The Court has delivered its judgment in Batt, an appeal against the Deputy Pensions Ombudsman's decision on an ill-health matter. The Court held that the Deputy Pensions Ombudsman had not erred in law and that the procedural irregularities were of little consequence as they could not be shown to undermine the reliability of the final outcome.

Background

The case involved the Royal Mail's pension scheme. The rules of the Royal Mail's pension scheme applicable to Mr Batt at the time provided for a member with at least ten years reckonable service to receive an immediate enhanced pension if he or she is "retired by the Employer before normal retiring age through Incapacity". Incapacity is defined as:

"Serious physical or mental ill-health (not simply a decline in energy or ability) such that, in the opinion of the Employer, the Member is permanently incapable of:

  1. carrying out his current duties;
  1. carrying out such other duties for the Employer as the Employer might reasonably expect the Member to perform; and
  1. engaging in employment with any other employer of a type which, in the opinion of his present Employer would be reasonable and appropriate for the Member."

The terms of a "National Ill-health Retirement Agreement" between the Royal Mail and the employees' unions makes further provision for "Retirement on ill-health grounds with a lump sum payment". This is defined as:

"Cessation of employment as a result of serious physical or mental ill-health (not simply a decline in energy or ability) such that, in the opinion of the Royal Mail Group or associated employer (whichever is the employer), the employee is, for the foreseeable future, incapable of:

  1. carrying out his current duties;
  1. carrying out such other duties for the employers as the employer might reasonably expect the employee to perform."

The same agreement provides that "permanent incapacity" shall be taken to mean incapacity lasting until normal retirement age or for at least ten years from the date of the relevant medical opinion. The phrase "foreseeable future" in the provisions about retirement on ill-health grounds means a period of at least nine months from the date of the relevant medical opinion. Mr Justice Briggs referred to the two tests as "incapacity" and "ill-health" respectively. It was noted that the incapacity test presented a formidable obstacle to a candidate employee because of the potentially lengthy period for which incapacity must be established and due to the requirement that the employee should be incapacitated from engaging in employment with any other employer, rather than merely in further employment with Royal Mail.

At all stages of the process which Royal Mail applied for the purpose of forming an opinion as to the level of Mr Batt's disability, it was concluded that he satisfied the ill-health test but not the incapacity test. Consequently, Mr Batt was awarded a lump sum benefit rather than an immediate enhanced pension.

Mr Batt's complaint was that if the combined effect of his various physical and mental ailments had been properly assessed by Royal Mail, he would have been found to have satisfied the incapacity test, and that its failure to do so arose from a succession of irregularities in the process (referring him on his initial appeal back to Dr Manickarajah; for his case then to be reviewed by Dr Swales without a personal interview; the Royal Mail's refusal to give him further time to obtain a psychiatric report before his first appeal; that the Royal Mail had been wrong to withhold Mr Bates' December 2006 report from the independent board; and that the Royal Mail should have commissioned its own psychiatric report) which the Ombudsman ought to have identified as maladministration.

The Facts

Mr Batt commenced employment with the Royal Mail in February 1991. By 2005 he was working as a post delivery person and by 2006 he was suffering from a combination of ailments including, the loss of the tips of three fingers, the after-effects of a ruptured bicep, deteriorating eyesight and depression. Mr Batt had gone on long-term sick leave in August 2005 and a brief return to work in January 2006 was followed by further sick leave beginning in February 2006.

The Royal Mail's procedures for decision-making about an employee's eligibility for a lump sum or disability pension involve a number of stages. The first is referral to the Employee Health Service ("EHS"), leading to a decision by management based on EHS's advice, followed by a two-stage appeal process. The first stage consists of a reference back to the EHS and the second of a referral to an independent medical board of two medical specialists drawn from outside the Royal Mail.

The Board's opinion, in agreement with Doctors Manickarajah and Swales, was that the combined effect of Mr Batt's physical and psychiatric ailments, was that, while he satisfied the ill-health test, there was no evidence that he was permanently incapacitated within the meaning of the incapacity test.

The Deputy Ombudsman's Decision

The Deputy Ombudsman's analysis may be summarised as follows:

  1. It was for the Royal Mail to decide whether Mr Batt satisfied the incapacity test, for which purpose it was obliged to take into account all relevant matters but no irrelevant ones, to interpret the rules correctly, to ask the right questions, and to reach a decision which could not be criticised as perverse.
  1. Royal Mail's decision-making process satisfied those requirements.
  1. Royal Mail was entitled reasonably to rely upon advice received from its own medical advisers, and from the independent medical board. In the event of a difference between those advisers and Mr Batt's medical advice, Royal Mail were entitled, after weighing up all the advice of their own doctors in the absence of strong reasons to the contrary.
  1. Although there were errors of detail in the reports produced by the Royal Mail's advisers they were immaterial, in the sense that, if corrected, they would not have led to a different conclusion on the balance of the probabilities.
  1. None of the Royal Mail's advisers (including for that purpose the independent board) had failed to consider all Mr Batt's relevant medical conditions.
  1. It could not be shown that the independent board's advice was vitiated by any failure to obtain or consider the written advice of other doctors who had examined Mr Batt. In particular it was for Board to decide whether to rely upon the reports of others or (as they did) to conduct their own psychiatric examination of Mr Batt, in particular because one of them was himself a consultant psychiatrist.

Decision of the High Court

In the judgment it was held that none of Mr Batt's criticisms, taken on their own or in the aggregate, disclose any error of law on the part of the Deputy Ombudsman. Further, Mr Justice Briggs said:

"...procedural irregularities committed at an early stage in a process leading to an appeal by an independent medical board are of little consequence unless in some way they can be shown to have undermined the reliability of the medical board's opinion (18.) ... It is apparent from the papers before the Court that by January 2008 Mr Batt had been interviewed or examined, or his case papers considered, and had been reported upon, by no less than none doctors, including two GPs, three occupational specialists, two consultant ophthalmic surgeons and two consultant psychiatrists. In none of their reports (to the extent available to the court) is there any evidence that would have justified a conclusion that Mr Batt was at the relevant time permanently incapacitated from work within the meaning of the incapacity test.(24)"

Accordingly, the combined effect of all the written medical opinions was that Mr Batt did not satisfy the incapacity test and therefore his appeal was dismissed.

Comment

Despite procedural irregularities at an early stage of the employer's ill-health assessment, such irregularities did not constitute maladministration in this particular case as they could not be shown to undermine the reliability of the final outcome as there was no evidence before the court to show that Mr Batt satisfied the incapacity test.

Ill-health assessment procedures are in place for a reason and they should be followed by both employers and trustees (as the case may be) when considering applications for ill-health pensions. In this set of facts, Mr Batt did not satisfy the incapacity test and as such the procedural irregularities did not prejudice the final outcome of the case. It is worth noting that the Pensions Ombudsman and Pension Protection Fund Ombudsman Annual Report and Accounts for 2010/11 highlights that ill-health pension complaints have always been a source of complaint as they "involve an extra set of emotional, financial and medical uncertainties plus difficult judgments to be made and significant costs to the schemes". Moreover, the Annual Report states that ill-health pension complaints were the second highest category of closed complaints (110 cases for 2010/11) and therefore care should be exercised and assessment procedures should be adhered to when considering applications for ill-health pensions to avoid any criticisms or official complaints from being made.