Hamilton v Monmouthshire County Council & anor

For an ill-health pension under regulation 27 of the Local Government Pension Scheme Regulations 1997, leaving employment must have been caused by permanent incapacity. The coincidence of permanent incapacity and the ending of employment is insufficient. An appeal on a point of law cannot ordinarily reopen factual findings by the Pensions Ombudsman unless they disclose an error of law. Under regulation 31, the right to immediate payment arises only when the member makes the required election and satisfies the permanent-incapacity condition. A retrospective diagnosis may establish when incapacity arose, but payment cannot precede the election. The decision in Spreadborough v Wandsworth LBC concerned differently worded regulations and does not establish a general rule requiring accelerated benefits to be back-dated to the onset of incapacity.

Nicholas Hamilton appealed under section 151 of the Pension Schemes Act 1993 against a determination of the Deputy Pensions Ombudsman. The Ombudsman rejected a claim for an ill-health pension under regulation 27 of the Local Government Pension Scheme Regulations 1997, finding that Hamilton’s fixed-term employment had ended naturally rather than because of permanent incapacity. He accepted, under regulation 31, that Hamilton could elect for early payment of deferred benefits, but held that payment could not precede the later of the election and the onset of permanent incapacity.

Hamilton challenged both conclusions. He relied on Spreadborough v Wandsworth LBC, where retrospective medical evidence had been considered in relation to earlier regulations. The central issues were whether the Ombudsman had made an error of law in relation to regulation 27, and whether regulation 31 permitted payment from a date before the election.

1. Regulation 27. The appeal on the regulation 27 issue was rejected. The statutory condition required the member to leave employment by reason of permanent incapacity. The Ombudsman’s finding that the fixed-term contract ended naturally was a finding of fact. The absence of consideration for ill-health retirement, the failure by Hamilton to raise the issue at the time, and the absence of contemporaneous medical evidence supported that conclusion. The Ombudsman’s reference to the contract not being renewed because Hamilton did not return to work did not create a legally inconsistent finding. No error of law was established.

2. Regulation 31. The Ombudsman’s construction was correct. Regulation 31 creates no automatic entitlement to immediate payment. The entitlement arises when the member makes an election, and the word “immediately” means without intervening delay after that election. It does not mean payment from an earlier date.

3. Retrospective diagnosis. A retrospective diagnosis may establish the date on which permanent incapacity arose. It does not permit payment under regulation 31 before the date of election. Benefits were therefore payable from the later of the election and the onset of permanent incapacity.

4. Spreadborough v Wandsworth LBC. The decision concerned regulation D11 of the Local Government Pension Scheme Regulations 1995. That provision operated automatically and expressly identified the appropriate payment date, so the reasoning concerning payment from the actual date of incapacity was correct in that statutory context. It did not establish a general principle applicable to every statutory or contractual scheme for accelerated ill-health benefits.

5. The appeal was dismissed. Hamilton was entitled to benefits under regulation 31 only from the date of his election, subject to the permanent-incapacity requirement.

• High Court (Chancery Division): appeal under section 151 of the Pension Schemes Act 1993 against the Deputy Pensions Ombudsman’s determination dated 11 August 2008. The appeal was dismissed.