(PO-8094, 2 February 2016): Webber v Teachers’ Pension Scheme. The six-year limitation period in relation to actions to recover pension overpayments is stopped when recovery of overpayments is first sought.
Mr Webber was a teacher and member of the Teachers’ Pension Scheme (“TPS”). Having taken early retirement April 1997 he was subsequently re-employed as a teacher on a full-time basis completing a further period of pensionable service in the TPS between September 2001 and August 2010. Mr Webber was required to complete a certificate of re-employment in each tax year if he received an increase in salary; however, he only submitted one of these to the scheme administrator when he first returned to work in 2001.
In each tax year between 2002/3 to 2008/9 Mr Webber’s earnings and pension had exceeded his index-linked salary of reference and in November 2009 TPS wrote to Mr Webber to recover the overpayments.
First Complaint to the Ombudsman
Mr Webber complained to the Pensions Ombudsman regarding TPS’s attempts to recover the overpayment claiming he had changed his position in reliance on the overpayments.
The Deputy Pensions Ombudsman (“DPO”) at the time, rejected his change of position defence and ruled he should have been aware he needed to complete a certificate of re-employment in each tax year he received an increased salary.
First Appeal to the High Court
In November 2012, on appeal Asplin J upheld Mr Webber’s appeal and remitted the matter to the DPO with the following questions:
- Whether Mr Webber was aware he had been overpaid and if so, on what grounds;
- Whether Mr Webber ought to have been aware he had been overpaid and if so, on what grounds; and
- Whether each element of alleged expenditure to his detriment would have been incurred in any event and/or was a detriment and in each case giving reasons.
Second Determination by the DPO
The DPO again rejected Mr Webber’s defences on the following grounds:
- In the case of much of his expenditure, she ruled he was aware or ought to have been aware of the overpayment and so could not rely on the change of position defence.
- Mr Webber’s argument that TPS’s claim was statute barred under section 32 Limitation Act 1980 was also rejected as the DPO believed TPS had acted reasonably and could not have discovered the mistake any earlier.
Second Appeal to the High Court
In December 2014, the High Court again dismissed Mr Webber’s appeal in relation to his change of position defence. However, his appeal was upheld, in part, by Mr Justice Nugee in relation to the limitation period.
Mr Justice Nugee held it should have been apparent to the TPS when they wrote to Mr Webber in 2001 that he would exceed his earnings limit in that year; the person who calculated his salary for the 2001/2002 year over a 7 month period had the information available and should have noticed that if Mr Webber continued in the same employment the following tax year he would exceed his earnings limit.
Therefore he held that the limitation period started to run as soon the TPS started making overpayments, which would have been at some point in the 2002/03 tax year. Further, TPS could not recover overpayments made more than six years before the relevant date when the limitation period is regarded as having stopped (“the cut-off date”).
The Third DPO Determination
As the parties were unable to agree on the cut off date and therefore the overpayment amount due, the matter was again referred to the DPO for determination.
The Department for Education, on behalf of TPS, argued the cut-off date was 24 November 2009, which was when the TPS sent its letter to Mr Webber informing him overpayments had been made and giving a detailed breakdown of the overpaid amounts.
Mr Webber argued the cut-off date should be when the case was formally accepted by the Pensions Ombudsman, namely the 26 November 2011. Mr Webber also made the following alternative suggestions for the cut-off date:
- It should be the 29 June 2012 when Mr Webber made an application to appeal the first DPO determination; or
- It should be the date when the Limitation Act 1980 was first appealed and first accepted by the High Court e.g. the date of the second DPO determination.
Mr Justice Nugee suggested the cut-off date was likely to be the formal bringing of the complaint by Mr Webber to the Ombudsman, as this was the most comparable point to the issuing of a claim form.
However, the DPO decided that Mr Justice Nugee’s view was only provisional and the position had not been fully considered nor had submissions been heard on the issue. As the Pensions Ombudsman Service is unable to accept a complaint for investigation which has not triggered an internal dispute resolution procedure; the DPO determined it could not be right that engaging in the statutory procedure should delay the relevant cut-off date to when Mr Webber’s complaint was brought to the office of the DPO.
As in this instance the TPS sought a restitutionary remedy and Mr Webber was merely seeking to halt TPS’s attempts to recover the overpayment; the applicable date was the date closest to when the TPS demanded payment from Mr Webber as this is when the TPS made its claim.
It was therefore determined that the demand for repayment on the 24 November 2009 was the date most analogous to court action and this stopped time running for limitation proposes. The TPS was able to recover six years of overpayments from Mr Webber prior to 24 November 2009.
Should this determination be appealed, it will be interesting to see if the High Court reverses the decision.