England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOCIAL SECURITY COMMISSIONER
CH 5125-5130/2002

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/04/2004

Jacob LJ :

1. This appeal is from a decision of Mr Commissioner Jacobs given on 20^th May 2003 when sitting as a Social Security and Child Support Commissioner. He dismissed appeals in 5 cases decided by Mr Richard Poynter, the Social Security Appeal Tribunal. Mr Commissioner Jacobs gave permission to appeal to this Court. The 5 appellants claim housing benefit ("HB"). This has wrongly been refused contends their counsel, Mr James Goudie QC.
2. The decisions below set out with commendable clarity the details of the facts. Essentially the position is simply as follows. All the appellants are members of the Jesus Fellowship Church. They have become what are called "Style Three" members. This means that they have agreed to live communally, pooling their income in a common purse, and giving all their capital to the Church Trust. They occupy properties owned by the Church under agreements of various types. These agreements are genuine legal agreements, not shams. There are real legal liabilities for rent. It is not suggested the agreements were created to take advantage of the HB scheme.
3. The provision with which we are concerned is regulation 7 of the Housing Benefit (General) Regulations 1987 as amended by regulation 3 of the Housing Benefit (General) Amendment (No 2) Regulations 1998. This reads:

"(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where –

(a) the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis ….

(1A) in determining whether a tenancy or other agreement pursuant to which a person occupies a dwelling is not on a commercial basis regard shall be had inter alia to whether the terms upon which the person occupies the dwelling include terms which are not enforceable in law.

4. The Tribunal, upheld by the Commissioner, held that the agreements pursuant to which the appellants occupied their dwellings were not "on a commercial basis." So by the regulation, they are treated as if they do not have to pay rent and hence are not entitled to HB.
5. Mr Goudie has two main points, one under the ECHR and the other relating to how regulation 7 came to be amended in 1998. His ECHR point does not challenge the validity of the regulation as such – his point relates to what he claims is an error of approach caused by a failure to take the ECHR into account in reaching the decision. His alternative point about the amendment, if right, would have the consequence that the amendment would be ultra vires and invalid. It is a pure domestic law point.

The ECHR Point

6. I begin by setting out the Tribunal's reasons for holding that the agreements were not on a commercial basis. It did so in a model way, first identifying the "commercial" factors and then those which were "non-commercial."

"Factors which tend to suggest the agreements are commercial

75. The factors which tend to suggest that the agreements are commercial are as follows:

(a) The Trust is non-charitable. The Trustees are under legal obligations to protect Trust property, to ensure that it is only used for proper purposes and to secure a proper return on Trust assets. Its finances are properly managed by Mr Farrant and are subject to detailed and rigorous financial controls.

(b) Those Conditions of Residence which deal with the Board and Lodging charge create a genuine and legally enforceable liability on the part of Community Members to make payments in respect of the occupation of Community Houses.

(c) The Trust takes reasonable measures to enforce payment of arrears of the Board and Lodging charge by former residents of Community Houses who have left.

(d) The Trust takes reasonable measures short of eviction against Community Members who are in arrears of the Board and Lodging charge but are otherwise in good standing with the Church and who wish to remain as Community Members.

Factors which tend to suggest the agreements are not commercial

76. The factors which tend to suggest that the agreements are not commercial are as follows:

(a) The Lifestyle Conditions which (inter alia) require Members to pool their income in a Common Purse, actively to pursue a particular religious lifestyle, submit to the authority of the Elders, bring up their children in a specified way and participate wholeheartedly in the activities of the Church and the communal life of the Community Houses.

(b) In the case of the Elders' Conditions of Residence, the requirements to be responsible for oversight of the religious life of the Community House, including matters of religious discipline.

(c) Full Style 3 Members are required to donate all their belongings to the Trust.

(d) The Board and Lodging charge is not set so as to maximise the Trustees' return on their investments but so as to cover costs and provide a reasonable return on capital. It is also relevant that:

i. The Board and Lodging charge is not based on the current values of the Trust's property portfolio but on its historic cost;

ii. The Board and Lodging charge is not based on the actual value of the property occupied by the payor but on figures calculated on the value of the Trust's property portfolio as a whole;

iii. The Board and Lodging charge is not related to the size of the accommodation occupied by the payor and his or her family;

iv. As the Board and Lodging charge is based on bed-spaces, the return which the Trust receives from the Elders (who are, in effect, the Head Licensees) varies according to the number of occupiers.

(e) The Board and Lodging charge can be increased by the Trustees, on occasion with retrospective effect, without consulting or securing the prior agreement of the payor.

(f) The Elders may unilaterally change the sleeping arrangements of Community Members.

(g) The Elders' conditions of residence may be unilaterally changed by the Trustees.

(h) The procedure of merging a Common Purse which is in financial trouble with one which is not. The possibility that one group of sub-licensees of a Landlord should intervene to assist the Landlord by assuming the financial responsibilities of another group of the Landlord's sub-licensees is without any parallel in the commercial letting market.

(i) Community Members in good standing are permitted to run up arrears of Board and Lodging charge indefinitely without being evicted as long as the failure to pay the charge results from factors outside that Member's control, such as non-payment of housing benefit. Mr Farrant said in evidence that, in the long run, the Trustees stood a better chance of recovering their money by keeping the person with arrears as a Style 3 member and that since a continuing Style 3 member would already be paying all of his or her income into the Common Purse there would be no assets against which any legal judgment could be enforced. That may be so in the short or even the medium term but ultimately there would come a point when a commercial landlord would cut his or her losses and seek to replace a tenant who could not pay the ongoing charge with one who could, even at the risk of making it more difficult to recover any arrears. A commercial landlord would not have permitted the Elders of … to accumulate arrears in excess of £84,000 without taking steps to terminate their licenses no matter what the reasons for the arrears may have been.

(j) When pursuing arrears, even through the courts, the Trust or the Elders do not normally make a claim for interest."

7. For convenience I set forth the Convention provisions relevant to this case:

"Article 8 – Right to respect for private and family life

1. Everyone has the right to respect for his private and family life, his home and his correspondence.

2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder and crime, for the protection of health or morals, or for the protection of the rights and freedom of others.

Article 9 – Freedom of thought, conscience and religion

1. Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.

2. Freedom to manifest one's religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedom of others."

"Article 14 – Prohibition of discrimination

The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."

Protocol 1 Article 1 – Protection of property

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

8. Mr Goudie's argument goes in a number of steps. I take them from his skeleton argument:

(1) Was the Tribunal obliged to consider the appellants' Convention rights in drawing the inference about commerciality?

(2) Are the appellants being discriminated against?

(3) Was Art. 14 engaged?

(4) Was the discriminatory treatment imposed in furtherance of a legitimate aim?

(5) Was the discrimination proportionate to the aim?

9. As will be seen from what I say below, I would answer these questions as follows:

(1) No;

(2) No;

(3) No because there is no violation of any substantive Article;

(4) There is a legitimate aim and no discriminatory treatment, and

(5) In any event if there is discrimination it is proportionate in furtherance of a legitimate aim.

Commerciality and the Convention

10. Mr Goudie accepts that this point is crucial to his argument. In essence he contends that the Tribunal was wrong in law to take into account any actual facts if the cause of them is the appellants' religious beliefs. His argument is that the overall evaluation of whether there is a commercial basis involves taking into account a number of primary detailed facts – as the Tribunal so clearly set out. Thus the question is analogous to the exercise of a discretion where one weighs relevant factors. In his skeleton argument he actually went so far as to suggest that the determination of whether or not there was a commercial basis was an exercise of discretion.
11. Perhaps recognising that would not do (and it obviously will not) in oral argument he shifted his position. He said the overall evaluation "had a lot in common" with the exercise of a discretion in which one weighed a number of factors. And, he submitted, in weighing the various factors, the weight to be given to those factors the reason for which was religious belief should be nothing or very slight. This was because the Convention was engaged - the factors were manifestations of the belief. To take into account factors due to manifestation of religion was to take into account factors which were not lawfully relevant.
12. Mr Goudie's argument then proceeded to examine the various negative factors identified by the Tribunal, factors which he accepted overlap in part with one another. Most of the factors had some connection with the religious belief indeed only (c) was wholly untouched by belief. The key factor was (a). If weight was given to these factors, manifestations of religious belief, then, he submitted there was an interference with the appellants' religious practices contrary to Art.9. It followed that the enjoyment of the right to freedom of religion – and particularly the freedom to manifest that religion - should be secured by Art.14.
13. I would reject this argument. The issue of whether or not there is a commercial basis is one of fact. True it is that this overall question involves weighing a number of factors – sub-facts so to speak. But everything in the evaluation is purely factual. The Convention cannot and does not purport to change facts or make evidence relevant to a factual inquiry inadmissible. The true position is that the arrangements are non-commercial for religious reasons. Religious, or indeed any other, reasons cannot turn that which is non-commercial into that which is.
14. Although we were taken to a number of authorities, both UK and in the ECHR, none came near to establishing that at the stage of a factual investigation reality should be ignored. Perhaps the nearest, but only at first blush, was Thlimmenos v Greece (2001) 31 EHRR 411. A Jehovah's witness was convicted of refusing to enlist in the army. Greek law said that anyone who had a conviction could not be a chartered accountant. The reason for the conviction did not matter. The ECHR held that there was a violation of Art. 14 taken in conjunction with Art. 9. It said:

"44. The Court has so far considered that the right under Article 14 not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is violated when States treat differently persons in analogous situations without providing an objective and reasonable justification. However, the Court considers that this is not the only facet of the prohibition of discrimination in Article 14. The right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when States without an objective and reasonable justification fail to treat differently persons whose situations are significantly different."

"47. The Court considers that, as a matter of principle, States have a legitimate interest to exclude some offenders from the profession of chartered accountant. However, the Court also considers that, unlike other convictions for serious criminal offences, a conviction for refusing on religious or philosophical grounds to wear the military uniform cannot imply any dishonesty or moral turpitude likely to undermine the offender's ability to exercise this profession. Excluding the applicant on the ground that he was an unfit person was not, therefore, justified. The Court takes note of the Government's argument that persons who refuse to serve their country must be appropriately punished. However, it also notes that the applicant did serve a prison sentence for his refusal to wear the military uniform. In these circumstances, the Court considers that imposing a further sanction on the applicant was disproportionate. It follows that the applicant's exclusion from the profession of chartered accountants did not pursue a legitimate aim. As a result, the Court finds that there existed no objective and reasonable justification for not treating the applicant differently from other persons convicted of a felony.

48. It is true that the authorities had no option under the law but to refuse to appoint the applicant a chartered accountant. However, contrary to what the Government's representative appeared to argue at the hearing, this cannot absolve the respondent State from responsibility under the Convention. The Court has never excluded that legislation may be found to be in direct breach of the Convention. In the present case the Court considers that it was the State having enacted the relevant legislation which violated the applicant's right not to be discriminated against in the enjoyment of his right under Article 9. That State did so by failing to introduce appropriate exceptions to the rule barring persons convicted of a felony from the profession of chartered accountants."

15. So it was the Greek law itself which violated the Convention. By way of contrast in this case no challenge is made to the relevant law, amended Reg. 7. The argument before us did not go into why there was no challenge. Mr Sales, for the Secretary of State, said that if there had been a challenge he had plenty of answers to it. What is clear is that Thlimmenos is not authority for the proposition that facts are changed by the Convention.
16. Since Mr Goudie accepts that this first point is crucial to the rest of his argument it is not necessary to go further. I will, however, consider some of the later stages of the argument too, for in my judgment his argument fails at later stages too. The points of failure are

(a) the absence of a material interference with the appellants' religious practice;

(b) the proportionality of the grounds for refusal of HB;

(c) the lack of a sufficient nexus (close link) between the alleged discrimination and the refusal of HB.

No material interference

17. It is said that reg.7(1)(a) indirectly discriminates against the appellants because the lifestyle conditions of residence are manifestations of their religious practice. In this context "manifestations" should be given a wide interpretation, see R (Williamson) v Secretary of State [2003] QB 1300. So, it is said, refusal of HB is a material interference with the appellants' religious practices – without HB they will have to abandon or modify lifestyles dictated by their religious beliefs.
18. But I cannot see that is so. The Tribunal so held as a matter of fact. It put it this way:

"Further, the type of communal living desired by the appellants is not incompatible with the receipt of housing benefit. In order to receive housing benefit, it is not necessarily that, as between themselves, they should abandon any of their religious beliefs, practices or discipline, or the pooling of their income and capital, or the donation of surplus income to the Church. All that is required is that they should have a normal commercial relationship with those who let or licence them to occupy their homes. Given my conclusions on the commerciality issue, this will require that the terms on which they occupy those homes should not impose those religious practices and discipline as a condition of occupation and that the properties occupied should not be let or licensed by the Church, the Trust or, possibly, the Housing Association. (In this, the position of the appellants is analogous to that of the claimant in the Tucker case who is free to rent accommodation from any landlord in the country who is willing to let it except from the father of her child). It is no part of the Statement of Faith and Practice that the communal living which is considered desirable should necessarily take place in property owned by the Church or persons and organisations connected with it."

19. We were taken to the Church's "Statement of Faith and Practice". I can find nothing in that which suggests the Tribunal's conclusions were wrong. So far as I can see you can be a member of the Church, even a Style 3 member, and yet have entirely commercial arrangements vis-à-vis a commercial landlord. And if you otherwise qualify for HB under that arrangement you will be entitled to it.
20. Furthermore this point seems to be one of fact and appeal to this Court lies only on points of law (see s.15 of the Social Security Act 1998).

Proportionality and insufficient nexus

21. Moreover I can see no real distinction between this case and that of Tucker v Secretary of State [2002] HLR 500. HB was refused under one of the other heads of the amended reg. 7(1) – reg.7(1)(d). This is, in effect, where the landlord is responsible for the applicant's child. It was said that the circumstances were within the scope of Art. 8 (respect for private and family life and home) and that Art. 14 was engaged when read together with Art. 8. Mr Goudie argues that here, though he suggested his strongest case was Art. 14 with Art.9. Waller LJ (with whom the other members of the Court agreed) assumed that the facts brought the matter within the scope of Art. 8 on the basis that Art 8 with Art. 14 applied. On that assumption he upheld Maurice Kay J's rejection of an ECHR attack on the provision. It was not disproportionate, aimed as it was against abuse.
22. The position is exactly the same here. Assume that Art. 14 with Art. 9 applies. Is the regulation or its operation disproportionate? In my view manifestly not. The practice of religious beliefs of any kind does not receive a positive subsidy from the State. Yet if the appellants were right, their special form of communal non-commercial arrangements would be entitled to a subsidy by way of HB because it was based on religious belief. Uniquely, as compared with that of any other religion, the practice of the applicants' religion would get a subsidy.
23. Mr Sales pointed to other cases which, he submitted, were stronger than the present yet in which it was held there was no breach of Convention rights.
24. In Logan v UK 22 EHRR CD 178 the Commission held inadmissible a claim by a father that the amount of maintenance he was ordered to pay left him with inadequate funds to enable him to maintain reasonable contact with his children in violation of Art.8. That was rejected. So also was his complaint that the maintenance payments restricted his ability to practise his religion by restricting his ability to attend places of Buddhist worship:

"The Commission is not persuaded … that visits to the priories can be considered an indispensable element of the applicant's religious worship."

25. In Botta v Italy (1998) 26 EHRR 241, a physically disabled person complained to the carabinieri that the relevant authorities (e.g. the Mayor) had failed to equip bathing establishments with appropriate facilities required by Italian law. He said there was a violation of Art.8. The ECHR held there was no violation of Art.8 because there was no direct link between the measures he said should be taken and his private life. And the Court made it clear that Art.14 complements the substantive provisions of the Convention – you have to find that a substantive right is engaged before Art. 14 can come into play.
26. It is to be noted that the Court applied a "direct link" test. Here, submitted Mr Sales, in my judgment correctly, there can be no question of a "direct link" between the refusal of HB and the rights of the appellants under Art.9. to their freedom to manifest their religion. The link here is even more tenuous than the insufficient link in Botta.
27. In Chapman v UK (2001) 33 EHRR 399 a gypsy lived in a caravan on her own land in violation of planning control. She said there was a violation of her Art. 8 rights, that there was discrimination because she was a gypsy and an interference with her right to respect for private life, family life and home. The ECHR rejected the claim, holding that enforcement of planning control was proportionate and legitimate in a democratic society. The fact that alternative accommodation was not available at suitable prices was not relevant. The Court accepted that the imposition of far-reaching positive obligations on a State was not required by Art. 8.
28. This seems to me to be a point of importance. There is a real difference between requiring a State to observe the rights conferred by the Convention in a negative way – refraining from acts which would interfere with those rights - and a positive obligation on a State to subsidise or allocate scarce resources to enable a particular lifestyle or belief to be practised. Proportionality dictates that this must be so.
29. Another example of the application of the difference between negative and positive obligations on a State is Sentges v Netherlands 8^th July 2003 Appn. No. 27677/02. The applicant had MS. The evidence was that the provision of some relatively expensive equipment would greatly improve his life. The Court said:

"In the instant case the applicant complained in substance not of action but of a lack of action by the State. While the essential object of Article 8 is to protect the individual against arbitrary interference by the public authorities, it does not merely compel the State to abstain from such interference: in addition to this negative undertaking, there may be positive obligations inherent in effective respect for private or family life. These obligations may involve the adoption of measures designed to secure respect for private life even in the sphere of the relations of individuals between themselves (see, inter alia, X and Y v The Netherlands, cited above, § 23), Stubbings and Others v the United Kingdom, judgment of 22 October 1996, Reports 1996-IV, p. 1505, §.

The Court has held that Article 8 may impose such positive obligations on a State where there is a direct and immediate link between the measures sought by an applicant and the latter's private life (see Botta v Italy, cited above, § 34). However, Article 8 does not apply to situations concerning interpersonal relations of such broad and indeterminate scope that there can be no conceivable link between the measures the State is urged to take and an individual's private life each time an individual's everyday life is disrupted, but only in the exceptional cases where the State's failure to adopt measures interferes with that individual's right to personal development and his or her right to establish and maintain relations with other human beings and the outside world. It is incumbent on the individual concerned to demonstrate the existence of a special link between the situation complained of and the particular needs of his or her private life (see Zehnalovà and Zehnal v the Czech Republic (dec. no. 38621/97, ECHR 2002-V).

Even assuming that in the present case such a special link indeed exists – as was accepted by the Central Appeals Tribunal -, regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole and to the wide margin of appreciation enjoyed by States in this respect in determining the steps to be taken to ensure compliance with the Convention (see Zehnalovà and Zehnal, cited above).

The margin of appreciation is even wider when, as in the present case, the issues involve an assessment of the priorities in the context of the allocation of limited State resources ….

In view of their familiarity with the demands made on the health care system as well as with the funds available to meet those demands, the national authorities are in a better position to carry out this assessment than an international court ….

In the present case the Court notes that the applicant has access to the standard of health care offered to all persons insured under the Health Insurance Act and the Exceptional Medical Expenses Act (see Nitecki v Poland (dec. no. 65653/01, 21 March 2002, unreported). It thus appears that he has been provided with an electric wheelchair with an adapted joystick. The Court by no means wishes to underestimate the difficulties encountered by the applicant and appreciates the very real improvement which a robotic arm would entail for his personal autonomy and his ability to establish and develop relationships with other human beings of his choice. Nevertheless the Court is of the opinion that in the circumstances of the present case it cannot be said that the respondent State exceeded the margin of appreciation afforded to it."

30. All of that reasoning applies here. It is true that Mr Goudie primarily relies upon Art 9 rather than Art 8 but I can see no relevant difference between the two Articles. Neither right is absolute. Art 9 in particular confers a right on all, including the applicants, to manifest their religion. It does not confer a right to have that manifestation subsidised by the State. The State is in the best position to allocate its limited resources – which includes the provision of HB.

The Art 1 of Protocol 1 ("1P1") Point

31. Although not advanced below, we permitted Mr Goudie to raise the point. The oral argument was supplemented by written submissions from Mr Sales and Mr Goudie. Mr Goudie contended that the removal of the applicants from their previous entitlement to HB amounted to "deprivation of a possession" within the meaning of 1P1. The removal from entitlement was effected by the 1998 amendment to the regulations (see below for more detail).
32. At first blush this is a startling proposition. The appellants never "owned" a right to HB in any meaningful sense. HB is a non-contributory State benefit given to certain persons who have housing needs and who satisfy the relevant criteria. If it is right, then so far as I can see, any form of State benefit would count as a "possession." So, once a State has allowed payment of a benefit, it could never be withdrawn or even, I suppose, reduced. And Mr Goudie did not shrink from so contending.
33. Standing in the way of Mr Goudie's proposition is the decision of this Court in Carson v Secretary of State for Work and Pensions [2003] EWCA Civ 797, [2003] 3 All ER 577. It was a case concerned with jobseeker's allowance and income support – welfare benefits which it was not suggested differed in any material way from HB. After reviewing the Strasbourg authorities, particularly the case of Gaygusuz v Austria (1997) 23 EHRR 364. Laws LJ concluded:

"47. It seems to me, then, that the law of the Convention is settled on this point as to the scope of "possessions" for the purpose of Article 1P. The policy of the cases is, I think, that while States are in general free to grant, amend or discontinue social security benefits and to change the conditions for entitlement to them as they please without any ECHR constraint, yet where contributions are exacted as a price of entitlement the contributor should be afforded a measure of protection: it has, so to speak, cost him something to acquire the benefit."

34. If that conclusion is right, then Mr Goudie must fail here. But, he says, it is wrong; things have moved on in Strasbourg since Carson. Although he refers to other cases, at the heart of his argument is the recent Strasbourg case of Poirrez v France 30^th Sept. 2003, Appn. No. 40892/98. The case concerned a refusal by France to award to a non-French national an allowance ("AAH") for disabled adults (allocation aux adultes handicapés). The ECHR held that AAH was a "possession" within 1P1 and that there was a violation of Art 14. It said:

"37. The Court also points out that it has already held that the right to emergency assistance – in so far as provided for in the applicable legislation – is a pecuniary right for the purposes of Article 1 of Protocol No 1. That provision is therefore applicable without it being necessary to rely solely on the link between entitlement to emergency assistance and the obligation to pay "taxes or other contributions" (see Gaygusuz, cited above, § 41). In that connection the Court considers that the fact that, in that case, the applicant had paid contributions and was thus entitled to emergency assistance (ibid., § 39) does not mean, by converse implication, that a non-contributory social benefit such as the AAH does not also give rise to a pecuniary right for the purposes of Article 1 of Protocol No 1.

38. In the instant case it was not disputed that the applicant had been registered as 80% disabled and issued with an invalidity card. His claim for an allowance for disabled adults was refused solely on the grounds that he was neither a French national nor a national of a country that had signed a reciprocity agreement in respect of the AAH.

Accordingly, the Court notes that the allowance could be awarded both to French nationals and to nationals of a country that had signed a reciprocity agreement with France to that end.

39. In the Court's view, the fact that the applicant's country of origin had not signed such an agreement, whereas the applicant had been issued with an invalidity card, resided in France, was the adopted son of a French citizen residing and working in France and, lastly, had previously been receiving the minimum welfare benefit, did not in itself justify refusing him the allowance in question. As the allowance is moreover intended for persons with a disability, the Court also refers to the recommendation of the Committee of Ministers no. R (92) 6, adopted on 9 April 1992 (see paragraph 27 above), which is aimed at the adoption of a policy and measures adapted to the needs of the persons with disabilities, and to the conclusions of the European Committee of Social Rights (see paragraph 29 above).

40. Furthermore, the Court notes that the nationality condition for the award of the allowance was abolished by the Act of 11 May 1998. The AAH has therefore been awarded without any distinction on grounds of nationality since that Act was enacted. The applicant has indeed received it since June 1998, that is immediately after the Act was passed.

41. The Court considers finally that the refusal to award the allowance to the applicant prior to June 1998 was based on criteria – possession of French nationality or the nationality of a country having signed a reciprocity agreement with France in respect of the AAH – which amount to a distinction for the purposes of Article 14 of the Convention.

42. Having regard to all the foregoing considerations, the Court holds that the applicant had a pecuniary right for the purposes of Article 1 of Protocol No. 1 and that Article 14 of the Convention is also applicable in the instant case."

35. I do not read this as laying down a general rule that all social security benefits are "possessions." If that were so, then all reference to "contribution" in the other cases would be misleading because it would be wholly irrelevant. I here refer to Gaygusuz para. 41, Neill v UK (App. No. 56721/00), Domalewski v Poland (App 34610/97, pp.5-7), Walden v Liechtenstein (Appn. 33916/96 p.6) and the cases referred to by Laws LJ in Carson.
36. Mr Goudie submits that these cases are all admissibility cases only and that Poirrez has swept all that away. I cannot see that is so. Poirrez seems to me to be a case on very special facts, facts which indeed the Court felt it necessary to take into account as the rather lengthy citation shows.
37. Mr Goudie suggests that Carson has itself been departed from by this Court in R (Purja) v Ministry of Defence [2004] 1 WLR 289. This was the claim concerning the pensions of Gurkha soldiers. Mr Goudie submitted that there was no contribution there. I do not agree. On the contrary, paragraph 42 of Simon Brown LJ's judgment explicitly considers that although there may have been no distinct abatement of pay for pension provision, the Gurkhas' overall pay package in effect included a pension entitlement. Far from dropping the contribution requirement, this Court looked for and found what was in substance a contribution.
38. Moreover in Poirrez there was direct discrimination – refusal of AAH because the applicant was not French (or a citizen of a relevant convention country). Hence Art. 14 came into play. It by no means follows, even if one regards HB as a "possession," that an indirect link with what is said to be discriminatory State conduct would apply. On the contrary the reasoning in Sentges seems to me to apply just as much to the 1P1 argument as it does to those under Art. 8 and 9. The reason that the present appellants are being refused HB is not because of their religious practices, it is because their arrangements are non-commercial.
39. There is a further reason in this particular case for rejecting the 1P1 argument. The amendment to the regulation was made before the Human Rights Act came into force. The Act was not retrospective. So when the Act came into force the appellants were not entitled to HB and thus were not deprived of a 1P1 property. Mr Goudie's answer to this point is that the relevant decisions to refuse HB were made after the Act came into force. That misses the point. At the date when the Act came into force there was no entitlement to HB under the amended regulation and so there could be no "possession."

The Ultra Vires Point

40. It is common ground that the amending regulations would be ultra vires and invalid if a committee called the Social Security Advisory Committee was misled as to the effect of the proposed amendments into agreeing that a formal reference to it was unnecessary pursuant to s.173(1) of the Social Security Administration Act 1992. The machinery is described in detail in the judgment of Peter Gibson LJ in Howker v Secretary of State for Work and Pensions [2003] ICR 405 and there is no need to repeat it here. In this case the only question is whether the Committee was misled in the advice it was given which led to its decision not to have the draft regulations formally referred it.
41. Before I turn to the relevant parts of the documents leading up to the decision I should state the position before the amendment. The unamended Regulation 7 provided:

"(1) The following persons shall be treated as if they were not liable to make payments in respect of a dwelling –

(a) a person who resides with the person to whom he is liable to make payments in respect of the dwelling and either –

…

(ii) the tenancy or other agreement between them is other than on a commercial basis …"

42. The relevant proposed change was therefore to widen the class of those who were not entitled to HB. Prior to the amendment the exclusion applied to a person who both resided with [his landlord] and had an agreement not on a commercial basis. After, the former condition was dropped, leaving just the "other than commercial" test. Prior to the amendment the appellants did not reside with their landlords and so the exclusion from HB did not apply to them even if the arrangements were other than commercial.
43. Before a meeting of the Committee on 7^th October 1998, it was given the following papers:

(i) A note (I think prepared by the Secretary to the Committee);

(ii) The draft amending Regulation;

(iii) A letter from the Department of 2^nd September 1998 to the Secretary of the Committee;

(iv) A Departmental Note on comments received from the Local Authority Associations;

(v) Some comments made by the Local Authority Associations.

It was not given (as probably would be better practice) the unamended regulation.

44. The letter of 2^nd September said:

"These regulations aim to simplify and clarify long standing Housing Benefit provisions against abuse. Housing Benefit is generally available to people on low incomes who have a genuine rent liability. However, some people and some organisations occasionally set out to exploit the social security system, and construct rent liabilities whose primary purpose seems to be to bring tenants within Housing Benefit. Successive governments have sought to deny claimants access to Housing Benefit in these circumstances and the current regulation 7(1) excludes from benefit people whose liabilities have been "created to take advantage of the Housing Benefit scheme". However, local authorities have found these regulations increasingly difficult to apply and interpret.

In a recent Appeal Court hearing, involving a determination that the liability of an Elder of the Jesus Fellowship Church has been created to take advantage of the Housing Benefit scheme, the judgment left local authority Housing Benefit departments with no clear test to apply in such cases. The proposed amendment to regulation 7(1) seeks to provide such a test, and to make such determinations easier to understand for both LA housing benefit personnel and for claimants. We propose to make and lay the regulations as soon as is practicable with a commencement date agreed with the Local Authority Associations.

This proposed amendment does not change the policy intention on who should be treated as not liable, but it does simplify interpretation of the regulation. It attempts to achieve this in two ways. Firstly, it states the basic principle involved in the regulation, which is that HB should not be payable where the substance of the liability amounts to an abuse of the Housing Benefit scheme.

Secondly, it provides a list of the situations in which such a liability can be said to have arisen. Some of these categories are already contained in Regulation 7, ie those whose liability is to a close relative with whom they reside, and some joint tenants who were previously non-dependents (sub-paragraphs (b) and (g)). However, we have included additional categories to represent particular cases where a person has arranged his affairs in such a way as to be liable to make payments for his accommodation when he could have avoided such a situation and still been adequately accommodated. Such arrangements are those that were meant to be covered by the so-called "contrived tenancy" provision in Regulation 7(1)(b), and they are the sorts of cases on which housing benefit departments seek guidance from DSS Headquarters on a daily basis.

There should be no effect on genuine Housing Benefit claimants from this amendment. It is intended to be a simplification of the existing provision, that is clear to administrators and claimants alike. We would expect that any claimants affected by the amended provision would have been similarly affected by the current one. We hope, however, that the clearer wording and the explicit list will mean that not only will benefit be refused when people seek to exploit the benefit system, but that people who are not seeking to do so will receive their proper entitlement. To prevent LAs having to search for claims which may be affected, there is a saving provision for existing claimants which provides that the change does not become effective until the end of their current benefit period."

45. The note accompanying the papers said:

"Attached at Annex A is a letter from the Department seeking the Committee's approval to make the above regulations which would simplify and clarify the Housing Benefit provisions against abuse. This would be done by providing a test to allow local authorities to decide whether a rent liability had been constructed to bring the tenant within Housing Benefit and by making such determinations easier for all involved to understand. The proposals would not alter existing policy on non-liability for rent."

46. The form of the draft amended regulation read:

"(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where the appropriate authority is satisfied that the substance of the liability amounts to an abuse of the housing benefit scheme established under Part VII of the Social Security Contributions and Benefits Act 1992.

(1A) Without prejudice to the generality of paragraph (1), persons falling within that paragraph include any person:

(a) whose tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis."

47. The comments from the Local Authority Associations included the following:

"The added list is essential to avoid confusion and make the regulation "tighter" in certain cases."

48. The Departmental note on the comments from the Local Authority Associations included the following;

"7(1B)(a) (referred to as 1A(j)) is not intended to tackle religious groups who live communally. Insofar as they seek to abuse the HB scheme by the terms of their residence, we would expect them to be caught by 1A(a) ie non-commercial arrangements."

49. The Committee met on 7^th October. The minutes record that it was concerned about a lack of definition of "abuse" and that the wording was too general. There was no discussion about whether or not the overall effect might be to widen the excluded classes. Professor Ogus, a distinguished lawyer in this field and a member of the Committee, particularly followed up after the meeting on the ambiguity of the word "abuse". A letter from the Department to the Secretary of the Committee in dealing with this included the sentence:

"The new draft regulation is a clarification, not a change of direction."

50. Mr Goudie contends that the Committee was misled in much the same way as it was misled in the Howker case. In that case the Department's practice was found to be that a proposed amendment to the regulations was specifically marked "technical", "neutral", "adverse" or "beneficial". The amendment in question was given the indicator "neutral" when the correct indicator should have been "adverse". The prior regulation was not supplied. The Commissioner and Court of Appeal had little difficulty in holding that the Committee had been misled.
51. Although there was no specific marking of "neutral" here, Mr Goudie suggests that certain passages in the material supplied to the Committee in the case here had the same effect. He particularly points to that part of the Department's letter of 2^nd September saying that the proposed amendment "does not change the policy intention on who should be treated as not liable," and the statement that there was "clarification, not a change of direction." He also submits that the word "abuse" in the papers was used merely to describe the conduct of those who tried artificially to arrange things so as to be entitled to HB. Thus, he submits, the Committee did not appreciate that people such as his clients (whose arrangements are not made for the purpose of obtaining HB) were or might be excluded when they had been included before.
52. I reject that submission. I do so for two reasons. Firstly it seems to me to be clear that in general the Committee were not told by implication that the proposals were wholly neutral. On the contrary there were clear indications that they might not be in some cases. The reference to "saving provisions" in the letter of 2^nd September can only refer to this. Moreover the same letter explicitly referred to "additional categories." The Local Government Association's comment about making the regulation "tighter" shows that it too understood that the scope would be narrowed. And that comment was itself before the Committee.
53. Secondly it seems to me clear that the position of religious groups who lived communally was explicitly drawn to the Committee's attention in the Department's comments on the Local Authority Associations observations. The Committee was told that it was expected they would be caught by the "non-commercial arrangements" provision. True it is the same comment describes that as "abuse" but, I think it is clear that the term in context is not being used in a pejorative sense – in context it means those who as a matter of policy ought not to receive HB. That particularly appears, for instance, from the draft regulation itself which began with a general reference to "abuse" in sub-paragraph (1) and went on to particularise instances in sub-paragraph (1A).
54. I therefore conclude that the Committee was not misled and reject the ultra vires point.
55. In the result I would dismiss the appeal.

Sir William Aldous:

56. I have read the judgments of Peter Gibson and Jacob LJJ. I agree that the appeal should be dismissed for the reasons they give.

Peter Gibson LJ:

57. I agree that this appeal should be dismissed. In deference to the careful arguments of Mr. Goudie Q.C. for the Appellants, Mr. Sales for the Secretary of State and Mr. Findlay for the Council, I will briefly state my reasons in my own words.
58. It is not in dispute that the Appellants can only succeed if they can show that there has been a relevant error of law. Two errors of law are alleged by Mr. Goudie. The first is that the Tribunal erred in law by weighing the evidence in a way that infringed the Appellant's rights under the Human Rights Act 1998. The second is that the Commissioner erred in law in not recognising that the amendments made in 1999 to Reg. 7 of the 1987 Regulations were ultra vires because the Department misled the Social Security Advisory Committee in the course of the making of the new regulation.

Human rights

59. On the first point, Mr. Goudie submits that the Tribunal, in applying the Regulation and in determining whether or not the Elders' tenancy agreements were "other than on a commercial basis," discriminated against the Appellants on the ground of their religious beliefs contrary to Art. 14 of the European Convention on Human Rights read in conjunction with Art. 8, Art. 9 or Art. 1 of the First Protocol to the Convention ("Art. IPI"). He argues that in making that determination, the Tribunal was drawing an inference and had a discretion as to the weight to be given to the various primary facts. He says that the Tribunal is obliged pursuant to s. 6(1) of the Human Rights Act 1998 to leave out of account, or give no weight to, any element of the relationship between the Appellants and their landlords which suggested that the agreement was not on a commercial basis if that element existed as a result of the Appellants' religious beliefs.
60. I am not able to accept that submission. If the Tribunal were given a discretion, then it is not disputed that that discretion must be exercised conformably with the Convention. However, it is plain that Reg. 7 (1)(a) gives neither the local authority nor the Tribunal any discretion at all. What has to be decided is a pure question of fact as to whether or not the tenancy agreements are or are not on a commercial basis. If a relevant factor has some relation to the Appellants' religious beliefs, it is not for the local authority or Tribunal to leave that factor out of account. That would be to distort the test. Mr. Goudie was invited to indicate which of the factors which the Tribunal helpfully listed as tending towards or against the commerciality of the tenancy agreements should, on his submission, be left out of account. The impracticality of such a blue pencil exercise was rapidly demonstrated and the result was wholly to distort the assessment required by the Regulation. I might have understood the submission better if it was directed at a proposition that the Regulation itself contravened the 1998 Act, but that was not Mr. Goudie's submission, no doubt rightly.
61. Accordingly, I would reject Mr. Goudie's first ground, even before one comes to the difficulties which he faces over establishing that the facts fell within the ambit of Art. 8 or Art. 9 or Art. IPI so as to be capable of bringing Art. 14, which has no independent effect, into play. I add too that the argument based on Art. IPI was not even put forward before the Commissioner nor was it raised by the Appellant's Notice. I do not find it necessary to say anything further on those difficulties nor on the arguments of Mr Sales rebutting Mr. Goudie's contentions.

Howker

62. Mr. Goudie's second point was not raised before the Tribunal because the decision of this court on which it was based, Howker v Secretary of State for Work and Pensions [2003] ICR 405, came after the Tribunal decision.
63. Mr. Goudie submits that the Social Security Advisory Committee was materially and seriously misled by comments made by the Department to it over the scope of the proposed changes just as the Committee was found to have been misled in Howker. He says that while the Department did not expressly attach the indicator "neutral" to the proposed amendment, that was the effect of what was said, the content not the categorisation being relevant.
64. I accept that some of the remarks made by the officials to the Committee, for example that the amendments were merely to simplify and clarify the existing regulations, could have been better expressed. Nevertheless, I do not see the facts of the present case as being comparable with those in Howker. In the Department's letter of 2 September 1998, it was stated that the proposed amendment included "additional categories", that is to say categories additional to those already covered by Reg. 7. The reference to "abuse" was not, to my mind, intended to define who should now become excluded from benefit. It was made plain (in the document headed SSAC 44/98 Annex C) to the Committee that by the terms of their residence some religious groups living communally might be caught by Reg. 7 (1)(a) because the tenancy agreements did not satisfy the test of commerciality. It is clear that members of the Committee focussed specifically on the effect of the amendment. In my judgment the Commissioner was right to conclude that the Committee was not misled.
65. I too would dismiss this appeal.