X v NHS London & Anor

An appeal from the Pensions Ombudsman lies only on a point of law. A factual conclusion about the cause of termination cannot be overturned where it was reasonably open to the Ombudsman on the evidence. Ill-health retirement requires retirement because the infirmity made the member permanently incapable of efficiently discharging the employment duties. Illness forming part of the background to a compromise termination is insufficient if the immediate cause was the settlement of an employment dispute. Remittal is unnecessary where only one factual finding is tenable on the evidence.

Mr X appealed against the Pensions Ombudsman’s determination that he was not entitled to an ill-health pension under regulation E2 of the National Health Service Pension Scheme Regulations 1995. His employment had ended under a compromise agreement resolving employment-related complaints after a period of sickness caused by AIDS and opportunistic illnesses.

The appeal raised whether the statutory conditions for ill-health retirement were satisfied, whether the Ombudsman had erred in law in treating the termination as consensual, and whether the employer’s failure to advise Mr X about the pension possibility constituted maladministration.

1. The appeal was dismissed. The statutory appeal to the High Court was confined to points of law under section 151(4) of the Pension Schemes Act 1993.
2. Regulation E2 required four conditions: retirement from employment; physical infirmity; infirmity making the member permanently incapable of efficiently discharging the duties of the employment; and retirement because of that infirmity. The first two conditions were satisfied.
3. The third condition was not established at the termination date. It was then impossible to tell whether the illness would permanently prevent a return to work. The court did not determine whether subsequent events could retrospectively satisfy that condition, because the fourth condition was decisive.
4. The question whether illness caused the termination was one of fact. The Ombudsman had objective evidence on which to conclude that illness was not the cause of termination. The appeal court could not interfere with that conclusion merely because another view might have been possible.
5. The compromise agreement ended the employment as part of the settlement of a discrimination dispute. Mr X had repeatedly expected to return to work, was dissatisfied with his employer, and there was no evidence that the employer had treated his illness as permanently disabling. His illness was part of the background, but was too remote to be the cause, or a cause, of termination.
6. Although the Ombudsman’s reasoning could have been fuller, remittal was unnecessary. The only tenable finding was that the employment did not terminate because Mr X was permanently incapable of performing his duties.
7. The maladministration argument also failed. On the evidence, it was not open to conclude that the employer should have rejected occupational-health advice, recognised permanent incapacity, or advised Mr X to seek a regulation E2 pension.

The judgment does not state any earlier court decision. It records an appeal to the High Court under section 151(4) of the Pension Schemes Act 1993 from the Pensions Ombudsman’s determination dated 24 May 2007.