Pension scheme - Department successfully appealing

Molyneux v Department for Education: Court of Appeal, Civil Division (Sir Anthony May P, Lady Justice Arden and Lord Justice Aikens): 28 February 2012

The Teachers' Pension Scheme (TPS) was a public service pension scheme for the purpose of section 1 of the Pensions Schemes Act 1993 (the act). The scheme manager of the TPS was the defendant Department for Education, formerly the Department for Children, Schools and Families (the Department). The Teachers' Pensions Regulation 1997 (as amended), SI 2010/990, (the Regulations), governed an applicant's pension entitlements.

Regulation E4 set out the circumstances in which a person was entitled to payment of retirement benefits. Regulation E33(2A), required an application to be accompanied 'by all medical evidence necessary to determine' whether an applicant fell within regulation E4. The applicant was a teacher and member of the TPS. The applicant was repeatedly absent from work after January 2002. The grounds of her absence included anxiety and/or depression. In October 2008, by which time the applicant was 50 years of age, she applied for ill-health retirement benefits. The applicant was required to complete an application for retirements benefit form. The notes accompanying the form made it clear that she had to demonstrate incapacity by medical evidence and that the incapacity was permanent, namely, likely to last until normal retirement age.

She supplied a report from her doctor, her employer's occupational health advisor and an occupational health psychologist. The latter stated that, in her opinion, it was unrealistic to expect the applicant to attempt to return to her work role either at that time or in the future. The application was refused by the Department on the recommendation of its medical advisor. An appeal and a second appeal were also refused, again on the recommendation of the Department's medical advisor who considered that permanent incapacity had not been shown. In 2009, the applicant's employment terminated.

She lodged a complaint, under section 146 of the act, with the Pension's Ombudsman against the Department's determination. The Ombudsman found, inter alia, that: (i) the applicant's application for ill-health had not been properly considered; and (ii) it was the Department's responsibility, rather than the applicant, to make sure that it had had the appropriate evidence on which to base its decision and, accordingly, the Department should have instructed its medical advisors to make enquiries of the applicant's medical practitioners for further information.

Consequently, the Department was required to reconsider the application. The Department appealed to the High Court under section 151(4) of the act. That appeal was allowed. The judge observed that the Ombudsman had made no express reference to regulation E33(2A) of the Regulations. The judge accepted that there might be categories of case in which the Department should ask further questions but, in the majority of cases where regulation E33(2A) put the duty on the applicant to submit 'all the medical evidence necessary to determine whether the person falls within regulation E4(3) or (4)', it would not usually be inefficient or improper administration to make a determination on that evidence.

In conclusion, the judge held that the Ombudsman's direction to the Department to reconsider the application and seek further information from her medical advisers would probably not have been made had she considered regulation E33(2A) of the Regulations. The applicant appealed. She submitted that regulations E33(2A) and E33(3) of the Regulations had to be read together so as to impose an implied obligation on the secretary of state for the Department to request further information from an applicant where, for example, the submitted medical evidence had not disclosed incapacity to the degree required and to give him an opportunity to obtain and submit that evidence. That evidence would be needed to enable an applicant to claim his entitlement to an incapacity pension under the TPS. Therefore, it was the function of the secretary of state to identify the missing information and give the opportunity mentioned. The appeal would be dismissed.

Regulation E33(2A) was framed as an obligation on the applicant to produce all necessary medical evidence and regulation E33(3) was framed as a supplementary power exercisable by the secretary of state as he thought fit. It might be that there was room for elasticity in certain other words in regulation E33(2A), but that cast no doubt whatsoever on the clarity of regulation E33(2A) in throwing the whole of the onus of producing medical evidence on the applicant. The role of the secretary of state was supplemented by his public law duties informed by the general law on the duties of pension fund trustees (see [24]-[26] of the judgment).

Regulation E33(3) of the Regulations clearly contemplated that the secretary of state might request information and it was clearly stated that that information might include necessary medical evidence. If regulation E33(2A) was read totally literally, there could never be any information of a nature that fell within regulation E33(3) since it would always have accompanied the application. However, the Regulations had to be interpreted in a pragmatic way. Regulation E33(3) was a sensible power given to the secretary of state to exercise in appropriate circumstances. In addition, the secretary of state might choose to exercise the power where some relevant change of circumstances came to light during the payment of a pension. It was clear that there was good reason for the power in regulation E33(3) and no compelling reason for it to be read as imposing any obligation (see [27] of the judgment).

In the instant proceedings, the judge had reached the correct conclusion and there could be no implication of the obligation that the applicant had sought to imply (see [24], [26], [29]-[31] of the judgment).

Decision of Judge Mackie QC [2010] All ER (D) 213 (Oct) affirmed; Scott Redpath (instructed by Nyland & Beattie Solicitors) for the claimant; Elisa Holmes (instructed by the Treasury solicitor) for the Department of Education.