Scottish Court of Session Decisions

[1] The appellant challenges the Pension Ombudsman's rejection of his complaints of 12 September 1995, 14 December 1996, 22 August 1998 and 12 October 1998 alleging injustice caused by maladministration on the part of the respondents. Parties are agreed that there are essentially two issues for determination by the court. The second arises only in the event of the first being determined in the appellant's favour. The first issue is whether the Ombudsman failed to investigate the complaints in the manner required by section 149 of the Pension Schemes Act 1993 (c. 48). Should the appellant succeed on that point, he invites us to remit the complaints to the Pensions Ombudsman for reconsideration. In the event that we decide to do so, the appellant also invites the court to interpret a crucial passage in the Civil Aviation Authority Pension Scheme and direct the Ombudsman to apply that interpretation in the course of reconsidering the complaints.

[2] The functions of the Pensions Ombudsman and the procedure to be followed on an investigation, so far as relevant, are set out in section 146 and sections 149 and 150 respectively of the 1993 Act, as amended by section 157 of the Pensions Act 1995 (c. 26), as follows:

[3] The appellant's submission on the first issue was that these provisions obliged the Pensions Ombudsman to carry out his own investigation of the complaint and the facts and circumstances of and behind the complaint and to reach his own conclusions on all material issues of fact and law independently of the determination of any conclusions on these matters reached by any other body which had previously determined them. In particular it would be a wholly erroneous approach to the Pensions Ombudsman's task for him to adopt a determination of fact crucial to the issue before him made by another body. Since the Pensions Ombudsman had accepted the determination made by other bodies of the crucial issue of fact in this case, he had failed to investigate the complaints as he was bound to do and had thus erred in law in a fundamental respect which wholly undermined his determination, requiring that it should be quashed and the complaints returned to him for reconsideration.

[4] The appellant was employed as an air traffic control officer by the first respondent between June 1965 and 30 November 1991 when his employment was terminated, the grounds given by the first respondent being his conduct and capability. As an employee of the first respondent he was a member of the Civil Aviation Authority Pension Scheme administered by the second respondent. At the centre of his complaints to the Pensions Ombudsman is the refusal of the second respondent to accept that the true ground for his dismissal and hence the cessation of his membership of the Pension Scheme was ill-health. In the absence of a finding to that effect the appellant cannot qualify to receive a pension prior to reaching pension age. The appellant's contention is that the Pensions Ombudsman failed to carry out his own full blown, independent investigation into the question whether the true reason for the termination of the appellant's employment was qualifying ill-health.

[5] The appellant first made application for a pension on the ground of ill-health by letters to the trustees dated 12 and 17 February 1995. That followed his unsuccessful challenge of his dismissal.

[6] Written notice of dismissal was first issued on 31 July 1991. The appellant exercised his right to appeal against dismissal under Civil Aviation Authority internal appeal procedures. His first appeal was to the Chief Executive of National Air Traffic Services, then a Division of the Civil Aviation Authority. That appeal was refused. Thereafter he appealed further to the Managing Director of the Civil Aviation Authority. That appeal was also refused and written reasons were issued on 7 January 1992. The appellant then applied to an Industrial Tribunal, claiming that his dismissal had been unfair. The Industrial Tribunal unanimously decided that the dismissal was not unfair and refused the application. The Tribunal's full reasons for their decision were issued on 16 December 1992. The appellant appealed to the Employment Appeal Tribunal. That appeal was rejected by the Registrar on 27 January 1993.

[7] The appellant's career with the Authority was split into three separate phases. Until May 1989 he served at Oceanic House at Prestwick. Thereafter for about seven months he worked at Manchester. Finally, in December 1989 he was transferred to Glasgow where he worked until his employment was terminated. There was substantial material before the Industrial Tribunal in relation to both grounds on which the appellant's employment was terminated. The conduct allegations related to his failure over a lengthy period to make and carry on a good working relationship with his immediate colleagues, whoever they were and wherever he was working, in a service where team work was of vital importance. The capability ground related to his failure, after a prolonged period of training at Glasgow Airport in an area of air traffic control from which he had been absent for a considerable number of years, to validate the ratings on his Air Traffic Control Officer's licence - in other words his work had not reached an acceptable standard. The material considered by the Industrial Tribunal included evidence of a series of complaints made by colleagues about his behaviour towards them, and evidence of his unreasonable attitude to colleagues and superiors and his frequent complaints about a variety of matters. Difficulties of this nature persisted at all three stations where he was employed. The problem was summed up by Dr. Fisher, one of the doctors who conducts medical examinations of air traffic control officers, in a letter on 28 November 1990 as the appellant's "attitude" when he wrote to him in these terms:

That was a reference to his training towards validation in Glasgow. There was a series of adverse reports from training officers in both Manchester and Glasgow. In their conclusions the Industrial Tribunal said this:

[8] Some time after his dismissal the appellant was engaged by a private air traffic control company. He subsequently had a variety of jobs outwith air traffic control. From 1991 until 1996 he was annually certified medically fit to continue to carry out his duties as an air traffic control officer.

[9] He first applied to the Secretary of the second respondent for advice regarding ill-health early retirement under the Pension Scheme on 17 January 1995, and followed that with a formal application in his letters of 12 and 17 February referred to above. On 16 March 1995 the second respondent refused his application on the basis that there was no ground for the award of an ill-health retirement pension at the time of his dismissal nor any medical evidence to support his claim that he should have been awarded one. When he intimated his intention to appeal against that decision he was invited by the second respondent to undergo a medical examination by Dr. Ewan B. Macdonald who reported on 16 August 1996. On 27 November 1996 the second respondent reconsidered his application in the light of Dr. Macdonald's report but again refused it. The appellant was advised of the decision by letter dated 2 December 1996. The trustees' decision was minuted this way:

As can be seen the trustees decided that the medical report which they had commissioned confirmed that the appellant was not fit for his operational duties as at 30 November 1991. However, because the appellant was fit for non-operational duties which, in the trustees' opinion, fell within his "duties" as an ATCO but to which the Authority chose not to assign him, the trustees refused the application.

[10] That decision was referred to arbitration under the Pension Scheme. The arbitrator made a finding on 14 August 1998 upholding the trustees' decision. The arbitrator revisited the medical evidence in detail. He was not persuaded by Dr. Macdonald's report and preferred the other medical evidence. He found as follows:

[11] The appellant's application for a pension on ill-health grounds was made in terms of Rule 21(1)(b) of the Pension Scheme. That provides an entitlement to pension on termination of employment in certain circumstances. Termination of employment is in the context of the rules described as "cessation of membership". Rule 21(1)(b) is in the following terms:

That part of the rule is followed by a number of provisos relating to the situation where an employee or former employee should be treated as incapable of gainful employment, of which no question arises in this case.

[12] Following the arbitrator's determination the appellant's final two complaints were submitted to the Pensions Ombudsman. The appellant's complaints relating to the improper rejection of his application were wide ranging, including stating that he had been caused distress and inconvenience due to a conspiracy against him by the authority and the pension trustees who, he stated, had lied in letters written to him and to the Ombudsman. The appellant stated that both the authority and the trustees had treated him with contempt and had concealed evidence relevant to the Ombudsman's investigation of his complaint. The Ombudsman decided to investigate and determine the complaints in terms of the statutory provisions we have quoted above. In doing that he considered that the first question for him to determine was the reason for the appellant's dismissal and thus the cessation of his membership of the Pension Scheme. He held it to be an established fact that the appellant was dismissed for conduct and capability. In the stated case presented to us he explains that he relied on the full reasons given by the Industrial Tribunal and the arbitrator's decision in coming to that view.

[13] Before us Mr. Napier for the appellant accepted that that was indeed the first question for the Ombudsman. His submission, however, was that the Ombudsman was not entitled to rely on the earlier decisions and the reasons for them in arriving at his determination. He was bound to carry out his own independent investigation of the facts and make his own findings in fact and determinations in law. The Ombudsman had erred in his interpretation of Rule 21(1)(b) and in particular the phrase "ill-health...in consequence of incapacity to perform his duties resulting from...mental or physical infirmity". On the correct application of Rule 21(1)(b) to the true facts there was incapacity and cessation of membership on the ground of ill-health. The Ombudsman was not entitled to say that, because of the decisions made by the Industrial Tribunal and the arbitrator, cessation of membership on the ground of ill-health had not been established. The matter had to be determined objectively by independent investigation by the Ombudsman. The terms of Dr. Macdonald's report provided a sound factual basis for an objective finding of ill-health in consequence of incapacity satisfying the terms of the Rule. The arbitrator's determination was of little significance in any event because he had far fewer powers of investigation than the Ombudsman. The Ombudsman could not assume that the Industrial Tribunal had reached a correct determination of the true reason for the appellant's dismissal. Mr. Napier relied on the approval by the House of Lords in Devis & Sons v. Atkins [1977] AC 931 at 954 of the view of Cairns L.J. in Abernethy v. Mott, Hay & Anderson [1974] I.C.R. 323 at 330 who said:

What the Ombudsman was bound to do was to investigate the real reason for the termination of the appellant's employment and to do that a fresh investigation of the facts was necessary. What the Ombudsman had done in this instance was to delegate his fact finding powers to the Industrial Tribunal in circumstances where he had no power to do so. Mr. Napier referred to the Opinion of Lord Ross in the Outer House in Young v. Fife Regional Council 1986 S.L.T. 331 at 334H as follows:

[14] While that short extract from the judgment of Cairns L.J. may provide an interesting commentary on the diplomacy of employers, beyond that it does no more than make the obvious point that an employer may not be entirely frank about the reason for dismissing an employee. We readily accept that that is so. The question for us, however, is the quite different one of whether the Ombudsman was bound to carry out his investigation into that matter in a particular way. We also readily accept that, as in Young, the Ombudsman was bound not to delegate his decision-making power to another. That is not what the Ombudsman did. He made the determination. The position might have been different had he left the complaints investigator, who assisted him in dealing with the appellant's complaint, to make the final determination.

[15] In reply Mr. Howlin for the respondents relied on the wide discretion given to an Ombudsman by sections 146, 149 and 150 to investigate and determine the complaint in the way which he considered to be appropriate. It was not suggested by the appellant that the Ombudsman had failed to consider any relevant issue. Nor was it suggested that there was any additional material to which he should have had regard. In these circumstances the Ombudsman could not be faulted for the approach he adopted which was to review all the available material including the determinations made and the reasons given therefor by the Industrial Tribunal and the arbitrator. It was plain from the terms of the stated case that the Ombudsman had not blindly accepted either of these determinations but had investigated the real ground for dismissal in an entirely appropriate way.

[16] We agree with the submission of both counsel that the powers of investigation and determination given to an ombudsman by sections 146, 149 and 150 of the Pension Schemes Act 1973, as amended, are very wide powers. However, we also agree with the submission of Mr. Howlin that these provisions give the Pensions Ombudsman a wide discretion to decide how best to conduct an investigation and determine the complaint presented to him. Parties were agreed that the first issue to be determined by the Ombudsman was the reason for the appellant's dismissal from his employment. In our opinion it was entirely appropriate for the Ombudsman to make that decision in this case on the basis of a review of the existing material. There is no question of the Ombudsman rubber stamping any earlier decision. He reviewed the material, which included the reasons given by both the Industrial Tribunal and the arbitrator for the decisions they had reached and Dr. Macdonald's report. That material included a 21 page written decision of an Industrial Tribunal with full reasons reviewing the evidence of a number of witnesses and the appellant's career and the various significant episodes therein in detail. It also includes the fully reasoned determination by the arbitrator. We are satisfied that it was within the powers of the Ombudsman to approach matters that way. Having done so he was entitled to reach the view that he did that the appellant was dismissed for conduct and capability which took him outwith the scope of Rule 21(1)(b) of the Pension Scheme.

[17] While Question 1 of the stated case which is designed to focus this issue is not framed in ideal terms it is adequate for the purpose of reflecting our determination by answering it in the negative.

[18] Question 2 does not raise any separate point. We were not invited by the appellant to answer question 5. It was suggested that it could only arise following reconsideration of the complaints by the Ombudsman.

[19] Questions 3 and 4 relate to the second issue we identified at paragraph 1 of this Opinion, i.e. the interpretation of Rule 21(1) and in particular whether the Ombudsman ought to have held that the appellant's incapacity to perform his duties, as found by Dr. Macdonald, was such as to entitle him to an ill-health pension, although he was fit for other work to which he could have been assigned by the Authority in terms of his contract of employment but to which they chose not to assign him. In view of our decision on the first question, this issue does not arise for determination. Nevertheless we should indicate that we found the appellant's submission on this issue more persuasive than on the first one. Throughout his service with the Authority the appellant worked only in operational duties. We consider that there is force in the submission made by Mr. Napier, under reference to Derby Daily Telegraph Ltd. v. The Pensions Ombudsman and Another [1999] I.R.L.R. 476, that the incapacity envisaged by Rule 21(1)(b) is the employee's inability to carry out his normal duties. In other words, if an employee was in fact dismissed because he was incapable of performing his normal duties as a result of an accident or mental or physical infirmity, he would qualify for a pension under Rule 21(1)(b) even though he would have been fit to perform other duties. In expressing that tentative view we have had regard to the submission of Mr. Howlin that that case related to different rules. In the circumstances we do not find it necessary to answer either question 3 or question 4.