The London Borough of Enfield v Jossa

Regulation 74 of the Local Government Pension Scheme (Administration) Regulations 2008 permits recovery or retention of pension benefits only where the member left employment in consequence of the relevant criminal, negligent or fraudulent conduct. The court cannot replace that causative requirement with a hypothetical inquiry into whether the employee would have been dismissed if the misconduct had been discovered earlier.

An apparently anomalous or unjust result does not justify implying words into legislation. Such an implication requires a necessary consequence of the enacted language, not merely a reasonable or desirable alternative. The principle that a person should not benefit from his own wrong has limited force where the provision itself deliberately defines the circumstances in which misconduct gives rise to set-off.

Mr Jossa, a former senior employee of the London Borough of Enfield, fraudulently diverted payments from his employer and was later convicted. His employment had nevertheless ended by redundancy before the fraud was discovered.

Enfield sought to recover or retain pension benefits under regulation 74 of the Local Government Pension Scheme (Administration) Regulations 2008. The Pensions Ombudsman decided that the regulation required the misconduct to have caused the termination of employment and therefore did not apply. Enfield appealed, arguing that the regulation should extend to misconduct which would have caused dismissal had it been discovered earlier. The central issue was the proper construction of the causative requirement.

1. Appeal dismissed. Regulation 74 required the former member to have left employment in consequence of the criminal, negligent or fraudulent act or omission. Mr Jossa’s redundancy did not satisfy that requirement.
2. The court rejected the submission that the regulation should be read as including misconduct which would have caused termination if discovered in time. The wording was clear and precise. The repeated use of a causative requirement in regulations 72, 74, 75 and 76 reinforced the conclusion that it was deliberate.
3. The apparent anomaly did not justify an implied term. Applying the approach in Duport Steels v Sirs [1980] 1 WLR 142, the court could not substitute its view of a preferable outcome for the enacted language. The principle concerning necessary implication, stated in R (Morgan Grenfell) v Special Commissioner [2003] 1 AC 563 at [45], required the implication to follow necessarily from the express provisions, rather than merely being sensible or reasonable.
4. The public-policy authorities, including Welwyn Hatfield BC v Secretary of State [2011] 2 AC 304, did not assist. Those cases concerned statutory benefits for which fraudulent conduct prevented qualification. Regulation 74 itself addressed the consequences of misconduct and deliberately drew the boundary of the set-off. The nexus between the concealment and avoidance of set-off was too tenuous to justify altering the text.
5. The reasoning in IRC v Hinchy [1960] AC 748 confirmed that unjust consequences cannot displace words which are incapable of bearing the proposed narrower construction. The order of the Pensions Ombudsman was upheld.

• High Court (Chancery Division): Appeal from the Pensions Ombudsman’s decision dated 28 March 2017. The appeal was dismissed.