Upper Tribunal (Administrative Appeals Chamber)

INTERIM DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The Secretary of State's appeal to the Upper Tribunal is allowed. The decision of the London Pensions Appeal Tribunal dated 13 May 2008 involved errors on points of law, for the reasons given below, and is set aside. (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). I defer the question of what further steps are to be taken by the Upper Tribunal on the claimant's appeal against the Secretary of State's decision dated 29 November 2006, subject to the direction in paragraph 17 below.

REASONS FOR DECISION

1. This case has raised some very intricate and technical issues of law. I attempt below to explain my interim decision in as simple terms as possible, not repeating some of the technical discussion in my directions dated 7 July 2009 and, in particular, 28 October 2009. As requested by the claimant's current representative, his father, in his letter dated 30 November 2009, I have waited until after the expiry of the time for either party, and in particular the claimants in that case, to apply for permission to appeal against the decision of the Court of Appeal in Secretary of State for Defence v Duncan and McWilliams [2009] EWCA Civ 1043. I have also thought it wise to wait until the result was known of Lord Boyce's Review of the Armed Forces Compensation Scheme, published yesterday with the response of the Secretary of State for Defence as a foreword (Cm 7798), since there had apparently been a commitment to apply any accepted recommendations back to the beginning of the scheme in 2005. It was announced in the foreword that the government would implement in full all the recommendations of the Review. As it turns out, one specific recommendation is of particular relevance to the present case. I mention it in paragraph 15 below.

2. The pensions appeal tribunal (PAT) was concerned with the decision dated 29 November 2006 that there was no entitlement to an award under the Armed Forces Compensation Scheme (AFCS) in respect of the claimant's noise-induced hearing loss. The claimant, then still under 21, had been medically discharged from his service in the Princess of Wales's Royal Regiment on 12 November 2006. There was therefore no need for him to make a claim under the AFCS and his medical records were automatically passed to the Veterans Agency. The "principal invaliding condition" was described as noise induced hearing loss. The medical records indicated that the first problem was tinnitus in the left ear during a week's live firing in basic training in August 2005, followed by gradual high frequency hearing loss in that ear. There was no hearing loss in the right ear. The claimant was medically advised that he should not be exposed to noise in the future. By the time of the Medical Board of 12 May 2006 he was reporting difficulty in hearing people talking to him in crowded places and was awaiting the issue of a digital hearing aid.

3. The reasons for decision accompanying the decision contained the following:

"Although your condition has been accepted as having been caused by your service, benefits are normally paid for injuries and conditions which are on the tariff. The Secretary of State has the discretion to make a temporary award for up to one year for an injury which is not on the tariff if he considers that the injury is sufficiently serious to warrant an award of benefit and the injury is listed in the International Statistical Classification of Diseases and Related Health Problems or in the Diagnostic and Statistical Manual of Mental Disorders. In your case the Secretary of State has decided not to exercise his discretion because the injury is not significantly serious to warrant an award of benefit.

In order for your condition to meet the minimum tariff threshold for compensation, the tariff states that your hearing loss must be a `bilateral permanent hearing loss of 50-75dB averaged over 1, 2 and 3kHz'. As this level of hearing loss only affects your left ear the condition does not meet the minimum tariff threshold and no award of compensation is payable."

4. The reference to the tariff was to the Tables in Schedule 4 to the Armed Forces and Reserve Forces (Compensation Scheme) Order 2005 (the AFCS Order), as amended with effect from 5 June 2006, and in particular to Table 7 (senses). There have been later amendments to Schedule 4, including Table 7, that do not affect the present case directly. It is now known, as a result of the decision of the Court of Appeal in Secretary of State for Defence v Duncan and McWilliams, that Table 4 cannot be relevant and that Table 7 was the only applicable Table in the present case. There is further explanation of that in paragraph 2 of my directions of 28 October 2009. Starting from the lowest level of award and working upwards, the first mention of hearing loss or deafness in Table 7 as at November 2006 was in item 20, tariff level 13 (bilateral permanent hearing loss of 50-75dB averaged over 1, 2 and 3kH, with mild or no tinnitus). Item 15, tariff level 11, had the same conditions, except for the tinnitus being severe. Item 13, tariff level 10, had the same conditions as for item 20 except that the bilateral permanent hearing loss was over 75dB. Item 8, tariff level 9, had the same conditions as for item 13, except for the tinnitus being severe and persistent. In addition, item 11, tariff level 10, applied to deafness in one ear; item 6, tariff level 6, applied to deafness in both ears; and item 1, tariff level 1, applied to total deafness and blindness or loss of both eyes. The reference to temporary awards at the discretion of the Secretary of State was a reference to the procedure under article 20 of the AFCS Order.

5. The claimant's appeal to the PAT was essentially on the basis that the Army had caused his hearing loss, as a result of which he had a lifetime disability that meant that he could not pursue his desired military career or an alternative in the police and was having difficulty in finding work. He attended the hearing on 13 May 2008 with his father and a representative from the Royal British Legion. Mr Shilcock of the RBL submitted that, in the absence of any definition of "deafness" in Table 7, as opposed to "total deafness", the claimant should have been made an award based on qualifying for item 11.

6. The PAT allowed the appeal and decided that the claimant fell within item 11 of Table 7. It first said this about the approach of the Secretary of State:

"On the face of it this is a remarkable state of affairs. Could Parliament have intended, as the Secretary of State is asserting, that a member of the armed forces can be injured due to service sufficiently to end his career but that the scheme designed to compensate such injuries does not allow for compensation? The statement of this proposition demonstrates how unfair and unjust such a scheme would be if such was intended."

The force of that observation cannot be denied. Indeed, those representing the Secretary of State now agree with it in essence, but say that the way out should have been through an initial temporary award under article 20, not through the route taken by the PAT.

7. The PAT in its statement of reasons did its utmost to find a rational justification for its conclusion in accordance with accepted principles of statutory interpretation. It noted, by reference to dictionary definitions, that in the ordinary use of language, "deafness" can cover both total and partial deafness. Applying what it called the literal rule produced the answer that in item 11 of Table 7 "deafness", used without further definition or qualification, covered both forms of deafness. The PAT thought that that was consistent with the "golden" rule in the wide sense of avoiding a ridiculous or repugnant outcome. Finally, applying the "mischief" rule, although the whole basis of the AFCS was different from that of the scheme applying to injury caused by service prior to 6 April 2005, there was no indication of any wish to take a potentially serious injury out of the whole scope of the scheme.

8. That was a valiant attempt to justify a result producing what the PAT saw as fair compensation for the claimant, but I am afraid that it cannot be accepted and that the Secretary of State's appeal, brought with the leave of Mr Commissioner Bano, must succeed to the extent of setting aside the PAT's decision as involving an error of law.

9. The essence stems from this, as it was put by Lord Nicholls of Birkenhead in R v Secretary of State for the Environment, Transport and the Regions, ex parte Spath Holme Ltd [2001] 2 AC 349, at 396-7, in what he described as a going back to first principles:

"Statutory interpretation is an exercise that requires the court to identify the meaning borne by the words in question in the particular context. ... In identifying the meaning of the words used, the courts employ accepted principles of interpretation as useful guides. For instance, an appropriate starting point is that language is to be taken to bear its ordinary meaning in the general context of the statute."

Thus, even the literal rule requires looking at the words in question in the context in which they are used.

10. In the present case there are two relevant levels of context that need to be looked at. The first is Table 7 within Schedule 4 to the AFCS Order. Looking at the ascending order of items leading to larger awards, it is inconceivable that partial deafness in one ear, even where there was a serious hearing loss in that ear, should have been intended to attract a larger award at tariff level 10 (which would also qualify the claimant for a guaranteed income payment) than significant bilateral hearing loss at tariff level 13 (no guaranteed income payment), which even severe tinnitus could not get to more than tariff level 11. To put the same point in another way, if "deafness" in item 11 meant what the PAT said it did, it would have to mean the same in item 6 (deafness in both ears), in which case items 13 and 20 on bilateral hearing loss would be deprived of any practical application. Accordingly, despite the very unhelpful drafting and the apparent ambiguity in the use of the word "deafness" without definition, in contrast to the precise conditions for qualifying bilateral hearing loss and the definition of total deafness, "deafness" in items 6 and 11 could only mean something like total or substantially total deafness in the ear or ears in question. That sort of comparison within Table 7 is entirely consistent with paragraph 58 of the judgment of Elias LJ in Duncan and McWilliams.

11. The second level of context is that the tariff in the Tables in Schedule 4 is part of the AFCS Order as a whole, including as an integral and important part article 20 on temporary awards. Article 20 applies when a claimant has sustained an injury of a description for which no provision is made in the tariff and which is sufficiently serious to warrant an award of injury benefit. If satisfied on those conditions, and that the injury is listed in the publications mentioned in the reasons for decision (paragraph 3 above), the Secretary of State must make a temporary award at the level he considers appropriate. If the Secretary of State does not amend the AFCS Order within a year to include the injury in question in the tariff, any guaranteed income payment stops, but a lump sum awarded cannot be taken away. That process caters for the case where the tariff does not make provision at all for an injury that is sufficiently serious as to deserve compensation. It indicates that there was no room for the arguments used by the PAT about the injustice of not making an award under Table 7 or the mischief aimed at in the interpretation of the Tables in Schedule 4, even though it could not itself, for the reasons given below, have made an article 20 temporary award on the appeal before it.

12. The PAT's reasoning in that respect falls foul of what was said by Elias LJ at paragraph 59 of his judgment in Duncan and McWilliams:

"What is plainly not legitimate, however, is for a decision maker [including a tribunal] to distort the application of the Scheme by identifying an inappropriate comparator on the basis that, looking at the compensation paid for other injuries, he or she does not think that the most appropriate descriptor results in adequate compensation. The originators of the Scheme have already carried out the exercise of determining the appropriate compensation both for different categories of injury and for different injuries falling within the same category. It is not for the decision maker to rewrite that Scheme or substitute his or her own view of what constitutes equitable compensation."

I am afraid that, while I entirely understand the basis of the claimant's father's submission in his letter of 30 November 2009 that the PAT's decision should be supported as making the best practical interpretation of bad drafting to secure the necessary recognition of the claimant's continuing income loss over a working lifetime, those arguments cannot stand with that confirmation of principle. Nor could the interpretation set out in paragraph 10 above be affected by such a submission.

13. What follows from the discussion above is that the real error in the present case was in an article 20 temporary award not having been made at the outset, as has now been recognised on behalf of the Secretary of State. The intention was expressed in paragraph 18 of the Secretary of State's application to the PAT for leave to appeal (page 112), and confirmed several times in later submissions, of making the claimant a temporary award at tariff level 12. It was stated in paragraph 22 of the submission of 17 October 2008 that under the amendments in effect from 16 October 2008 the claimant's injury would have fallen within item 24 of Table 7, tariff level 12 (blast injury to ears with permanent sensorineural hearing loss in one ear of 50-75dB averaged over 1, 2 and 3kHz with severe persistent tinnitus. It is not entirely clear what the PAT of 13 May 2008 should have done if it had applied what I have found to be the correct interpretation of Table 7, yet thought that the claimant deserved a temporary award. The Secretary of State's decision of 29 November 2006, in the light of the reasons given for it, can only be regarded as including a decision not to make a temporary award. By virtue of regulation 3(2)(c) of the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Regulations 2005, as amended with effect from 31 October 2006, such a decision is not appealable to a PAT (or now to the First-tier Tribunal), because it is taken out of the definition of "specified decision" for the purposes of section 5A of the Pensions Appeal Tribunals Act 1943. Therefore, the PAT could not have altered that decision. I think, without purporting to lay down any sort of general rule for the future, that it could probably have adjourned its hearing of the appeal, having brought its views to the attention of the Secretary of State, to give him the opportunity to exercise the powers of review under the AFCS Order.

14. I concentrate, however, on what should be done by the Upper Tribunal as the case currently stands. For the reasons given above, the decision of the PAT of 13 May 2008 involved errors of law and I set it aside. However, I stop at that point for the reasons explained in detail in my directions of 28 October 2009, and agreed on behalf of the Secretary of State in the submission dated 1 December 2009. That is why this decision is only an interim one. The currently operative decision in this case is therefore left as that of the Secretary of State under article 43 of the AFCS Order on 29 November 2006, subject to the claimant's outstanding appeal against that decision. In those circumstances, the Secretary of State has power under article 49(1), with article 46(2), to review that decision on the ground that it was based on a mistake as to the law. The mistake would be in the form either that no reasonable decision-maker, properly acquainted with the conditions in article 20, could have made a decision on that date without at least making an award under that provision or that a material consideration (that the service injury had been serious enough to merit a medical discharge) had been ignored (see paragraphs 18 and 19 of the submission of 1 December 2009). The Secretary of State could then in revising the decision make whatever temporary award under article 20 he sees fit to implement the intention that has already been stated (but see paragraph 15 below), no doubt followed (I need not unravel the details) by a permanent award under article 20(5). As noted in paragraph 13 above, the decision to make a temporary award would not be appealable to the War Pensions and Armed Forces Compensation Chamber of the First-tier Tribunal. It would of course be open to legal challenge by way of an application for judicial review in the Administrative Court (with consequent costs implications). Any such application might well be transferred under the discretionary arrangements to the Administrative Appeals Chamber of the Upper Tribunal.

15. One recommendation of the Review of the Armed Forces Compensation Scheme is particularly relevant to the question of what level of award the Secretary of State might consider appropriate. So far what has been suggested is tariff level 12, corresponding to item 24 of Table 7 as amended from 16 September 2008. In paragraph 2.176 the Review recommends that the level of compensation awarded for deafness and hearing loss below the top two categories (items 1 and 6 of Table 7) should be increased by putting each item up by one tariff level. Thus, the tariff level for item 24 would become 11, qualifying for a guaranteed income payment. And the government is committed to implement that, along with all the other recommendations, with effect from 6 April 2005. Those changes will require amendments to the AFCS Order and so cannot in ordinary cases be implemented immediately. If the claimant here were to be made an award at tariff level 12, it would no doubt in due course be altered to an award at tariff level 11, with the consequent entitlement to a guaranteed income payment. However, a temporary award under article 20 is to be at the tariff level that the Secretary of State considers appropriate. He has already accepted in full a recommendation that the tariff level for the kind of injury that he accepts the claimant here has should be 11 and not 12. In those circumstances, the Secretary of State will wish to give close consideration to whether the appropriate tariff level for an immediate temporary award in the present case is 11, rather than 12, allowing a permanent award once the AFCS Order is amended to give effect to the recommendations of the Review.

16. In an email dated 26 January 2010, in response to the submission of 1 December 2009, the claimant's father requested an explanation of what was meant in paragraph 19 of that submission when it was said that a failure by the decision-maker on 29 November 2006 to take into account the factor of the claimant's injury being sufficiently serious to merit a medical discharge merited "a review without more". That was a bit of legal shorthand indicating that nothing else had to be proved for the review to be required. It was not, for instance, suggesting that the review would not lead to any additional payment to the claimant. In his letter of 30 November 2009, the claimant's father had also expressed disquiet that there could not be an appeal against an article 20 award. That is the effect of the legislation currently in force, but I have noted in the previous paragraph that there is an avenue of legal challenge, although not by the relatively informal and free method of an appeal to the First-tier Tribunal. The claimant's father finally asked whether there was any redress for the fact that the claimant has been left without the compensation now agreed to have been due to him from the outset or for a mistake of law having been made. That is something that is not within the powers of the Upper Tribunal or the First-tier Tribunal. All government departments have schemes to provide financial redress in certain cases of maladministration, but it would not be right for me to say anything about whether the mistakes made in the claimant's case could be said to have amounted to maladministration.

17. As suggested in paragraph 5(d) of my directions of 28 October 2009, I now direct that the Secretary of State is, no later than six weeks after this decision is issued to the parties, to send a submission to the Upper Tribunal office stating whether or not a revised decision has been given on review of the decision of 29 November 2006 and, if so, what that decision is. In that case, there should be a submission as to whether the effect is that the claimant's appeal against the decision of 29 November 2006 has lapsed, whether rule 22 of the Tribunal Procedure (First-tier Tribunal) (War Pensions and Armed Forces Compensation Chamber) Rules 2008 applies directly or by analogy (in the light of an article 20(1) decision not being appealable) and whether any further action by the Upper Tribunal is necessary to dispose of the claimant's appeal. The claimant's father will then be given the opportunity to comment.

(Signed on original): J Mesher

Judge of the Upper Tribunal

Date: 11 February 2010