Case Nos: CAF/3829/2014
CAF/3833/2014 
IN THE UPPER TRIBUNAL			
ADMINISTRATIVE APPEALS CHAMBER

DECISION BY THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the appeals. 

The decision of the First-tier Tribunal (War Pensions and Armed Forces Compensation Chamber) [“the tribunal”] dated 24 April 2014 under reference AFCS/00305/2013 involved the making of two material errors on a point of law.

First, (i) the tribunal erred in law in applying the descriptor at Item 12 of Table 2 in Schedule 3 of the 2011 Scheme to the Appellant’s right thigh injury. 
(ii) I set that decision aside and remake the decision so as to confirm the decision made by the Respondent on 5 October 2011 that Item 29 of Table 2 in the 2008 Scheme applies to this injury.
(iii) I recommend that the Respondent consider making a temporary award pursuant to Article 26 of the 2011 Scheme which would have the effect of compensating the Appellant in accordance with the factual findings made by the tribunal about his right thigh injury.
(iv) I dismiss the appeal by the Appellant in respect of the right thigh injury.

Second, (i) the tribunal erred in law in applying Article 21 of the 2011 Scheme to the percentages allocated to each descriptor of injury for the purpose of calculating the total award payable to the Appellant. On the facts it had found it should have applied Article 22 of the 2011 Scheme.
(ii) I set that decision aside and direct that the Respondent calculate the total amount of compensation payable to the Appellant in accordance with Article 22 of the 2011 Scheme.

REASONS

Introduction

1.	These appeals raise issues about the interaction between the Armed Forces and Reserve Forces Compensation Scheme Order 2005 (as amended with effect from 16 September 2008) [“the 2008 Scheme”] and the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 [“the 2011 Scheme”]. Though the parties were in eventual agreement both as to the errors of law in the tribunal’s decision and the course they invited me to take in order to determine these appeals, I have set out the relevant law and explained my reasoning as intelligibly as I can in the hope that these reasons might be useful to future decision makers. 

2.	The root cause of the errors of law which arose in the tribunal’s decision lay in the complex interaction between the 2008 and the 2011 Schemes. Confusion arose in the mind of the tribunal as to which elements of which Scheme applied to the Appellant’s case and that confusion produced two significant errors of law in the tribunal’s decision.

Background

3.	The Appellant enlisted in the Royal Marines on 13 February 2006. On 2 February 2009 he sustained multiple injuries following the detonation of an Improvised Explosive Device whilst on foot patrol in Afghanistan. There is no dispute that the Appellant’s significant and life-changing injuries are attributable to service. 

4.	It is not necessary for me to list and describe the multiple injuries sustained by the Appellant. The injury to the Appellant’s right thigh was the subject of dispute in the first appeal. The second appeal took no issue with either the number of or the descriptors applicable to the Appellant’s injuries.

5.	On 22 April 2009 the Appellant submitted his claim for compensation for all his injuries and on 30 June 2009 the Respondent made an interim award as the prognosis of some of the injuries was then unclear. At that time the 2008 Scheme provided that compensation could be paid only for the three most serious injuries.  The award of compensation was made up as follows and totalled £55,361.25:

Condition	Tariff Awarded	% of Tariff Payable	
			
Infertility	Tariff 8 - £48,875
Infertility	100% thus £48,875	
Shrapnel Injuries to right leg	Tariff 11 - £13,750
High velocity gunshot wound, deep shrapnel fragmentation of one or more puncture wounds (or all or any combination of these injuries) to the head and neck, chest, back, abdomen or limb, with damage to one or more vital structures causing permanent significant functional limitation and restriction  	30% thus £4,125	
Open fracture of right tibia	Tariff 12
Fracture of one humerus, femur, radius, ulna or tibia which has caused, or is expected to cause, significant functional limitation and restriction beyond 26 weeks	15% thus £1,361.25 (plus additional £1,000 for open fracture)	

6.	The Appellant asked for a reconsideration of the Respondent’s decision. His request was received by the Respondent on 3 September 2009 and on 15 February 2011 the Respondent made a final award of compensation. This making of this final award was delayed because of developments in the Appellant’s medical condition in that he underwent a below knee amputation of his right leg in November 2010. In consequence, the amputation became the most serious injury. The total award of compensation was £108,725 made up as follows:

Condition	Tariff Awarded	% of Tariff Payable	
			
Below knee amputation of right leg	Tariff 6 – £92,000
Loss of one leg below knee (trans-tibial)	100% thus £92,000	
Infertility	Tariff 8 - £48,875
Infertility	30% thus £14,662.50	
Shrapnel injuries to right thigh	Tariff 11 - £13,750
High velocity gunshot wound, deep shrapnel fragmentation of one or more puncture wounds (or all of any combination of these injuries) to the head and neck, chest, back, abdomen or limb, with damage to one or more vital structures causing permanent significant functional limitation and restriction	15% thus £2,062.50	

7.	In a letter dated 1 March 2011 and received by the Respondent on 9 March 2011, the Appellant requested reconsideration of this decision. On 25 March 2011 he was notified that the award was to be revised since it was accepted that his left foot drop was more serious and thus fell into a higher tariff category than had previously been recognised. The total award was now £110,127.50 and was made up as follows:

Condition	Tariff Awarded	% of Tariff Payable	
			
Below knee amputation of right leg	Tariff 6 - £92,000
Loss of one leg below the knee (trans-tibial)	100% thus £92,000	
Infertility	Tariff 8 - £48,875
Infertility	30% thus £14,662.50	
Left Foot Drop	Tariff 10 - £23,100
Permanent foot or wrist drop	15% thus £3,465	

8.	The Appellant appealed in a letter received by the Respondent on 9 May 2011. The letter of appeal argued that, amongst other matters, the complex injury to the Appellant’s right thigh should be recognised as a Tariff Level 5 or 6 injury. 

9.	The 2011 Scheme came into force on 9 May 2011 and, under Part 11 of that Scheme, additional benefit was payable in relation to certain specified injuries for which compensation had been payable under the 2008 Scheme. Compensation for all injuries was now payable rather than being restricted to the three most serious injuries. Other than for certain specified injuries however, the Tariff Level for the additional award was that determined in the original decision – that is, under the 2008 Scheme. Application by the Respondent of the 2011 Scheme to the Appellant’s case on 5 October 2011 resulted in a total award of £279,280 of which the awards for the right leg injuries were as follows:

Injury	Descriptor/Relevant Amount	%  Amount Payable	
			
Right amputation below knee	Tariff 6 - £140,000
Loss of one leg below knee (trans-tibial)	100% thus £140,000	
			
Shrapnel injuries to right leg	Tariff 11 - £15,000
High velocity gunshot wound, deep shrapnel fragmentation of one or more puncture wounds (or all or any combination of these injuries) to the head and neck, chest, back, abdomen or limb with damage to one or more vital structures causing permanent significant functional limitation and restriction	40% thus £6,200	

10.	The Appellant pursued an appeal to the First-tier Tribunal [“the tribunal”]. The hearing took place on 26 February 2014 and the tribunal’s decision with reasons was given on 25 April 2014. 

The Tribunal’s Decision and the Appeal Process

11.	The tribunal upheld three aspects of the Appellant’s appeal. The first was to add an item to the list of injuries for “sensory loss medial aspect of right knee and stump” at tariff level 12. This addition is not in dispute in this appeal.

12.	Second, the tribunal further determined that the percentages applied by the Respondent to each injury were incorrect. These percentages were used to calculate the total award payable to the Appellant. This determination is the subject of the Respondent’s appeal.

13.	Third, the tribunal rejected the Appellant’s case that his right thigh injury fell within the definition of Item 3 in Table 2 in Schedule 3 to the 2008 Scheme thereby attracting compensation at Tariff Level 6. It found that the injury did not meet the definition of “covering all or most of the area from thigh to knee” which was defined for the purpose of the 2008 Scheme as “external injury causing direct damage to contiguous areas of the limb circumference”. 

14.	However the tribunal held that the right thigh injury did fall within the definition of Item 12 in Table 2 to the 2011 Scheme attracting an award at Tariff Level 7 not 11 as determined by the Secretary of State. The Appellant however maintained that the right thigh injury did indeed affect all of his leg. 

15.	The Appellant sought permission to appeal to the Upper Tribunal on 31 July 2014 and the Respondent likewise sought permission to appeal on 6 August 2014. By a ruling dated 22 August 2014 from Upper Tribunal Judge Rowland, permission to appeal was deemed to have been granted to both parties by the First-tier Tribunal though it was accepted that its decision was somewhat unclear.

16.	The Appellant requested a hearing of these appeals which was originally listed for 12 May 2015 in Manchester. Unfortunately the Respondent did not receive notice of that hearing and the appeal had to be re-listed. I held a hearing in Manchester on 31 July 2015 at which both parties appeared and were represented.

17.	Mr Tucker from the Royal British Legion appeared on behalf of the Appellant and Miss Ward of counsel appeared on behalf of the Respondent.  I am extremely grateful to both advocates for their comprehensive written submissions and for the realistic approach taken to the issues raised by these two appeals. This decision relies very heavily on those written submissions.

18.	Prior to the hearing, both parties had reached agreement on the basis of the Respondent’s suggestion to the Upper Tribunal as to how this appeal might be appropriately compromised. However one matter in the skeleton argument prepared by Mr Tucker remained in contention prior to the hearing. At the hearing, having heard some argument about the matter in contention, I rose to allow Mr Tucker to take further instructions from the Appellant. As a result, that matter no longer required the court’s adjudication and thus I am able to determine this appeal on a basis agreed by the parties before me on 31 July 2015. 

The Parties’ Agreed Position

19.	As I have indicated there were two appeals before me. The first in time was the Appellant’s appeal against the tribunal’s decision that the descriptor to be applied to his right thigh injury was that at Item 12 of Table 2 in Schedule 3 to the 2011 Scheme. The Appellant contended that the injury fell within Item 3 of the same table and so should attract an award at Tariff Level 6 rather than 7 as determined by the tribunal.

20.	The second appeal was the Respondent’s appeal against the decision of the tribunal to apply Article 21 rather than Article 22 of the 2011 Scheme when calculating the total amount of compensation due to the Appellant.

21.	In respect of the first appeal, though the Respondent did not accept that the grounds of appeal advanced by the Appellant disclosed any error of law, he submitted that the tribunal had in fact erred in law. This was because the descriptor applied by the tribunal to the right thigh injury was not available to it since it was bound by the Tariff contained in the 2008 Scheme. It was thus not open to the tribunal to order that Item 12 in Table 2 of the 2011 Scheme applied to the right thigh injury.  

22.	However the Respondent did not wish to deprive the Appellant of the benefit of the tribunal’s finding that the right thigh injury met the criteria in Item 12 of Table 2 in the 2011 Scheme. He proposed that I set aside the tribunal’s decision and remake it so as to reinstate the award determination made in October 2011. In addition the Respondent invited me to recommend that he make a temporary award to the Appellant pursuant to Article 26 of the 2011 Scheme so that the Appellant was put in the same position in respect of the injury to his right thigh as he would have been had the 2011 Scheme descriptors been legitimately available to the tribunal. 

23.	In his skeleton argument dated 13 July 2015 the Appellant indicated his consent to the Respondent’s proposal and, if that proposal was acceptable to me, he stated that he no longer wished to pursue his own appeal in respect of the right thigh injury. 

24.	In respect of the second appeal, the Respondent submitted that the tribunal had erred in law in treating the Appellant’s case as falling within Article 21 rather than Article 22 of the 2011 Scheme. The Appellant accepted in his skeleton argument that the tribunal did indeed err in law as submitted by the Respondent. 

25.	However the parties were at odds prior to the hearing as to what should follow from that error of law. At the hearing the Appellant’s position changed and both parties were then able to agree on the resolution of the second appeal. They invited me to set aside the tribunal’s decision and to direct that the total amount of compensation payable to the Appellant should be calculated in accordance with Article 22 of the AFCS.

26.	I agree with the parties’ submissions that the tribunal erred in law in each of the two appeals. Further I accept the parties’ agreed position as to the manner in which each appeal should be resolved. 

The First Appeal
(a) Legal Framework

27.	Section 1(2) of the Armed Forces (Pensions and Compensation) Act 2004 empowers the Secretary of State for Defence to establish schemes that provide for benefits to be payable to or in respect of a person by reason either of his/her illness or injury (whether physical or mental), or of his/her death which is attributable (wholly or partly) to his/her service in the armed forces or in the reserve forces. That power was exercised in the creation of the Armed Forces and Reserve Forces Compensation Scheme Order 2005 [“the 2005 Scheme”]. This Scheme was amended on a number of occasions and ultimately replaced by the 2011 Scheme. 

28.	The level of compensation is determined primarily by the allocation of each injury to a descriptive category [“the descriptor”]. These are itemised in a number of tables and attract a particular Tariff Level. The Tariff scale runs from 1 for the most serious injuries through to 15 in descending order of seriousness. This structure has been continued in the 2011 Scheme. 

29.	The tariff in the 2005 Scheme was replaced by that in the 2008 Scheme with effect from 16 September 2008. This latter Scheme was itself subject to further amendment including amendments made by virtue of the Armed Forces and Reserve Forces (Compensation Scheme) (Amendment) Order 2010 which came into effect from 3 August 2010 [“the 2010 Amendment Order”].

30.	The tariff in the 2008 Scheme is found in a number of tables in Schedule 4. The relevant table is Table 2 which contained a list of descriptors of injuries under the heading “Injury, Wounds and Scarring”. Item 29 in Table 2 provided for a Tariff of 11 for an injury falling within the following descriptor:
“High velocity gunshot wound, deep shrapnel fragmentation or one or more puncture wounds (or all or any combination of these injuries) to the head and neck, chest, back, abdomen or limb with damage to one or more vital structures causing permanent significant functional limitation and restriction”.

31.	In order to attract a higher Tariff under the 2008 Scheme, a leg injury would have to fulfil, inter alia, the definition of “covering all or most of the area from thigh to knee [or ankle]”. The footnotes in Table 2 provide, inter alia, that: “when applied to any limb, the expression ‘injury covering all or most of the area’ means external injury causing direct damage to the contiguous areas of the limb circumference. In the case of a lower limb this may include damage to the buttocks”.

32.	Article 15(2) of the 2008 Scheme provided that, where more than one injury was sustained in one incident, the amount of the lump sum was to be calculated as follows:
“...(a) for the first injury, 100 per cent of the relevant amount applicable to that injury; (b) for the second injury, 30 per cent of the relevant amount applicable to that injury; (c) for the third injury, 15 per cent of the relevant amount applicable to that injury…” 
No further amount was to be paid where four or more injuries were sustained in one incident.
	
33.	The 2010 Amendment Order introduced a number of new descriptors into the 2008 Scheme. These included the descriptor at Item 11A in Table 2 [now found at Item 12 in Table 2 of the 2011 Scheme] which attracted Tariff Level 7. This descriptor was introduced in recognition of the impact that injury to the internal structures of the body may have despite an injury not covering all or most of the external area of the relevant body part. The descriptor reads as follows:
“High energy transfer gunshot wound, deeply penetrating missile fragmentation or other penetrating injury (or all or any combination of these) with clinically significant damage to bone, soft tissue structures, and vascular or neurological structures of the head and neck, torso or limb, with complications which have required or are expected to require, operative treatment with residual permanent significant functional limitation or restriction”.

34.	The amendments made by the 2010 Amendment Order did not apply to a claim made before the date on which it came into force (namely, 3 August 2010) unless a temporary award had previously been or was being made.

35.	In February 2010 a Review of the Armed Forces Compensation Scheme by Admiral the Lord Boyce was published. It made a number of recommendations aimed at improving the Scheme to provide both for greater clarity in its operation and for higher compensation for the most seriously injured service personnel. The 2011 Scheme was introduced to give effect to all of the Review’s recommendations. Thus, the sums payable as compensation for very serious injuries were increased and the bar on payment of compensation for any injuries other than the three most serious was removed. To give effect to these changes, Part 11 of the 2011 Scheme provided for the payment of additional compensation in cases where a final award had already been made under the 2008 Scheme (or in the earlier versions of the 2005 Scheme).

36.	Article 75 of the 2011 Scheme required the Respondent to award additional benefit for any qualifying injury. A qualifying injury was defined in Article 74 (b) as an injury or injuries “which is described by one descriptor to which an entitlement to injury benefit was determined before 9 May 2011 and (i) injury benefit was paid or payable before that date or (ii) no injury benefit was payable under Article 15(2) of the AFCS 2005 because the injury was the fourth or subsequent injury sustained in the same incident”.

37.	 Article 76 of the 2011 Scheme provided that the Tariff Level for a qualifying injury which was not a specified injury was the Tariff Level determined in the original decision. Where the injury was a specified injury, the Tariff Level could be increased. Specified injuries were defined in Article 74(d) and, in part, by reference to a Table in Schedule 5 of the 2011 Scheme. Shrapnel wound to a limb was not a specified injury and thus the Tariff under the 2008 Scheme continued to apply to it.

(b) Discussion

38.	At the time the Appellant made his claim in 2009, the descriptor set out in paragraph 33 above - Item 12 of Table 2 - was not available under the 2008 Scheme. It thus could not be applied to the Appellant’s right thigh injury by the Respondent. In the October 2011 decision the Respondent was required by Article 76 of the 2011 Scheme to apply the Tariff Level determined in the original decision.

39.	As the Respondent was bound to apply only the descriptors contained in the 2008 Scheme, the tribunal was also subject to that same restriction. It was not open to the tribunal to order that a Tariff Level should apply to the right thigh injury that was not available at the time the Respondent’s decision was made in October 2011.

40.	In its Statement of Reasons the tribunal noted the positions of both parties and found that the injuries to the Appellant’s right thigh were “extremely serious” [paragraph 29, Statement of Reasons]. It concluded that Item 12 of Table 2 was an appropriate descriptor for the right thigh injury having made findings about the functional limitations caused by this injury. Those factual findings are not in dispute in this appeal. Where the tribunal fell into error was first in failing to consider whether the 2011 descriptor was available at all in this case. Second, its decision failed to adequately address the case put forward by the Respondent, namely that the right thigh injury was properly categorised as being Item 29 of Table 2 at Tariff Level 11 of the 2008 Scheme.

41.	I accept that the tribunal’s decision on this matter was in error of law and must be set aside. The only order that can be made is to reinstate the Respondent’s October 2011 decision. 

42.	The Respondent did not however wish to deprive the Appellant of the benefit accruing from the tribunal’s decision that his right thigh injury met the criteria in Item 12 of Table 2 of the 2011 Scheme. He proposed that the Appellant should be compensated in accordance with the factual findings of the tribunal by the making of a temporary award under Article 26 of the 2011 Scheme. That award would immediately become permanent under Article 26(8) as the Tariff had already been amended to provide an appropriate descriptor. He invited me to recommend this course of action and I note that the Appellant agrees with this proposal.

43.	I am happy to make the recommendation sought by the Respondent. The Appellant has sustained an injury for which no provision was made in the Tariff in force on the date of his claim for compensation. This injury was sufficiently serious to warrant an award of injury benefit and it was a recognised injury according to the criteria listed in Article 26(1)(c) of the 2011 Scheme. The making of such an award also carries appeal rights which the Appellant may wish to pursue, if so advised, on the basis of further medical evidence about his right thigh injury.

44.	In the light of the agreement reached by the parties which I endorse in my decision, it follows that I must dismiss the Appellant’s appeal against the tribunal’s decision in respect of his right thigh. This had sought a reclassification of the right thigh injury in order that this injury might attract a higher Tariff Level.

The Second Appeal

45.	This appeal by the Respondent relates solely to the percentages allocated to each descriptor of injury for the purpose of calculating the total award payable to the Appellant. The single ground of appeal is that the tribunal erred in law in treating the Appellant’s case as falling within Article 21 rather than Article 22 of the 2011 Scheme.

(a) Legal Background

46.	The level of benefits payable to the Appellant is covered by Part 3 of the 2011 Scheme. By Article 15 these include a lump sum, a supplementary award and a guaranteed income payment.  Schedule 3 applies so as to determine the amount of a lump sum and any supplementary award. It contains a series of tables setting out the descriptors for different types of injury in different categories and the relevant Tariff Level for each injury. In turn, this determines the relevant amount of the lump sum payable by reference to the Tariff contained in Table 10 of Schedule 3.

47.	Article 17 of the 2011 Scheme provides that the amount of a lump sum and any supplementary award payable for an injury is either the relevant amount or a percentage of the relevant amount determined in accordance with whichever of Articles 18-23 is applicable. I note that Articles 18, 19 and 23 are not applicable in this case.

48.	Article 20 applies where (a) one injury or more is described by more than one descriptor and is sustained in or arises from one incident; (b) the relevant percentage for the purpose of calculating the amount of guaranteed income payment is less than 100%; and (c) one injury or more is described by two or more descriptors with Tariff Levels 1 to 11. In such a case, each injury or injuries are to be allocated to one of the body zones specified in Article 20(6) and the amount payable is to be calculated in accordance with either Article 21 or 22.

49.	Article 21 is entitled “Amount where injury or injuries are described by two or more descriptors at tariff level 11 or above in more than one body zone”. It applies where (a) one or more injury which is described by more than one descriptor is sustained in or arises from one incident; (b) the descriptors of the injury or injuries relate to two or more body zones; (c) there is at least one descriptor which gives rise to an entitlement within Tariff Levels 1 to 11 in each of two or more body zones; and (d) the relevant percentage for the purpose of calculating the amount of a guaranteed income payment is less than 100%. Pursuant to Article 21(2) in such a case (and subject to Article 17(2)), the amount payable is to be calculated as follows:
“(a) for the first body zone, 100% of the relevant amount applicable to each descriptor in that body zone;
(b) for the second body zone, 80% of the relevant amount applicable to each descriptor in that body zone;
(c) for the third body zone, 60% of the relevant amount applicable to each descriptor in that body zone;
(d) for the fourth body zone, 40% of the relevant amount applicable to each descriptor in that body zone;
(e) for the fifth body zone, 20% of the relevant amount applicable to each descriptor in that body zone.”
Article 21(3) defines the first body zone as meaning the body zone in relation to which the highest relevant amount would, but for this Article, be payable. Where the same amount is payable for each of two body zones, one is the “first body zone” and the second is the “second body zone”. References to the third, fourth and fifth body zone are to be construed accordingly.

50.	Article 22 is entitled “Amount where injury or injuries are described by more than one descriptor – other cases”. This paragraph applies where either paragraph 2 or 3 is satisfied. Paragraph 2 applies where:
“a) one injury or more which is described by more than one descriptor is sustained in or arises from one incident;
(b) the descriptors of the injury or injuries relate to one or more body zones;
(c) the relevant percentage for the purpose of calculating the amount of a guaranteed income payment is less than 100%;
(d) and the descriptor or descriptors which give rise to an entitlement within tariff levels 1 to 11 are in a single body zone”. 
Paragraph 3 applies where there are no injuries described by a descriptor which give rise to an entitlement within Tariff Levels 1 to 11.

51.	The amounts payable are to be calculated on the same basis as set out in Article 21(2) [see paragraph 49 above]. The definitions of first and second body zones are the same as set out in Article 21(3).

(b) Discussion
 
52.	Save as discussed above, the Respondent did not seek to challenge the tribunal’s findings in relation to the injuries or the descriptors to be attached to them. On the tribunal’s findings all of the Appellant’s injuries attracting awards at Tariff Levels 1 to 11 were in the same body zone, namely “upper and lower limbs”. Those injuries were the right below knee amputation; the left foot drop and the shrapnel injuries to the right leg. 

53.	The tribunal held wrongly that the percentages to be applied were to be determined by reference to Article 21 rather than Article 22 of the 2011 Scheme. Article 22(2) applies where the descriptor or descriptors which give rise to an entitlement within Tariff Levels 1-11 are in a single body zone.

54.	The tribunal was in error of law in applying Article 21 rather than Article 22 to the percentages allocated to each descriptor of injury for the purpose of calculating the amount of compensation payable to the Appellant. I set this decision aside and direct that the total amount of compensation payable to the Appellant should be calculated in accordance with Article 22 of the 2011 Scheme.

Conclusion

55.	Given that the Appellant’s life-altering injuries were inflicted over six years ago, I hope that the Respondent will expedite the administrative steps necessary to give effect to my decision.

56.	I note that the Appellant will have the benefit of appeal rights arising from the making of an award pursuant to Article 26 in respect of his right thigh injury. Both parties to this appeal indicated to me that they each reserve their position in respect of any future tribunal hearings in respect of the Appellant’s injuries.

Gwynneth Knowles QC
Judge of the Upper Tribunal
25 August 2015.

[signed on original as dated]