The judge found that the cut-off date, for limitation purposes, for the recovery of overpayments should be the date on which TPO received the scheme’s “Reply” to Mr Webber’s complaint.
The Limitation Act 1980 provides timescales by which a legal action must have commenced where a breach of law has occurred. Ordinary breaches of contract, and actions to recover sums recoverable under statute, are actionable for six years after the cause of action accrues.
Where the action is for relief from the consequences of a mistake, the period of limitation does not begin to run until the claimant has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
Mr Webber had been involved in a long running dispute with the Teachers’ Pension Scheme (“the Scheme”) regarding overpayments, which involved several referrals to TPO as well as two appeals to the High Court.
Having retired early from the Scheme, Mr Webber started teaching again in 2001. The Scheme provided that if a retired teacher started working again and their salary exceeded a certain threshold, the pension would be reduced. Teachers were relied upon to inform the Scheme of increases in their salary. Mr Webber made a notification in his first year of re-employment, but not in subsequent years.
The Scheme only discovered the facts and sought recovery of overpayments from Mr Webber in November 2009. Following the final decision under the Scheme’s IDRP, Mr Webber made an application to TPO which was accepted for investigation in November 2011.
The Deputy PO rejected his complaint, finding that Mr Webber had “turned a blind eye” to the overpayment. She also rejected his change of position defence, and his argument that the claim for recovery of the overpayment was time-barred.
Mr Justice Nugee found that the Scheme ought reasonably to have discovered the overpayment from information available during the tax year 2002/2003, and so that the limitation period for a claim to recover the whole of the overpayment was six years from that date. As the Scheme had not claimed within six years, it was only entitled to recover overpayments going back six years from the “cut-off date”.
The judge referred the case back to TPO in order to decide what the “cut-off date” was and what amount of overpayments could be recovered. The judge provided guidance suggesting the relevant date ought to be the date Mr Webber made his complaint to TPO.
Second TPO Determination
TPO decided that the cut-off date could not be the date on which the member complained to TPO. If this were the case a member could simply delay bringing their complaint to TPO in order to limit a scheme’s ability to recover the overpayment. An appropriate cut-off date would be the date closest to the Scheme’s demand for payment from Mr Webber.
This meant that time would stop running for limitation purposes on 24 November 2009. Therefore the Scheme could recover six years of overpayments from Mr Webber prior to 24 November 2009.
The judge agreed with TPO that the closest analogy to the issue of a claim form had to be a step in the complaint procedure. However, he did not agree that Mr Webber’s bringing of the complaint constituted the relevant step.
As TPO had commented in the second determination, “if the date of the complaint form were the relevant cut-off date then an overpaid pensioner could simply delay bringing a complaint to [TPO] in order to maximise his limitation defence”.
While the judge agreed that it would appear to be contrary to the purpose of TPO (cheap and speedy resolution of disputes) if pension trustees were forced to protect themselves by issuing court proceedings over all pension overpayments, whatever their value, he nevertheless did not agree that the date on which Mr Webber complained to TPO about the Trustees’ actions could be classed as analogous to the date on which the Trustees brought a claim for recovery of the overpayment.
Case law indicates that the expiry of a limitation period is generally fixed by reference to an action by the claimant (in this case, Teachers’ Pensions). In the context of this PO claim, the first “unilateral” activity of the claimant was its response to Mr Webber’s PO complaint. At this point Teachers’ Pensions asserted their entitlement to repayment of the overpaid pension.
The High Court disagreed with this assessment and concluded that the cut-off date for limitation purposes was the date on which TPO received Teacher’s Pensions’ letter of response to Mr Webber’s complaint on 19 December 2011.
While Mr Webber’s appeal was allowed, the judge was unable to draft an Order as:
Finally, TPO had not identified any figure for the quantum of overpayments repayable by Mr Webber if his (November) date was agreed by the parties to be the cut-off date for limitation purposes.
Reluctant to remit the matter back to TPO yet again, the judge declared that, if the parties were able to agree on dates and figures then he would require submissions on the form which his Order should take. He also “echoed” TPO’s expectation that the parties would now enter into sensible discussions about how the money should be repaid and, in the circumstances, hoped that “Teachers’ Pensions would take a highly charitable view of any modest but sensible repayment programme put forward by Mr Webber”.
This case potentially creates difficulties for trustees dealing with overpayments. The limitation date settled upon by the High Court is, to a large extent, outside the Trustees’ control as a member can delay making a complaint to TPO until three years after he or she is aware of the overpayment, thus potentially limiting to three years the extent of the recovery. Trustees’ only protection against such slippage may be to make a formal legal claim against the member, which some trustees may feel uncomfortable in doing.
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