Neutral Citation Number: [2006] EWHC 27 (Ch)

Case No: CH/2005/APP/0510
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19/01/2006

Before :

MR JUSTICE PATTEN
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Between :

	John Chapman	Appellant	
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	South Holland District Council	Respondent	

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Mr Nicholas Randall (instructed by Thompsons Solicitors) for the Appellant
Mr Geoffrey Topham (instructed by Browne Jacobson) for the Respondent

Hearing date: 9 November 2005
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Judgment

Mr Justice Patten : 
1.	This is an appeal by Mr John Chapman, a retired local government officer, against the dismissal by the Pensions Ombudsman of his complaint that his former employer, the South Holland District Council (“the Council”) had acted unlawfully in failing to award him credited periods under paragraph 8 of the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 (“the 2000 Regulations”) which if awarded would have increased his redundancy and pension entitlement when he left the Council’s service in October 2001.
2.	Under s.151(4) of the Pension Schemes Act 1993 (“the 1993 Act”) an appeal to the High Court from the Pensions Ombudsman lies only on a point of law and the main issue before me is whether the Pensions Ombudsman correctly interpreted regulation 26 of the 2000 Regulations which governs the ability of an employing authority to implement changes of policy in relation to the exercise of its discretionary powers under Part 1V of the 2000 Regulations.  This includes regulation 8.  This is apparently the first occasion on which these provisions have been judicially considered.
  The Facts 
3.	The facts as found by the Pensions Ombudsman are not in dispute on this appeal and I can take my summary of them from his decision.  
4.	In June 2001 the Council embarked on a re-structuring exercise as part of which all officers over 50 were invited to consider taking early retirement.  Mr Chapman was over 50 at this time.  As part of this process a meeting took place between the Chief Executive of the Council and senior managers (including Mr Chapman) during which the Chief Executive said that he would urge the Council to follow its existing policy in relation to awarding credited periods of service.
5.	At that time the Council had a published policy in accordance with Regulation 26(1) of the 2000 Regulations to award added years and this policy had been followed in all previous cases of early retirement.
6.	On 6 July 2001 the Chief Executive wrote to Mr Chapman stating that the review of staffing structures had resulted in a new structure which did not include Mr Chapman’s existing post.  The letter contained details of the new posts and explained that although other posts were being created, some of these were unlikely to be at the same salary level.  In his letter the Chief Executive then said this: 
“A further option, which is available to you, because of your age, is to retire.  The Council has the option to add years to pensionable service, thereby increasing the lump sum on retirement and the annual pension.  However, the Council will consider whether it is prepared to exercise this discretion on the merits of each application for early retirement and bearing in mind the financial implications.  The Council does not therefore commit itself to accepting any application for early retirement nor to the terms of departure except that, where an application is accepted, a statutory redundancy payment will be made based on your actual salary.  A statement showing estimated payments in your case, and assuming redundancy/retirement on 31st March 2002 is attached. …
Finally, I invite you to complete the attached form indicating which, if any, of the new posts you would wish to be considered for.  You are invited to express an interest in up to three posts in priority order.  You are also invited to indicate whether you wish to apply for early retirement/redundancy.  If this would be your preference above being considered for one of the new posts, please indicate in the space for comments at the foot of the form. …”
7.	This letter was accompanied by an estimate of core benefits and was stated to include and to take account of  five years added compensatory service “the awarding of which is subject to the discretion of the District Council”.
8.	Mr Chapman completed the Expression of Preference Form on 24 July 2001 by choosing to apply only for early retirement.  He did not ask to be considered for any of the alternative posts available.  In the form he made the following comments:
“Owing to personal circumstances my preference is early retirement.
I trust you and the Members will respect my decision and recognise the commitment and effort that I have given the Authority over the last 13 years.
I would ask for this issue to be determined speedily in order that I may consider my future options.”
9.	The Chief Executive acknowledged receipt of the form in a letter dated 13 August 2001.  He said:
“…As you know, all such applications have to be considered by the full Council when the decision as to the extent to which, if any, the Council will exercise its discretion to add years for pension purposes will be made. …”
10.	At the same time discussions were taking place between the Council and Mr Chapman’s trade union, UNISON.  The union response to the re-structuring is contained in a letter of  3 August 2001 written to the Chief Executive following a meeting between them:
“For those UNISON  members who wish to seek redundancy/early retirement, it was positive to note your comments that your enhancement of pension up to the six and two thirds maximum would be considered.  I would therefore like to take this opportunity to reiterate that UNISON would hope that such requests are considered favourably.”
11.	Following these discussions the Chief Executive prepared a report for the Council setting out its current policy on added years and inviting the Council to decide whether it wished to apply existing policy to the eight applications it had received for early retirement  or to take one of a number of alternative courses.
12.	The material parts of the Report read as follows:
“ 2.0       CURRENT POLICY
2.1	The Council’s current policy with regard to early retirement and redundancy is set out in Minute 564/98 of the Business Unit Management Board and provides as follows:
‘(a)	The maximum discretion which might be applied to employees under the age of 50 years set out in paragraph 2.2.3 of the report, be not adopted, and the Council’s current policy of awarding a maximum of 30 weeks’ pay for redundancy and no compensation for retirement in the interest of efficiency be retained;
(b)	In cases of redundancy of employees aged 50 or over with not less than two years’ service, discretionary added years be calculated by applying 20% to the employees’ pensionable service, rounded down to the nearest whole number, as follows: …’
2.2	At the time of adoption of this policy, a major re-structuring exercise, and the possibility of multiple applications was not anticipated.
3.0	DETAILS OF APPLICATIONS
3.1	Details of the eight applications received, and the financial implications, are set out in the following table. …
4.0	SUITABLE ALTERNATIVE EMPLOYMENT
4.1	I consider that the new structures, which will be considered at a special meeting of the Business Unit Management Board later this month, may provide suitable alternative jobs for AC Pickering, DB Reddin or J. Chapman.  However, whilst this would reduce costs, members will no doubt wish to consider the extent to which officers who are refused the opportunity to retire would be motivated if retained.  It is also possible that, if the Council does not apply the present policy in respect of added years and redundancy pay, one or more applicants may withdraw their applications.  For most, this will have no effect since there will be no suitable job in the new structure and they will then be made compulsorily redundant.
5.0	OPTIONS
5.1	the options available are:
1.	accept all applications and make payments in accordance with the existing policy set out above ie make payments in accordance with columns 6, 7 and 8 [of the table at 3.1]
2.	accept all applications but pay statutory redundancy pay and statutory pension and lump sum only ie. columns 5 and 7.
3.	accept all applications and pay redundancy based on actual salary and statutory pension and lump sum but no added years ie. columns 6 and 7.
4.	accept all applications and pay statutory redundancy pay, statutory pension and lump sum and added years ie. 5, 7 and 8.
5.	accept some applications but not others and make payments in respect of those accepted in accordance with options 1, 2 or 3 above.
5.2	If the Council is minded to depart from the existing policy with regard to redundancy and early retirement I would strongly advise against applying Option 2 above.  … If the council wishes to reduce the financial impact of the number of applications which must now be determined, Option 3 should be carefully considered. …”

13.	On 16 October the Chief Executive also sent an e-mail to the employees involved (including Mr Chapman) in these terms:
“As previously advised, applications for early retirement/voluntary redundancy are being considered by the full Council tomorrow.  A copy of the report is attached.  From my informal soundings with members, it is quite clear that at least some members do not feel constrained by the present policy to add years which was approved in 1998.  You will recall that I have always made it clear that there I could not be certain that the council would add years.  It is also the case that some members do not think the council should be paying redundancy based on actual pay.  My own prediction is that the council will pay redundancy based on actual pay but  will not add years but I do not know.  I am expecting a long debate.
…
One issue which might arise is that you may not be prepared to accept the terms approved by the council.  In those circumstances I would want to discuss whether there are opportunities for suitable alternative employment in the new structures for you.  For at least some, I believe there are. ”
14.	On 17 October the Council met to consider the Chief Executive’s Report and to decide what course to adopt.  The decision they reached is recorded in the minutes of the meeting as follows:
“RE-STRUCTURING …
Further to minute 379 of the joint meeting of the Policy and Best Value Committee and the Business Unit Management Board held on 3 July 2001, the Chief Executive submitted a report detailing applications for redundancy and early retirement arising from the current re-structuring exercise.  The current policy relating to early retirement and redundancy, and details of applicants, were referred to in full in the report, and a detailed list of options for consideration was set out in the report.
RESOLVED:	(a)	That all applications be accepted, but                    that the Council set aside its present policy and pay redundancy in accordance with option 3 contained within the report of the Chief Executive;
	(b)	That, in future, the Council does not exercise its discretion to add years for pension purposes in respect of redundant employees aged 50 or over with not less than 2 years’ service but, in all other respects, maintains the policy set out in minute 564/98; and
	(c)	That, following consultation with the Leader and Deputy Leader of the Council and the Leaders of the next two largest political groups on the Council, the Chief Executive be authorised to determine the actual date of redundancy of each applicant bearing in mind the needs of the service during the transition to the new structures.”
On 22 October the Chief Executive met Mr Chapman and informed him of the Council’s decision.  There was then a discussion about possible dates of redundancy.  Mr Chapman asked for personal reasons to be allowed to leave at the earliest opportunity and if possible, by the end of that week.  The Chief Executive accepted this.  On 16 November he wrote to Mr Chapman informing him that his post had been made redundant with effect from then.
The 2000 Regulations
15.	Regulation 8 provides as follows: 
“8 Award of credited period by way of compensation 

(1) An employing authority may award a credited period to an eligible person. 

(2) A credited period must not exceed whichever is the shortest of— 

		  (a)	   the difference between his total membership and 40 years; 

	

		  (b)	 the period beginning with the day after the termination date      and ending on his 65th birthday, less the period of his residual entitlement (if any); 

	

		  (c)	   the total of— 

	

	                    (i)   his total membership; and 	

                   (ii)   any period which counts as a period of superannuable       membership; and 	

               (iii)  any increase in membership under regulation 13 of the Transitional Regulations, 

	

	 or, if he is an assumed member, any period which would count or any increase which would be awarded apart from a relevant disqualification and on the relevant assumptions; and 

	

		  (d)	 10 years. 

	

(3) An award may not be made later than six months after the termination date.”
                   
16.	Eligibility depends upon the applicant satisfying the conditions set out in Regulation 7.  These specify a minimum age of 50 and other membership requirements.  The provisions of Regulation 8(3) are directory only: see Eastbourne Borough Council v Foster [2002] EWHC 138.
17.	Regulation 26 is headed “Policy Statements”.  It provides as follows:
“26 Policy statements 

(1)   Each employing authority must formulate, publish and keep under review— 

		    (a)	 the policy that they apply in the exercise of their discretionary powers under Parts II to IV and Parts VI to VIII, and 

	

		    (b)	 the policy they apply in the exercise of their duty under regulations 17 and 19 to reduce annual compensation. 

	

(2)   If the authority decide to change either policy, they must publish a statement of the amended policy within one month of the date of their decision. 

(3)   The authority must not give effect to any policy change until one month has passed since the date of publication of the statement under paragraph (2). 

(4)   In formulating and reviewing their policies the authority must— 

		    (a)	have regard to the extent to which the exercise of their discretionary powers (in accordance with the policy), unless properly limited, could lead to a serious loss of confidence in the public service; and 	

		    (b)	be satisfied that the policy is workable, affordable and reasonable having regard to the foreseeable costs.” 	

Regulation 8 is included as one of the discretionary powers contained in Part 1V of the Regulations.
The Appeal
18.	The Pensions Ombudsman summarised the effect of Regulation 26 on the decision which the Council made on 17 October in this way:
“32. 	The Discretionary Compensation Regulations require employing authorities to formulate, publish and keep under review the policy that they will apply in the exercise of their discretionary powers.  The employing authorities are entitled to review and alter that policy, but the Discretionary Compensation Regulations state that the authority must not give effect to any change until a month had elapsed since the publication of the new statement of policy.  
 33.	I cannot see that Mr Chapman has any contractual right to be made redundant on terms which reflected the 1999 statement of policy.  It was open to the Council at any time to formulate and adopt a new discretionary policy regardless of any consent on the part of Mr Chapman.  Nor can I see that he can claim there was a legitimate expectation on his part that no such change would be made.  The previous policy was of relatively short duration.  He had been expressly warned that a change was possible.  Comments that the Chief Executive would seek to persuade the Council to retain the policy and illustrations supplied to him stating what benefits would be available if the policy capital, do not give rise to a legitimate expectation.
34.		In the circumstances of the case before me, the Council has sought to implement its new policy within the month following its publication.  That was maladministration, but in determining which if any injustice was caused I need to take account of the context.”

19.	But having found that the implementation of its new policy was premature the Pensions Ombudsman went on to consider whether this act of maladministration had caused injustice to Mr Chapman.  He concluded that the premature implementation of the new policy not to add years had not caused Mr Chapman injustice.  He found that Mr Chapman selected early retirement as his only preference, despite being told in the Chief Executive’s letter of 6 July that the Council would have to take into account the financial implications in deciding whether to apply its existing policy of adding years and that when told on 22 October of the Council’s decision to agree to early retirement, but without the benefit of added years, Mr Chapman sought the earliest possible termination date.  The Council accept that this was not done by Mr Chapman in the knowledge that it might allow him to retire before the change in policy could take effect.  But the Pensions Ombudsman considered that it would be unjust for Mr Chapman to succeed when the act of maladministration had resulted solely from the Council agreeing to Mr Chapman’s request to allow him to leave its employment at the earliest opportunity.  The Pensions Ombudsman’s reasoning on this point is set out in paragraphs 37 to 38 of the Determination:
	“37.	Mr Chapman’s employment ended earlier than planned under the Council’s redundancy programme.  This was at his own request.  The Council could have delayed the date on which he was made redundant, so as to allow the elapse of the month’s period since the change in its policy. That the matter was not delayed was in response to his own request, a request made at a time when he did know of the change of policy. 
38. 	It would be inequitable for him to succeed in a claim whose foundation is dependent, in part, on the Council having agreed to his request that he leave earlier than would otherwise have been the case.  Had such agreement not been forthcoming the policy would not have been applied within the month’s required delay and he would have no complaint.”  

20.	There is no appeal against the Pensions Ombudsman’s rejection of any claim by Mr Chapman based on a legitimate expectation that no change would be made in its policy.  Mr Randall accepts that the Council  was under a duty to keep its policy under review and that Mr Chapman could have no complaint if it was changed in accordance with the statutory procedures set out in Regulation 26.  His challenge to the decision is limited to the way in which the Pensions Ombudsman treated the Council’s failure to retain and apply the existing (1999) policy prior to the newly adopted policy coming into effect.  
21.	Mr Randall accepts that the provisions of Regulation 26 (1) make it clear that the employing authority must formulate, publish and review its policy on added years.  Regulation 26 was added to the 2000 Regulations to deal with a situation which had arisen under the earlier Local Government (Discretionary Payments) Regulations 1996 (“the 1996 Regulations”) which also contained a power to add years in computing local government redundancy payments and pension benefits due to employees on early retirement.  The requirement to be satisfied that the policy adopted is workable, affordable and reasonable having regard to the foreseeable cost, was intended to prevent over generous awards which had in the past led to controversy and even litigation.  This explains the reference in regulation 26 (4) (a) to the need to consider whether the exercise of the discretionary powers unless properly limited could lead to a serious loss of confidence in the public service.
22.	But part of this new code, he says, is the requirement contained in regulation 26 (3) which prohibits the local authority from giving effect to any policy change until one month after the publication of the amended policy statement.  The Pensions Ombudsman based his finding of maladministration on the Council’s failure to observe this requirement, but then took into account extraneous considerations to determine whether injustice had been caused.  Mr Randall submits that this was the wrong approach.  The effect of regulation 26 (3) is that the existing policy must continue to be applied until replaced by the new or amended policy in accordance with the procedural timetable laid down by the regulation.  During this period (and indeed at all times up to the implementation of the new policy) the discretionary powers must be exercised in accordance with the policy.  As an alternative to this primary submission he says that  even if there is some residual discretion to depart from the existing policy in particular cases that is of no consequence in this case because of the Pensions Ombudsman’s findings of fact that the decision not to add years in the case of Mr Chapman was made as part of the implementation of the new policy rather than as an isolated departure from the old.
23.	The Council’s failure to apply existing policy was therefore an unlawful exercise of power and not simply an act of maladministration within the meaning of s.146 (1) (a) of the 1993 Act.  By dealing with the case as one of maladministration, the Pensions Ombudsman failed, Mr Randall submits, really to consider the question of vires and legality at all or to give a remedy on that basis.  What he should have done was to make a determination of a question of law under s.146 (1) (c) and to rule that the Council had no power as of 17 October 2001 to disapply its existing policy.
24.	The report of the Chief Executive (which was considered by the Council on 17 October) was prompted by the eight applications for early retirement which had resulted  from the re-structuring exercise.  The choice presented to the Council was either to apply its existing policy or to depart from that policy and adopt one of the alternative forms of treatment suggested.  It is apparent from the resolution of 17 October 2001 that the Council decided not merely to depart from its existing policy, but to cease to add years both in respect of the eight current applications for early retirement and in all future cases of redundant employees aged 50 or over with not less than two years’ service.
25.	The Pensions Ombudsman (in paragraph 34 of his Determination) treated this decision as the implementation of a new policy and there is no challenge on this appeal to that finding of fact.  On that basis, there is really no dispute that the Council acted unlawfully in so far as it gave effect to a policy change prior to the publication of the new policy it had decided upon.  That decision was made on 17 October 2001 in respect of Mr Chapman.  Even if he had remained in employment until after the policy change had been publicised and then retired, the Council could not have satisfied the requirements of Regulation 26 (3).  A decision not to add years was made and the policy applied on 17 October.  I do not therefore accept the analysis contained in paragraphs 37 and 38 of the Determination.
26.	In relation therefore to the issue of vires, it is not strictly necessary for me to express any view on whether the provisions of Regulation 26 do leave the Council with a residual discretion as to whether or not to apply the policy in any particular case.  But this may be relevant to the question of remedy.  Clearly, if the Council could have chosen to disapply the policy to Mr Chapman and the other applicants for early retirement in advance of deciding on and implementing a change of policy that is something which I need to consider when deciding whether Mr Chapman is entitled to an order which effectively requires the Council to apply the previous 1999 policy in his case.
27.	For the Council, Mr Topham submits that regulation 8 clearly contains a discretionary power which falls to be exercised having regard to the purposes of the legislation and the relevant circumstances affecting its exercise in any particular case.  If Mr Chapman is right in his contention that regulation 26 effectively ties the Council’s hands by requiring it to apply its currently adopted policy in all cases, then the discretionary element contained in regulation 8 has gone.
28.	There is nothing, Mr Topham submits, in the wording of regulation 26 which requires me to give it that meaning and the legislative history does not support it.  Regulation 26 (1) has to be construed together with the other regulations to which it applies and to be consistent with them.  Regulation 26 (1) in terms recognises that regulation 8 embodies a discretionary power.  All that it does is to require the local authority to formulate and keep under review a policy in relation to the exercise of that power.  That policy is to be based on the considerations set out in regulation 26 (4) but it is still only a policy.  Nothing in regulation 26 requires the local authority to apply it in all cases.
Conclusions
29.	The ability of a public body to adopt a policy in relation to the exercise of a discretionary power is well established.  In British Oxygen Co. Ltd v Minister of Technology [1971] AC 610 (at p.624-5) Lord Reid set out the general approach of the courts to the legality of such a policy: 
“It was argued on the authority of R v Port of London Authority, ex parte Kynoch Ltd that the Minister is not entitled to make a rule for himself how he will in future exercise his discretion. In that case Kynoch owned land adjoining the Thames and wished to construct a deep-water wharf. For this they had to get the permission of the authority. Permission was refused on the ground that Parliament had charged the authority with the duty of providing such facilities. It appeared that before reaching their decision the authority had fully considered the case on its merits and in relation to the public interest. So their decision was upheld. Bankes LJ said ([1919] 1 KB at 184): 
	
‘There are on the one hand cases where a tribunal in the honest  exercise of its discretion has adopted a policy, and, without refusing to hear an applicant, intimates to him what its policy is, and that after hearing him it will in accordance with its policy decide against him, unless there is something exceptional in his case. I think counsel for the applicants would admit that, if the policy has been adopted for reasons which the tribunal may legitimately entertain, no objection could be taken to such a course. On the other hand there are cases where a tribunal has passed a rule or come to a determination, not to hear any application of a particular character by whomsoever made. There is a wide distinction to be drawn between these two classes.’ 
	
I see nothing wrong with that. But the circumstances in which discretions are exercised vary enormously and that passage cannot be applied literally in every case. The general rule is that anyone who has to exercise a statutory discretion must not ‘shut [his] ears to the application’ (to quote from Bankes LJ ([1919] 1 KB at 183)). I do not think that there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all. But a Ministry or large authority may have had to deal already with a multitude of similar applications and then they will almost certainly have evolved a policy so precise that it could well be called a rule. There can be no objection to that provided the authority is always willing to listen to anyone with something new to say—of course I do not mean to say that there need be an oral hearing.”

30.	The adoption of a policy which will apply in the generality of cases is therefore lawful so long as it does not 
“preclude the person on whom the power is conferred from departing from the policy or from taking into account circumstances which are relevant to the particular case in relation to which the discretion is being exercised.  If such an inflexible and invariable policy is adopted, both the policy and the decisions taken pursuant to it will be unlawful.”
 See Lord Browne-Wilkinson in R v Home Secretary,Ex p. Venables [1998}     AC407 at p.497B.
31.	Against this background it would I think be extraordinary if Parliament had intended to cure the problems caused by over-generous applications of the regulation 8 power by requiring local authorities not only to formulate and publish their policy on these matters, but also  to apply that policy regardless of the circumstances of any particular case.  The provisions of regulation 26 are capable of preventing abuse without that degree of restriction.  Regulation 26(1) requires a local authority to formulate, publish and keep under review the policy which it applies.  It does not in terms require that policy to be applied regardless of the circumstances and  as I see it, leaves intact the ability of the local authority to exercise its discretion in some other way in appropriate cases.
32.	That said, those circumstances are likely to be limited.  The considerations of workability, affordability and reasonableness which regulation 26 (4) requires the local authority to be satisfied about when formulating and reviewing its policy, are likely to inform any decision to depart from an existing policy in a particular case.  It is difficult to see how any exercise of the discretion to add years could be carried out other than on the basis of these criteria.  This may explain why it was unnecessary for Parliament to impose an express obligation on local authorities to apply an existing policy until changed.
33.	Mr Topham therefore accepted that for the policy to be disapplied the circumstances must be exceptional.  Had it been open to him on this appeal to challenge the Pensions Ombudsman’s findings of fact, he would have argued that the decision made on 17 October in relation to the eight immediate applications for early retirement was not the premature implementation of a new policy.  It was simply a departure from existing policy pending the introduction of the new policy.  But he concedes that he is bound on this appeal by the Pensions Ombudsman’s findings contained in paragraph 34 of his Determination.  He also accepts that the Pensions Ombudsman made no finding as to whether the local Council could have reached any other decision (and if so what) had it correctly applied the provisions of regulation 26.  His main answer to the appeal was to rely on an estoppel argument.  He submitted that Mr Chapman knew he would get no added years as a result of the decision made on 17 October, but still opted for redundancy.  He asked for and was given an early date for retirement in this knowledge and on the understanding that he would not receive a pension enhanced by added years.  Both sides therefore proceeded on a common assumption that no years would be added and it would be inequitable for Mr Chapman to be allowed to resile from that.
34.	The estoppel argument is derived from the decision of the Court of Appeal in Amalgamation Investment and Property Co. Ltd. v Texas Commerce International Bank Ltd [1982] QB 84.  That decision established that parties to contracts and other transactions will be held to the factual and legal assumptions which form the basis of their agreement.  But this doctrine has no application to public law remedies when the issue is whether a statutory body had the power to act in the way that it did.  An agreement or understanding between the statutory body and the person immediately affected by its decision cannot give to the authority powers which it does not have.  For this reason alone, the estoppel argument is no answer to the appeal but it also fails for another reason.  As already stated, the decision not to add years was made on 17 October as part of the adoption of the new policy.  The date chosen for Mr Chapman’s retirement was therefore irrelevant.  Even if he had agreed to postpone his retirement until after the policy had been published and a month had expired, the decision taken on 17 October would still have been open to challenge.  It was then that the policy was given effect in relation to Mr Chapman.
35.	On 17 October the Council found themselves in a situation in which the existing policy of adding years could no longer be justified in financial terms.  A decision was taken, applying the criteria set out in regulation 26(4) to abandon that policy and to cease to add years in cases of early retirement.  No one suggests that that decision was in any sense flawed.  The Council were, however, required to deal on 17 October with two related matters: the wider question of what the future policy should be and the more immediate question of what to do in the case of the eight applications for early retirement.  Having determined that it was right to abandon the old policy of adding years the decision to disapply existing policy in the case of the eight current applications was entirely consistent with the Council’s assessment of what was affordable and reasonable.
36.	The result of the Pension Ombudsman’s finding that this constituted the implementation of the new policy is that the decision was unlawful because it was taken too early having regard to the provisions of regulation 26 (3).  The Pension Ombudsman accepted this but dealt with it only as a case of maladministration.  He did not address the challenge to its legality under s.146(1) (c) of the 1993 Act on which this appeal has largely concentrated.  The admitted breach of regulation 26 (3) required him to consider the question of remedy under s. 151 (2) and it seems to me that this appeal really turns on this issue.
37.	Both sides accept that it is unrealistic for me to direct the Council to re-consider their earlier decision.  It was made in October 2001 and it would be quite impossible for the local authority now to re-construct what would then have been the relevant circumstances.  Mr Randall accepts that if contrary to his primary submission there was a residual discretion which could have been exercised, then I have to decide whether there was any basis for the Council to have departed from its existing policy.
38.	It seems to me that the Council would have been justified in departing from its adopted policy in relation to Mr Chapman’s application and the eight other applications for early retirement.  If (as I have found) a discretion remained then it had to be exercised according to the criteria laid down in regulation 26 (4).  Once the Council had decided that the application of these criteria required its existing policy of adding years to be abandoned, it is hard to see how they could have reached a different conclusion in relation to the eight applications under consideration.  The decision was essentially the same.  Indeed, it is arguable that a decision to adhere to an outdated and unjustifiable policy which they had a discretion to disapply would itself have been open to challenge.  I therefore consider that the local authority, properly directed, would have reached the same conclusion and for this reason the appeal fails.