Administrative Court dismisses suggestion LGPS ‘exit credits’ claim was brought out of time

A judge in the Administrative Court has rejected arguments that claims in relation to Local Government Pension Scheme (LGPS) ‘exit credits’ was brought out of time.

According to Brick Court Chambers, the claimants – Amey Plc and Enterprise Managed Service Limited – had entered into a number of contracts to provide local authority functions under which they were obliged to make pension payments into Local Government Pension Scheme funds and to make good any shortfall in the funds if they were in deficit at the end of any contract.

From 2018 onwards, if the pension fund to which they had contributed was in surplus at the time the contracts come to an end, they became entitled to an “exit credit” of the value of that surplus.

Brick Court said the claimants were entitled to a number of exit credits including one valued at £6.5m. 

However, the local authority in question refused to make payment and the claimants brought legal proceedings in the Chancery Division to enforce payment of the sum owed.

The Local Government Pension Scheme (Amendment) Regulations 2020 (“the 2020 Regulations”) were then introduced which removed the claimants’ right to an exit credit with retrospective effect.

Amey and Enterprise Managed Service have challenged the 2020 Regulations on the grounds that they unlawfully violated their property rights and their right to a fair trial at common law and under A1P1 and Article 6 of the European Convention on Human Rights, Brick Court said.

The 2020 Regulations were made on 25 February 2020 and laid before Parliament, by way of the negative resolution procedure, on 27 February 2020. They came into force on 20 March 2020. The claim was issued on 19 June 2020, within three months of the date the Regulations came into force.

According to Brick Court the defendants and interested parties argued that the claim had not been issued “promptly and in any event not later than 3 months after the grounds to make the claim first arose” as required by CPR 54.5(1) and was therefore out of time.

They argued that the date “grounds … first arose” for any judicial review challenge ran from the date the Regulations were made, alternatively when they were laid before Parliament, rather than when they came into force.

At an oral permission hearing in the Administrative Court Mrs Justice Lang rejected that argument. Brick Court said the judge held that the existing authorities on this point were ambiguous and contradictory.

“In her view, time ran from the date on which the 2020 Regulations affected the rights of the Claimants and that was the date on which they came into force. The judgment provides clarity in this important area of law,” the set said.

Mrs Justice Lang went on to hold that – even if the claim had been issued out of time – she would have extended time because the claimants and their lawyers had been adversely affected by the difficulties that arose out of the coronavirus pandemic.

Paul Bowen QC and Tim Johnston of Brick Court appeared for the claimants, instructed by Blake Morgan LLP.