R(DLA) 2/99
(Harris v. Secretary of State for Social Security)                           
CA (Evans, Hobhouse and Hutchison LJJ)	CDLA/640/1994
15.5.97

Residence condition - claim for disability living allowance while ordinarily resident in Spain - whether Article 10(1) of Council Regulation (EEC) 1408/71 disapplies the residence condition
After the claimant was seriously injured in a road traffic accident he moved to Spain where he received incapacity benefit.  His claim for disability living allowance from 6 April 1992 was disallowed on the ground that he failed the residence and presence requirements. The Commissioner held that, on the facts, the claimant was not ordinarily resident in Great Britain as required by regulation 2(1)(a)(i) of the Social Security (Disability Living Allowance) Regulations 1991.  He also held, following R(A) 2/94, that Article 10(1) of Council Regulation (EEC) 1408/71, which provided that benefits “acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated” did not assist the claimant because he had never acquired entitlement to disability living allowance in Great Britain. The claimant appealed, arguing that Article 10(1) disapplied the residence condition on disability living allowance claimed after he had ceased to reside in Great Britain. The Secretary of State responded that since the benefit was non-contributory the claimant had never acquired a right to it and, therefore, the residence condition applied.  
Held, dismissing the appeal, that: 
1.	the fact that a scheme was non-contributory was irrelevant;
2.	Daalmeijer v. Bestuur van de Sociale Verzekeringsbank [1991] ECR I-555 clearly held that Article 10 (1) had no effect on the acquisition of the right to a benefit (except in cases of the kind mentioned below), with the result that any residence conditions were not disapplied;
3.	the position might have been different if there had been a pre-existing or established benefit that had been added to or supplemented in some way, but that was not the case here: Bestuur der Sociale Verzekeringsbank v. Smieja [1973] ECR 1213; Giuliani v. Lands Versicherungsanstalt Schwaben [1977] ECR 1857; Caracciolo v. Institut National d'Assurance [1982] ECR 2213 and Caisse Régionale d’Assurance Maladie Rhône-Alpes v. Giletti [1987] ECR 955 considered.
[Note:	From 1 June 1992, Council Regulation (EEC) 1408/71 was amended so that disability living allowance ceased to be an invalidity benefit within the scope of Article 10.]

DECISION OF THE COURT OF APPEAL
Mr. N. Nicol (instructed by Messrs Shah & Burke, London NW10 0DG) appeared on behalf of the Appellant.
Mr. N. Paines QC (instructed by Solicitor, Department of Social Security, London WC2A 2LS) appeared on behalf of the Respondent.

LORD JUSTICE EVANS:
Under the relevant social security legislation, a disabled person is entitled to claim disability living allowance (DLA) when certain conditions as to his residence and presence in this country are satisfied.  These conditions are that on the relevant day -
	“2(1).....
	 (a) ....
		(i)	he is ordinarily resident in Great Britain;  and
		(ii)	he is present in Great Britain; and
(iii)	he has been present in Great Britain for a period of, or for periods amounting in the aggregate to, not less than 26 weeks in the 52 weeks immediately preceding that day; ......
		(Social Security (Disability Living Allowance) Regulations 1991).”

The issue raised by the present appeal is whether the condition as to ordinary residence in Great Britain (Reg. 2(1)(a)(i)) was rendered invalid or “disapplied” by Article 10(1) of EEC Council Regulation No. 1408/71 (“Regulation 1408/71”), before that Article was amended, as it was with effect from 1 June 1992.
Since the earliest date from which DLA was claimed by the appellant was 6 April 1992, it follows that the decision on this issue affects only his entitlement to DLA for that period of rather less than two months.
Article 10(1) of Regulation 1408/71 is unamended reads as follows:-
	Article 10
	Waiving of residence clauses ......
1.	Save as otherwise provided in this Regulation, invalidity, old-age or survivors’ cash benefits, pensions for accidents at work or occupational diseases and death grants acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated.
		..........”.

History
The appellant lived and worked in Great Britain until he was involved in a car accident in 1984 and suffered serious injuries.  He underwent a number of operations and in April 1987 he and his wife, on his doctor’s advice, moved to Alicante in Spain.  He has since been ordinarily resident there rather than in this country.  He has made occasional return visits, for further operations in each of the years 1987 to 1990, and in December 1991 in order to “sort out” his claim for invalidity benefit.  That benefit was payable under earlier legislation and it has been superseded by incapacity benefit.  In March 1992 his entitlement was recognised and retrospective payments of incapacity benefit were made to him.  He has been entitled to and has received incapacity benefit throughout.  His claim for DLA from 6 April 1992, when the 1991 Regulations came into effect, gives rise to this dispute.
His claim was rejected by the adjudication officer, on review, on 22 June 1993.  That was on the ground, put shortly, that he failed to satisfy the medical conditions required for the grant of DLA.  His appeal to the Disability Appeal Tribunal was dismissed, but on the preliminary ground that he failed to satisfy the residence and presence conditions prescribed by regulation 2(1)(a) (quoted above).  
For the purposes of this appeal, the objection is that he was not “ordinarily resident in Great Britain” on 6 April 1992 when the application was or is deemed to have been made.  The appellant does not dispute that by then he was in fact ordinarily resident in Spain.  Questions did arise as to the dates of his presence in Great Britain, as required by regulation 2(a)(ii) and (iii), but these do not concern us, because Mr. Nicholas Nicol, counsel for the appellant, accepts that he cannot mount any separate or wider attack on the validity of sub-paragraphs (ii) and (iii), the presence requirements, than he does on the residence requirement in sub-paragraph (i).
The appellant then appealed to the Social Security Commissioner, Mr. J. Mesher, whose decision is dated 12 December 1995.  He upheld the Appeal Tribunal’s ruling.  His reasons for doing so was that he followed his own decision in ref. CDLA/56/1994.  There, he felt bound to follow an earlier ruling by Commissioner Goodman that the residence requirement for DLA was not disapplied by Article 10(1) (Decision No. R(A)2/94).  If not so bound, he “would have referred questions to the ECJ in order to clarify the principles of Community law to be applied in cases such as this.  I would have been uncertain what the ECJ would decide were the question of the scope of Article 10(1) raised in the context of the stark facts of this case” (CDLA/56/1994 para. 11).
Submissions
We have had the advantage of clear and concise submissions both from Mr. Nicol for the appellant and from Nicholas Paines QC for the Secretary of State, and we are most grateful to them.
Mr. Nicol submits, by reference to European authority, that the words of Article 10(1), “invalidity .... benefits .... acquired under the legislation” of Great Britain, must be given their full effect.  In particular, they are not limited to such benefits as were acquired by the individual before he or she ceased to be ordinarily resident here.  The Court has held that Article 10(1) embraces after-acquired benefits in the form of increases in the amount of a benefit already received (Bestuur der Sociale Verzekeringsbank v. Smieja [1973] ECR 1213) or of a supplementary allowance paid to the recipients of old-age or invalidity benefits (Caisse Régionale d’Assurance Maladie Rhône-Alpes v. Giletti [1987] ECR 955).  Therefore, he submits, “acquired” means “acquired at any time”, so that Article 10(1) has the effect of disapplying the residence condition provided only that the appellant personally is qualified to rely upon the Article.  This he is, because by Art. 2, Regulation 1408/7 -
“.... shall apply to employed or self-employed persons who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States .... “(Art. 2(1)).

The appellant, he submits, is a “Person covered” within Art. 2 and for the purposes of Regulation 1480/71.  He therefore can take advantage of Art. 10(1) in order to disapply the residence condition attached to the grant of DLA
	Moreover, it is common ground that the relevant DLA legislation is within the definition of “Matters covered” in Art. 4.  This reads:-	
(Art. 4)

“1.	 This Regulation shall apply to all legislation concerning the following branches of social security:
	(a) 	....
		(b)	invalidity benefits ....
		(c)	old-age benefits ....
2.	This Regulation shall apply to all general and special social security schemes, whether contributory or non-contributory ....”.

Mr. Paines relies on the fact that the DLA allowance is non-contributory, which fact Mr. Nicol does not dispute.  Mr. Paines’ submission is that a benefit which is introduced after the applicant ceases to be employed or self employed in the EU state in question and which is non-contributory ie is not based on previous contribution, is not “acquired” by him for the purposes of Art. 10(1), hence the residence condition is not disapplied in his case.
Consequences
Mr. Nicol accepts that, if his submission is correct, then any person who is or has been employed or self-employed in (any) EU Member State and who is a national of (any) Member State is entitled to claim a benefit of any of the specified kinds in any EU country where legislation is introduced which imposes, apart from any medical or other eg age requirements, only a condition of residence (or presence) within that country.  If the residence condition is disapplied, then that country becomes liable under European law to pay the benefit in question to all EU nationals wherever they may live and work, or have worked.
This means that in the present case it is not relevant that formerly the appellant was employed in Great Britain; any EU country would suffice.  Moreover, if some new non-contributory benefit was introduced in Germany, or France, he would equally be entitled to disapply any residence (or presence) condition imposed by legislation there.  
This apparently extreme result of his submissions, if they are correct, led to the suggestion that Mr. Nicol should perhaps define, as his alternative submission, some interpretation of Regulation 1408/71 which would mean that the appellant’s previous employment in Great Britain was relevant to his ability to rely upon Art. 10(1), but this suggestion was not taken up.
The authorities 
These can best be summarised in date order.
In Smieja (above) the applicant was a German national resident in the Federal Republic of Germany who was granted an old-age pension based on her previous residence in Holland.  The amount to which she was entitled was in dispute.  The European Court’s judgment included the following:
“15.	The aim of [Article 10(1)] is to guarantee the party concerned his right to have the benefit of such payments even after taking up residence in a different Member Country, eg his country of origin.
20.	As already stated, the purpose of this provision is to promote the free movement of workers, by insulating those concerned from the harmful consequences which might result when they transfer their residence from one Member State to another.
21.	For this, the protection given must necessarily extend to cover benefits which, while created within the confines of a particular scheme .... are given effect by increasing the value of the pension which would otherwise accrue to the recipient.
22.	It follows that, to the extent that a national law .... imposes a condition of residence on would-be recipients of some of the benefits of the type mentioned in Article 10, the fact that the person concerned resides in the territory of a different Member State is no ground for modification withdrawal or suspension of such benefits.”

In Antonio Giuliani v. Landsversicherungsanstalt Schwaben [1977] ECR 1857 an Italian national resident in Italy had worked for a time in Germany and became entitled to a pension there.  However, as stated in the Judgment,
“Under German law, the right to a pension is in principle held in abeyance where the recipient is not a German and so long as he voluntarily resides outside the Federal Republic of Germany.  The right to payment of the benefit can be exercised only as a result of the waiving of the residence clause referred to in Reg. No. 1408/71” (p. 1859).

The Court held that Article 10(1) had no effect on a “new acquisition of the right to benefit” (para. 6 p. 1865).
Antonia Caracciolo (née Camera) v. Institut National d’Assurance etc.  [1982] ECR 2213 involved a claim by a Belgian national who was resident in Italy for an invalidity pension under Belgian law, which imposed a condition of presence in Belgium at the time of the claim (see p. 2224).  Before leaving Belgium, she was declared unfit for work on 12 July 1965 and she was authorised by the Belgian insurance institution to stay in Italy, but she over-stayed the time limit which it imposed.  As a result, the allowance which she was receiving was stopped, and she later made a fresh claim for invalidity pension based on her previous residence as an insured person in Belgium.  The Court held that the territoriality principle could not be applied (para. 16 p. 2225).  After referring to its Smieja decision, the  Court said:-
“..... the aim of the provision contained in Article 10 is to promote the free movement of workers by insulating those concerned from the harmful consequences which might result when they transfer their residency from one Member State to another.  It is clear from that principle not only that the person concerned retains the right to receive pensions and benefits acquired under the legislation of one or more Member States even after taking up residence in another Member State, but also that he may not be prevented from acquiring such a right merely because he does not reside in the territory of the State in which the institution responsible for payment is situated” (para. 14 page 2224).

Caisse Régionale d’Assurance Maladie Rhône-Alpes v. Anna Giletti [1987] ECR 955 was one of four cases heard together regarding the application of social security schemes to employed persons and their families moving within the Community.  Anna Giletti was “an Italian national, in receipt of a widow’s pension by virtue of the fact that her husband, also an Italian citizen, worked as an employed person within French territory between 1930 and 1961, the year of his death”.  After that date, she lived in Italy, and in 1981 she applied for a supplementary allowance under French law, but her application was refused on the ground that she did not reside within French territory (Opinion of the Advocate General, para. 4 p. 962).  The relevant part of the Court’s judgment is para. 56 and following at page 968 of the Report.  The issue was defined as “whether the allowance in question must be regarded as ‘acquired’ so that it will continue to be payable in the event of a change of residence to the territory of another Member State” (para. 56).  Having held that the case-law of the Court clearly established that the “waiver of residence clauses” provided in Article 10(1) applied (para. 61), the Judgment continued:-
“62.	A further difficulty arises, however, where a person entitled to an allowance .... no longer resides in the country responsible for payment .... or has never resided there ....”,
and having referred to authorities as to the scope of Article 10(1),  and having pointed out that the Article refers to those who (now) reside in another Member State, not for example “takes up residence” there, concluded as follows:-
“69.	In the last analysis, since reference is made to benefit acquired for the purposes of the waiving of residence clauses, the objective pursued by Article 10 is, by all appearances, to safeguard not only the payment of such benefits, but also the acquisition of entitlement to them”.

Finally, in Daalmeijer v. Bestuur van de Sociale Verzekeringsbank [1991] ECR I-555 the applicant was a Netherlands citizen who throughout his life was affiliated to the Dutch general old-age insurance scheme, but who in May 1974 took early retirement and went to live in France together with his wife.  When he became 65 in 1982 he discovered that the authorities in the Netherlands would not take into account for the calculation of his retirement pension the years which he had spent in France (paras. 4-5 I-566): In his Opinion, the Advocate-General advised the Court:-
“26.	I consider that apart from the very specific situations dealt with by the Court in [Smieja, Camera and another case],  the lifting of the residence requirement provided for by [Article 10(1)] must be interpreted in the manner specified by the Court in [Giuliani], namely, that it “has no effect on the acquisition of the right to benefit”. 
27.	To accept the interpretation that a person who has ceased to reside in the Netherlands nevertheless continues, by virtue of Article 13, to complete new periods of insurance there would be tantamount not only to prohibiting that State from basing its general insurance scheme on a residential requirement but also to introducing .... a principle which the authors of Regulation No. 1408/71 precisely did not wish to incorporate in Article 10.”  (page I-570)”.
In its judgment, the Court held:-
“15.	.... it should be borne in mind that, as the Court has consistently held, it is for the legislature of each Member State to lay down the conditions creating the right or the obligation to become affiliated to a social security scheme or to a particular branch under such a scheme, which include the conditions governing the cessation of affiliation, provided always there is no discrimination between nationals of the host State and nationals of the other Member States ....

16.	Nor does Regulation No. 1408/71 contain any provision whose application, whether directly or by analogy, would make it possible to set aside a residence requirement of that kind” (page I-578).

For completeness, reference should also be made to Newton v. Chief Adjudication Officer [1992] 1 CMLR 149 but in my view that adds nothing which is relevant for present purposes.
Discussion
It is clear from these authorities that Article 10(1) can have some application when a benefit is first acquired at a time when the beneficiary is not resident in the Member State whose institutions undertake to pay for it.  Additional and supplementary benefits cannot be denied on grounds of residence alone.  Cases of that kind, which have been the subject of particular decisions of the Court, necessarily imply some pre-existing or established benefit which has been added to or supplemented in some way.  Some further right has therefore been “acquired”, but not without regard to the beneficiary’s previous rights which, as it was put in Smieja, were “created within the confines of a particular scheme” (para. 21, quoted above).
It does not follow from this inclusion of additional and supplementary benefits that Article 10(1) also disapplies a residence requirement in national legislation which “creates the particular scheme” in question.  In my view, the Court’s judgment in Daalmeijer holds expressly that it does not.  The Court there recognised that it is for the national legislature of each Member State “to lay down the conditions creating the right or the obligation to become affiliated to a social security scheme” (para. 15), and Article 10 does not set aside a residence requirement “of that kind” (para. 16).
Therefore, as I read Daalmeijer, the residence requirement was upheld, not because the benefit in question was non-contributory, but because it was part of the original scheme under which the benefit was payable.  True, if the scheme is non-contributory, it may be easier to show that it is new and independent of any that went before, just as if a new benefit is “contributory” then it cannot be claimed except by reference to contributions already made under some previous scheme.  Moreover, a distinction between “contributory” and “non-contributory” is difficult to sustain, consistently with the Art. 4 definition of relevant schemes (quoted above) which includes both.  
It seems to me, for these reasons, that Mr. Nicol’s submission is not supported by the judgments in Smieja, Caracciolo/Camera and Giletti, as he contends, and moreover that it is inconsistent with the Courts decision in Daalmeijer.  I would agree with Mr. Nicol that the precise meaning of “acquired” in Article 10(1) could give rise to some uncertainty in the practical application of the Article, but only, I would add, when there is some pre-existing link between the applicant and the benefits scheme, whether based on previous residence, or employment, or some other connection with it.
Thus it is important that the present applicant does not rely upon any such pre-existing link.  He does not assert that DLA is merely the modern guise of some previous benefit scheme, to which he was or might have become entitled, nor that his previous residence or employment in this country can be said to establish a sufficient connection between himself and the DLA scheme.  Nor is it possible for Mr. Nicol to put forward a modified or “half-way house” submission as to the exact scope of Article 10(1) which could be relevant here, and he has not sought to do so.
Neither counsel invited us to refer the issue to the European Court for its opinion, each contending that the construction which he put forward was clearly correct.  in my judgment, it is unnecessary for us to do so.
I would hold, simply, that the applicant has never acquired any entitlement to benefit under the DLA scheme within the scope of Article 10(1), because the residence requirement (and the presence requirements) legitimately is part of the scheme itself, and I would dismiss this appeal.

LORD JUSTICE HOBHOUSE:
I agree.

LORD JUSTICE HUTCHISON:
I also agree.

Order:	 Appeal dismissed; no order for costs; legal aid taxation; leave to appeal refused.