10 – he could not have since he was still in service and I have explained how the Rule operates formally at paragraph 20 above – but I mean also that he did not make a request for the Trustee to assure him that, were he to retire, he would be entitled to an ill health early retirement pension. He did not pursue such a request because, as he says, he was concerned about jeopardising his position in relation to the Rule 24 claim.
66. There is a curious tension in all this. Thus, looking at matters from Mr Hughes' perspective, he declined to make an application for an ill health retirement because of his concerns (not raised with the Trustee) about the Rule 24 issue. He believed his appointment with Dr Hancock was for an occupation health assessment and did not think that it was anything to do with ill health retirement. He says that, had he realised it was sought for the purposes of ill health retirement, he would have allowed the report to be provided to the Company and the Trustee. And yet if he was not making an application for ill health retirement because of his concerns about Rule 24, why, I wonder, would a medical report for that purpose be obtained unless, perhaps, to have everything in place if he later, in fact, made an application.
67. But looking at matters from the Company's point of view, it required a medical report for occupation health purposes; it was in relation to that that Mr Hughes refused to consent to its being provided. The Company itself did not strictly require any medical report concerning Incapacity unless it considered that its consent to retirement was necessary and that Mr Hughes could not simply leave service and claim to have retired. The DPO said nothing about that and there is not so far as I am aware anything in the evidence about it. The Trustee would, however, have needed such evidence if ever Rule 10 came to be operated (that is to say after Mr Hughes had retired from Service) and would have needed it if it had been asked to give a provisional decision about provision of an ill health early retirement pension were Mr Hughes to retire. In the event, Mr Hughes neither retired from Service (since he was made redundant) nor did he ever request the Trustee for a provisional decision or, as it might be put in the language which has been universally adopted in this case all along, he did not make an application for ill health retirement. In particular, even if he had informally asked the Company and/or the Trustee to agree to the provision of an ill health pension, he did not complete and return the Forms with which he had been provided so that the matter could not be progressed.
68. It is not, however, entirely easy to reconcile the suggested absence of an application of any sort with Mr Edwards' letters of 22 December 2008 and 25 February 2011. In the earlier letter, Mr Edwards referred to "your case for an ill health pension as Stage 2 of the IDR procedure" and went on to explain why he rejected "the application for further consideration of your ill health pension, as insufficient medical evidence has been supplied". The IDRP papers were not before the DPO and are not before me. Nor is earlier correspondence. It is impossible to tell what complaints Mr Hughes in fact made in relation to ill health retirement or when he made them. But what can be said is that, on the basis of the actual medical evidence available to the Trustee when Mr Edwards wrote, the decision to refuse Mr Hughes ill health retirement is one which the Trustee was properly entitled to make. Perhaps there was confusion, perhaps there was misunderstanding between Mr Hughes on the one hand, and the Company and/or the Trustee on the other. But that does not detract from the fact that adequate medical evidence had not been submitted to or obtained by the Trustee.
69. Accordingly, I do not consider that the DPO can be criticised for what she said in [32] and [33] of the Determination about the provision of medical evidence and the progressing of any application for ill health retirement which Mr Hughes wished to make. What might be more open to question is the fairly critical attitude which the DPO shows towards Mr Hughes in [34] of the Decision. Nonetheless, there is some substance in what she says. Thus Mr Hughes must have known that some medical evidence would be required by the Trustee if he was to become entitled to a pension under Rule 10. If, as he believed, the report from Dr Hancock was not to be such a report, where, I wonder did he think the medical evidence was coming from? He did not himself return the application form, Form B, which he had been sent to him by the Company and had not himself provided medical evidence directed at Incapacity. But ultimately the issue is not a blame-game between Mr Hughes and the Trustee. The essential points are (i) that Mr Hughes did not submit an application by completing the Forms, and never formally indicated a request for ill health early retirement and (ii) that, for reasons for which the Trustee – and perhaps no-one at all can be –  blamed, the Trustee did not have sufficient medical evidence at any time before Mr Hughes' redundancy to have made a decision that it would, on his retirement, provide a pension under Rule 10.
70. As to the question whether Mr Hughes supplied sufficient evidence of Incapacity to the Trustee (the second issue recorded at paragraph 52 above which it is said the DPO did not address), Mr Buchan does not identify any evidence which could reasonably be said to have been sufficient. Although the Company had the GP's report dated 15 January 2008, it is not clear when, if at all, it came into the hands of the Trustee prior to the end of 2008. In any case, that report by itself would have been inadequate. But this was not the issue before the DPO. It was not Mr Hughes' case, and still is not his real case as I understand it, that the Trustee had before it sufficient information on which to make a decision in his favour, rather it is that the maladministration in relation to Rule 24 prevented Mr Hughes from making his application and getting all the material necessary in front of the Trustee. As to the sub-issues (see paragraph 52.ii above), I do not consider that Rule 4 has any relevance, being concerned only with provision of evidence when a person became a Member or in the case of an increase in Salary, neither of which arises in the present case.
71. The third issue identified in paragraph 52 above is based on the premise that Mr Hughes had 6 months in which to submit any further evidence and that, had he done so and satisfied the Trustee of his Incapacity, he would have been entitled to an ill-health pension. In order to address this submission, it is necessary to consider the effect of the Scheme entering into an assessment period. I should note, before I do so, that the assessment period in relation to the Scheme has, since the hearing of this appeal, come to an end and the Board assumed responsibility for the Scheme on 9 March 2012.
72. Turning then to the legislation concerning the Board and the Pension Protection Fund, the first point to note is that the commencement of the administration of the Company on 27 November 2008 gave rise to the start of an assessment period for the scheme under section 132 Pensions Act 2004. During an assessment period, the benefits payable to a member under the scheme rules are restricted by section 138. Benefits must be reduced to the extent necessary to ensure that they do not exceed the compensation which would be payable by the Board if it had taken responsibility for the Scheme (which, it will be remembered, actually took place recently on 9 March 2012) and as if the assessment date referred to in Schedule 7 were the date on which the assessment period began. Accordingly, as from 27 November 2008, the Trustee was required to restrict benefits under the Scheme so that they did not exceed the compensation which would be payable in accordance with Schedule 7. It is to be noted that this is a restriction on benefits: nothing in the legislation permits trustees to pay greater benefits during the assessment period than the scheme rules provide.
73. Schedule 7 deals with the amount of compensation which is payable once the Board has assumed responsibility for a scheme (and, by reference to section 138, provides an upper limit to the level of benefits which may be paid during an assessment period). For the purposes of Schedule 7, the "assessment date" is the date on which the assessment period began, that is to say, in the case of the Scheme, 27 November 2008. Paragraph 3 and the following paragraphs deal with the level of compensation in various different circumstances. In the present case, we are concerned in particular with paragraphs 3, 11, 15 and 25. These paragraphs refer to benefits in accordance with "admissible rules", the definition of which is found in paragraph 35; for present purposes, those rules can be taken to be simply the Rules of the Scheme.
74. Paragraph 3 deals with the case where a person is entitled, immediately before the assessment date, to the "present payment of a pension under the admissible rules of the scheme". The compensation payable is equal to either 90% or 100% (depending on the circumstances) of the pension payable under the Rules.
75. Paragraph 11 deals with the case where a person who, under the admissible rules, is an active member of the scheme immediately before the assessment date and has not before that date attained normal pension age. If such a person survives to normal pension age, he becomes entitled to periodic compensation. The amount of the compensation is 90% of his accrued pension at the assessment date, revalued to the date when payment commences.
76. Paragraph 15 deals with the case where, under the admissible rules of the scheme, a person who is a deferred member immediately before the assessment date has not attained normal pension date. If such a person survives to normal pension age, he becomes entitled to periodic compensation. The amount of the compensation is, again, 90% of his accrued pension at the assessment date, revalued to the date when payment commences.
77. Paragraph 25 provides for the making of regulations which may prescribe the circumstances in which, and conditions subject to which, a person may become entitled to periodic compensation under paragraphs 11 or 15 before he attains normal pension age. Paragraph 25(2) provides that the Board of the PPF must determine the amount of the actuarial reduction to be applied to compensation where a person becomes so entitled by virtue of regulations under paragraph 25.
78. I will come to section 140 to 142 in a moment. But subject to those provisions, the effect of section 138 and Schedule 7 appears to be as follows although their operation is, perhaps, not entirely clear in all respects.
79. Starting with the case where the Board has actually taken responsibility for a scheme, a member of the scheme is entitled to compensation under paragraph 3 Schedule 7 if, but only if, he is entitled to the actual receipt (the words used are "present payment") of a pension under the rules immediately before the assessment date. The level of compensation is "the protected pension rate" plus annual increases. The protected pension rate is the annual rate of the pension under the admissible rules immediately before the assessment date. Where a member is in receipt of an ill health early retirement pension at the assessment date, the protected pension rate will reflect that amount.
80. Consider the case of a member who leaves service before the assessment date. He claims an ill health pension (unreduced or perhaps even enhanced depending on the rules in question), but the decision remains to be made under the rules whether he should be awarded one. I can well see, in such a case, that if, in the event, the decision is made to award an unreduced or enhanced pension which then becomes payable from a date before the assessment date, that it would be arguable that the case falls within paragraph 3 and that the "protected pension rate" is the rate of the ill health pension. But where a member is still in service at the assessment date or where an ill health pension, if awarded after the assessment date, is not be backdated to a date before the assessment date, I find it impossible to say that case falls within paragraph 3 since the member is not entitled (even retrospectively) to the present (that is to say, at the assessment date) payment of a pension. Moreover, given the hypothesis that an ill health pension is not backdated, the protected pension rate would appear to be nil.
81. I have just addressed the position on the assumption that the Board had actually taken responsibility for the scheme. During the assessment period, the position is slightly different. In that case, a member's benefits are to be determined under the scheme rules but subject to reduction to ensure that they do not exceed the compensation which would be payable had the Board in fact assumed responsibility for the scheme. In other words, a member cannot obtain during an assessment any more than the rules provide although ultimately adjustments can be made under section 162 where the Board does assume responsibility for the scheme. One result is that the member will not, at the end of the day, receive more than the compensation to which he would have been entitled of the Board had taken responsibility for the scheme on the assessment date itself.
82. The question then arises whether this analysis is altered in any way by sections 140 to 142. Section 140 is concerned principally with reviewable ill health pensions. The definition of "ill health pension" is found in section 142(1). For present purposes, the significant aspect of the definition is that the pension is one to which the member is entitled immediately before the assessment date. This must mean that the pension is in payment immediately before the assessment date. However, as with compensation under paragraph 3 of Schedule 7, it may well be correct to say that, where the member has left service and a decision about payment of an ill health pension from a date prior to the assessment date remains outstanding, it can nonetheless be argued that the ill health pension (if the decision is made to award one) is a pension "to which a person is entitled immediately before the assessment date" provided that its payment is backdated to a date prior to the assessment date. But if the rules entitle the member to payment of an ill health pension only from a date on or after the assessment date, it does not seem to me that the pension falls within the definition of "ill health pension".
83. The meaning of "reviewable ill health pension" is to be found in section 140(3). It is an ill health pension (within the meaning of the definition I have just examined) which has been awarded under the scheme rules either (a) in the period of three years prior to the assessment date or (b) before the end of a prescribed period (6 months has been prescribed) beginning with the assessment date. The reference to the prescribed period beginning with the assessment date indicates that it is possible to have an ill health pension as defined which arises under an award made after the assessment date. Thus the argument becomes compelling that a member who has left service prior to the assessment date claiming an ill health pension, which is eventually awarded from a date prior to the assessment date, is entitled to that pension "immediately before the assessment date" for the purposes of the definition. And by parity of reasoning, he would be entitled to compensation under paragraph 3 of Schedule 7 based on the amount of his ill health pension. However, by the same parity of reasoning, a member would not be entitled to compensation based on an ill health pension if the award was made on or after the assessment date and was not backdated to a date prior to the assessment date.
84. This approach to the effect of backdating an eventual ill health pension finds support, I consider, from section 140(5), although it is not a provision which I find entirely easy to understand. It is concerned with the case where an award of an ill health pension is made in response to an application made after the assessment date or in relation to an application made before that date but not decided until later than the end of the 6 month period from that date. If the award would, apart from this subsection, take effect prior to the assessment date, it is nonetheless to be treated as taking effect after the date of the decision when it comes to ascertaining compensation in a case where the Board assumes responsibility for the scheme. It is there expressly recognised that an award might, under the relevant rules, take effect before the assessment date. The inference which I think it is proper to draw is that in a case where the application for an ill health pension is made before the assessment date and is dealt with within the 6 month prescribed period, any backdating under the rules will be recognised for the purposes of compensation under paragraph 3 of Schedule 7.
85. Unlike subsections (2) and (3), subsection (5) is not focused on a reviewable ill health pension (that is to say, an ill health pension pursuant to an award made in the period of 3 years prior to the assessment date) or within the prescribed period of 6 months from that date. Accordingly, an award of an ill health pension under the rules made in response to an application made after the assessment date or after the end of the prescribed period is not reviewable. There does, nonetheless, have to be an ill health pension as defined so that the member must "immediately before the assessment date" be entitled to the pension, a requirement which is consistent with paragraph (b) of subsection (5) identifying the case as one where the award would take effect before the assessment date.
86. As to subsection (3), paragraph (b), like subsection (5), indicates that an ill health pension awarded after the assessment date is not thereby necessarily excluded from being an ill health pension within the definition: a member can be entitled to an ill health pension immediately prior to the assessment date notwithstanding that an award had not actually been made by that date.
87. In the present case, Mr Hughes was in service on 27 November 2008 (the assessment date) and did not leave service until the end of the year or the beginning of 2009. It is clear that he was not entitled, under the Rules, to a pension of any sort on 27 November 2008 and, even if a request for an ill health pension had been made and accepted after that date, and if he had actually retired, he would not have been entitled to have the payment of that pension backdated to some date prior to 27 November 2008. It follows that, even if he had retired prior to his redundancy with an entitlement under the Rules to an ill health pension, his benefit would have been capped by section 138 and, now that responsibility for the Scheme has been assumed by the Board, he is entitled only to compensation under Schedule 7. Paragraph 3 would not entitle him to compensation based on the level of an ill health pension. Given the conclusion that there was no maladministration on the part of the Company or the Trustees in failing to award Mr Hughes an ill health pension prior to 27 November 2008, the unfortunate effect for Mr Hughes of the way in which the legislation works is not a matter for which they can be held responsible to him. This consequence has nothing at all to do with what it might have been possible for the Trustee to do within the 6 month period. Mr Hughes has no claim against the Company or the Trustees even if, contrary to their case, there had been a failure to make a decision about his ill health pension entitlement within the period of 6 months from 27 November 2008.
88. The final issue (the fourth issue identified in paragraph 52 above) relates to [36] of the Determination where the DPO dealt with the suggestion that the Trustee should consider paying Mr Hughes a deferred pension under Rule 13(2). This was not, so far as I can see, raised in Mr Hughes' complaint and seems to have surfaced for the first time in the comments of Mr Jenkins (Mr Hughes' solicitor) on the preliminary determination where he said, simply

"I would also put forward the alternative contention that the Trustees could, in any event, have granted Mr Hughes an ill-health retirement pension from deferred status pursuant to Rule 13(2)."

89. This suggestion faces insuperable difficulty. Suppose that Mr Hughes had in fact left service and been awarded, during the assessment period, an ill health pension under Rule 13(2), the benefit which he could actually receive during the assessment period would be restricted by section 138(2). Had the Board actually assumed responsibility for the Scheme, Mr Hughes would have been entitled to compensation under paragraph 11 of Schedule 7. That paragraph makes provision for payment of a pension from normal pension age of 90% of the "protected notional pension" together with annual increases. The definition of "protected notional pension" is found in paragraph 11(4). It includes no element of enhancement as a result of ill health even if the relevant rules would provide for it in certain circumstances. Paragraph 25 provides a regulation making power in order to prescribe circumstances in which the payment of such compensation can be made prior to normal pension age. The Board (see paragraph 25(2)) must determine the amount of the actuarial reduction to be applied in the case of early payment. I doubt very much that the regulation-making power would authorise early payment without actuarial reduction even in special cases such as ill health. It is not necessary to decide that point since there is in fact no regulation which purports to do so. Accordingly, Mr Hughes could not, during the assessment period, receive more by way of benefit than his statutory compensation under paragraph 11 or (assuming that paragraph 25 can be applied at all during the assessment period in giving effect to the statutory hypothesis of section 138(2)) paragraph 25.
90. In fact, Mr Hughes elected in early April 2010 or thereabouts, to take an immediate pension under Rule 13(1). I imagine that that his immediate pension during the assessment period was of a virtually identical amount to the cap on benefits under section 138(2) by reference to the amount of statutory compensation. That cap would have taken no account of any entitlement to an ill health pension which he might have had under Rule 13(2). Likewise, now that the Board has actually assumed responsibility for the Scheme, Mr Hughes' compensation will take no account of such entitlement.
91. Quite apart from those difficulties facing Mr Hughes, no argument is made about why the Trustee might have been guilty of maladministration in failing to grant a pension under Rule 13(2). As the DPO correctly said, it could do so only once Mr Hughes had become a deferred member (that is to say on his redundancy). She found that Mr Hughes had not made a request for a pension under that Rule, and there is no appeal from that finding as one she could not properly have reached. She decided that the Trustee was not obliged to consider him under Rule 13(2) in the absence of any request from him. That is, in my judgment, correct since the Rule 13(2) expressly requires an election to be made for receipt of a pension under that Rule.
92. Further, the letter dated 22 December 2008 from Mr Edwards states quite clearly that he had to reject the application for further consideration of an ill health pension as insufficient medical evidence had been supplied. Mr Hughes knew the Trustee's position by then, at latest, and knew that, at the very least, further medical evidence would be required.
93. I am not clear whether a further point was pressed by Mr Buchan but I deal with it nonetheless. There is a suggestion that the Company should not have made Mr Hughes redundant but should have allowed him to retire in order to be able to claim the ill health early pension to which he might have become entitled. This point was not, I think, raised with the DPO and was certainly not dealt with by her. There is, in my judgment, nothing in it. That is clear, so far as the Trustee is concerned, since it had no part to play in when or how Mr Hughes' Service might come to an end. I do not consider this is anything in the point so far as concerns the Company either. The Company was under no duty to Mr Hughes to treat him in a special way and differently from the rest of the workforce who were made redundant. I do not consider that there was any maladministration on the part of the Company, through its joint administrators, in taking the course which it did.
94. The point does not, in any case, have any consequence. Even if Mr Hughes had been allowed to retire with an ill health pension rather than been made redundant, his compensation (and his capped benefits during the assessment period) would not have taken account of the more generous provision which the Rules make in relation to ill health.

Disposition

95. Mr Hughes' appeal is dismissed.