Smith, R (on the application of) v Secretary of State for Defence & Anor [2004] EWHC 1797 (Admin)

Case No CO/5431/2003[2004] EWHC 1797 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of JusticeDate Monday 26 July 2004
Strand,
London, WC2A 2LL
Before
THE HONOURABLE MR JUSTICE WILSON
Between
THE QUEENClaimant(on the application of SUSAN JOAN SMITH)ClaimantSECRETARY OF STATE FOR DEFENCEDefendantSECRETARY OF STATE FOR WORK AND PENSIONSInterested Party
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
The Claimant appeared in person, assisted by Brian Leonard Friend, her McKenzie friend. for in personThe Defendant and the Interested Party were represented by Miss Elisabeth Laing, instructed by the Treasury Solicitor.
JudgmentSECTION A: INTRODUCTION
[1]When, upon divorce, a pension sharing order takes effect in favour of an ex-wife under the age of 60, then, insofar as the law prevents her share of the pension from coming into payment until she attains that age while at the same time permitting the ex-husband, also under the age of 60, to receive payments of pension referable to his share, is it incompatible with her human rights? Such is the question posed by this claim.[2]The claimant is the ex-wife of a retired general in the army. At the time of their divorce in 2003 the claimant was aged 56 and her husband was aged 59. In 2002 he had retired from the army and had begun to receive a pension under the Armed Forces Pension Scheme [“the AFPS”] which is a statutory non-contributory occupational pension scheme. It is unfunded in the sense that there is no specific fund out of which its liabilities are met; instead they are met out of the general resources of government. Under a pension sharing order made within their divorce proceedings one half of the value of the husband’s rights under the AFPS was transferred to the claimant.[3]When the order came into effect, the amount of the pension received by the husband out of the AFPS was duly halved. But as yet there has been no payment out of it to the claimant. The defendant, namely the Secretary of State for Defence, who has ultimate responsibility for the administration by the Defence Council of the AFPS, contends that there is no power to make any payment to the claimant out of it until she attains the age of 60 in 2007. In this contention he is supported by the interested party, the Secretary of State for Work and Pensions, who was responsible for the introduction to Parliament of the pension sharing legislation, namely Parts III and IV of the Welfare Reform and Pensions Act 1999 (“the Act of 1999”). The Secretary of State (as it will be convenient to describe the Secretary of State for Work and Pensions) contends that such is the effect of ss. 101C(1) and 101B of the Pension Schemes Act 1993 (“the Act of 1993”), which were inserted into it by s. 37 of the Act of 1999.[4]The claimant responds that, if such contentions are valid, ss. 101C(1) and 101B of the Act of 1993 are incompatible with certain of her rights under the European Convention on Human Rights (“the convention”); and, subject to her argument that the legislation provides a route whereby the Secretary of State and thereafter the defendant might in tandem remove such incompatibility, she seeks a declaration of the incompatibility of these sections with convention rights under s.4(2) of the Human Rights Act 1998 (“the Act of 1998”). The convention rights upon which she relies are:-(a) her right under Article 1 of the first protocol (“Article IP”) to the peaceful enjoyment of her possessions and her right not to be deprived of them except in specified circumstances irrelevant to the case;(b) her right under Article 8 to respect for her private life; and(c) her entitlement under Article 14 to enjoy her rights under each of the articles referred to above without discrimination on the ground of her gender or status as an ex-wife.[5]In presenting her case the claimant has had the wide-ranging assistance of a McKenzie friend, namely Captain Friend. His contribution on her behalf has been masterly. I am also deeply indebted to Miss Laing who with efficiency and good humour has sought to satisfy my appetite for a fuller understanding of various points. SECTION B: THE FACTS.[6]In 1962 the husband began service in the army. In 1964 his service became pensionable for the purpose of the AFPS. In 1971, when he was a captain, he married the claimant. There were two children of the marriage. On the evidence before this court the claimant was a wonderful wife. She followed the drum. Tours of duty abroad created the dislocations of family life with which in particular army wives must cope. While the husband was rising to the highest pinnacle of an army career, the claimant was adding all the necessary public social support for him to the private support which she had always given to him. She made a profoundly important contribution to the welfare of the family and to his success, which the order of the divorce court was later to recognise.[7]Most army personnel have to retire at the age of 55. But a few senior officers, including generals, can continue to serve until the age of 58. In October 2001, just before attaining that age, the husband separated from the claimant. In January 2002, upon his attaining it, he retired.[8]For the army, the provisions of the AFPS are set out in The Army Pensions Warrant 1977 (“the Warrant”), made pursuant to the Pensions and Yeomanry Pay Act 1884. By virtue of his service for at least 34 years, the husband upon retirement became entitled under the Warrant to a pension which amounted to one half of his final salary, namely an annual pension of £59,000. He was also paid a terminal grant equal to three times his annual pension. Because of the payment of terminal grants, the facility for commutation of any part of a pension under the AFPS is limited. At all events the husband did not seek commutation of any part of his pension because, says the claimant, he was anticipating a pension sharing order upon divorce and did not want the value of his pension rights to be thereby reduced to her disadvantage.[9]In 2002, represented by solicitors, the claimant filed a divorce petition in the Bristol County Court and made financial claims against the husband. At that time the managers of the AFPS, namely the Armed Forces Personnel Administration Agency, supplied her solicitors with a leaflet entitled “Armed Forces Pensions on Divorce”. It indicated that, if the court made a pension sharing order in favour of one spouse in relation to the other’s rights under the AFPS, the spouse in whose favour the order was made would fall into a special category of membership of the scheme and would hold “pension credit benefits” under it. It conveniently described such a member as a “pension credit member”. It continued:
“43. These pension credit benefits will consist of an award of preserved benefits which are payable when the pension credit member reaches the age of 60. The benefits will be payable immediately if he or she has already reached that age. … 46. No pension credit benefits will be payable before age 60 in any circumstances.”
Later, at the request of the husband, the managers supplied a Cash Equivalent Transfer Value of his rights under the scheme, calculated in accordance with regulations made pursuant to the Act of 1999. The value was £852,000.[10]On 28 May 2003 a Financial Dispute Resolution meeting took place at the Bristol County Court. It was an early without prejudice meeting in relation to the claimant’s financial claims against the husband, presided over by a district judge who, in the absence of settlement, would not be the judge who would later determine them. The claimant and the husband each attended with specialist counsel. At the meeting they achieved a compromise, which was later cast into a consent order dated 26 June 2003. The principal terms were that, on the basis of a clean break, the husband should pay a lump sum to the claimant, convey a flat to her and transfer to her one half of his rights under the AFPS. The date on which the pension sharing order was to take effect was the date of the decree absolute of divorce, which proved to be 17 July 2003. I know nothing about the extent of the claimant’s existing resources at the date of the order so I am not aware – nor do I need to be aware - of the overall financial position in which she was placed by virtue of the order.[11]The claimant accepts that at the date of the order she and her legal advisers were aware that the managers of the AFPS were purporting to insist that, in the event of a pension sharing order, no pension could begin to be paid to her until she reached the age of 60.[12]On 14 October 2003, pursuant to regulations made under the Act of 1999, the managers of the AFPS notified the claimant and the husband that they had discharged their liability under the pension sharing order by setting up pension rights for her within the scheme and by adjusting his rights accordingly. They supplied calculations which showed that the overall value of the rights had risen to £858,000, with the result that each party’s half share was worth £429,000. They set out the result of an actuarial calculation of the amount of pension payable to the claimant by virtue of a capital value of that size in the following words:
“Pension Due at age 60: £30,162.34”
. SECTION C: THE PENSION SHARING LEGISLATION[13]For 30 years prior to 1999 family lawyers developed increasing concern that upon divorce the court had no power to carve pension provision for one spouse out of the other’s pension rights.[14]In the Pensions Act 1995 (“the Act of 1995”) a half-hearted attempt was made to address the problem. By s.166 of that Act, provisions were inserted into the Matrimonial Causes Act 1973 (“the Act of 1973”) which have enabled the court upon divorce to make orders which at first were generally described as ear-marking orders and are now officially described as attachment orders. The court can thereby oblige the managers of a spouse’s pension scheme to make payments to the other spouse (whom only for convenience I will assume to be the wife), in total or partial satisfaction of such periodical payments order as might then subsist against the husband in her favour, of all or part of what would otherwise be payable to him by way of pension annuity; and analogously it can oblige them to pay to her, in total or partial satisfaction of such lump sum order as might then be outstanding against him in her favour, all or part of such lump sum as is payable upon his death in service or would otherwise be payable to him by way of commutation on retirement.[15]It is relevant to the present claim for me to stress the limitations of an attachment order as a vehicle for making provision for a wife out of the husband’s pension rights. It does not carve out of his rights pension rights for her, bespoke to her needs and in particular to the length of her life. It merely impresses upon whatever may be payable to the husband under a pension scheme a compulsory redirection to the wife in satisfaction of his obligations under court orders. Thus no part of his pension is payable to the wife, whatever her age and however great her need, until, within the limits open to him under the scheme, the husband chooses to retire. Even more significantly, no further payment falls to be made to her in the event that following his retirement he predeceases her. In a sentence, the problem is that, notwithstanding divorce, the wife who has the benefit only of an attachment order remains hitched to the husband’s wagon.[16]By the Act of 1999 the more radical step, surrounded by fiscal and other complexity, was taken. It empowered the court to make a pension sharing order, by which freestanding pension rights for the wife could be carved out of those relating to the husband. I need refer only to that part of the legislation which is said to preclude payment to the claimant out of her share prior to her attaining the age of 60.[17]Section 37 of the Act of 1999 makes a lengthy insertion into the Act of 1993. The insertion follows s.101 of the Act of 1993; it is headed “Part IVA” and proceeds from s. 101A to s. 101Q. For the purpose of Chapter 1 of Part 1VA, which contains s. 101A to s. 101E, the meaning of a “scheme” includes an unfunded statutory occupational scheme such as the AFPS: see ss. 101B and 101A(1)(a) and (2)(b).[18]Section 101C(1) provides:
“Normal benefit age under a scheme must be between 60 and 65”
. Section 101B defines “normal benefit age” as:
“… the earliest age at which a person who has pension credit rights under [a] scheme is entitled to receive a pension by virtue of those rights (disregarding any scheme rule making special provision as to early payment of pension on grounds of ill-health or otherwise).”
The phrase “pension credit rights” in effect means the rights of a transferee under a pension sharing[19]The effect of the above provisions is clear: save in special circumstances for which the rules of a scheme may provide, a pension created by a pension sharing order referable to an occupational pension scheme cannot come into payment until the pension credit member attains the age of between 60 and 65; and it is for the rules of the scheme to identify the point within those five years at which payment will begin.[20]Before addressing the provisions, or otherwise, of the AFPS in respect of pension credit members, I must make a slight detour; but I will negotiate it at speed. Section 101C(2) of the Act of 1993 provides:
“A scheme must not provide for payment of pension credit benefit in the form of a lump sum at any time before normal benefit age, except in such circumstances as may be prescribed.”
For this purpose the Secretary of State has prescribed certain circumstances by Regulations 3 and 4 of the Pension Sharing (Pension Credit Benefit) Regulations 2000 (S.1. 2000 No. 1054). Regulation 3 permits a scheme to provide for commutation of the whole of the benefit where the pension credit member has a brief life expectancy or where the pension payable would be nominal. Regulation 4 permits a scheme to provide for partial commutation (i.e., says Miss Laing, commutation to the usually permitted maximum of 20% or 25%) where the pension credit member (i) is in an extremely abstruse category, namely suffering from incapacity and not only a pension credit member but also an active member of the scheme “or (ii) has reached the age of 50…”. In relation to that quotation from Regulation 4(1)(a) Miss Laing tells me that the Secretary of State intended that the first word should be “and” rather than “or”. Nevertheless the word used is unambiguous and administrators of pension schemes are entitled to act on it.[21]Within the statutory framework how have the administrators of the AFPS provided for pension credit members? In March 1999, in anticipation of the Act of 1999, the Treasury’s Official Committee on Occupational Pensions produced a paper entitled “Implementing Pension Sharing In Public Service Schemes”. In paragraph 7 the committee said:
“Once legislation is made, schemes should seek their own actuarial and legal advice in good time and set a timetable for amending their rules and administrative procedures to ensure that they are able to implement pension sharing from the operative date.”
[22]Notwithstanding that the Act of 1999 came into force more than three years ago, the Warrant has never been amended to provide in any way for pension credit members; nor, I presume, have the equivalent instruments in respect of the navy and the air force. The defendant ascribes this omission to “resourcing issues”. In the absence of rules under which to work, the managers of the AFPS seek to address the entitlements of pension credit members, of whom by December 2003 there were 484, by reference to a handbook of guidance for internal use. In passing I asked Miss Laing to identify the legal authority under which the Defence Council, as administrator of the AFPS, made payments to pension credit members. She pointed to the effect of the respective court orders and of the Act of 1999. Do these, however, provide a sufficient legal structure within which an award of a proportion of a notional capital value can be translated into, and administered as, as a pension scheme? I assume that this surely irregular state of affairs will be promptly rectified.[23]Regardless of questions of legal authority, Miss Laing asks me to proceed on the basis of certain premises; and the claimant does not, I think, object to my doing so. I collect the premises together as follows:(a) Conferred by the Act of 1999 with the choice of beginning to pay a pension to a pension credit member at any time between the age of 60 and that of 65, the AFPS chooses to begin to pay at the age of 60.(b) The actuarial calculation of a pension of £30,162.34 issued to the claimant in October 2003 was expressly based upon the hypothesis that she would begin to receive payment of it only at the age of 60. Had instead the hypothesis been that she would begin to receive payment immediately, namely at the age of 56, the figure would have been less.(c) The figure of £30,162.34 will be increased annually by reference to the rate of inflation both prior to the proposed start of payment in 2007 and thereafter during the remainder of the claimant’s life.(d) In that, before the pension sharing order came into effect, the husband retired and thereupon received a terminal grant amounting to three times his pension, there is no basis for paying any analogous grant (or lump sum) to the claimant when her pension comes into payment.(e) The administrators of the AFPS have no intention of exercising the power to permit commutation of any part of pension credit benefits by those who have reached the age of 50.[24]In paragraph 4 I have referred to the claimant’s argument that the legislation provides a route whereby the Secretary of State and thereafter the defendant might in tandem remove the alleged incompatibility of ss.101C (1) and 101B with her human rights. The argument is based on s.101C (2), which I have set out in paragraph 20. It is to the effect that the Secretary of State might thereunder, by further regulation, prescribe that a scheme be permitted to provide for payment of pension credit benefit to a person under the age of 60 in the form of a lump sum upon the first such date, not before that upon which the order takes effect, as the pension of the active member, also under the age of 60, is in payment; and that the Defence Council, with the approval of the defendant, might thereupon choose to introduce such provision into the AFPS. But payment of a lump sum to a pension credit member in those fortuitous circumstances would throw up absurd anomalies; and indeed I cannot imagine that the Secretary of State could lawfully so use his prescriptive powers as to subvert both the meaning of “normal benefit age” in ss.101C(1) and 101B and indeed the whole principle that a pension should save in exceptional circumstances take the form of an annuity rather than a capital sum. At all events the fact is that he has not so prescribed; and the law is that, although under s.6 of the Act of 1998 it is unlawful for him to act in a way which is incompatible with a convention right, his failure to make subordinate legislation is not an “act” for this purpose: see s.6(6)(a). So I must survey the legislation as it stands.[25]Just as the claimant’s advisers were aware of the ostensible effect of ss. 101C (1) and 101B, so family lawyers in general are aware of it. In the leading handbook on the subject, namely Salter’s Pension Sharing In Practice, 2nd edition, the author writes at 3.3:
“… if H who is aged 60 has an occupational pension which is already in payment and W is aged 57, any pension sharing order made will bring about an immediate reduction in H’s pension income but will not produce any immediate corresponding benefit to W until she attains age 60. In other words, an ‘income gap’ will arise.”
It is axiomatic that in negotiation a wife’s advisers, and in determination the court, will strive to ensure that provision is made to meet her needs during the years before her pension under a sharing order comes into payment. Many pension credit members of an occupational pension scheme can currently bypass the problem by electing under s.101F of the Act of 1993 to require its administrators to transfer the value of their rights out of the scheme into such an approved personal pension scheme as they may identify; for under a personal pension scheme the pensioner can currently elect that the pension should come into payment as early as age 50. But an occupational pension scheme qualifies as one out of which such external transfer can be made only if it is funded: see s.101P(1) and (4). There seems to have been no better reason for Parliament’s exemption of unfunded public sector pension schemes from exposure to external transfer than government’s preference to discharge its financial obligations later rather than sooner. At all events an external transfer is not available to those in the position of the claimant. But the countervailing benefit, submits Miss Laing, is that the pension payable to the claimant from age 60 will be higher if it comes into payment at that age rather than earlier. SECTION D: THE CLAIMANT’S HUMAN RIGHTS[26]In that, as I will explain in paragraphs 32 to 38, it is clear to me that the Secretary of State establishes justification for the no – payment - until - 60 provision (“the impugned provision”) contained within the Act of 1993 and thereby saves whatever might otherwise be an infringement of the claimant’s human rights by virtue of that provision from being so, there is limited value in my analysing in detail whether the other constituents of an infringement are present. A judgment is an explanation for decision and not an essay. I will not dispute the charge that in recent years judgments have become unacceptably long; nor will I deny that I find some of these aspects of convention law as elusive as a bar of soap in bath-water. For these reasons I will try to address the other necessary steps in the claimant’s argument briefly.[27]Article 1P(a) I hold that the husband’s pension rights under the AFPS have at all times been his “possessions” for the purpose of Article 1P. I accept that a non-contributory social security benefit is not a “possession”: see Carson and Reynolds v SSWP [2003] EWCA Civ 797 at paras. 45-47; nevertheless, pursuant to s. 2(1)(a) of the Act of 1998, I have to “take into account” a more recent decision of the Strasbourg Court in Koua Poirrez v France, 40892/98, which throws even that conclusion into some doubt. I also accept that the AFPS is non-contributory; and that the fact that army pay is set lower than otherwise because of rights under the AFPS does not make it in substance contributory: Hudson v HM Treasury [2003] EWCA Civ 1612 at para. 71. Nevertheless the husband’s non-contributory rights under the scheme are part of the package of remuneration which, unlike a non-contributory social security benefit, he has earned by service and thus they qualify as possessions: Purja v Ministry of Defence [2003] EWCA Civ 1345 at paras 41-42.(b) I hold that the claimant’s pension credit rights under the AFPS have been her “possessions” for the purpose of Article IP since 17 July 2003 (when the order took effect) but I reject her claim that “possessions” arising out of the husband’s membership of the scheme were held in part by her from any earlier date. The fact that the quality of her contribution to the marriage gave her a strong claim upon divorce to transfer of half of his pension rights does not mean that prior thereto she was already in any sense in possession of them.(c) Thus, in order to establish infringement of her rights under Article IP, the claimant has to establish that, at the time when she acquired her AFPS possessions, she was also deprived of them by the impugned provision. I hold that she cannot do so. In Carson and Reynolds the Court of Appeal held that domestic legislation which specifies the amount of a state benefit defines, rather then interferes with, the right under Article IP: see paras 18 to 23. At para. 20 Laws L.J. cited a decision of the Commission in Corner, No.11271/84, that Article 1P does not guarantee a right to a pension of a particular amount; nor, I would add, to payment of it from a particular time. There is no reason to limit this analysis to social security benefits. Indeed in Coke v UK, 38696/97, the Commission had in this regard to consider the AFPS itself. Widows of officers in the armed forces complained that they had been unlawfully excluded from benefit by the terms of amendments to the AFPS, of which the general object had been to make greater provision for widows, including in particular those who had married the deceased after his retirement. The Commission held that there was no interference with their rights. In my view the proper analysis is that, in passing the Act of 1999 and in thus enabling the divorce court to interfere with contractual or other arrangements between a spouse and a pension-provider in order to extricate provision for the other spouse, Parliament had to draw the contours of the new facility; and that part of what it drew was the impugned provision. Parliament therefore defined what the claimant got and it cannot be said to have deprived her of what she got. The claimant describes the CET value of the husband’s pension rights as a “capital sum [and an] asset of the marriage”. Insofar as she might view the half awarded to her as a capital sum, it is easy to see how the claimant might regard the impugned provision as an interference with her enjoyment of it. But any such premise would be false. The CET value is only a notional valuation placed on a bundle of rights which, even when in his sole hands, the husband could exercise only in strictly limited ways.[28]Article 8(a) I hold that respect for “private life” for the purpose of Article 8 encompasses respect for a person’s need for financial support when under as well as over the age of 60. In R (Razgar) v SSHD [2004] 3 WLR 58 at 67C Lord Bingham of Cornhill observed that “private life” extended to those features of life which were integral to a person’s ability to function socially as a person; and the House of Lords there held that action which had foreseeable consequences in terms of a person’s ill-health (or suicide) might interfere with his right to respect for his private life. Indeed in R(Hooper) v SSWP [2003] EWCA Civ 813 the Court of Appeal proceeded on the undisputed basis that a refusal to pay a state pension to widowers engaged their rights under Article 8.(b) I hold that the impugned provision does not interfere with respect for the claimant’s need for financial support when under the age of 60. It is common ground that Article 8 imposes no positive obligation upon the state to provide financial support (Carson and Reynolds, above, para. 26) but the relevance of this line of authority is in dispute. The Secretary of State submits that, in that Article 8 does not oblige the state to provide financial support, it certainly cannot require the state, when providing a mechanism for sharing pensions on divorce, to enable the pension credit member to receive benefits at a particular time. On balance, however, I agree with the claimant that that line of authority is too distant to illumine resolution of this point. I look at the matter far more simply. One cannot say that the impugned provision challenges the principle that the claimant needs financial support before as well as after age 60. In making the provision the state has decreed only that provision carved out of pension rights should not result in payment earlier than what is presently regarded, in the context of state provision, as normal pensionable age. In other words pension credit rights are conferred so as to address later, rather than earlier, need; and, because of the delay in payment suffered by some pension credit members, the real amount of their pension is correspondingly increased. The impugned provision does not derogate from the duty of the divorce court under s.25(2)(b) of the Act of 1973 to have regard to a spouse’s likely needs prior to the age of 60 in deciding what, if any, order to make for her or his benefit by way of financial provision or property adjustment in addition to the pension sharing order.[29]Article 14 (in conjunction with Article 1P or Article 8)(a) I have already in effect held that, although the impugned provision does not infringe the claimant’s rights either under Article 1P or under Article 8, it falls within their ambit. Accordingly she has a right under Article 14 to enjoy them without discrimination on any ground “such as sex … or other status”. The claimant argues that the provision creates discrimination in the enjoyment of such of those rights as are referable to a pension sharing order by delaying payment of the pension to women (such as her) but not to men (such as her husband), and/or to those with the status of ex-wives (such as her) but not to those with the status of widows. To this the Secretary of State responds that, if and insofar as, notwithstanding his argument that later payment means greater payment, any discrimination is wrought by the impugned provision, it is only what it seems to be, namely discrimination on ground of age, which is fully justified.(b) In support of his argument the Secretary of State points to the effect of a pension sharing order in favour of a husband under the age of 60 against a wife under that age whose pension either is already in payment or will come into payment before she attains that age: there is no doubt that, like the claimant, he will have to wait until age 60 before his pension comes into payment. The Secretary of State also points to the effect of a pension sharing order for the benefit of a spouse aged 60 or over against a spouse under that age whose pension, for whatever reason, is not yet in payment: there is no doubt that the beneficiary of that order, whether male or female, will receive the pension immediately.(c) The claimant responds that, in effect, these examples are not representative of the real world; and that the discrimination against wives wrought by the impugned provision is indirect. She points to the fact that each of the 484 pension sharing orders made in relation to the AFPS prior to December 2003 was made in favour of a wife; and submits that that statistic is likely to be at least substantially replicated in relation to civilian pension schemes. She might also add that wives who are older than their husbands are in a minority. At all events, she argues, it is women who suffer as a result of the provision. She cites the definition of indirect discrimination in s.1(2) of the Sex Discrimination Act 1975 (“the Act of 1975”), namely the application to a woman of a provision which would apply equally to a man but which is such that it would be to the detriment of a considerably larger proportion of women than men; and, in the realms of EU law, she cites Rinke v Ärztekammer Hamburg, The Times 25.9.03, in which, by reference to statistics, the E.C.J. held that Council Directives which required even a part-time medical trainee to perform some full-time training indirectly (albeit justifiably) discriminated against women.(d) Miss Laing submits that it is by no means clear from authority that Article 14 follows domestic and EU law in prohibiting indirect as well as direct discrimination. But I see no reason to consider that its prohibition should be less extensive. Indeed in Meyne – Moskalczuk v The Netherlands, 53002/99, the four applicants, each aggrieved that the Dutch legislation for pension sharing upon divorce was so framed as not to be available in their cases, alleged “indirect discrimination on the ground of their gender since the group of divorcees without pension entitlements of their own consists, almost exclusively, of women”. The Court of Human Rights held their claims inadmissible for another reason but gave no indication that such a formulation of discrimination was controversial.(e) I therefore uphold the claimant’s contention that the impugned provision differentiates not only directly on grounds of age but also indirectly on grounds of gender when it delays payment to the pension credit member until (her) age 60 even in circumstances in which the active member is receiving or will receive his pension prior to (his) age 60. In other words, in the terms recommended by Laws L.J. in para. 61 of his judgment in Carson and Reynolds, I hold that the circumstances of the female beneficiary of a pension sharing order and of her ex-husband are sufficiently similar as to call, in the mind of a rational and fair-minded person, for a positive justification for the different and ostensibly prejudicial treatment of the woman in comparison with the man.(f) I hold, by contrast, that a widow of a husband who dies in retirement is not an apt comparator with an ex-wife pension credit member. The analogy is too thin. To state the obvious, it is not even as if the widow’s pension comes into payment at the point suggested as necessary in the case of the claimant, namely by reference to the date upon which the husband’s pension comes into payment: on the contrary the widow’s pension comes into payment when his pension ceases, and indeed regardless of the age of either of them. Nor has the divorce court sought to provide for a widow’s future economy.[30]Justification Thus, at last, the claimant’s initial progress with her claim under Article 14 brings me to the point at which it founders; and, had they not already foundered for other reasons, her claims under Articles 1P and 8 would have founded at this same point. In this area the onus is on the Secretary of State to establish objective and reasonable justification for the impugned provision, i.e. that it is a proportionate response to a legitimate aim. Whether such justification, if established, negatives the existence of discrimination under Article 14 or merely saves the discrimination from being unlawful thereunder is a semantic point not worth pursuing.[31]The preface to Miss Laing’s submission is that the impugned provision is intended to be a simple rule which applies across the board to all occupational pension schemes, whether they relate to the armed forces, civil servants, employees of private companies or otherwise. She also submits that the claimant’s challenge to the provision relates to its effect in a small proportion of cases in which, upon retirement under the age of 60, the active member of the scheme is entitled under its rules to draw an immediate pension rather than to suffer its deferment until that age.[32]The essential justification for the impugned provision is said to be that, just as the rights of the active member under the scheme are primarily designed to provide him with an income in his old age, so the rights carved therefrom under a pension sharing order should be primarily designed to provide the pension credit member with an income in her old age. So the provision prohibits schemes from making payments to pension credit members prior to what, for women, is presently normal retirement age for the purpose of state pensions. The intention of the Secretary of State in introducing the provision and of Parliament in enacting it was that the ex-wife under the age of 60 should be encouraged to work until that age; and that, if she could not work or otherwise maintain herself until age 60, she could reasonably expect the divorce court to oblige the ex-husband to provide her with support in respect of that period.[33]Encouragement to ex-spouses to work until age 60 is, I am sure, a legitimate aim of the state. It is an economic necessity for the state that the majority of those of us who can work should do so. More specifically, as Miss Laing points out, the ex-wife who works is not only thereby supporting herself (or at least contributing to her support) but also perhaps building further state or private pension rights, independent of her pension credit rights, which will augment her income in old age.[34]Miss Laing stresses that, in real terms rather than in terms merely of keeping pace with inflation, the impugned provision yields to the pension credit member a larger pension from age 60 than would be paid to her from that age if it had already come into payment at an earlier date. Thus, in statistical terms, says Miss Laing, the provision does not prejudice pension credit members although in individual cases it will work either to their advantage or to their disadvantage by reference to the date of their death.[35]The corollary, namely that a pension paid earlier is a smaller pension in real terms, has the effect, submits Miss Laing, that the pension credit member, less motivated to work even if able to do so, receives a smaller pension in old age and is then more likely to need income-related state support.[36]The response of the claimant is that it is “utterly disgraceful” for the state to expect ex-wives in her position to work. I accept that it is unreasonable to expect this claimant, in her position and at her age, to work; instead, for her, the backstop is divorce court provision. But it is essential not to appraise justification for a rule by reference to the facts of one case. In this connection, moreover, it is important to perceive with clarity the provision which, according to the claimant, human rights demand. The claimant’s argument is not that pension credit rights should come into payment when the pension credit member attains the age at which the active member’s pension comes into payment. In this case the husband’s pension came into payment when he was aged 58 but the claimant does not contend that her pension should come into payment when she attains the age of 58. No part of the argument has revolved around her 58th birthday, which indeed is yet to come. Her contention is simply that, since she was aged under 60 when the pension sharing order took effect and since the pension of the husband, also aged under 60, was then under the terms of the scheme already in payment, her human rights entitle her to have received immediate payments of pension referable to her share. So, as became clear during the hearing, she claims an entitlement to payment from the age of 56; but her argument, if valid, would entitle her to immediate payment even if, at the date when the order took effect, she had been aged 46, 36 or 26. The state is justified in taking steps to prohibit such a result.[37]Miss Laing has an additional argument. But, in order to establish justification for the impugned provision, she does not need it. So I will simply record it. It is that, because many occupational schemes (such as the AFPS) have been contracted out of the State Earnings Related Pension Scheme (now re-branded as the State Second Pension Scheme), a proportion of an active member’s rights thereunder is impressed, as a condition of that contract, with special limitations analogous to those which would have obtained under SERPS; that, when a pension sharing order is made in relation to a contracted-out scheme, the pension credit member currently suffers an identical impression upon a proportion of her rights, such being called “safeguarded rights”; and that regulations thus provide that the pension credit member’s safeguarded rights cannot yield payment of pension until what for the purpose of state pension schemes is normal pensionable age, namely not before age 60.[38]When, as a family lawyer, I stand back from the detail, I find myself driven to label this claim as misconceived. Where it is appropriate for a marriage to be dissolved, it is also appropriate, if practicable, to devise financial independence for the parties to it. Such has been legitimate policy enshrined in statute since 1984: see s.25A(1) and (2) of the Act of 1973, as then inserted. I have explained in paragraph 15 that the principal limitation upon the usefulness of attachment orders introduced by the Act of 1995 is that they link provision for one spouse out of the other’s pension scheme to that other’s circumstances, in particular to the date of his (or her) retirement and death. The main purpose behind the pension sharing legislation was to free pension credit rights from links with the circumstances of the active member and to render them apt to the circumstances only of the pension credit member. Yet the premise behind the present claim is that the legislation is incompatible with the human rights of the pension credit member in failing to retain a link between the dates when each pension share comes into payment. It simply does not follow that, because the circumstances of the active member are such that he or she can draw a pension prior to age 60, the circumstances of the pension credit member will be such that she or he should also be enabled to do so.

POSTSCRIPT:SEX DISCRIMINATION ACT 1975

[39]The claimant also alleges a breach by the defendant of s.29 of the Act of 1975, which makes it unlawful(a) for any person concerned with the provision of goods, facilities or services(b) to the public or a section of the public(c) to discriminate against a woman who seeks to obtain or use those goods, facilities or services(d) by refusing to provide her with them on the like terms as are normal in his case in relation to male members of the public or (where she belongs to a section of the public) to male members of that section.[40]This argument fails, if for no other reasons, because pension credit members of the AFPS are not a section of the public and because the definition of (indirect) discrimination in s.1(1)(b) of the Act of 1975 excludes the application of conditions, such as the impugned provision, which can be shown to be justifiable.

order

see ss. 29(1)(b) and 28(1)(a) of the Act of 1999. Order: Appeal Allowed. 41. --------------------- MR JUSTICE WILSON: I invited Miss Laing and Captain Friend to point out any obvious typographical errors to me. Miss Laing kindly pointed out a very minor matter in paragraph 4 of the judgment and I have taken her point on board. It is purely cosmetic. Equally, over the weekend I have decided to change one word in paragraph 24. Apart from in those utterly immaterial respects, the judgment, which each party received last week as the draft judgment, is now my final judgment in the matter and for the reasons given therein, this claim stands dismissed. Are there any applications arising out of that? MS LAING: My Lord, yes. I am instructed to ask for the defendant's costs in this matter. MR JUSTICE WILSON: Captain Friend, would you like, as before, to speak for Lady Smith? CAPTAIN FRIEND: With your permission, my Lord. MR JUSTICE WILSON: Of course. CAPTAIN FRIEND: Obviously, my Lord, Lady Smith has asked me for leave to appeal against your judgment and if it is the case and you grant it, we would ask for the costs at the moment to be in the case. MR JUSTICE WILSON: I think the two are distinct and it would not be normal practice nor would it be logical to say that just because there may be an appeal, costs should be stood over. If there was an appeal, if the appeal was allowed, then it might well be that any costs order I made would be set aside. But I think that here and now I should adjudicate upon the claim of the defendant for costs and so I reject your suggestion that it should be costs in the case and what would you like to say as to why I should not make Lady Smith pay the costs? CAPTAIN FRIEND: My Lord, in your own words this is a very important case. It is not, as I think the law has judged, confined to Lady Smith. It spreads far beyond service wives, which she in this particular case appears to represent. It is of such importance that English justice is an act of fairness. I would say one thing, although Lady Smith is not a pauper, she certainly could not afford to do this case without my assistance. My assistance is because I have been a friend of hers for nearly 40 years. But on the pure fairness aspect of justice and in such an important case, I would ask the judge to look at the defence -- what is teemed against Lady Smith and would justice ever be served if costs are to be borne by somebody like her? We are going to seek leave to appeal. MR JUSTICE WILSON: I will come on that. CAPTAIN FRIEND: I can ask no more. She is not a rich person. She certainly could not have afforded -- she realised what she entered into, but it is such an important case and I believe one of basic justice. I would ask, in fact, that in this case you use your discretion under 44.3 not to award case costs. MR JUSTICE WILSON: Thank you very much, Captain Friend. Miss Laing, although Lady Smith has the inestimable advantage of her McKenzie friend, she is not legally represented, and so I wonder whether I might properly ask you this question: if you were representing Lady Smith, what arguments would you advance as to why she should not pay the costs? MS LAING: My Lord, that is a slightly difficult question because the primary rule, as your Lordship is well aware, under the CPR, is still that the losing side should pay the costs unless there anything exceptional to take the case out of that primary rule. Clearly there is a discretion where, for example, the case is readily divisible into sub-issues and one can clearly say that time and costs have been expended on sub-issues in relation to which the party who has won the case has, in substance, lost. So that is one way that one could, as it were, escape from the rigour of the general rule. But apart from that, my Lord, I am not sure that there really is any ground that can be advanced in this case. I was looking at the notes to the relevant rule, which, as Captain Friend rightly says, is CPR 44.3, and one sees on page 1078 a note between 44.3.12. Does your Lordship have it? It is just about halfway down the page. MR JUSTICE WILSON: Yes. MS LAING: It says: "Where the trial judge awarded the successful defendant only 75 per cent of its costs on the grounds that the case was a test case, the Court of Appeal held that the grounds upon which the court could depart from the usual order was set out in rule 44.3(4) and (5). The list is not exhaustive. It is wrong to deprive a successful defendant of part of its costs on ground that the judgment might be of assistance to it in the future." Obviously one does not have the full judgment there but that suggests, at any rate, that the fact that the case may have wider ramifications than the immediate parties to it is not necessarily room for disapplying the general rule. I am certainly aware there may be one or two instances where, in what has been described as public interest litigation, the court will occasionally make no (inaudible) as to costs. I think those are cases where it has been said that the claimant should have no personal interest in the matter and of course in this case the claimant very clearly does have a personal interest in the matter because that is what has motivated the litigation. So, my Lord, I would respectfully submit that this is a case where the normal rule should be applied. There is perhaps an additional reason for doing that, which is that when Mr Justice Mitting granted permission, he did make it very clear that there might well be cost consequences if the claimant was to lose at the substantive hearing. That is paragraph 4 of the transcript in the bundle. My Lord I am not really sure there is much else I can add. MR JUSTICE WILSON: Thank you. I think it would be fair to see whether Captain Friend wants to say anything arising out of that. CAPTAIN FRIEND: My Lord, I cannot think of a more -- purely because Lady Smith has a personal interest in this case -- in view of the numbers involved, and looking around this room, that are represented here, the public interest of this point of law we have tried to establish and we are being judged on now, is the first step in establishing whether it is within the human rights or not. I would beg in the circumstances -- although I should leave this court (inaudible) and I shall move heaven and earth to raise the money for Lady Smith -- but in this particular public interest case you recognise Lady Smith's courage in taking forward and getting it resolved once and for all. Thank you my Lord. MR JUSTICE WILSON: Thank you. The defendant seeks an order that the claimant should pay his costs. I have been racking my brain over the weekend and now as to whether there might be some valid reason for not condemning Lady Smith to pay the defendant's costs. Rule 44.3.2A says that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. Are there any grounds for taking this case out of the general rule? Indeed, I should add that when on 11th February Mr Justice Mitting gave the claimant permission to proceed with her claim on the basis that it was arguable, he said: "Captain Friend, the granting of permission on those grounds may be a curse in disguise. The Duke of Wellington said that a battle won is more terrible than anything other than a battle lost. I think you and Lady Smith must face the fact that, having raised these highly complex questions of high principle, you are going to find your judicial review application strenuously and skilfully resisted by the Government, not only in the High Court but also if it goes beyond the High Court all the way up to the House of Lords. In those circumstances Lady Smith may be buying for herself, if she loses, the privilege of paying an enormous bill of costs to the Government and placing herself in a far worse financial position than she would be now if she did nothing more." In resisting the application for costs Captain Friend has sought to point out the importance of the case to many pension credit members. My attention, however, has been drawn by Miss Laing to the passage in the text of the White Book at rule 44.3.12 where the Court of Appeal held that it was wrong to deprive a successful defendant of part of his costs on the ground that the judgment might be of assistance to it in the future. Although we do not have a transcript of that decision, which was Pexton v The Wellcome Trust, 10th October 2000, it rather seems that the Court of Appeal was there holding that the fact that the case was or was regarded as a test case was not a strong reason for departing from the general rule. I know that in a moment Captain Friend will be pressing upon me an application for permission to appeal to the Court of Appeal. That would be consistent with his contention that the case is a test case. Were I to give permission or were the Court of Appeal to give permission and were then an appeal to the Court of Appeal allowed, I expect that my decision today in relation to costs would be likely to be set aside in whole or in part. That must not deflect me from making the proper order today about costs flowing from the decision which I have reached. I asked Miss Laing, in the light of the fact that Lady Smith is not legally represented, to seek to put before me any argument which had she been representing the claimant and resisting costs she might have marshalled. She very properly reminded me that these days a decision about costs can be more issue based than hitherto and that there are rules to that effect. I am well aware that in the course of my judgment in relation to certain aspects of convention law, I have upheld the contentions of Lady Smith and rejected those of the defendant and the interested party. Nevertheless, the fact is that this claim has not only failed but that after careful thought I described it in my judgment as misconceived. In those circumstances, as it seems to me, it is impossible for me properly to depart from the general rule and to do other than to direct the claimant to pay the costs of the defendant and the interested party to be the subject of detailed assessment on the standard basis. Captain Friend your application please. CAPTAIN FRIEND: My Lord, I have not done this before I believe I have to summarise the reason why I wish to appeal this. MR JUSTICE WILSON: Yes. CAPTAIN FRIEND: My Lord, I tried to simplify the whole claim that Lady Smith had and I think in fact in your judgment you upheld the primary one, that she had a possession which the particular rule of the pension fund or the pension law denied her the enjoyment of. That particular rule in fact invoked indirect discrimination on the grounds of:(1) her sex as a woman, it was only women who were affected by it; and(2) her divorced status. That you have actually found for -- you have declared that the Government or the defendants have a justification for applying that. My appeal, my Lord, is that there is no justification for that. There is no justification in denying somebody a human right to achieve against a particular set of group of the population in a discriminatory way. I did in fact give you an authority on this. The EOC -- may I refer to it at this time or would you rather I did not? MR JUSTICE WILSON: If you want to, do. CAPTAIN FRIEND: It is quite clearly where it was in fact part-time workers and full-time workers. It was number 29 in my bundle. It was the Sector Saving Employment (ex parte), The EOC and another. The summary of this case, my Lord, is that they had different regulations for part-time workers which discriminated against the full-time workers. The part-time workers, to quote this, were 87 per cent women and because in fact -- the purpose of the legislation as stated here was to get more people into full-time jobs, getting more people into full-time jobs in a part-time situation. The situation of most wives, Lady Smith being one of them, who put her family first, was that they could only work part-time. That contravened Article 199 of the (inaudible) Treatment. My submission is exactly the same situation is mirrored here. We have a group of women. I have chosen the services but I believe, my Lord, it is a Pandora's box. A group of women who chose to put their families first and in fact got on the back end of the divorce, usually in their 50s, although it is not confined to the 50s, and then fell foul of this regulation, which purely as women and as divorced status it is almost marginalising and demonising divorcees. A situation that we have not had in this country since the 40s. We have stopped that nonsense. This law, the way the pension upholds it, is in my view -- and this is the where the word that I used "disgraceful" comes along -- it is not Lady Smith's word -- MR JUSTICE WILSON: Forgive me, Captain Friend, I took you as speaking on her behalf. I heard nothing from her. All I heard was you and so I presumed that I should ascribe to her the sentiments articulated through your mouth. CAPTAIN FRIEND: I think I must put it this way, she would have chosen different words. MR JUSTICE WILSON: That is nothing to do with me, Captain Friend. CAPTAIN FRIEND: I do apologise. MR JUSTICE WILSON: You were allowed, exceptionally, not only to assist her in court but to speak for her. If you are now telling me that she would not have associated herself with a phrase used by you, that is not my fault exactly, Captain Friend. CAPTAIN FRIEND: I do not mean it that way, as I am sure you understand. Getting back to the point I am making of the -- we seem to have this group of women, divorcees, who are treated -- I cannot identify another section of society which is treated in this way. As you pointed out, my Lord, you have given some rulings in support of Lady Smith, some in support of the defendant and against either and on that basis the challenge would be: is that regulation still compatible? Is not the justification there within the fact that they are discriminating totally in this implication or the application of this rule against women? That would be the grounds of any appeal that Lady Smith had made. There is no objective justification based on the indirect discrimination (inaudible). I do not think I can say any more, my Lord. MR JUSTICE WILSON: Captain Friend, thank you very much indeed. Miss Laing. MS LAING: My Lord, as your Lordship knows, the test for permission to appeal is set out in CPR Part 52, rule 52.3.6. There are two gateways. Either the court considers that the appeal would have a real prospect of success or that there is some other compelling reason why the appeal should be heard. That is the test. My submissions in relation to those two gateways are very short. In relation to the first gateway, the merits gateway, I would simply repeat your Lordship's description of the claim upon analysis of it being misconceived and a view with which the defendants would obviously incur. So we would submit that in terms of prospects the prospects are very low. Secondly, so far as whether there is a compelling other reason why there should be an appeal, we would say that despite Captain Friend's suggestion that this case had wider ramifications, when one analyses the position carefully, its ramifications are not very high at all because what it applies to is a situation where one spouse belongs to an occupational pension scheme which entitles him or her to retire on a full pension below the age of 60. He or she is married to a spouse who is younger than he or she is and a pension sharing order happens to be made at a time when the younger spouse is still less than 60 and the older spouse is drawing the pension. So we would submit that on analysis this case has had very narrow ramifications because it only applies to that very narrow class of people. For those reasons we would say there is no compelling other reason why an appeal should be heard. MR JUSTICE WILSON: Thank you Miss Laing. Do you want to come back on any of that Captain Friend? CAPTAIN FRIEND: I have to say, the demographic organisation about our society is that still now the wives tend to be younger than the husbands. The door that I am attempting to open is very wide. I can only use the analogy of my own wife, who is 14 years younger than me. Should we split and we consent to the splitting of my two small pensions, she has to wait 8 years. That is across the country. I have confined my activities obviously for Lady Smith, to her situation, but I have talked to a solicitor of the (inaudible) country practice. They are all in this position, every single one. They were all consent orders. I think this is the basis of my objection. These pension share arrangements were not imposed by the court on husbands that refused to comply, they were voluntary arrangements by consent and far from leaving people unable to or not wanting to apply for state benefit, they have done the exact opposite because there are certain husbands who do not take the responsibility seriously. They have given half the pension and they clear off. But the numbers involved; I think we would be surprised as to just how great a number that is. It is not a narrow issue, it is a very broad one and I submit possibly affecting every woman in this court room. Thank you, my Lord. MR JUSTICE WILSON: Thank you very much indeed, Captain Friend. It is always difficult for a judge who has reached a decision to stand back at one remove and consider whether an appeal would have a real prospect of success. I think that it is always difficult for advocates to address a judge on why his decision would be likely to be overturned on appeal. I make allowance for those difficulties that I have and that in this respect Captain Friend has. But having thought about this case at such great length, I came to a very clear conclusion and I have spent many days trying to articulate that conclusion in terms which were totally clear. I have clearly not persuaded Lady Smith of the logic behind my decision and she is utterly convinced that the decision is wrong, unfair to women and contrary to the human rights of many female pension credit members. Hand on heart, I cannot say that the appeal would have a real prospect of success. I would be amazed if this appeal were to succeed. As to whether there is some other compelling reason why the appeal should be heard, I have sought, and forgive me for repeating myself, to set out very clearly why the claim is misconceived and unless my whole approach is wrong, which I cannot readily accept, there is no compelling reason why the law should go further than is reflected in the paragraphs of my judgment. I believe that the proper course is for Lady Smith, by Captain Friend, to approach the Court of Appeal to see whether she, through him, can persuade it that one or other of the basis for permission set out in rule 52.36 obtains. But doing the best I can down here I conclude that permission should not be granted. Are there any other matters Captain Friend? CAPTAIN FRIEND: No my Lord. Again thank you very much for your forbearance and understanding. MR JUSTICE WILSON: Not at all. Any other matters, Miss Laing? MS LAING: No, my Lord. May I echo Captain Friend in expressing our gratitude to your Lordship. MR JUSTICE WILSON: Thank you, Miss Laing.

Cited in 1 later judgment