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England and Wales High Court (Administrative Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> British Gurkha Welfare Society & Ors v Ministry of Defence [2010] EWHC 3 (Admin) (11 January 2010) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2010/3.html Cite as: [2010] EWHC 3 (Admin) |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| BRITISH GURKHA WELFARE SOCIETY & OTHERS |
Claimant |
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| - and - |
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| MINISTRY OF DEFENCE |
Defendant |
____________________
Claimant
Mr. R. Singh QC and Mr. Grodzinski (instructed by Treasury Solicitor) for the Defendant
Hearing dates: 27th and 28th October 2009
____________________
Crown Copyright ©
Mr. Justice Burnett:
Introduction
i) The decision that Gurkhas who retired prior to 1 July 1997 are not entitled to transfer their pension rights under the GPS into the AFPS, thereby denying them the right to enhance their existing pensions. The second claimant retired in February 1997 after 15 years' service and thus has been unable to enhance any of his pension rights;
ii) The decision for those Gurkhas who retired after 1 July 1997 and therefore can transfer their pension rights into the AFPS that the service before that date does not rank on a year for year basis but rather on an actuarial basis. The third claimant retired in July 2002 and thus falls into the category of ex-Gurkha who was able to transfer his pre-July 1997 accrued pension only on an actuarial basis.
The complaint in respect of both groups is that the MoD failed to equalise pension entitlement in respect of periods of service before 1 July 1997 as well as after.
Background Facts
"[The rule change] in train created the probability that the wife and children of a Gurkha with ILR/E would also obtain leave in line with that granted to the Gurkha. The [rule] change was in its terms retrospective. About 90% of the 2230 eligible Gurkhas discharged after 1st July 1997 have taken advantage of that provision, along with their qualifying dependants."
"6. In January 2005, the Secretary of State for Defence announced a review of the Gurkha TACOS. Mr Hoon said:
"As the House will be aware, our policy is to keep the Brigade of Gurkhas' terms and conditions of service under review, to ensure that they are fair and that any differences from the wider Army are reasonable and justifiable. We are also aware of our historic relationship and understandings with the Governments of Nepal and India, which have enabled Gurkhas to serve in the British Army since 1947.
Gurkha soldiers have spent an increasing proportion of their time in UK since withdrawal from Hong Kong in 1997, and successive amendments to the conditions under which they serve have recognised their changing role, status and personal aspirations. The most recent of these was their inclusion in the new HM forces immigration rule, which took effect from 25 October 2004. This has potentially far-reaching effects on the way we recruit and manage the brigade and care for its serving members, families and veterans. In addition, some public criticism and unease continues about the remaining differences between Gurkhas' terms and conditions and those of the wider Army. We are, therefore, anxious to ensure that such differences are absolutely justifiable as well as fully understood and accepted by our Gurkha soldiers and want to ensure that the MOD's position, both legally and morally, is beyond reproach.
I have therefore directed that the MOD should carry out a wide-ranging review of all Gurkha terms and conditions of service. This will be an extensive piece of work and we will endeavour to take account of the views of all those with a legitimate interest. This new review will build on earlier findings, including work to date on the review of Gurkha married accompanied service (MAS), but its scope will be much wider and it is aiming to complete in late autumn 2005."
7. Before publication of the results of that review, the results were announced of the earlier review into the differences between British Gurkhas and the rest of the British Army in the availability of Married Accompanied Service, an increasingly troublesome issue as the Brigade of Gurkhas was now based in the UK. With effect from 1st April 2006 MAS was allowed to those who had served 3 years in the Brigade, so that serving Gurkhas were entitled to be joined in the UK by wives and children. ...
8. In December 2006, the MoD published the results of the wider TACOS review. The context of the Review was the new Immigration Rules and the changes to MAS which:
"changed the traditional assumption that British Gurkhas would retire in Nepal, and pointed to a future in which Gurkhas could be expected increasingly to regard the UK, rather than Nepal, as their family base. In addition it was clear that the remaining differences between Gurkha terms and conditions of service and those applied to the rest of the Army were increasingly open to legal challenge"
9. Its overall conclusions were:
"The Review Team concluded that, the affordability issues notwithstanding, the major differences in Gurkha terms and conditions of service could no longer be justified on legal or moral grounds and recommended that they be modernised by bringing them largely into line with those available to the wider Army. However the Review Team also concluded that some differences should be retained on the grounds of maintaining the Brigade's military capability and to satisfy the Government of Nepal."
10. Although many aspects of service were reviewed, crucial to this case is what was said about pensions. Chapter 10 of the Report said that pension arrangements, together with the length of service provisions of the Brigade of Gurkhas, represented the most significant differences between the Gurkha TACOS and the rest of the British Army TACOS: these were "complex and unprecedented" but the changes (to which I have referred above) made "radical reconsideration inevitable". The previous assumption of retirement in Nepal, which was the general basis for the decision in Purja that these differences had been lawful, had been replaced by an entitlement to live in the UK after retirement and to obtain employment.
11. ….
12. The quite elaborate consultation process with the Gurkhas about changes to pension arrangements led to a clear view that they preferred the AFPS 2005[1] although for some the GPS had particular advantages. ...
13. The discussion in the report ended:
"On balance, then, the GPS was clearly more suitable than AFPS to support the "life-cycle" of the great majority of Gurkhas up until July 1997. However, UK basing for BG and HMFIR changed the previously valid assumption of retirement in Nepal. For a Gurkha retiring to a second career in UK, the GPS profile is clearly wrong, paying sums too small to be useful at a time when he does not need them and an inadequate pension at retirement age. As the life profile of the typical Gurkha approaches that of his UK/Commonwealth counterpart, there can be little to be said in favour of providing them with such different pension benefit profiles"
14. It concluded:
"Pensions have proved to be an extremely complex area. The GPS has evolved since 1948 to meet the changing needs of BG as and when they were recognised. It remained, until recently, decidedly more "fit for purpose" than AFPS but the rules are complicated and arcane. It has been maintained largely on a piecemeal basis and (with scarce exceptions such as its arrangements for Gurkha DE officers) on the assumption that Gurkha and UK TACOS would never have to converge. Whilst the Review Team's vision for the future of Gurkha pensions is now clear and summarised in the following recommendations, there is no doubt that their development and implementation will reveal a myriad of transitional anomalies that will need time and substantial and skilled staff resources to resolve."
15. The report recommended, put shortly, that serving and retired members of the Brigade of Gurkhas should be enabled to transfer from the GPS to either AFPS 1975 or 2005, depending on when they enlisted. Those who were already in the GPS and wished to remain in it could do so but it would be closed with effect from April 2006, in effect for the 2006 recruit intake which attested in December of that year.
16. The transfer options were put to the Gurkhas for their individual decision, with the aid of illustrations and advice in what was known as the Gurkha Offer to Transfer or the GOTT, which was announced by Mr Twigg, Parliamentary Under Secretary of State at the MoD in March 2007. The decision to make the offer in the terms in which it was made is the subject of these proceedings.
17. The GOTT reflected the recommendations of the Review Report. It applied to all Gurkhas who retired or were serving on or after 1st July 1997. Those who wished to stay in the GPS for the advantages which it offered them could do so. They could transfer to the AFPS on this basis: their accrued pension based on service in the Brigade of Gurkhas after 1st July 1997 would transfer into the AFPS scheme on a Year for Year credit. This would have the effect of raising their accrued pension benefits, bringing their pot into line with what the rest of the British Army had accrued for that period, as if they had been members of the AFPS from 1st July 1997. ...
18. For the years of service before 1st July 1997, the value of the Gurkha Pension rights would be valued actuarially and the whole of that value would be transferred in to the AFPS, as a pension credit. However, for those years before 1st July 1997, as the total value of a year's pension in the GPS at Gurkha pensionable pay, was rather less than the total value of a year's pension in the AFPS at the then rest of the British Army pensionable rates of pay, 100% of its value in the GPS would be considerably less than 100% of the same year in the AFPS for the rest of the British Army. ...
19. ...
20. The transition from the GPS to the AFPS for those opting to transfer who were already in receipt of a pension under the GPS would not deprive them of their existing GPS pension, which would already be in payment. Very few would have been in a position to claim either the Immediate Pension after 22 years under the AFPS 1975 or the Early Departure Payments after 18 years under the 2005 AFPS, because they would not have had enough years of service. Transfer to the relevant AFPS would occur at 60 or 65, when they would receive the preserved pension. However, because they would have been in receipt of the GPS pension from normally about age 33, the capital value of the pension pot at retirement age would be reduced by the payments received under the GPS up to that date. This could mean that there would be no increase in pension at retirement age under the AFPS. But by comparison a soldier retired from the rest of the British Army might have been in receipt of nothing for what could be as long as 27 years during the whole of which a Gurkha could have been in receipt of pension under the GPS.
21. The GOTT was given statutory effect in the Armed Forces (Gurkha Pension) Order 2007 SI 2007/2608 in force on 1st October 2007. It includes the actuarial percentages of the value in the AFPS of transfer from the GPS for the years not transferred on a Year for Year basis, for different ranks. Those years, transferred on the basis of actuarial valuation, are at the heart of this case. ...
22. The decision date for serving Gurkhas was 30th September 2007, the day before the Order came into force. There appears to have been a clear consultation and information process for the Gurkhas as to what the best option for them individually would be. The MoD's evidence was that all 3400 serving Gurkhas made a positive election and nearly all chose the AFPS; only 10 stayed in the GPS. 90% were eligible for transfer to the AFPS 1975. Of the 2230 eligible retired Gurkhas, 73% made a positive election, with most choosing AFPS 1975, as that was the scheme for which they were eligible. Only 65 made a positive choice to stay in the GPS. If no positive election were made, the retired Gurkhas would stay in the GPS.
23. The position of the 3 Claimants here is as follows: Mr Shrestha enlisted in 1987 and after 20 years was discharged as a Staff Sergeant in March 2007. He opted for the AFPS 05 and the value of his 10.5 GPS years service before 1st July 1997 was transferred to the AFPS at either 26% of 29% of the AFPS value. As Mr Davies puts it, a little tendentiously perhaps, that treated 4 years of actual Gurkha service as equivalent to 1 year's service by the rest of the British Army or 1 year's service by a Gurkha after 1st July 1997. Mr Purja, a Rifleman throughout, enlisted in 1989 and was discharged in December 2006. He opted for AFPS 1975. His 8 years GPS service before 1st July 1997 were transferred at 40% of the AFPS value. Mr Gurung served 20 years as a Rifleman before discharge in January 2007. He made no positive option and so stayed in the GPS. Had he opted for the AFPS, his 10.5 years before 1st July 1997 would also have been transferred at 36%. 70% of Gurkhas retire as Riflemen or Lance Corporals.
24. Although there are some distinct features about each of these cases, including the unusual length of service and their medical discharge, the complaint which they make is a simple one and would in principle be applicable to all those who had years of service transferred in to the AFPS on a less than Year for Year basis. For those post 1st July 1997 years, 100% of the GPS value, albeit only 36% of the AFPS value, was transferred as 100% of the AFPS; that is the effect of the Year for Year transfer. The Claimants contended, and it is at the heart of the case, that that should have been the basis of transfer for all their years of service, including those before 1st July 1997 or 1st October 1993. If all the years of service had been transferred on a Year for Year basis, and not just the years after 1st July 1997, or 1st October 1993 in certain cases, their individual pension pot would have been larger on reaching 60 or 65. In general terms, the MoD accepts that that would enlarge the pension pot at retirement, although it cautions against the assumption that that would always increase the pension payable at 60 or 65, because of the effect of the deduction from the retirement pension pot of the amount already received by way of Immediate Pension from age 33 under the GPS. ..."
The Conclusions of Ouseley J in Gurung
"Irrationality
The Judge in his full and careful judgment considered the irrationality argument at length.
His reasoning amply supports his conclusion in para 54 that "the GOTT comes well within the range of responses available to a reasonable decision maker", even without regard to the particular need for caution before making a finding of irrationality in a case of the present kind for the reasons mentioned in para 55.
Discrimination
The selection of 1 July 1997 as the date of the optimal transfer from the GPS to the AFPS Scheme was not irrational and had, of itself, nothing to do with the Gurkhas' ages. The valuation of benefits earned by that date under the GPS was done actuarially. Of course, its effect varied according to the number of years prior service, but that does not make the approach age discriminatory.
The argument was that there was nevertheless indirect age related discrimination. The judge considered whether the effect of the scheme was "disproportionately prejudicial", taking into account the basis of the differentiation between different cases. He concluded that it was not, and I can see no real prospect of a successful appeal against that conclusion".
The application for permission to appeal was not renewed orally.
"54. For present purposes, I accept that flawed logic, more readily shown than a decision which simply defies comprehension, may breach the principle of rationality. That principle also requires a rational connection between the problem to be solved or aim to be advanced and the means chosen to solve the problem or to advance the aim. The GOTT comes well within the range of responses available to a reasonable decision-maker. I also accept that where human rights are interfered with, the greater the scrutiny to which the reason for the interference will be subjected before the Court can be satisfied that the decision is reasonable, ie within the range of responses open to a reasonable decision maker. I shall deal with those rights later when I deal with the next head of arguments.
55. I also accept Mr Singh's more general submission that, as Sir Thomas Bingham MR said in Smith v MoD [1996] QB 517 at 556 A, the greater the policy content of a decision, the more remote the subject matter of a decision from ordinary judicial experience, the more hesitant the Court must be in holding a decision to be irrational. This is especially so in the context of the allocation of public resources, as he also said in R v Cambridgeshire Health Authority ex p B [1995] 1 WLR 989 at 905. This is I accept a case which does involve the allocation of resources, including how far an exception to the principle of non-retrospectivity in public sector pension improvements should go. But all that said, the decision seems to me quite rational without any special tests."
i) The assumption underlying Purja, namely that all Gurkhas retired to Nepal was no longer true. Most Gurkhas who could retire in the United Kingdom would do so. Nepal related cost of living was thus no longer relevant.
ii) A pension with an element calculated actuarially for pre-1997 service would not provide an adequate pension for those who retired here.
iii) Thus to enable a Gurkha to retire in the United Kingdom, the review recognised that changes to pension arrangements would be needed.
iv) The Government accepted the need for year for year transfer as part of those new arrangements and so it was irrational to exclude years before 1997 in circumstances where the aim of the policy was to be legally and morally justifiable.
v) The date of 1 July 1997 was relevant only for operational but not pension purposes. To exclude the earlier periods from year for year transfer was contrary to the rationale of the policy change itself.
vi) The near universal take up by those eligible to retire in the United Kingdom emphasised the necessity of extending the year for year scheme to all service.
vii) Cost (about £170 million) was not put forward as a primary reason for resisting further backdating. In so far as it was relied upon little weight should attach to it.
viii) The undoubted policy of not enhancing public sector pensions with retrospective effect was not in point, because there was an element of retrospective enhancement in the scheme in any event.
i) The combination of the move from Hong Kong and the HMFIR would strengthen ties with the United Kingdom and weaken those with Nepal. The GOTT's fundamental aim was to reflect those changes which, as from 1 July 1997, had altered the assumptions about where Gurhkas would retire. Changes to pension arrangements had to be made.
ii) It was necessary to make transitional arrangements for those already in the GPS who wished to transfer to the AFPS. There were three options:
(a) all on an actuarial basis;(b) all on a year for year basis; or(c) a mixture of the two.iii) Purja had held that the terms of service and pension arrangements which applied before 1 July 1997 were lawful when based upon the previous assumption about where Gurkhas would retire.
iv) The first option (all actuarial) would undervalue service after 1 July 1997, because since then the Gurkhas were being paid at the same rate as others in the British Forces and were based in the United Kingdom. The second option (all year for year) would enhance the pension payable substantially, but on the basis of assumptions that had no place when the pension was earned before 1 July 1997. The third (that adopted) reflected the different assumptions that underlay pay and pensions before and after 1 July 1997.
v) Although that means that years served before 1 July 1997 are valued for pension purposes differently as between Gurhkas and other British Soldiers, Purja had held that the differences were objectively justified.
vi) The distinction drawn at 1 July 1997 reflects the fact that the Gurhkas thereafter became United Kingdom based. Furthermore, it is the retirement date by reference to which the opportunity to settle here became an option. The longer the service after 1997, the greater are the ties to the United Kingdom. Conversely the shorter the service after 1997, the greater are the ties to Nepal.
vii) The policy's aim was not to provide an adequate sum upon which to retire in the United Kingdom. HMFIR gave an option for retirement here. Nepal remains an option and in any event Gurhkas could be expected to find another source of income on retirement.
viii) For the years after 1997 there was an enhancement of the pension package to reflect location in the United Kingdom which turned the additional pay allowance into pensionable pay. It did not follow that the years before 1997 should be enhanced in the same way.
ix) The suggestion that because the Government accepted that the GPS was not fit for purpose after 1997 (in the light of the HMFIR) they should have accepted that it was no longer fit for any purpose was fallacious. The difference reflected where Gurhkas had served and their expectations at the time.
x) The additional costs of £170m or so (in addition to £90m - £120m cost of establishing prior service back to 1 July 1997 on a year for year basis) were not irrelevant. Cost was part of the overall consideration. Costs were a concern.
xi) Whilst the Government could not simply rely on the policy of resisting retrospective improvements in public sector pension arrangements (since they had demonstrated they could do so) there was nonetheless no principle of law, logic or morality that required 'in for a penny, in for a pound.'
xii) Where to draw the line in public expenditure terms calls for an exercise of political judgement and thus may give rise to an appearance of arbitrariness where very similar cases fall either side of a chosen line.
v) The GOTT and the Order only apply to those who retire after 1 July 1997. There is nothing irrational in drawing the line there because of the changes in the home base of the Brigade of Gurhkas, in the HMFIR and hence the expected place of retirement.
xiv) Those who retired before 1 July 1997 would not be confronted with the prospect of colleagues who retired later having secured additional pension entitlement in respect of the same earlier service based (at the time) on the same assumptions. That result would generate a different but stronger irrationality argument in the mouths of those who had retired before 1 July 1997. This was a potential outcome of the judicial review challenge before Ouseley J if year for year transfer were applied to all service for those who retired after 1 July 1997 because, by contrast, the position might be left unchanged for those who had retired before and had no entitlement to come to the United Kingdom.
"72. The groups are not defined by age but by years of service at particular dates. There should be two dates in his definition of the groups because the date at which Year for Year transfer began varied according to the circumstances of a particular group anyway; the groups as formulated by Mr Davies require further adjustment to reflect the years after 1st October 1993. This complicates further the question of status and any age discrimination.
73. Be that as it may, and I do not need to resolve it, this is not a case of direct age discrimination between those two groups and was not argued to be such. Mr Davies contended that there was indirect age related discrimination. I bear in mind what Carnwath LJ said at para 17 in R (Esfandiari and Others) v SSWP [2006] EWCA Civ 282 about the need for caution in the application to Article 14 of the concept of indirect discrimination. Mr Davies submits that in such a case the question formulated by Lord Hoffman in Carson requires a degree of adjustment to reflect that fact. Is the measure employed disproportionately prejudicial to one group compared to the other? Is there enough of a difference between the two groups to justify the effect of the difference in treatment on the impugned ground? Mr Singh submits that the question is still: is there enough of a difference between the two groups to justify differential treatment? They amount to the same test to my mind. Proportionality and justification are obviously relevant to answering the question.
74. There may be differences of view about whether age is or can be a "suspect" ground for discrimination, requiring a more intense scrutiny, or whether "old age", which is not quite the same, can be. But the grounds of differentiation here, not wholly aptly characterised as those of age, are not suspect grounds. The grounds of difference do not arise because someone is above or below a particular age, but because the introduction of changes which are not directly age related are defined by dates, and years of service. The drawing of lines, by reference to dates, around schemes which help some but not others is an inevitable part of many legislative or policy changes; this is the more so where a past disadvantage or even wrong is being remedied retrospectively. Of course, this means that either the older or younger will be affected; the date itself will import an indirect differentiation on age grounds. But that is a weak starting point for an assertion of indirect discrimination on age grounds. In any event, if there is a rational basis for the selection of the date as at which the changes are made, that disposes of the Article 14 challenge.
75. I also accept what Mr Singh says about the ECtHR's approach to Article 14, where the decision is about social and economic policy, particularly those concerned with the equitable distribution of public resources: a generous margin of appreciation is allowed; see Lord Hoffman in R (Hooper) v Secretary of State for Work and Pensions r20051 UKHL 29. r20051 1WLR 1681. Mr Singh referred to the ECtHR, admissibility decision in Neill and Others v UK (App 56721/00) 29 January 2002 which concerned claims by retired army officers that the calculation of widows' service pensions was discriminatory in breach of Article 14 and Article 1, Protocol 1 because of differences arising out of dates of marriage and retirement. The Court said:
"The Court observes that, in making provision for the future payment of service pensions to servicemen and to their widows, national authorities are in principle permitted to set conditions governing entitlement to such pensions and, in particular, to restrict such entitlement to those who are still in service at the time of introduction of the new provisions, and to fix the level of entitlement by reference to the period of service completed following introduction of the relevant provisions."
76. The application was ruled inadmissible. I accept that that supports his contentions.
77. I see no need to repeat here the reasons which I have given for regarding the decision in GOTT, and the Order which gave effect to it, as reasonable and lawful. They apply to this part of the claim as well and show that the dates chosen for the change to Year for Year transfer from actuarial valuation are reasonable, and that the difference which that creates is justified. A line was drawn; that was in itself reasonable, and the particular dates chosen for its drawing are reasonable too. The difference reflects not age in reality but the number of years of service based in the Far East or in the UK. If there was indirect discrimination on the grounds of age or "other status", it was justified and proportionate.
"7. In very brief summary however. Gurkhas were not in an analogous position to the rest of the British Army before 1 July 1997. They were overseas based, in Hong Kong and elsewhere in the Far East, and had little or no opportunity to develop the close physical ties needed to satisfy the immigration regulations. This changed from 1 July when the Gurkhas became UK based. This clear distinction is behind the different treatment of service either side of this date. Service on or after 1 July 1997 was given a year-for-year value in the AFPS, while service before this date was given a value by the scheme actuary broadly the same as the pension benefits earned in the GPS.
8. I should make clear that the MoD wrote to the first and third Claimants in December 2005 to invite their participation in the MoD's review of the Gurkhas Terms and Conditions of Service (the "GTACOS Review"), the background to which I also explain in my earlier statements. That letter made clear the Review would not generally look at the TACOS of those who had retired. However, it also made clear that exceptionally it would consider the arguments for changing the TACOS for those Gurkhas who left the Army on or after 1 July 1997. The Government made this position clear in a Parliamentary debate in the House of Commons on 7 June
2006 when the Minister said:
"As part of the [GTACOS] Review, The Department is looking again at the pension position of Gurkhas back to 1 July 1997, when the Gurkhas first became a UK-based force. We remain of the view that the position of Gurkha veterans discharged prior to 1 July 1997 remains exactly as it was when the judicial review [Purja in 2003] reached its conclusions." (Official Report cols 93-94)
9. The responsible MoD Minister wrote letters to Tikendra Dewan, the third Claimant and Chairman of the British Gurkha Welfare Society (BGWS), the first Claimant, in the first half of to explain the basis of the GOTT. There was also a meeting with the Minister on 28 March 2007. The third Claimant was therefore fully apprised of the Government's position not to include in the Review those who left the Army before 1 July 1997.
10. The fact that Gurkhas who left the Army before July 1997 were not covered by the Review meant, for pensions, that the target group for the GOTT was relatively small: there were 3,400 serving Gurkhas and 2,200 who retired on or after 1 July 1997. There are around 25,000 retired Gurkhas in receipt of GPS pension, so the eligible group of retired Gurkhas was less than 10% of the total group.
11. As far as I know, this was the first time a public sector pension scheme had offered to change the terms on which some of its pensioners had left service. Such an exercise to amend past terms and conditions is fraught with difficulty and is not usually done.
12. The GOTT exercise would of course have been very different if all 25,000 retired Gurkhas, most of whom live in Nepal, had been included. The idea of a GOTT for all retired Gurkhas would have been called into question for two reasons - namely significantly increased cost and the difficulty of communications with retired Gurkhas. I deal with each of these below.
The cost of equalising pensions for all retired Gurkhas
13. The main reason that MoD would not have agreed to give GOTT to all retired Gurkhas, rather than only those who retired on or after 1 July 1997, is because the cost would have been too great. A pre-1 July 1997 retiree would, of course, have been better off only if the terms of the GOTT had been improved to value all their service as equivalent to AFPS. This offer would then have had to be extended to the serving brigade for their service before 1 July 1997. The cost of giving year-for-year to the eligible group for all their service would have increased from around £150m to £320m (see paragraph 46 in JF1). Further, and depending on the assumptions made, for example how far back improved terms were offered, the cost of extending the GOTT in the way described for serving and retired Gurkhas would have run to many hundreds of millions of pounds. It should also be noted that the further back in time any approach is taken the more technically difficult it would be to construct something which is fair to any transferees. These retired Gurkhas would have been drawing their pension over many years. Providing a fair value option is likely to be significantly more complicated than the existingGOTT option which needed to consider only leavers since 1 July 1997."
He went on to explain the nature of the communications operation to convey the proposals. Mr O'Dempsey did not accept the figures provided by Mr Flitton of the additional cost involved in enhancing the pensions of those retired Gurkhas who had transferred into the AFPS to give year for year value to pre-1997 service. Nonetheless he accepted that the cost of enhancing the pensions of all Gurkhas would cost hundreds of millions of pounds.
Purja
"So far as pay is concerned, for so long as they are in an analogous situation to a British soldier whilst they are serving in the United Kingdom or abroad outside Nepal, elementary fairness would suggest that they should receive the same treatment, including the same take home pay. They will be undertaking the same duties in the same circumstances as their British counterparts. Since the introduction of UA in 1997, the TACOS have recognised this. But the position of the ex British soldier and the ex Gurkha soldier on retirement is not analogous. While there will be a few exceptions, the former will have been born in the United Kingdom and will expect to retire in the United Kingdom. He may choose to retire to a more or a less expensive country, but in that respect he would be no different from any other United Kingdom pensioner. By contrast, the Gurkha, born in Nepal and a citizen of Nepal, will retire to Nepal. It would be wholly irrational to fail to have regard to the very different circumstances that exist in Nepal and Great Britain when making provision for pensions on retirement."
He also noted that whilst the claimants before him had originally contended that Gurhkas who were retired in Nepal were entitled to the same pension as all other British soldiers, the argument was refined to a proposition that a retired Gurkha should have an 'equivalent standard of living' in Nepal. That entailed a concession that the cost of living in Nepal was relevant for pension purposes. I mention this concession made by counsel at first instance in Purja because no such concession is made before me. On the contrary Mr O'Dempsey's core proposition is that each and every year of service of a Gurkha should be transferred into the AFPS on a year for year basis. Sullivan J considered that the concession was obviously correctly made. Sullivan J also rejected a bare irrationality challenge to the pension arrangements.
"We are left, therefore, with Mr Blake's core argument that because Gurkhas and British soldiers live and die together in the field, there should be no distinction made between them as to the amenities and benefits of their service. [50]"
"56. Domestic legislation cannot, of course, override the UK's obligations under ECHR. In the final analysis the decision for this court is whether, the 1976 Act notwithstanding, it is unlawful to engage soldiers on two quite different bases, the consequence of which is that in various respects British soldiers enjoy certain advantages over the Nepalese nationals who comprise the Gurkha Brigade.
57. With that thought in mind let me return to Michalak question iii), or rather to Laws LJ's reformulation of that question in Carson: "Are the circumstances of X and Y so similar as to call (in the mind of a rational and fair-minded person) for a positive justification for the less favourable treatment of Y in comparison with X?"
58. If one asks this question in relation to British and Gurkha soldiers' respective pension entitlements I am in full agreement with Sullivan J's conclusion at paragraph 55 of his judgment (see paragraph 25 above). Indeed not only are Gurkhas, as the judge there observed, "leaving the United Kingdom and returning to Nepal, where their pensions will be paid, and conditions in Nepal are markedly different from those in the United Kingdom", but it must be borne in mind too that these pensions are generally payable from a much earlier age. Whether that consideration - that the Gurkhas' pensions become payable immediately after 15 years whereas British soldiers only receive theirs after 22 years or (in 83% of cases) at the age of 60 - is to be regarded as a) demonstrating that the two groups are not "in an analogous or relatively similar situation" or b) providing "reasonable or objective justification" for the distinction between their respective pension rates, or perhaps even c) suggesting that British soldiers are not after all enjoying "preferential treatment" (all these phrases being taken from Stubbings - see paragraph 43 above), seems to me a matter of choice and ultimately immaterial.
59. The question directly raised by article 14 is whether the Gurkhas' pension rights are "secured without discrimination on [the] ground [of] national ... origin", which to my mind translates into the question whether, in regard to their pension rights, they have been unjustifiably less well treated than others because of their being Nepalese.
60. It can of course be said that it is only because they are Nepalese that the Gurkhas will be retiring to Nepal and living there more cheaply than their British counterparts. But I reject entirely the proposition that they are therefore to be regarded as unjustifiably less well treated on the ground of their nationality. It is, of course, only because they are Nepalese that they are recruited into the Gurkha Brigade in the first place. Nor am I impressed by Mr Blake's argument that because, say, an Irish or Jamaican (dual) national will be discharged from the British Army with a pension calculated without reference to wherever he may be intending to retire, so too should a Gurkha. I simply cannot recognise the two groups as being in "an analogous or relevantly similar situation" looking at the nature of the Gurkha Brigade as a whole - the basis and circumstances of the Gurkhas' recruitment, service and discharge."
"The manner in which the treatment of the appellants under Gurkha TACOS differed from the treatment of non-Gurkha soldiers serving in the same Army - and the manner in which the characteristics of Gurkha soldiers relevant to terms and conditions of service differ from the characteristics of non-Gurkha soldiers - have been fully set out both by the judge and in the judgment of Lord Justice Simon Brown. It is unnecessary for me to rehearse those matters in any detail. It is enough to draw attention to the following: (i) Gurkha soldiers are recruited, exclusively, from Nepal, under arrangements to which the governments of Nepal and India have given approval; (ii) Gurkha soldiers are, invariably, discharged in Nepal at the end of their service, and have no right of abode in the United Kingdom; (iii) Gurkha soldiers will, almost invariably, complete 15 years service and retire on pension (payable with immediate effect) at or about the age of 35 years; (iv) there is an obvious, and recognised, need in those circumstances to foster and maintain links between Gurkha soldiers while in service and the country (Nepal) to which they will return on retirement; and (v) that need is enhanced by the wide social, economic and cultural differences between Nepal and the United Kingdom - and between Nepal and the other countries throughout the world in which Gurkha soldiers have been, or are likely to be, required to serve.
Taking those matters into account I find it impossible to reach the conclusion that the characteristics of soldiers serving in Gurkha units in the British Army are so closely analogous to the characteristics of soldiers serving in non-Gurkha units in the same Army that the circumstances call for a positive justification for the different treatment, in relation to basic pay and pensions, for which Gurkha TACOS provide. Once it is appreciated that there are good reasons for the payment of an immediate pension to Gurkha soldiers after 15 years service - as, plainly, there are, given the fact that Gurkha soldiers will return to Nepal on completion of their service - rather than a deferred pension payable at age 60 on retirement after less than 22 years service, or an immediate pension only after 22 years service, it seems obvious that the amount of the immediate pension payable to Gurkha soldiers will differ from the immediate, or the deferred, pension payable to non- Gurkha soldiers. Further, once it is appreciated that there are good reasons for Gurkha soldiers to enjoy periods of extended home leave during service - as, plainly, there are, given the need to maintain the links with Nepal - it seems obvious that the amount of pay during those periods of extended leave will be different from the amount paid to non-Gurkha soldiers in respect of the substantially shorter periods of paid leave to which those soldiers are entitled. It is important to keep in mind that the difference in basic pay has practical effect only during periods of extended home leave, when no "universal addition" is payable. It follows that I am satisfied that, in relation to the challenge to basic pay and pensions, the judge was entitled to answer Michalak question (iii) in the negative. In relation to basic pay and pensions the judge was correct to reject a challenge based on article 14."
"For my part, in company with all your Lordships, I prefer to keep formulation of the relevant issues in these cases as simple and non-technical as possible. Article 14 does not apply unless the alleged discrimination is in connection with a Convention right and on a ground stated in Article 14. If this prerequisite is satisfied, the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the court's scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact."
The decision withstands scrutiny. Gurkhas with service before 1 July 1997 were in a different position from others serving in the British Army before that date. Such differentiation in pension arrangements reflected that different position. There is clear justification for drawing the distinction between the actuarial and year for year transfer of pension from the GPS to the AFPS for all the reasons already summarised when considering the policy in connection with the argument advanced by reference to age.
Section 71 of the Race Relations Act 1976
"71(1) Every body or other person specified in Schedule 1A or of a description falling within that Schedule shall, in carrying out its functions, have due regard to the need -
(a) to eliminate unlawful racial discrimination;
(b) to promote equality of opportunity and good relations between persons of different racial groups." (2)...
The defendant accepts that it is subject to this duty. The performance of the duty is subject to statutory guidance issued by the Commission for Racial Equality ["CRE"]:
"71C(1) The Commission may issue codes of practice containing such practical guidance as the Commission thinks fit in relation to the performance by persons of duties imposed on them by virtue of subsections (1) and (2) of section 71.
….
(11) A failure on the part of any person to observe any provision of a code of practice shall not of itself render that person liable to any proceedings; but any code of practice issued under this section shall be admissible in evidence in any legal proceedings, and if any provision of such a code appears to the court or tribunal concerned to be relevant to any question arising in the proceedings it shall be taken into account in determining that question."
"3.2 Four principles should govern public authorities' efforts to meet their duty to promote race equality:
(a) promoting race equality is obligatory for all public authorities listed in schedule 1A of the Act.
(b) Public authorities must meet the duty to promote race equality in all relevant functions.
(c) The weight to be given to race equality should be proportionate to its relevance.
(d) The elements of the duty are complementary (which means they are all necessary to meet the whole duty).
3.16 To assess the effects of a policy, or the way a function is being carried out, public authorities could ask themselves the following questions.
a. Could the policy or the way the function is carried out have an adverse impact on equality of opportunity for some racial groups? In other words, does it put some racial groups at a disadvantage?
b. Could the policy or the way the function is carried out have an adverse impact on relations between different racial groups?
c. Is the adverse impact, if any, unavoidable? Could it be considered to be unlawful racial discrimination? Can it be justified by the aims and importance of the policy or function? Are there other ways in which the authority's aims can be achieved without causing an adverse impact on some racial groups?
d. Could the adverse impact be reduced by taking particular measures?
e. Is further research or consultation necessary? Would this research be proportionate to the importance of the policy or function? Is it likely to lead to a different outcome?
….
Arrangements for assessing, and consulting on, the likely impact of proposed policies
4.16 Public authorities must set out in their race equality scheme arrangements for assessing, and consulting on, the likely impact of
their proposed policies on race equality (see 4.6).
4.17 Public authorities are expected to set out their arrangements for:
a. assessing the likely impact their proposed policies will have, including their arrangements for collecting data;
b. consulting groups that may be affected by the policies.
4.18 Public authorities may find that they can use the arrangements they already have in place to carry out the necessary assessments and consultations.
Assessment
4.19 Assessing the likely impact of a proposed policy should help to identify whether that policy might have a different impact on some racial groups, and whether it will contribute to good race relations. The assessment may involve using:
a. information that is already available;
b. research findings;
c. population data, including census findings;
d. comparisons with similar policies in other authorities;
e. survey results;
f. ethnic data collected at different stages of a process (for example, when people apply for a service);
g. one-off data-gathering exercises; or
h. specially-commissioned research.
Consultation
4.20 Public authorities already consult people in a number of different ways. However, an authority will raise confidence in its services and improve the way it develops policy if it uses clear consultation methods and explains them to its staff and to the public.
4.21 Public authorities could consult people through:
a. consultation meeting;
b. focus groups;
c. reference groups;
d. citizens' juries;
e. public scrutiny; or
f. survey questionnaires.
4.22 Whichever consultation method they use, public authorities should try to make sure that:
a. they use people's views to shape their decision-making process;
b. the exercise represents the views of those who are likely to be affected by the policy;
c. the consultation method is suitable for both the topic and the groups involved;
d. the exercise is in proportion to the effect that the policy is likely to have;
e. the consultation's aims are clearly explained;
f. the consultation exercise is properly timetabled;
g. the consultation exercise is monitored; and
g.[sic] the consultation's findings are published.
4.23 If the assessment or the consultation shows that the proposed policy is likely to have an adverse impact or harm race equality, the public authority will want to consider how it is going to meet the general duty to promote race equality. The authority might ask itself the following questions.
a. If one of our policies leads to unlawful racial discrimination, can we find another way of meeting our aims?
b. If one of our policies adversely affects people from certain racial groups, can we justify it because of its overall objectives? If we adapt the policy, could that compensate for any adverse effects?
c. If the assessment or consultation exercise reveals that certain racial groups have different needs, can we meet these needs, either within the proposed policy or in some other way?
d. Could the policy harm good race relations?
e. Will changes to the policy be significant, and will we need fresh consultation?"
(i) the defendant simply failed to comply with section 71 of the 1976 Act before devising the GOTT and laying the Order;
(ii) there was no equality and diversity impact assessment made before the material decisions, as the defendant's own procedures required. It was mandated by the MoD's Equality and Diversity Scheme for 2006 - 2009 ["the Scheme"];
(iii) Such an impact assessment was in any event recommended by the CRE in its statutory Code of Practice on the Duty to Promote Race Equality, and the defendant generally failed to have regard to that Code when devising the policy;
(iv) There is no detail before the Court of the product of the consultation undertaken by the defendant in formulating its policy, nor of its dealings with the CRE which are merely referred to but not elucidated in the documents;
(v) The defendant carried out a formal impact assessment after the decision making process was complete. That represents a formulaic response to the criticism of an absence of proper consideration of section 71, which is in any event defective.
"30. We had detailed submissions from Mr Allen as to the meaning of section 71(1) and in particular the promotion of equal opportunity limb of section 71(l)(b). I shall summarise his principal submissions briefly, because they were not disputed by Mr Coppel. First, the duty is imposed on a large range of public authorities. This demonstrates its importance as a national tool for securing race equality in the broadest sense. Secondly, promotion of equality of opportunity (and indeed good relations) will be assisted by, but is not the same thing as, the elimination of racial discrimination. Mr Drabble emphasised that his case on behalf of the appellants was not based on an allegation of racial discrimination. Thirdly, the promotion of equality of opportunity is concerned with issues of substantive equality and requires a more penetrating consideration than merely asking whether there has been a breach of the principle of non-discrimination. Fourthly, the duty is to have due regard to the need to promote equality of opportunity (and good relations) between the racial group whose case is under consideration and any other racial groups. The reference to any other racial groups may be no more than a reference to the general settled community. Fifthly, the equality of opportunity is of opportunity in all areas of life in which the person or persons under consideration are, or may not be, at a disadvantage by reason of membership of a particular racial group. In practice, this is likely to include disadvantage in the fields of education, housing, healthcare and other social needs.
31. In my judgment, it is important to emphasise that the section 71(1) duty is not a duty to achieve a result, namely to eliminate unlawful racial discrimination or to promote equality of opportunity and good relations between persons of different racial groups. It is a duty to have due regard to the need to achieve these goals. The distinction is vital. Thus the Inspector did not have a duty to promote equality of opportunity between the appellants and persons who were members of different racial groups; her duty was to have due regard to the need to promote such equality of opportunity. She had to take that need into account, and in deciding how much weight to accord to the need, she had to have due regard to it. What is due regard? In my view, it is the regard that is appropriate in all the circumstances. These include on the one hand the importance of the areas of life of the members of the disadvantaged racial group that are affected by the inequality of opportunity and the extent of the inequality; and on the other hand, such countervailing factors as are relevant to the function which the decision-maker is performing.
32. In the context of the present case, the areas of the appellants' lives affected by the inequality of opportunity are of central importance to their well-being and the extent of the inequality of opportunity is substantial. As is clearly stated at para 5 of Circular 01/2006, gypsies and travellers suffer the worst health and education status of any disadvantaged group in England and there is a pressing need to promote equality of opportunity in these areas between gypsies/travellers and the general settled community in order to eliminate the problem. Again as recognised by the Circular, an effective way of achieving this is to reduce the number of unauthorised encampments and developments and increase the number of gypsy and traveller sites in appropriate locations with planning permission.
33. On the other hand, the fact that the appeal sites are on Green Belt land is a powerful countervailing factor: see paras 3.2 and 3.3 of PPG2. It is common ground that the residential use of all 3 appeal sites is "inappropriate development" within the meaning of para 3.4 of PPG2. Paras 49, 50 and 71 of the Circular make it clear that PPG2 applies with equal force to applications for planning permission from gypsies and travellers.
34. Thus, in discharging the duty to have due regard to the need to promote equality of opportunity in this case, the Inspector was required to take into account the need to promote equality of opportunity for the appellants to have housing which would enable them to have access to education, health care and other social needs. But she also had to take into account the powerful countervailing imperative of PPG2. Ultimately, how much weight she gave to the various factors was a matter for her planning judgment.
35. Mr Drabble (supported by Mr Allen) submits that a person does not perform the section 71(1) duty unless he demonstrates by the language in which he expresses his decision that he is conscious that he is discharging the duty. Applying that approach to the facts of the present case, Mr Drabble submits that the Inspector's decision letter should have included something along these lines:
"I recognise that, in addition to the considerations flowing from ordinary gypsy policy, there is a situation in Bromley in which there is not equality of opportunity for Irish travellers. I am under a duty to have due regard to the need to promote such opportunity. I must, therefore, give proportionate weight to that need."
36. I do not accept that the failure of an inspector to make explicit reference to section 71(1) is determinative of the question whether he has performed his duty under the statute. So to hold would be to sacrifice substance to form. I agree with what Ouseley J said in The Oueen (on the application of Lisa Smith) v South Norfolk Council [2006] EWHC 2772 (Admin), para 87:
"I do not accept the submission made by Mr Bird that s71 was concerned with outcomes; ultimately of course it is aimed at affecting the way in which bodies act. But it does so through the requirement that a process of consideration, a thought process, be undertaken at the time when decisions which could have an impact on racial grounds or on race relations, to put it broadly, are being taken. That process should cover the three aspects identified in the section. However, that process can be carried out without the section being referred to provided that the aspects to which it is addressed are considered, and due regard is paid to them..."
37. The question in every case is whether the decision maker has in substance had due regard to the relevant statutory need. Just as the use of a mantra referring to the statutory provision does not of itself show that the duty has been performed, so too a failure to refer expressly to the statute does not of itself show that the duty has not been performed. The form of words suggested by Mr Drabble to which I have referred above may not of itself be sufficient to show that the duty has been performed. To see whether the duty has been performed, itis necessary to turn to the substance of the decision and its reasoning.
38. Nevertheless, although a reference to section 71(1) may not be sufficient to show that the duty has been performed, in my judgment it is good practice for an Inspector (and indeed any decision-maker who is subject to the duty) to make reference to the provision (and any relevant material, including the relevant parts of the Code of Practice and Circular) in all cases where section 71(1) is in play. In this way, the decision-maker is more likely to ensure that the relevant factors are taken into account and the scope for argument as to whether the duty has been performed will be reduced.
"It will be apparent from the evidence given above and in my earlier witness statements that the main driver leading to the GTACOS Review and the GOTT was the MoD's wish to address issues of inequality between the Gurkhas and the wider Army. Thus the MoD considers that in arriving at the decisions now under challenge, due regard was had to the need to eliminate unlawful racial discrimination, and to promote equality of opportunity and good relations between persons of different racial groups, as required by section 71. However, the MoD did not undertake a formal equality and diversity impact assessment (EDIA) at the time of the Review. Whilst section 71 does not require such a formal assessment to be undertaken, the MoD has considered it appropriate, since the present litigation has arisen, to carry out an EDIA focussed on pension issues. I attach a copy of the formal assessment."
"a systematic way of finding out whether a policy (or proposed policy) affects different racial groups differently. This may include obtaining and analysing data, and consulting people, including staff, on the policy."
The review did not contain a statement of the nature identified in the Scheme although the impact of various aspects of the TACOS upon Gurkhas was what the review was all about. The review did, however, have explicit regard to the defendant's duties under section 71(1) in its paragraph 1. It did not link those duties to the question of pension changes in the overall conclusions of the report set out in paragraph 15 of Chapter 1, but it recognised the need to apply the principle of 'equality of treatment' to the whole of the Gurkhas' remuneration package, including pensions (see Chapter 8 paragraph 19). The methodology adopted for the purposes of the review, which it must be remembered covered the entire spectrum of Gurkha TACOS, included 'a comprehensive Attitude Survey of the serving Brigade and number of Pension focus groups.' In addition to consulting other Government Departments, the Governments of Nepal and India were consulted as was the CRE 'and groups representing Gurkha ex-servicemen in UK and Nepal'. Those groups included the first claimant in these proceedings.
"8. During the development of the survey, AMCS and the Review Team concluded that due to the complexities of pension issues, meaningful responses on that subject were unlikely to be obtained through a multi-choice answer questionnaire. An external agency was therefore commissioned to conduct a series of focus groups specifically to find out the attitudes of Gurkhas towards pensions issues. The methodology used was to set out the likely changes to pensions in the future and what options were likely to be available and to explain the key differences between the Gurkha Pension Scheme (GPS) and the AFPS 1975 (AFPS 75) and 2005 (AFPS 05).
9. AFPS 05 was the preference amongst most Gurkhas with the higher monthly payouts and larger lump sums after the age of 60/65 being considered in the context of living and working in the UK after retirement.
10. Some of the more junior soldiers (LCpl and below), however, held to the view that for them the GPS was a better scheme, noting that in actuarial terms it was worth about the same for many junior ranks as the AFPS, and that it would be more beneficial to receive payment of pension at an earlier stage.
11. The most significant issue to arise was how past service credit from GPS to AFPS 05 would be treated with a clear preference for transfer to be done on a one for one basis. This is addressed in detail in Chapter 10."
The Indian Government felt it inappropriate to comment on TACOS of those serving in the British Army and was content for the matter to be dealt with bilaterally between the British and Nepalese Government. The latter were consulted on proposed changes to the TACOS, including pension arrangements. So too were representative groups in the United Kingdom and Nepal.
"The exception is the position of ex-Gurkhas who retired before 1997, although their position fell outside the scope of the Review."
Delay
Note 1 The Armed Forces Pension Scheme 2005 superseded that known as AFPS 1975. Although both are referred to in the judgment of Ouseley J, and they confer different benefits, those difference do not affect the principles that were applied in Gurung, nor do they affect the arguments advanced in this case. [Back]
