In Phillips v National Grid Gas Plc, the High Court has ruled that a member's claim was time-barred. The member had argued that the employer had breached a duty to give a properly formed opinion regarding whether the member's condition amounted to incapacity under the scheme rules, and that that failure was an ongoing breach. The question of whether a breach of duty is ongoing in nature can be crucial to the question of whether any claim for that breach is time barred. We take a look at the judgment and its wider implications for pension schemes.
High Court rules that breach of duty claims in incapacity case were time barred
In Phillips v National Grid Gas Plc, the High Court has ruled that a member's claim was time-barred. The member had argued that the employer had breached a duty to give a properly formed opinion regarding whether the member's condition amounted to incapacity under the scheme rules, and that that failure was an ongoing breach. The case is of wider importance for pension schemes because, in cases of document errors that happened a long time ago, trustees will often be out of time for bringing a claim against anyone unless they can show that there was a continuing breach of duty.
The member was dismissed on capability grounds in 2002 following a back injury. In 2002 the employer said that it had not dismissed the member for incapacity. The judge referred to this as the "2002 opinion". Following a complaint under the scheme's internal disputes resolution procedure (IDRP), in 2008 the employer said that in its opinion based on medical evidence, it was not possible to reach the conclusion that the member was permanently incapable, and that he was therefore not eligible for an ill-health pension (the "2008 opinion"). The member argued that this breached the employer's duties on various grounds. The member only issued legal proceedings in 2022, and the employer argued that the claim was time-barred under the six-year limitation period for breach of contract or tort. The member argued the employer’s failure was ongoing, so the limitation period had not expired.
There were three potential points at which the duty to give a properly formed opinion on incapacity could have arisen: (1) in 2002 when the member applied for an incapacity pension; (2) in 2008 when the member made a first stage complaint under the IDRP; and (3) in 2009 following a second-stage IDRP complaint, when a review undertaken by the employer at the trustees' request resulted in a recommendation for the employer to obtain a medical opinion. (No such opinion was ever obtained, with each party blaming the other for the delay.)
The judge held that any breach of duty in 2002 or 2008 occurred at the time of the relevant opinion, with no ongoing duty to revisit the opinion. That meant any claim in relation to those opinions was time barred. To the extent that the employer had a duty to provide an opinion in response to the trustees' 2009 request, the court found the employer’s duty was to respond within a reasonable time, so the six year limitation period would run from when that reasonable time expired.
Our thoughts
Where a person commits a breach of duty but could have put things right later, that raises the question of whether the failure to put things right was itself a breach of duty. This is important because if it is legally possible to bring a claim for a failure to put things right, it may be possible to bring that claim long after a claim for the original breach has become time barred. This case indicates that where an initial breach of duty occurs at a particular point in time, the courts are likely to consider that any limitation period runs from that point, and that there is no separate ongoing duty to put things right.
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