Duncan Campbell v NHS Business Services Authority
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Sir Launcelot Henderson,Lord Justice Lewison |
| Judgment Date | 16 November 2023 |
| Neutral Citation | [2023] EWCA Civ 1351 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000905 |
[2023] EWCA Civ 1351
Lord Justice Lewison
Lady Justice Asplin
and
Sir Launcelot Henderson
Case No: CA-2023-000905
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Mr Justice Zacaroli
[2023] EWHC 928 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
David Schmitz (instructed by The Associate Law Firm) for the Appellant
Naomi Ling (instructed by the Government Legal Department) for the Respondent
Hearing date: 31 October 2023
Approved Judgment
This judgment was handed down remotely at 12 noon on 16 November 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This appeal is concerned with the proper construction of the regulations governing the National Health Service Pension Scheme, 1995 section (the “1995 Scheme”) and, in particular, the construction and application of Regulation E2A of the National Health Service Pension Scheme Regulations 1995/300 (the “1995 Regulations”).
The appeal arises out of a complaint made to the Pensions Ombudsman by the Appellant, Mr Campbell, in his capacity as the administrator of his wife's estate. The complaint was that both the Respondent to this appeal, NHS Business Services Authority, (“NHS BSA”) and the South Tyneside NHS Foundation Trust (the “Trust”) mishandled Mrs Denise Campbell's application for commuted tier 2 ill health retirement benefits.
By a determination dated 29 April 2022 and numbered CAS-43833-N8K7 (the “Determination”), the Pensions Ombudsman dismissed the complaint on the basis that taking into account her outstanding annual leave, Mrs Campbell had died in service because she was treated as being in pensionable employment with the NHS until 20 June 2018 which was after she had died. The Pensions Ombudsman did not go on, therefore, to consider Mr Campbell's other head of complaint which had been that NHS BSA had refused to authorise payment of commuted ill health benefits in relation to his wife on the basis that Regulation T1 had not been met because Form AW8 had not been received by NHS BSA prior to Mrs Campbell's death. The Pensions Ombudsman noted that as he did not consider that Mrs Campbell had become entitled to Tier 2 benefits before she died, any failure concerning the completion and/or submission of Form AW8 had not affected that entitlement.
Mr Campbell appealed the Pensions Ombudsman's Determination to the High Court. The appeal relating to the Trust was compromised during that hearing. As a result, Zacaroli J made no more mention of it and accordingly, the Trust has taken no part in the appeal before us.
By an order dated 4 May 2023, Zacaroli J dismissed the appeal against the Determination. At [59] of his careful judgment, he concluded that the Pensions Ombudsman was correct to decide that Mrs Campbell's pensionable employment was to be treated, for the purposes of Regulation E2A, as having continued until the expiry of an additional period in lieu of her untaken leave, so that she was to be treated as having died whilst still in pensionable employment within Regulation F1 as opposed to having retired from pensionable employment within Regulation E2A.
At [15] of his judgment, the judge explained that although both heads of complaint were raised before him (both (i) the proper construction of the 1995 Regulations in the circumstances and (ii) the way in which the relevant forms had been dealt with), since the hearing NHS BSA had withdrawn its objection based upon Regulation T1. He recorded their position as being that if the appeal on the matter of the construction of Regulation E2A was upheld, then a claim could be made by Mr Campbell on a different form and commuted ill-health benefits would then be paid to Mrs Campbell's estate. As a result, the judge did not address the Regulation T1/Form AW8 issue.
Background in more detail
The detailed background to this matter is set out at [3] – [15] of the judgment and reference should be made to those paragraphs. Suffice it to say for the purposes of this appeal that Mrs Campbell was employed by the Trust. Her employment by the NHS had commenced in May 1989 and she was a member of the 1995 Scheme. In early 2018, she was informed that she had limited life expectancy and as a result, on 26 May 2018, she submitted an application to commute ill health retirement benefits and sought a lump sum payment. On 30 May 2018, a Form AW33E (consideration of entitlement to ill health retirement benefits) was submitted on her behalf and the following day, Ms Atkinson, the Head of Employee Relations for the Trust, wrote to Mrs Campbell informing her as follows:
“I have no alternative but to terminate your employment … on the grounds of capability due to ill health with effect from 31 May 2018. You are entitled to receive 12 weeks pay in lieu of notice which will be paid as a lump sum at the end of June 2018. You will also be paid for any outstanding annual leave which equates to 5.5 days for 18/19 and 10 days from 17/18; this will be paid as part of your final salary at the end of June 2018.”
On 3 June 2018, Ms Atkinson was informed that Mrs Campbell's application for ill-health retirement benefits had been approved at Tier 2 and that a Form AW8 should be forwarded and completed as soon as possible. Unfortunately, Mrs Campbell died on 6 June 2018 before Form AW8 was completed. She was 51.
Having initially given other reasons for being unable to authorise the payment of commuted ill health benefits, in June 2019, NHS BSA gave two reasons for refusing to do so. They were: (i) that the last day of Mrs Campbell's employment, taking into account her outstanding annual leave, was 20 June 2018 and that accordingly, she had died in service; and (ii) the requirements of Regulation T1 had not been met because Form AW8 had not been received before her death.
The judge's interpretation of the 1995 Regulations has a stark effect upon the benefits payable from the 1995 Scheme. In her skeleton argument on behalf of NHS BSA, Ms Ling contrasted what NHS BSA considers to be the difference between the death in service benefits payable to Mrs Campbell's estate and the commuted ill health benefits which she had requested:
Death in Service Benefits
Lump sum on death = £139,019.92
Initial survivor pension payable for 6 months = £5,936.91 per month. Total payable £35,621.46
Continuing survivor pension payable when initial pension stops at £14,660.92 per annum
Commuted Ill Health Benefits
Commuted lump sum = £274,887.72
Initial survivor pension payable for 6 months = £2,443.48 per month. Total payable £14,660.92
Continuing survivor pension payable when initial pension stops at £14,660.92 per annum.
Judge's reasoning in more detail
The judge rejected the distinction made by the Pensions Ombudsman between retirement from “employment” and from “pensionable employment” for the purposes of Regulation E2A. He considered that the only retirement which was contemplated by that regulation is a retirement from pensionable employment [35] – [37]. In particular, he stated that:
“35. I do not think, however, there is any distinction being drawn in Regulation E2A between retirement from employment and retirement from pensionable employment. In my judgment, Regulation E2A is only concerned with retirement from “pensionable employment”. It is only where a member retires from “pensionable employment” that (by para (1)) the Regulation applies at all and (by para (2)) an entitlement to a pension under the Regulation arises. The Regulation does not in fact refer to retirement from employment at all. The only reference to “employment” (as opposed to pensionable employment) is in para (2)(b), where two additional requirements are set out which entitle a member who has retired from pensionable employment to a pension. The first imposes a requirement as to the minimum length of qualifying service. The second imposes a requirement as to the reason for terminating the employment of the member, namely that it must have been terminated “ because of physical or mental infirmity as a result of which the member is either permanently incapable of efficiently discharging the duties of that employment or of regular employment of like duration.
36. In other words, para (2)(b) is not imposing a requirement that the member's “employment” was terminated per se, but is imposing a requirement — in relation to a member who has retired from pensionable employment — that such retirement was as a result of their employment being terminated on grounds of physical or mental infirmity leading to one or other of the outcomes in (2)(b)(i) or (ii).
He went on to hold that it did not follow, however, that the Pensions Ombudsman was wrong to conclude that the extended definition of pensionable employment in Regulation C2(5) applies to Regulation E2A(1). He stated:
“38… If, as I have concluded, the only concept of retirement used in that Regulation [E2A(1)] is retirement from “pensionable employment”, the question still remains as to whether the extended meaning of that term in Regulation C2(5) applies to the question whether someone has retired from “pensionable employment” within Regulation E2A(1) and (2).”
The judge also noted the circumstances in which the deeming provision in relation to pensionable employment in Regulation C2(5) applies for other purposes in other parts of the 1995 Regulations ([47] –[49]) and stated at [50] that there was force in the point that the 1995 Regulations as a whole “create a mutually exclusive distinction between the period or periods when members are contributing to the 1995 Scheme and the period or periods when they are receiving benefits under it”. He...
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