The long history of the dispute in Webber v Department for Education started back in November 2009, when the administrator of Teachers' Pension Scheme (TP) wrote to the claimant asking him to pay back some £40,000 of overpaid pension instalments going back to 2002. The claimant complained to the Pensions Ombudsman about the attempted recovery by TP.

What had happened was that the claimant had taken early retirement and then been re-employed a few years later. He did tell TP that he had been re-employed, but didn’t tell them about subsequent salary increases that should have resulted in a reduction in his pension.

The claimant failed to persuade the Pensions Ombudsman that he had changed his position in reliance on the incorrect payment (and therefore did not have to repay) but he also argued that TP's repayment claim was out of time. If TP had tried to recover the overpayments in court, then under the Limitation Act they would have been subject to a six year "limitation period" for overpayments, running from the date it discovered (or should have discovered) the mistake and stopping when it issued a claim. The claimant would have a defence to recovery of overpayments more than six years prior to this "cut-off date". The problem was that TP had not issued a claim – it was responding to the claimant's maladministration complaint. So in 2014 the High Court had to decide on the cut-off date – what was the equivalent, in the Ombudsman's procedure, to issuing a claim in the courts?

The High Court found that TP could, with reasonable diligence, have discovered the mistake in 2002/03 and this meant time started running then. As for the cut-off date, the High Court suggested this might be the date of the complaint to the Ombudsman in April 2011 but left it to the parties to agree, which they were unable to do. So back it went to the Ombudsman who decided that the cut-off date was when TP demanded payment in November 2009 – this meant the claimant would have to repay nearly all the overpayments.

The High Court has now allowed the claimant's appeal against that decision and selected a third option for the back calculation – the date of receipt by the Ombudsman of TP's letter in December 2011 opposing the complaint. The Court decided that this was TP's first unilateral assertion of its entitlement to repayment – the closest analogy to bringing an action in the courts.

Comments & Actions

  • Although strictly the Limitation Act does not apply to the Ombudsman, it has to act in accordance with legal principles and give effect to a valid limitation defence. However, it is clearly not a satisfactory position for trustees to have to issue claims to protect their position – that would defeat the object of having internal dispute resolution procedures and the Ombudsman's jurisdiction. Unsurprisingly, therefore, the Ombudsman issued a statement after the case saying it is going to review its procedures for dealing with overpayments.
  • The High Court did not make an order, leaving it for the parties to agree on dates and figures. If there is no agreement, then the case will go back to the Ombudsman (for the fourth time) to decide. The High Court did say it hoped TP would take "a highly charitable view of any modest but sensible repayment programme" suggested by the claimant.
  • If trustees become aware that overpayments have been made, clearly they need to consider what steps to take to stop time running if the dispute becomes protracted. It may be better in some circumstances to think about reducing future instalments of pension (if possible) rather than asking for repayment – the limitation rules would not then apply.
  • The case also demonstrates that limitation periods are often very complex – but can provide a very useful way of disposing of a claim.