City and County of Swansea v Johnson 1

Reference: (1999) PLR 187

A scheme member worked for a local authority and took early retirement at age 56. He was entitled to and received a pension and lump sum. He also took further employment. He later received state sickness benefit, claimed that his asbestosis resulted from his local authority employment, and sought an injury allowance from his former employer which was denied at first on the grounds he was not eligible. Later, an allowance of GBP 50 a year was paid but the employer refused to backdate it or calculate differently.

The Ombudsman upheld the member's complaint and ordered back-payment of the injury allowance, interest and GBP 5,000 for pain and suffering.

The local authority appealed to the High Court on the grounds that the Pensions Ombudsman had no jurisdiction in injury allowances, that his findings were not based on evidence, that he had breached the rules of natural justice and that the directions were not sustainable as a matter of law.

The Court held the Pensions Ombudsman was wrong to require the local authority to reconsider the award "in order to meet the complainant's legitimate expectations". In principle, a token award of GBP 50 was not unreasonable, if the authority took the view that a person was entitled to a payment in principle, but the circumstances did not justify the payment of a substantial amount. The Ombudsman did have jurisdiction over injury allowance arrangements under the Local Government Superannuation Regulations as they fell within the wide definition of occupational pension schemes for this purpose.

However, the Ombudsman had no evidence in this case to conclude that the complainant's employment had been terminated by reason of illness rather than redundancy, so this constituted an error of law entitling the court to intervene. This question was remitted to the Ombudsman. Furthermore, in the absence of very exceptional circumstances, the Ombudsman should not make an award in excess of GBP 1,000 as damages for distress - the original award having been GBP 5,000.