Trinity
Term
[2017] UKSC 47
On appeal from: [2015] EWCA Civ 1000
JUDGMENT
Walker (Appellant) v Innospec Limited and
others (Respondents)
before
Lady Hale, Deputy
President
Lord Kerr
Lord Reed
Lord Carnwath
Lord Hughes
JUDGMENT GIVEN ON
12 July 2017
Heard on 8 and 9 March
2017
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Appellant
Martin Chamberlain
QC
Max Schaefer
(Instructed by
Liberty)
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Respondent
Nicholas Randall QC
Claire Darwin
(Instructed by
Eversheds Sutherland (International) LLP (Manchester))
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Interested Party
(Secretary of State for Work and Pensions)
Jason Coppel QC
Holly Stout
(Instructed by The
Government Legal Department)
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LORD KERR: (with whom Lady
Hale and Lord Reed agree)
1.
John Walker, the appellant in these proceedings, started to work for
Innospec Ltd on 2 January 1980. From the beginning of his employment, he was
required to become a member of the firm’s contributory pension scheme. He
continued to pay into the scheme throughout the time that he was employed by
Innospec. His employment continued until Mr Walker accepted early retirement on
31 March 2003. He would have reached normal retirement age, as prescribed by
the pension scheme, in 2007.
2.
Under the terms on which Mr Walker could take early retirement, he was
able to maximise his pension to the level that it would have reached if he had
retired in 2007. The concessions made by his employer which allowed him to do
so were not made in exchange for any waiver by him of his future pension
rights.
3.
Mr Walker is gay. He has lived with his male partner since 1993. They
applied for a civil partnership on 5 December 2005 (the same day the Civil
Partnership Act 2004 came into force) and their civil partnership was
registered on 23 January 2006. They are now married.
4.
Shortly after the civil partnership was registered, Mr Walker asked
Innospec to confirm that, in the event of his death, they would pay the
spouse’s pension, which the scheme provides for, to his civil partner. They
refused, because his service predated 5 December 2005. The basis of the refusal
(which was confirmed after Mr Walker and his partner married) is paragraph 18
of Schedule 9 to the Equality Act 2010. This provision must be considered in
greater detail later in this judgment but, in broad outline, it provides an
exception to the general non-discrimination rule implied into occupational
pension schemes. Under this exception, it is lawful to prevent or restrict
access to a benefit, facility or service to a person (a) where the right to that
benefit etc accrued before 5 December 2005, or (b) which is payable in respect
of periods of service before that date.
5.
If Mr Walker was married to a woman, or, indeed, if he married a woman
in the future, she would be entitled on his death to the pension provided by
the scheme to a surviving spouse. When the claim was issued, the value of that
“spouse’s pension” was about £45,700 per annum. As things stand at present, Mr
Walker’s husband will be entitled to a pension of about £1,000 per annum (the
statutory guaranteed minimum).
The proceedings
6.
In November 2011, Mr Walker lodged a claim in the Employment Tribunal
(ET) against his employers, alleging that they had discriminated against him on
the ground of his sexual orientation. On 13 November 2012, the ET unanimously
decided that there had been both direct and indirect discrimination on that
ground. It had been argued on behalf of the respondents that there had not been
direct discrimination and that, although the operation of the pension scheme
amounted to indirect discrimination, this was justified. Both arguments were
rejected by the ET. The discrimination was direct, the ET said, in that it
involved unequal treatment of straightforwardly comparable individuals viz heterosexual
married couples and same sex couples who had entered a lifetime commitment to
each other. It was likewise indirect discrimination because an unwarranted
requirement had been imposed in respect of the couple of the same gender. The
proffered justification by the respondents (that it was necessary to have the
restriction in place in order to ensure proper funding of the scheme) was found
by the ET to be unsupported by sufficiently cogent evidence.
7.
The ET concluded that paragraph 18 could and should be read in a manner
which would render it compliant with Council Directive 2000/78/EC of 27
November 2000 [2000] OJ L 303/16 (the Framework Directive). This establishes a
general framework for equal treatment in employment and occupation. It
therefore upheld Mr Walker’s claim on liability and fixed a date for a remedies
hearing.
8.
Innospec appealed. Its arguments on direct and indirect discrimination
failed. The Employment Appeal Tribunal (EAT) rejected the argument that
because, as a matter of status, a spouse is entitled to a pension or survivor’s
benefit without the restriction which paragraph 18 places upon a civil partner,
they were not comparable: [2014] ICR 645. The EAT’s dismissal of the argument
drew on section 23(3) of the Equality Act 2010 which provides that if the
protected characteristic is sexual orientation, the fact that one person “is a
civil partner while another is married is not a material difference between the
circumstances relating to each case” and on the statement of Lady Hale in Bull
v Hall [2013] UKSC 73; [2013] 1 WLR 3741, para 29, to the effect that the
“criterion of marriage or civil partnership [should be regarded] as
indissociable from the sexual orientation of those who qualify to enter it”. On
the question of indirect discrimination, the EAT held that the ET was entitled
to conclude that Innospec had failed to produce any cogent evidence on the
issue of justification but had merely relied on generalised assertions. It had
thus failed to show that the indirect discrimination was proportionate.
9.
The EAT allowed Innospec’s appeal, however. It held that the Framework
Directive did not have retrospective effect to render unlawful inequalities
based on sexual orientation that arose before the last date for its transposition.
After that date the Directive provided a basis for ensuring equal treatment
between those with different sexual orientation but not before. Paragraph 18
was therefore not incompatible with the Directive.
10.
The EAT further held that if, contrary to its view, paragraph 18 was, on
its face, incompatible with the Directive, it was not open to it to interpret
that provision in a way that rendered it compatible. The plain purpose of the
paragraph was to create an exception. To nullify that exception would run
directly contrary to the “grain” of the legislation (Ghaidan v Godin-Mendoza
[2004] 2 AC 557). It was also held that paragraph 18 could not be
disapplied. In reaching that conclusion, the EAT referred to the judgment of
Lord Mance in R (Chester) v Secretary of State for Justice [2013] UKSC 63; [2014] AC 271, at paras 61-62 where he said:
“The Court of Justice has accepted
that, although the Treaty contemplates that the general principle of
non-discrimination underlying article 13 EC will be implemented by Directives,
member states will be bound thereby to discontinue, disregard or set aside
measures so far as they involve discrimination on a basis contrary to article
13 at least after the time for transposition of such a Directive: Kücükdeveci
v Swedex GmbH and Co KG (Case C-555/07) [2010] All ER (EC) 867, Römer v Freie und Hansestadt Hamburg (Case C-147/08) [2011] ECR I-3591, para 61 ...
however, for the general principle of non-discrimination to apply, the context
must fall within the scope of Community or now Union law ...”
The EAT considered that Mr Walker’s claim, in so far as
it related to an asserted entitlement to spousal pension, could not be brought within
the scope of European Union (EU) law in respect of the period prior to the time
limit for transposing the Framework Directive.
11.
Mr Walker appealed the EAT’s decision. In the Court of Appeal the
Secretary of State argued that the EAT was wrong in its conclusion on direct
discrimination. In effect, he repeated the argument advanced by Innospec to the
EAT that civil partners and married persons are not “in a comparable position”
in respect of pension rights because paragraph 18 itself created a difference
in status between the two groups. That argument was rejected, Lewison and
Underhill LJJ finding that civil partnership and marriage were indeed
comparable situations in the UK and Lord Dyson MR agreeing with both: [2016] ICR 182.
12.
The Court of Appeal nevertheless dismissed Mr Walker’s appeal. At the
outset, Lewison LJ identified what he described as two relevant principles of
EU law. These were said to be the “no retroactivity” principle and the “future
effects” principle. Lewison LJ described the first of these principles as
prescribing that “EU legislation does not have retroactive effect unless,
exceptionally, it is clear from its terms or general scheme that the legislator
intended such an effect, that the purpose to be achieved so requires and that
the legitimate expectations of those concerned are duly respected” - para 5 of
his judgment. Because the Court of Appeal found that to require payment of a
spouse’s pension to Mr Walker’s husband, after Mr Walker’s death, would be to
give the Framework Directive retrospective effect, it concluded that the no
retroactivity principle precluded this. The second principle was said to be that
amending legislation applies immediately to the future effects of a situation
which arose under the law as it stood before amendment, unless there was a
specific provision to the contrary - again para 5.
13.
The application of those principles by the Court of Appeal is central to
their decision. They underpin critically their conclusion that the Framework
Directive’s prohibition of discrimination on grounds of sexual orientation
applies only to pension payable in the future in respect of service and/or contributions
paid prior to 2 December 2003, the deadline for its transposition. In turn that
conclusion depends vitally on the Court of Appeal’s analysis of the EU cases
which, it says, articulate the no retroactivity and future effects principles.
The issues in broad outline
14.
The appellant identified three principal issues. The first is whether
the differential treatment provided for by paragraph 18 of Schedule 9 is
compatible with the Framework Directive.
15.
The second issue is whether, if the differential treatment is not
compatible with the Framework Directive, the appellant’s claim must nonetheless
fail because paragraph 18 must be given effect, or whether, as the appellant
contends, the paragraph must be disapplied because of its inescapable conflict
with the Directive.
16.
The final issue raised by the appellant is whether a declaration of
incompatibility under section 4 of the Human Rights Act 1998 should be made by
this court, declaring that paragraph 18 is incompatible with article 14, read
with article 8 and/or article 1 of the First Protocol of the European
Convention on Human Rights and Fundamental Freedoms (ECHR).
Some general considerations
17.
Until the beginning of this century there was no legal prohibition on
discrimination on the grounds of sexual orientation at work. Since then, the
legal status of gay and lesbian employees has been transformed, mainly because
of two developments. The first was the introduction of equal treatment
legislation by the European Union. The Framework Directive’s prohibition of discrimination
in the field of employment and occupation extended to unequal treatment on the
ground of sexual orientation. The deadline for transposing the Directive into
domestic law was 2 December 2003 and the UK did this initially by way of
regulations (the Employment Equality (Sexual Orientation) Regulations 2003) (SI
2003/1661)) and subsequently in primary legislation now incorporated into the
Equality Act 2010. Part 5 of that Act prohibits direct and indirect
discrimination on grounds of sexual orientation in the context of employment.
18.
The second development is domestic in origin. Parliament has legislated
to recognise same-sex unions, first by introducing civil partnerships
equivalent to marriage (the Civil Partnership Act 2004) and subsequently by legalising
same-sex marriage itself (the Marriage (Same Sex Couples) Act 2013). The recognition
of same-sex partnerships, which is not required by EU law, was motivated by an
appreciation that formal equality for same-sex couples will always be deficient
if they are unable to avail themselves of the legal benefits attendant on
marriage. In her foreword to the consultation paper preceding the introduction
of the Civil Partnership Act 2004, Jacqui Smith, the Minister of State for
Industry and the Regions and Deputy Minister for Women and Equality, noted:
“Many [same-sex couples] have been
refused a hospital visit to see their seriously ill partner, or have been
refused their rightful place at their partner’s funeral. Others find themselves
unable to access employment benefits reserved only for married partners.
Couples who have supported each other financially throughout their working
lives often have no way of gaining pension rights. Grieving partners can find
themselves unable to stay in their shared home or to inherit the possessions
they have shared for years when one partner dies suddenly without leaving a
will. In so many areas, as far as the law is concerned, same-sex relationships
simply do not exist. That is not acceptable.”
19.
Although EU law does not impose any requirement on member states to
recognise same-sex partnerships, the European Court of Justice has held that if
a status equivalent to marriage is available under national law, it is directly
discriminatory contrary to the Framework Directive for an employer to treat a
same-sex partner who is in such a partnership less favourably than an
opposite-sex spouse (Maruko v Versorgungsanstalt der Deutschen Bühnen
(Case C-267/06) [2008] 2 CMLR 32). Thus in the UK it is unlawful as a matter of
both EU and domestic law for an employer to deny a same-sex civil partner or
spouse of an employee a benefit that would be provided to a spouse of the
opposite sex.
20.
That is not an end of the matter, however. When it introduced civil
partnerships, Parliament also decided to include an exception to the
prohibition on discrimination in the context of employment. That is now
contained in paragraph 18 of Schedule 9 of the Equality Act 2010, which
provides in its current form:
“(1) A person does not
contravene this Part of this Act, so far as relating to sexual orientation, by
doing anything which prevents or restricts a person who is not [within
sub-paragraph (1A)] from having access to a benefit, facility or service -
(a) the right to which
accrued before 5 December 2005 (the day on which section 1 of the Civil
Partnership Act 2004 came into force), or
(b) which is payable in
respect of periods of service before that date.”
21.
Mr Walker does not come within section 1A. (It concerns either (a) a man
who is married to a woman, or (b) a woman who is married to a man, or (c) someone
married to a person of the same sex in a relevant gender change case.) If the
effect of the Framework Directive is to prohibit discrimination on the ground
of sexual orientation with regard to the payment of pensions in respect of
periods of service before 5 December 2005, paragraph 18 is plainly incompatible
with it. The essential question, therefore, is whether that is the effect of
the Directive.
The rule against retroactive legislation
22.
The general rule, applicable in most modern legal systems, is that
legislative changes apply prospectively. Under English law, for example, unless
a contrary intention appears, an enactment is presumed not to be intended to
have retrospective effect. The logic behind this principle is explained in Bennion
on Statutory Interpretation, 6th ed (2013), Comment on Code section 97:
“If we do something today, we feel
that the law applying to it should be the law in force today, not tomorrow’s
backward adjustment of it. Such, we believe, is the nature of law. ‘… those who
have arranged their affairs … in reliance on a decision which has stood for
many years should not find that their plans have been retrospectively upset’.”
23.
EU law is no different in this respect. As the Court of Appeal observed,
the Court of Justice of the European Union (CJEU) has developed two principles
to establish the temporal application of EU legislation - the “no
retroactivity” principle and the “future effects” principle. These were described
by the CJEU in Land Nordrhein-Westfalen v Pokrzeptowicz-Meyer (Case
C-162/00) [2002] 2 CMLR 1, paras 49-50 as follows:
“According to settled case law, in
order to ensure observance of the principles of legal certainty and the
protection of legitimate expectations, the substantive rules of Community law
must be interpreted as applying to situations existing before their entry into
force only in so far as it clearly follows from their terms, their objectives
or their general scheme that such effect must be given to them (see, in
particular, Bout (Case C-21/81) [1982] ECR 381, para 13, and GruSa
Fleisch (Case C-34/92) [1993] ECR I-4147, para 22).
It also follows from settled case law
that new rules apply immediately to the future effects of a situation which
arose under the old rules (see, among other cases, Licata v Economic and
Social Committee (Case C-270/84) [1986] ECR 2305, para 31). In application
of that principle the Court has held, in particular, that since the Act
concerning the conditions of accession of the Republic of Austria, the Republic
of Finland and the Kingdom of Sweden and the adjustments to the Treaties on
which the European Union is founded (OJ 1994 C 241, p 21, and OJ 1995 L 1, p
1) contains no specific conditions whatsoever with regard to the application of article 6 of the EC Treaty (now, after amendment, article 12 EC), that provision must be regarded as being immediately applicable and binding on the Republic of Austria from the date of its accession, with the result that it applies to the future effects of situations arising prior to that new member state’s accession to the Communities (Case C-122/96) Saldanha and MTS [1997] ECR I-5325, para 14).”
24.
The policy behind the no retroactivity principle is thus similar to that
described in Bennion - the need to ensure “legal certainty” and to
protect the “legitimate expectations” of those who have relied on the law as it
previously stood. The future effects principle is simply the other side of the
same coin. It is a method developed by the CJEU to avoid any retrospective
effect and to ensure the immediate prospective application of legislation to
ongoing legal relationships. The principle is necessary because it is not
always easy to identify the point at which a right accrues. Employment provides
a paradigm example. How should a new EU provision be applied to an ongoing
employment relationship that had begun before the provision came into force? In
Land Nordrhein-Westfalen, the CJEU answered that question by holding that
“the application of a new rule … from the date of its entry into force, to a
contract of employment concluded prior to its entry into force, cannot be
regarded as affecting a situation arising prior to that date (para 52).” As
Advocate General Jacobs explained at para 59 of his Opinion:
“Applying a legal provision to a
fixed-term employment contract which has not finally ended by the time that
provision enters into force does not involve the retroactive application of the
law; it entails only the immediate application of that provision to the effects
in the future of situations which have arisen under the law as it stood before
amendment.”
25.
The CJEU draws a distinction, therefore, between the retroactive
application of legislation to past situations (which is prohibited unless
expressly provided for) and its immediate application to continuing situations
(which is generally permitted). The distinction was elucidated by Advocate
General Jacobs in Andersson v Svenska Staten (Case C-321/97) [2000] 2 CMLR 191, para 57:
“Retroactive effect consists in
the application of the rule to situations which were permanently fixed before
that rule came into force. Immediate effect, which, in principle, works
likewise according to the principle tempus regit actum, consists in applying
the rule to situations which are continuing.”
26.
The application of these principles presents a challenge when one is
dealing with entitlement to an occupational retirement pension. Conventionally,
the right to a pension accumulates over decades. During the time that the right
is accruing, actuarial assumptions are made based on existing legal conditions,
notwithstanding that the pension is payable in the future. Those assumptions
are upset when, because of changes in social values, a new equal treatment
provision is introduced. It is not immediately easy to identify the point at
which entitlement to a pension becomes “permanently fixed” - whether for
example at the date of retirement or when the pension is paid.
The Directive
27.
So far as are material to the circumstances of this case, the relevant
passages from Recitals 11 and 12 of the Framework Directive are these:
“(11) Discrimination based on
religion or belief, disability, age or sexual orientation may undermine the
achievement of the objectives of the EC Treaty, in particular the attainment of
a high level of employment and social protection, raising the standard of
living and the quality of life, economic and social cohesion and solidarity,
and the free movement of persons.
(12) To this end, any direct
or indirect discrimination based on religion or belief, disability, age or
sexual orientation as regards the areas covered by this Directive should be
prohibited throughout the Community. …”
Article 1 provides that “The purpose of this Directive is
to lay down a general framework for combating discrimination on the grounds of
religion or belief, disability, age or sexual orientation as regards employment
and occupation, with a view to putting into effect in the member states, the
principle of equal treatment”. Article 2 provides:
“1. For the purposes of this
Directive, the ‘principle of equal treatment’ shall mean that there shall be no
direct or indirect discrimination whatsoever on any of the grounds referred to
in article 1.
2. For the purposes of
paragraph 1:
(a) direct discrimination
shall be taken to occur where one person is treated less favourably than
another is, has been or would be treated in a comparable situation, on any of
the grounds referred to in article 1;
(b) indirect discrimination
shall be taken to occur where an apparently neutral provision, criterion or
practice would put persons having a particular ... sexual orientation at a
particular disadvantage compared with other persons unless:
(i) that provision,
criterion or practice is objectively justified by a legitimate aim and the
means of achieving that aim are appropriate and necessary ...”
The appellant’s arguments
28.
For the appellant, Mr Martin Chamberlain QC submits that the Court of
Appeal has fundamentally misconstrued the nature of the issues involved in the
jurisprudence of the CJEU. Mr Chamberlain argues that the line of cases on
which the Court of Appeal relied are all concerned with temporal limitations
imposed on claims for equal pay for men and women, not for claims for equal
treatment in relation to pension entitlement for heterosexual and gay men and
women. Moreover, that limitation was, he says, introduced as an exceptional
measure to deal with the consequence of the abrupt, financially catastrophic
impact that retrospective entitlement to equality of pay would have had on the
economies of many member states of the EU.
The cases considered by the Court of Appeal
29.
In Defrenne v Sabena (Case 43/75) [1976] ECR 455; [1981] 1 All ER 122 (Defrenne II) the court held that article 119 had direct
effect and could be relied on from the date by which it had required member
states to implement the principle of equal pay (1 January 1962). The court
recognised, however, that this would have far-reaching economic consequences.
In light of these and the anticipated impact of large numbers of backdated
claims, the court exceptionally limited the effect in time of its judgment, so
that the direct effect of article 119 could not be relied on to support claims
for pay periods before the judgment date (except those that had already been
launched by that date). That this was a pragmatic decision, inspired by the
combination of unusual circumstances surrounding the application of article 119,
is clear from the final part of the judgment. In para 70 it referred to the
fact that many undertakings could not have foreseen that they might become
liable for claims from the date that member states were required to implement
the principle of equal pay and that many might be driven to bankruptcy in
consequence. Then at paras 72-74, the court said this:
“72. However, in the light of
the conduct of several of the member states and the views adopted by the
Commission and repeatedly brought to the notice of the circles concerned, it is
appropriate to take exceptionally into account the fact that, over a prolonged
period, the parties concerned have been led to continue with practices which
were contrary to article 119, although not yet prohibited under their national
law.
73. The fact that, in spite
of the warnings given, the Commission did not initiate proceedings under article
169 against the member states concerned on grounds of failure to fulfil an
obligation was likely to consolidate the incorrect impression as to the effects
of article 119.
74. In these circumstances,
it is appropriate to determine that, as the general level at which pay would
have been fixed cannot be known, important considerations of legal certainty
affecting all the interests involved, both public and private, make it
impossible in principle to reopen the question as regards the past.”
30.
It is clear from these passages that the CJEU was not propounding a
general rule relating to the retrospective application of legislation.
Rather, it was expressing an exception to the general rule that judicial
decisions will generally have retrospective application. The statement in
para 5 of Lewison LJ’s judgment (see para 12 above) that “EU legislation does
not have retroactive effect unless, exceptionally, it is clear from its terms
or general scheme that the legislator intended such an effect,” though no doubt
correct, is not supported in any way by Defrenne II. Moreover, the
statement that the legitimate expectations of those concerned are required to
be “duly respected” must also be approached with some caution in the context of
judicial decisions, which are generally retroactive. In Defrenne II, it
was the combination of the expectations of undertakings (fuelled as they were
by the inaction of the Commission) and the circumstance that considerable
financial hardship might accrue which led the court to take the exceptional
course which it did.
31.
Bilka-Kaufhaus GmbH v Weber von Hartz (Case C-170/84) [1986] ECR 1607; [1986] 2 CMLR 701 determined that benefits under an occupational pension
scheme amounted to “pay” within the meaning of article 119, being
“consideration received by the worker from the employer in respect of his
employment” (para 22). The issue whether there was entitlement to benefits
deriving from service before article 119 should have been implemented in
Germany did not arise.
32.
Barber v Guardian Royal Exchange Assurance Group (Case C-262/88) [1990] ECR I-1889; [1991] 1 QB 344 involved a different question from that in Bilka-Kaufhaus.
The issue in Barber was whether benefits under contracted-out schemes
fell within “pay” for the purposes of article 119. The court held that they did
- para 28. Under the cross heading, “Effects of this judgment ratione
temporis” the court considered in paras 40-44 the question whether the
judgment should be restricted in relation to any retrospective effect. Some
passages from these paragraphs are of significance in understanding whether
this case has any bearing on the principle of non-retroactivity of legislation.
At para 40 the court recorded the submissions of the Commission and the UK
government:
“40. … the Commission has
referred to the possibility for the court of restricting the effect of this
judgment ratione temporis in the event of the concept of pay, for the purposes
of the second paragraph of article 119 of the Treaty, being interpreted in such
a way as to cover pensions paid by contracted-out private occupational schemes,
so as to make it possible to rely on this judgment only in proceedings already pending
before the national courts and in disputes concerning events occurring after
the date of the judgment. For its part the United Kingdom emphasised at the
hearing the serious financial consequences of such an interpretation of article
119. The number of workers affiliated to contracted-out schemes is very large
in the United Kingdom and the schemes in question frequently derogate from the
principle of equality between men and women, in particular by providing for
different pensionable ages.”
33.
Referring to its judgment in Defrenne II, the court then made
clear in para 41 that taking the course that the Commission and the UK
government had invited it to follow was only possible as an exceptional
measure. It said that “it may, by way of exception, taking account of the
serious difficulties which its judgment may create as regards events in the
past, be moved to restrict the possibility for all persons concerned of relying
on the interpretation which the court, in proceedings on a reference to it for
a preliminary ruling, gives to a provision.” (emphasis added)
34.
Another factor in play in the court’s decision to restrict the effect of
its judgment was that, because of earlier Directives, “the member states and
the parties concerned were reasonably entitled to consider that article 119 did
not apply to pensions paid under contracted-out schemes and that derogations
from the principle of equality between men and women were still permitted in
that sphere” - para 43. This factor carries echoes of the situation which
pertained in Defrenne II. As in that case, the decision in Barber does
not constitute an example of a general principle of non-retroactivity for EU
legislation. It is, rather, an instance of curtailing what would otherwise be
the logical application of the judgment to existing and precedent situations
for essentially practical reasons.
35.
The scope of the Barber limitation was considered in Ten Oever
v Stichting Bedrijfspensioenfonds voor het Glazenwassers- en Schoonmaakbedrijf
(Case C-109/91) [1993] ECR I-4879; [1995] ICR 74. That case related to an occupational
pension scheme. Until 1 January 1989 rules of the scheme provided for
survivors’ pensions for widows only, but after that date widowers also were
entitled to pensions. After the death in October 1988 of the applicant’s wife,
who had been a member of the scheme, he requested but was refused the grant of
a widower’s pension. He brought proceedings for a declaration that he was
entitled to the pension because such a pension was to be treated as “pay”
within the meaning of article 119 of the EEC Treaty and that no discrimination
between men and women was permissible. The national court referred to the Court
of Justice the questions whether “pay” in article 119 covered non-statutory
benefits to surviving relations and, if so, from what date the applicant could
claim a widower’s pension.
36.
Various possible interpretations of the effect of the Barber limitation
were considered by the judge rapporteur and the Advocate General - see AG10. One
of these was “to apply equal treatment to all pension payments made after 17
May 1990 [the date of the Barber judgment], including benefits or
pensions which had already fallen due and … irrespective of the date of the
periods of service during which the pension accrued.” Advocate General Van
Gerven explained in AG13-17 why he considered that it was not appropriate to do
so. An important passage appears at AG13:
“Before I take my position on the
effect in time of Barber v Guardian Royal Exchange Assurance Group (Case
C-262/88) [1990] ICR 616, I consider it important to clarify the rationale
which led the court to introduce that limitation into its judgment. That that
is an unusual step needs no demonstration, given the declaratory character
which in principle attaches to the court’s interpretation of Community law
pursuant to article 177 of the EEC Treaty: … That was formulated by the court
in Amministrazione delle Finanze dello Stato v Denkavit Italiano Srl
(Case 61/79) [1980] ECR 1205, 1223-1224, paras 16-18 and Amministrazione
delle Finanze dello Stato v Meridionale lndustria Srl (Cases 66/79, 127/79,
128/79) [1980] ECR 1237, 1260-1261, paras 9-11:
‘The interpretation which, in the
exercise of the jurisdiction conferred on it by article 177, the Court of
Justice gives to a rule of Community law clarifies and defines where necessary
the meaning and scope of that rule as it must be or ought to have been
understood and applied from the time of its coming into force. It follows that
the rule as thus interpreted may, and must, be applied by the courts even to
legal relationships arising and established before the judgment ruling on the
request for interpretation, provided that in other respects the conditions
enabling an action relating to the application of that rule to be brought
before the courts having jurisdiction, are satisfied.
As the court recognised in its
judgment of 8 April 1976 in Defrenne v Sabena (Case C-43/75) [1976] ECR 455, it is only exceptionally that the court may, in application of the general
principle of legal certainty inherent in the Community legal order and in
taking account of the serious effects which its judgment might have, as regards
the past, on legal relationships established in good faith, be moved to
restrict for any person concerned the opportunity of relying on the provision
as thus interpreted with a view to calling in question those legal
relationships’ …” (emphasis added)
37.
Once again, the exceptionality of restricting the full availability of a
right declared by the CJEU as deriving from an EU measure is emphasised. AG Van
Gerven was clearly heavily influenced to the view that a restriction on the
availability of the right was essential because of the dire financial
consequences that would otherwise follow. They had been described in the Judge
Rapporteur’s report at p 86. If the option discussed above had been chosen, “the
additional financial impact on occupational pension schemes would be at least
£45 billion, and [under another canvassed option] £33 billion. [To these
figures would have to be] added approximately £2 billion per annum required in
any event to meet the effect of equalisation of pensions for the future.” It is
unsurprising, therefore, that in para 26, AG Van Gerven stated that the
financial consequences of allowing article 119 to have retroactive effect would
be “catastrophic”.
38.
It is important to recognise, however, that AG Van Gerven accepted that
a literal reading of the Barber judgment would apply equal
treatment to all pension payments made after 17 May 1990, including those which
had already fallen due irrespective of the date of the periods of service
during which the pension accrued. At para 19 he said:
“On a literal reading, it may
indeed be asserted that the effects of an occupational pension are only fully
exhausted once the pension has been paid in full to the retired employee. [He
then explained why that could not be permitted by continuing …] Such a reading
would mean that the temporal limitation of the judgment decided on by the Court
would have almost no significance and that the useful effect of the limitation
imposed by the Court would largely vanish.”
39.
The Advocate General expanded on his reasons for adopting the more
restrictive interpretation of Barber in para 21:
“The fact that the good faith of the parties concerned, in
particular of employers and occupational pension funds, is to be taken into
account means that, before Barber, those parties, in the belief that article
119 … was not applicable, could promise pensions and make payments based on a
different pensionable age for men and women. The financial balance of the
pension schemes concerned could therefore be maintained on that basis before
the judgment. Only in respect of periods of service after Barber did
employers know that, in administering occupational pension schemes and
calculating the contributions to be made to them, account had to be taken of a
pensionable age which was the same for men and women. If no account were taken
of their good faith and that of pension scheme administrators, that would
entail serious financial problems for pension schemes. All these factors argue
in favour of not allowing obligations entered into and payments made before the
date of the Barber judgment to be affected.”
40.
The court accepted the more restrictive definition, stating at para 19:
“Given the reasons explained in Barber
[1990] ICR 616, 672, para 44, for limiting its effects in time, it must be made
clear that equality of treatment in the matter of occupational pensions may be
claimed only in relation to benefits payable in respect of periods of
employment subsequent to 17 May 1990, the date of the judgment in Barber,
subject to the exception in favour of workers or those claiming under them who
have, before that date, initiated legal proceedings or raised an equivalent
claim under the applicable national law.”
41.
The court thus allied itself closely to the reasons in Barber (discussed
in paras 33 and 34 above) for espousing and extending to occupational pension
schemes a similar restriction on the retroactive effect of article 119.
42.
Vroege v NCIV Instituut voor Volkshuisvesting BV (Case C-57/93) [1994] ECR I-4541; [1995] 1 CMLR 881, concerned a pension scheme that until 1990 did
not admit married women. Among the questions referred to the CJEU was whether
the Barber limitation applied to Mrs Vroege’s claim for equal access to
the scheme. The court said that it was “important to remember the context in
which it was decided to limit the effects in time of the Barber
judgment” (para 20), and reaffirmed the two “essential criteria” for such a
limitation, viz, “the general principle of legal certainty … and the
serious difficulties which its judgment may create as regards the past for
legal relations established in good faith” (para 21), both of which had been
met in Barber (paras 22-25). On that basis, it stated that the Barber
limitation “concerns only those kinds of discrimination which employers and
pension schemes could reasonably have considered to be permissible owing to the
transitional derogations for which Community law provided and which were
capable of being applied to occupational pensions” - para 27.
43.
The Court of Appeal in the present case understood the decision in Ten
Oever to establish a general principle of EU law, to the effect that
entitlement to a survivor’s pension is “permanently fixed” as it is earned. It
concluded that the same principle could be applied where the law is changed not
by a judgment, but by legislation. It was influenced to this view by the
opinion that the same policy considerations lay behind the no retroactivity
principle and the CJEU’s power to limit the retrospective application of its
judgments. To an extent, the same policy considerations are in play. In both scenarios
one can acknowledge the need to ensure legal certainty and to protect the
legitimate expectations of those who rely on the law as it was thought to be.
44.
But it is vital to keep the two concepts distinct. “No retroactivity” and
“future effects” are principles of law which apply to all EU legislation,
unless a contrary intention can be found. The Barber exception is an
example of a technique used by the CJEU to limit the generally retroactive
application of its judgments, which it will only exercise in the most
exceptional circumstances and where the impact would be truly “catastrophic”. The
court limits the temporal application of its judgments in cases where reliance
has been placed on a different understanding of the law and legitimate
expectations may be upset, but only in the most special circumstances. Therefore,
how the court exceptionally applies a temporal limitation to one of its rulings
has no inevitable bearing on the temporal application of legislation as a
matter of principle.
45.
Mr Chamberlain submits that all the cases considered by the Court of
Appeal and the EAT, in so far as they concerned article 119, involved the
application of the exceptional limitations imposed in Defrenne II and Barber.
None expressed a general rule that immediate application of EU legislation at
the point of enactment should normally be avoided. On the contrary, the
consistent theme of the CJEU jurisprudence was that rights established by
legislation should be activated at the time that they were stated to exist.
46.
I agree with Mr Chamberlain’s analysis of the relevant jurisprudence and
I turn now to consider his principal argument that two recent decisions of the
Grand Chamber of the CJEU (which troubled the Court of Appeal because of their
perceived incongruence with what that court considered to be the fundamental
principles governing retroactivity) put success for Mr Walker’s claim beyond
doubt. Those decisions are Maruko v Versorgungsanstalt der Deutschen Bühnen
[2008] ECR I-1757; [2008] All ER (EC) 977; (Maruko) and Römer v Freie
und Hansestadt Hamburg (Case C-147/08) [2011] ECR I-3591, [2013] 2 CMLR 11
(Römer).
Maruko
47.
The claimant in Maruko was a registered life partner of a
designer of theatrical costumes who had been a member of the German theatre
pension institution (VddB). After his partner’s death in 2005, the VddB refused
Mr Maruko the pension which would have been paid automatically to a surviving
spouse. He brought a claim before the Bavarian Administrative Court, which
referred several questions to the Court of Justice. The most pertinent of these
for present purposes is the fifth. This was whether entitlement to the
survivor’s benefits should be restricted to the period from 17 May 1990 in the
light of Barber, as considered in Coloroll Pension Trustees Ltd v
Russell (Case C-200/91) [1995] All ER (EC) 23; [1994] ECR I-4389. The
spouse’s pension in issue arose from Mr Maruko’s service and contributions
during a period that started in 1959 and ended (in all likelihood) before 2003.
48.
Although the question proceeded on the premise that any limitation to
the relevant period of service would be from the date of the Barber judgment,
the CJEU’s summary of the issue makes it clear that it considered that wider
considerations were potentially at stake, for it said at para 74 that the
referring court “seeks to know whether … entitlement to the survivor’s benefit …
must be restricted in time and in particular to periods subsequent to [the Barber
judgment]”.
49.
The pension fund in the Maruko case presented an argument similar
to that advanced by the Secretary of State in the present appeal. It suggested
that, to take account of service before the Framework Directive’s implementation
deadline would give the Directive retrospective effect. The court summarised
that argument in para 75:
“The VddB considers that the case
which led to the judgment in Barber’s case differs, on its facts and in
law, from the case in the main proceedings and that Directive 2000/78 cannot be
given retroactive effect by means of a decision that the Directive applied at a
date prior to the date of expiry of the period allowed to member states for its
transposition.”
50.
At paras 77-79, the CJEU unambiguously rejected that argument:
“77. It is clear from the case
law that the court may, exceptionally, taking account of the serious
difficulties which its judgment may create as regards events in the past, be
moved to restrict the possibility for all persons concerned of relying on the
interpretation which the court gives to a provision in response to a reference
for a preliminary ruling. A restriction of that kind may be permitted only by
the court, in the actual judgment ruling upon the interpretation sought (see
inter alia Barber at para 41; and Meilicke v Finanzamt
Bonn-Innenstadt (Case C-292/04) [2007] 2 CMLR 19 at para 36).
78. There is nothing in the
documents before the court to suggest that the financial balance of the scheme
managed by VddB is likely to be retroactively disturbed if the effects of this
judgment are not restricted in time.
79. It follows from the
foregoing that the answer to the fifth question must be that there is no need
to restrict the effects of this judgment in time.”
51.
The material ruling of the court was that “The combined provisions of
articles 1 and 2 of Directive 2000/78 preclude legislation such as that at
issue in the main proceedings under which, after the death of his life partner,
the surviving partner does not receive a survivor’s benefit equivalent to that
granted to a surviving spouse”. The effect of this, as regards Mr Walker and
his husband, is unmistakable. If he survives Mr Walker, his husband is entitled
to a spouse’s pension on the same basis as would a wife.
Römer
52.
This was a case of a pensioner who had been in a registered life
partnership. His claim was for the same supplementary pension payments that
were given to married pensioners. His pension rights arose from contributions
paid during a period of service from 1950 until 31 May 1990. The CJEU held that
he was entitled to equal treatment if German life partnerships were comparable
to marriage.
53.
One of the supplementary questions which the court considered was
whether, if Mr Römer was entitled to pension payments, their amount should be
calculated only by reference to the contributions that were made after the Barber
judgment. Advocate General Jääskinen approached this question on the basis
that any limitation of the period of service to be considered would require a
restriction on the otherwise natural application of the principle that
contemporaneous discrimination was forbidden unless exceptional circumstances
would justify such a restriction (AG157-158). As it happened, no party had
requested one in the Römer case, and it was, moreover, “by no means
apparent from the documents in the case that the financial balance of the supplementary
pension scheme managed by the defendant in the main proceedings risks being
retroactively disturbed by the lack of such limitation.” (AG159)
54.
In the circumstances, the CJEU held that Barber had no bearing on
Mr Römer’s entitlement. Neither the Federal Republic of Germany nor the Freie
und Hansestadt Hamburg had suggested any limitation in time of the effects of
the present judgment and no evidence submitted to the court indicated that they
should be so limited.
55.
From this it is clear that, unless evidence establishes that there would
be unacceptable economic or social consequences of giving effect to Mr Walker’s
entitlement to a survivor’s pension for his husband, at the time that this
pension would fall due, there is no reason that he should be subjected to
unequal treatment as to the payment of that pension.
The decisions of the EAT and the Court of Appeal
56.
Mr Chamberlain submitted that the EAT wrongly took AG Van Gerven’s
description of pension benefits in Ten Oever as “deferred pay” as
equating the time at which a pension right accrues with the time at which any
discrimination in the provision of resulting benefits is to be judged. I agree
that the EAT was wrong to do so. The point of unequal treatment occurs at the
time that the pension falls to be paid. If Mr Walker married a woman long after
his retirement, she would be entitled to a spouse’s pension, notwithstanding
the fact that they were not married during the time that he was paying
contributions to his pension fund. Whether benefits referable to those
contributions are to be regarded as “deferred pay” is neither here nor there,
so far as entitlement to pension is concerned. Mr Walker was entitled to have
for his married partner a spouse’s pension at the time he contracted a legal
marriage. The period during which he acquired that entitlement had nothing whatever
to do with its fulfilment.
57.
As AG Jääskinen said in Römer at AG160:
“In the hypothetical case that Mr
Römer had been able to enter into a marriage in October 2001, instead of a life
partnership, the Freie und Hansestadt Hamburg would have had to increase the
supplementary pension paid to him ... The financing of the retirement scheme
concerned must have been planned taking into account the possibility of changes
in the marital status of pensioners.”
58.
Likewise, the financing of Innospec’s retirement scheme should have been
planned taking into account a possible change in Mr Walker’s marital status. He
could not have been denied entitlement to a spouse’s pension if, perfectly
legally, he married a woman after he retired. His marriage to his current
partner is just as legal as would be a heterosexual marriage. His entitlement
to a spouse’s pension is equally well-founded.
59.
The Court of Appeal considered that the Barber case explained how
the future effects principle should be applied to the Framework Directive. At
para 11 of his judgment, Lewison LJ said of the exception in Barber,
“The concept underpinning this limitation on the effect of the judgment is, in
my judgment, the same concept that distinguishes between situations that are
permanently fixed or established and those that are not.” In fact, none of the Barber
line of cases mentions the future effects principle. As Mr Chamberlain
submitted, this is because that principle is concerned with the effects of
legislation, whereas Barber and Ten Oever dealt with temporal
limitations on judgments.
60.
The approach of the Court of Appeal led it to the same conclusion as the
EAT, in equating the time at which a right to a pension accrues with the time
at which discrimination in the provision of benefits is to be judged. The
implication of this approach was considered by Professor Wintemute in an
article in (2014) 43 ILJ 506, 510, commenting on the EAT judgment when he said:
“The implication of the EAT’s
analogy was that, from 1980 to 2003, Mr Walker had been paid the lower ‘gay
wage’ (one with no expectation that a survivor’s pension would ever be paid to
the employee’s surviving partner despite the employee’s equal contributions to
the pension scheme), rather than the higher ‘heterosexual wage’ (one with an
expectation that a survivor’s pension might be paid to the employee’s surviving
spouse based on the employee’s contributions to the pension scheme).”
61.
This illustrates the essential flaw in the approach of the EAT and the
Court of Appeal. The salary paid to Mr Walker throughout his working life was
precisely the same as that which would have been paid to a heterosexual man.
There was no reason for the company to anticipate that it would not become
liable to pay a survivor’s pension to his lawful spouse. The date when that
pension will come due, provided Mr Walker and his partner remain married and
his partner does not predecease Mr Walker, is the time at which denial of a
pension would amount to discrimination on the ground of sexual orientation.
62.
Dealing with Maruko Lewison LJ said that the fifth question which
the referring court had posed (set out at para 47 above) was “very puzzling” -
para 37. He suggested (at para 40) that the court had given “an unnecessary
answer to the wrong question.” Undoubtedly, the referring court’s reference to
17 May 1990 was misplaced - how could that date, being the date of the Barber
judgment on equal pay under article 119, have any possible relevance to the
temporal application of the judgment in Maruko on equal treatment under
the Framework Directive? But the Court plainly understood the referring court
as asking essentially whether the effect of its judgment should be “limited in
time”. That question is only puzzling or unnecessary if one proceeds on the
assumption that there is a general rule that the time at which a pension right
accrues should be equated with the time at which discrimination in the
provision of resulting benefits occurs. For the reasons given earlier, I do not
consider that this is correct. The response given to the fifth question in Maruko
is therefore perfectly explicable and provides the inescapable
answer in Mr Walker’s case.
63.
In order to deal with the Court of Appeal’s treatment of the Römer
decision, it is necessary to say a little more about the questions referred to
the CJEU in that case. The fifth question had two parts which the CJEU
interpolated as 5(a) and (b). Question 5(a) asked whether, if the domestic
legislation contravened the Framework Directive, Mr Römer was entitled to
supplementary pension payments in line with married people before that
legislation was amended. This was answered affirmatively by the court - see
paras 53-56. Question 5(b) was whether, if the domestic legislation contravened
the Directive, Mr Römer was entitled to backdated supplementary pension payments
even for the period before the transposition deadline for the Framework
Directive. Question 6 was whether, if Mr Römer was entitled to supplementary
pension payments, the amount of those payments should be calculated by
reference to the contributions made after the Barber judgment.
64.
Mr Römer had conceded that the answer to question 5(b) might be that he
could only receive backdated supplementary payments from 2003. But, as far as
question 6 was concerned, “his pension payments should, in any event, be
calculated from that date on the basis of all the contributions he has paid,
irrespective of their date.” A-G Jääskinen - AG142. The CJEU accepted that Mr
Römer was not entitled to payments that were due to be paid before 2003
(because the Directive had not been implemented before then) but that when it
came to the calculation of the quantum of the pension payments, the fact
that the contributions underpinning the entitlement had been paid before then made
no difference - para 66.
65.
Put simply, Mr Römer could not claim pension payments before 2003 but
the pension due to him after that date should be calculated on the basis of all
the years during which entitlements to them had been built up. Translating that
to Mr Walker’s case, the message is clear. He could not have claimed
entitlement to the payment of the pension before the transposition of the Directive
into UK law but, once that happened, the rate of his pension was to be based on
all the years of his service, even those which preceded the date of the
transposition.
66.
The Court of Appeal misunderstood Römer. At para 43,
Lewison LJ said that the CJEU had held that entitlement to equal treatment did
not become part of EU law until the time limit for transposing the Directive
had expired. On that basis, the “answer to question 5 was plainly a negative
answer: the entitlement did not apply before the deadline for transposing the Directive”
(para 44). It was, of course, true that entitlement did not arise until the Directive
had to be transposed, but this does not address the question of what the
entitlement was after the deadline was reached. Lewison LJ thought that
question 6 was conditional on an affirmative answer to question 5” and since,
in his estimation, a negative answer had been given to question 5, question 6
was irrelevant. This was, I am afraid, wrong.
67.
In the first place, both parts of question 5 had not been given a
negative answer. Question 5(a) had been answered affirmatively. More
importantly, question 6 remained supremely relevant to Mr Walker’s case. His
entitlement to a spouse’s pension did not materialise until after the
transposition of the Directive but the response to question 6 provided the key
to the nature of the right that Mr Walker then acquired. It was entitlement to
a pension calculated on the basis of his years of service before the Directive
was transposed.
Parris v Trinity College Dublin
68.
The case Parris v Trinity College Dublin (Case C-443/15) [2017] Pens LR 3 was a reference to the CJEU from the Labour Court in Ireland. It also
concerned a claim for a survivor’s pension under the Framework Directive. Dr
Parris had entered a civil partnership with his partner of 30 years in the UK
on his 63rd birthday in 2009. This civil partnership was not recognised in
Ireland until a change in the law on 12 January 2011. Dr Parris had been
employed as a lecturer by Trinity College Dublin (TCD) from 1972 to 2010. He
took early retirement in 2010. He had been a member of TCD’s non-contributory
occupational pension scheme. The scheme provided a survivor’s pension, but only
where the marriage or civil partnership took place before the member’s 60th birthday.
The questions referred to the CJEU concerned whether TCD’s refusal to provide
the survivor’s pension to Dr Parris’ civil partner, by reference to that rule,
constituted indirect discrimination on sexual orientation grounds, direct age
discrimination, and/or discrimination on a combination of those grounds.
69.
The questions referred did not concern Dr Parris’s period of service. In
fact, his employment almost entirely predated the deadline for transposing the
Framework Directive, and had ended before Ireland’s recognition of civil
partnerships. The UK nevertheless made submissions to the CJEU which broadly
mirror those of the Secretary of State in the present appeal. It was submitted
that since Dr Parris’s pension entitlements were based almost entirely on
periods of service completed before the coming into force of the Directive,
they could not be subject to the principle of equal treatment.
70.
Advocate General Kokott rejected those submissions. At paras 39-42 of
her Opinion she said
“39. ... that objection is
unfounded. For it is settled case law that a new rule of law applies from the
entry into force of the act introducing it, and, while it does not apply to
legal situations that have arisen and become definitive under the old law, it
does apply to their future effects, and to new legal situations. It is
otherwise, subject to the principle of the non-retroactivity of legal acts,
only if the new rule is accompanied by special provisions which specifically
lay down its conditions of temporal application.
40. Those principles also
apply to the temporal application of Directive 2000/78. A restriction of the temporal
scope of that Directive, in derogation from the aforementioned general
principles, would have required an express stipulation to that effect by the EU
legislature. No such special provision has been made, however.
41. Consequently, the Court
has already declared Directive 2000/78 to be applicable to cases concerning
occupational and survivor’s pension schemes the entitlements under which had
arisen - much as they did here - long before the entry into force of that Directive
and any contributions or reference periods in respect of which also predated
the entry into force of that Directive. Unlike in Barber, for example,
concerning article 119 of the EEC Treaty (now article 157 TFEU), the Court expressly
did not apply a temporal restriction to the effects of its case law relating to
occupational pension schemes under Directive 2000/78. I would add that there
was, moreover, no longer any need for such a temporal restriction, since it had
become sufficiently apparent to all the interested parties since the judgment
in Barber that occupational pensions fall within the EU-law concept of
pay and are subject to any prohibitions on discrimination.
42. It is true that the
Court has held that the prohibition on discrimination contained in Directive 2000/78
cannot give rise to claims for payments in respect of periods in the past that
predate the time limit for transposing that Directive. However, the recognition
of the right to a future survivor’s pension, at issue in the present case, is
unaffected by that principle because such recognition is concerned only with
future pension scheme payments, even though the calculation of those payments is
based on periods of service completed or contributions made in the past.”
71.
These statements are entirely consistent with the analysis of Maruko and
Römer which Mr Chamberlain offered and which I accept. The CJEU held
that Dr Parris’s case did not amount to discrimination at all, citing the
principle in Maruko that legislation treating surviving civil partners
less favourably than surviving spouses will amount to direct discrimination if
the two are in comparable situations under national law, but noting that the
rule in issue in Dr Parris’s case applied equally to opposite-sex marriages and
same-sex civil partnerships. His inability to meet the qualifying criterion for
the survivor’s pension resulted from the lack of provision for same-sex
partnerships under Irish law at the time of his 60th birthday and it was for
member states to decide both whether to make such provision and, if so, whether
to make it retrospective. The CJEU did not, therefore, need to address the UK
government’s argument that Dr Parris’s claim fell outside the temporal scope of
the Directive but nothing in its judgment cast doubt on AG Kokott’s clearly
expressed opinion that the submissions of the UK were incompatible with Maruko
and Römer.
Conclusion on the first issue
72.
I would therefore hold that Mr Walker’s husband, provided he does not
predecease him, and that they remain married at the time of Mr Walker’s death,
is entitled under the Framework Directive to a spouse’s pension calculated on
the basis of all the years of Mr Walker’s service with Innospec. On that
account, paragraph 18 of Schedule 9 is incompatible with the Framework
Directive. In particular, paragraph 18(1)(b) which authorises a restriction of
payment of benefits based on periods of service before 5 December 2005 cannot
be reconciled with what I consider to be the plain effect of the Directive.
Must effect be given to paragraph 18 or should it be
disapplied - the second issue?
73.
The appellant claims that, applying the principles established by Kücükdeveci
v Swedex GmbH and Co KG (Case C-555/07) [2010] 2 CMLR 33, paragraph 18
must be disapplied. As Lord Mance explained in R (Chester) v Secretary of
State for Justice in the passage cited at para 10 above, for the
general principle of non-discrimination to apply, the context must fall within
EU law. Both the EAT and the Court of Appeal considered that non-discrimination
did not become a fundamental principle of EU law until the transposition deadline
of the Framework Directive - Lewison LJ at para 49 and Underhill LJ at para 59.
74.
Mr Chamberlain submits that this is incorrect, arguing that the CJEU did
not say that non-discrimination only became a general principle of EU law in
2003. Its relevant finding was that Mr Römer’s claim for equal pension benefits
only came within the material scope of EU law from that time. Whether that is
right or not need not be decided finally in this case because Mr Chamberlain’s
second argument disposes of the issue. That is that non-discrimination on
grounds of sexual orientation is now a principle of EU law. It follows that any
contemporary denial to his husband of a spouse’s pension, calculated on all the
years of Mr Walker’s service, would be incompatible with the Framework
Directive. In so far as paragraph 18 authorises that, it must be disapplied on
the basis of the principles articulated in Kücükdeveci and Chester.
The third issue
75.
In light of my conclusion on the first two issues, it is not necessary
to decide the third issue, viz whether paragraph 18 is incompatible with
Mr Walker’s rights under article 14 of ECHR, when read together with article 8
and article 1 of the First Protocol.
Final conclusion
76.
I would allow Mr Walker’s appeal and declare that, in so far as it
authorises a restriction of payment of benefits based on periods of service
before 5 December 2005, paragraph 18 of Schedule 9 to the 2010 Act is
incompatible with the Framework Directive and must be disapplied. I would make
a further declaration that Mr Walker’s husband is entitled to a spouse’s
pension calculated on all the years of his service with Innospec, provided that
at the date of Mr Walker’s death, they remain married.
LORD CARNWATH AND LORD
HUGHES:
77.
We agree that Mr Walker’s appeal should be allowed, but on more limited
grounds. This appeal was heard at the same time as the appeal in O’Brien v
Ministry of Justice [2017] UKSC 46, in which the court has decided
to refer to the European court a question relating to the pension entitlement
of part-time workers. As explained in the judgment of Lord Reed, that arises
from a difference among the members of the court as to the interpretation of
the Ten Oever line of authority (as he describes it - para 20). In so
far as Lord Kerr’s reasoning in the present case (in particular, paras 35-46)
turns on his interpretation of that line of authority, we prefer to await the
authoritative ruling of the European court.
78.
The present case is in our view distinguishable substantially for the
reasons given by Lord Kerr at paras 56-58. On any view Mr Walker had earned a
right to a pension for his spouse. That right, and the possibility of a change
in his marital status, should have been taken into account in the financing of
the scheme. The question who qualified as his spouse fell to be answered at a
date when it was unlawful under the Directive to discriminate as between
heterosexual and same-sex marriages. At that time, as Lord Kerr says (para 56),
he was entitled to have for his married partner a spouse’s pension; “The period
during which he acquired that entitlement had nothing whatever to do with its
fulfilment.” To the extent that paragraph 18 of Schedule 9 to the Equality Act
2010 restricted that right it was incompatible with European law, and must be
disapplied.
