Court of Appeal clarifies interpretation of descriptors in Armed Forces Compensation Scheme for mental disorders.

Introduction

In the recent case of Christopher Pearson v The Secretary of State for Defence ([2024] EWCA Civ 150), the Court of Appeal (Civil Division) was tasked with interpreting the correct application of descriptors in the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 (SI 2011/517) (“the Order”) relating to compensation for mental disorders as a consequence of service in HM Forces. This case delves into both the assessment of the severity of functional limitation caused by a mental disorder and the correct timeframe for such an evaluation.

Key Facts

Mr. Christopher Pearson, a former consultant ear, nose, and throat surgeon and Surgeon Commander in the Royal Navy, was diagnosed with a permanent mental disorder – specifically, a recurrent depressive adjustment disorder. He claimed compensation under the Order but disputed the assigned descriptor, which recognized his condition as causing ‘moderate functional limitation or restriction’. The crux of the dispute revolved around whether Mr. Pearson’s condition merited a higher compensation level due to ‘severe functional limitation or restriction’.

Both the First-tier Tribunal (FtT) and the Upper Tribunal (UT) encountered challenges in interpreting the descriptors from Table 3 of the Order and determining whether Mr. Pearson’s capacity to work in less demanding jobs had diminished over time. Central to their decisions was the interpretation of regularity in less demanding work, as delineated in footnotes (a) and (b) accompanying Table 3. Mr. Pearson’s appeal centered on the approach taken by the tribunals and whether it was properly rooted in the legal framework of the compensation scheme.

Legal Principals

The court examined critical elements of the Order, particularly Article 5 regarding the definition of ‘functional limitation or restriction’ and Article 16 concerning injury benefit entitlement. The court also interpreted the relevant provisions surrounding the descriptors, focusing on the interpretation of ‘regularly’ in footnote (b) and ‘and over time’ in footnote (a) within Table 3, “Mental disorders.”

A fundamental issue was the method employed by the FtT and UT to categorize mental disorder severity. The court emphasized that descriptors from the Order should be indicative rather than determinative, requiring a holistic assessment of all relevant evidence within the appropriate period. The court rejected a rigid reading of ‘regularity’ as the sole factor distinguishing ‘severe’ from ‘moderate’ functional limitation, as this would be too narrow an approach, possibly leading to irrational outcomes.

Additionally, the court underscored the importance of weighing both the trajectory of a claimant’s ability to work since the onset of a mental disorder and their capacity to engage in regular employment in a less demanding job. The key legal principle established was that a multi-factorial and comprehensive assessment of evidence is necessary to determine the correct descriptor.

The court also referenced the approach used in Secretary of State for Defence v Duncan and McWilliams [2009] EWCA Civ 1043, which confirmed the importance of selecting a descriptor representing the most accurate description of the injury.

Outcomes

The Court of Appeal found that the FtT and UT had erred in their interpretations, having restricted their examination to the appellant’s ability to work regularly and failing to consider the overall decline in his capacity for work since the onset of his illness. The UT’s decision was set aside, and the matter was remitted to the FtT—differently constituted—to re-evaluate which descriptor was most appropriate for Mr. Pearson’s injury and its effects.

Conclusion

The Court of Appeal’s decision in Christopher Pearson v The Secretary of State for Defence demonstrates the necessity of a nuanced and thorough approach in applying descriptors to assess compensation for mental disorders under the compensation scheme for armed forces. It reiterates the principle that legal interpretation of statutory schemes must avoid rigidity, ensuring that the actual circumstances and effects of an injury are adequately and fairly captured to determine entitlement. This case will serve as instructive precedent for future cases addressing the categorization of injuries under the compensation scheme, emphasizing the importance of an individualized, evidence-based approach.