England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR CHRISTOPHER SYMONS QC
(SITTING AS A DEPUTY HIGH COURT JUDGE)
[2010] EWHC 213 (Admin)

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/12/2010

Lord Justice Sedley :

1. This appeal against the judgment of Christopher Symons QC, sitting as a deputy judge of the Queen's Bench, comes before the court by permission of Lord Justice Scott Baker, who wrote:

"I think that there are issues here that warrant the attention of the Court of Appeal, although the appellant may have an uphill struggle to succeed."

2. The issue in the appeal is stated in this way by Simon Cox, counsel for the appellant:

"whether an EU citizen who is no longer a self-employed person retains the status of worker or self-employed person in the circumstances described in sub-paragraphs (b) and (c) of article 7(3) [of Directive 2004/38] by virtue of his previous employment as a self-employed person."

3. The question has been answered in the negative by the judgment of the deputy judge, [2010] EWHC 213 (Admin), as well as by a decision of Judge Rowland in Secretary of State for Work and Pensions v RK [2009] UKUT 208 (AAC), both of them impressively reasoned decisions. Before answering it for ourselves, it is necessary to describe what I regard as the unsatisfactory way it has come before the court.
4. Mr Tilianu is a Romanian national and thus an EU citizen. He came to the United Kingdom in June 2008 and began working under the Construction Industry Scheme. He was able to produce some payslips for this period. From January to February 2009 he says he worked for his uncle, though the legal nature of the relationship is obscure. Then on 26 February 2009 he was admitted to hospital with a drug-resistant form of TB. Before his discharge on 13 July 2009 he claimed employment and support allowance (ESA), then after his discharge claimed jobseeker's allowance (JSA). While the latter claim was pending Mr Tilianu ran out of funds and applied for a crisis loan from the social fund.
5. Both allowances were refused on the ground that, having no right to reside here, the appellant was not habitually resident. This has not been directly challenged. The crisis loan was refused on review by a social fund inspector (SFI), on the ground that, since he was not habitually resident, the appellant was a "person from abroad" and therefore ineligible. A challenge by way of further review failed.
6. This was the situation when the case came before the Administrative Court. But shortly before the hearing in this court a fresh decision was made that the appellant was after all entitled to ESA, and a payment was made to him accordingly. This is something of an embarrassment for the Secretary of State, since the decision, which is in law his own decision, is to an extent contrary to the stance he takes in these proceedings through his counsel Jason Coppel.
7. But these proceedings have not taken the form of a claim for benefit. There have been as yet no findings of fact by a competent tribunal. Rather than pursue his appeal to the tribunal against the refusal of JSA, Mr Tilianu sought by way of judicial review a declaration that self-employment comes within the meaning of "employment" in article 7(3)(b) and (c) of the Directive, together with consequential relief which is no longer material. Since no appeal lay from the refusals of a crisis loan it was not realistic for the Secretary of State to submit that judicial review was the wrong way to proceed; but the result has been that we are required to answer the question without reference to ascertained facts. In particular we do not know what the true employment status of the appellant was at each material time.
8. The reason why this may not only matter but be crucial is that the concept or status of self-employment, on which the present question of law turns, is elusive. It is, first of all, an oxymoron: you cannot in law or in common sense be employed by yourself. What it signifies in English is carrying on business on your own behalf by providing services to others. Its counterpart in both the Treaty and the Directives is "worker". The equivalents in the French version of the Directive are travailleur non salarié – a non-salaried worker – and travailleur salarié; in the German version, Selbstständiger – literally a freestanding person – and Arbeitnehmer – literally one who takes work. These disparities of language and usage, however, are not problematical because they are subsumed in the autonomous meaning given by EU law to both concepts. For EU purposes, a worker is anyone who, irrespective of the legal label put on the relationship, "performs services for and under the direction of another person in return for which he receives remuneration" as contrasted with "independent providers of services" : Allonby v Accrington and Rossendale College [2004] ICR 1328 (ECJ), §67-8.
9. We do not know where Mr Tilianu comes on this spectrum; but Mr Cox's case is that, even if he falls outside the catholic EU class of 'worker' and turns out to have been an independent provider of services, the appellant is still entitled to the benefits he claims. The unlikelihood of this being the case with an unskilled building worker underscores the inappropriateness of litigating on a bare hypothesis.
10. In this factual vacuum, I turn to the question of law. It arises from article 7 of the Directive, of which the two material paragraphs read:

Article 7 - Right of Residence for more than three months

1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they:

(a) are workers or self-employed persons in the host Member State; or

(b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State

....

3. For the purposes of paragraph 1(a), a Union citizen who is no longer a worker or self-employed person shall retain the status of worker or self- employed person in the following circumstances:

(a) he/she is temporarily unable to work as a result of an illness or accident;

(b) he/she is in duly recorded involuntary unemployment after having been employed for more than one year and has registered as a job- seeker with the relevant employment office;

(c) he/she is in duly recorded involuntary unemployment after completing a fixed-term employment contract of less than one year or after having become involuntarily unemployed during the first twelve months and has registered as a job-seeker with the relevant employment office. In this case, the status of worker shall be retained for no less than six months;

(d) he/she embarks on vocational training. Unless he/she is involuntarily unemployed, the retention of the status of worker shall require the training to be related to the previous employment. "

11. If the appellant retains the status of a self employed person under Article 7(3), he has a right to reside, is not a "person from abroad" within the meaning of the relevant social security legislation, and will in principle be eligible to claim jobseekers' allowance and a crisis loan from the social fund. The contest is as to whether sub-paragraphs 3(b) and (c) of this article include the self-employed. Mr Cox says they do; Mr Coppel says they do not. The breadth and depth of the learning and argument which have been deployed over a day and a half in this court in debating this simple question are truly impressive, but one starts with the simple fact that on their face the two provisions relate only to persons who have been workers within the autonomous meaning of that word (and which for all we still know may have included Mr Tilianu). Since Mr Cox accepts as much, it has fallen to him, as Lord Justice Scott Baker predicted it would when granting permission to appeal, to displace this apparent limitation.
12. The deputy judge put his conclusion this way:

… [T]he wording of the Directive is not apt in Articles 7(3) (b)-(d) to cover self- employed persons. A distinction is drawn between workers, and having the status of worker on the one hand and self-employed persons on the other. That distinction is made in Article 7(1) and 7(3). Where "status of worker" is used in Article 7(3) it is referring to someone in employment as opposed to a self-employed person. When the same phrase is used in Article 7(3)(c) and (d) in my judgment it has that same meaning. The use of the words "involuntary unemployment" in sub-article (b) is not apt for those who have been self-employed and in any event it is followed by the words "having been employed for more than one year". A "jobseeker" is a person seeking employment rather self-employment. Similar points can be made in relation to (c).

13. Mr Cox points first to the fact that paragraph (3)(a) plainly refers to both classes of claimant. This is true but neutral: it is as consistent with a deliberate contrast between (a) and the succeeding sub-paragraphs as it is with identity of purpose.
14. Mr Cox's next argument is that this construction, even if coherent with the words on the page, is incompatible with some at least of the other versions of the Directive. For instance, he suggests that the use of the noun travailleur in the French text of paragraphs 1(a) and (3) to describe both classes of beneficiary points towards a single class which carries through to (b) and (c). In my judgment the very equality of the various texts excludes the use of one to gloss another in this way. It also overlooks the reality that EU instruments ordinarily go from first to final draft in a single language, probably French, and when agreed upon are translated into the other EU languages; so that what one is in reality looking at is the quality of the translations. But in any event, all that the versions we have been shown illustrate is the variety of vernacular terms in which different countries have come to describe the possible relationships between people who do work and the individuals or organisations for whom they do it. The common noun travailleur in the French text, split into salaried and non-salaried, is not even replicated in the Spanish text, which speaks of actividad por cuenta ajena o por cuenta propia – activity (not trabajo – work) for another or for himself. All of them fall equally to be understood and applied in accordance with EU law. If there is an odd one out, it is the English expression "self-employed", but that too shares the EU meaning with its neighbours.
15. From the words of article 7, Mr Cox turns to the rest of the Directive including its preamble, and from there to the travaux préparatoires and the antecedent history. It is convenient to take these in reverse order.
16. The forebears of the 2004 directive were directives dealing separately with employed and self-employed persons: respectively 68/360 and 73/148. The latter of these was silent on the effect of lack of work on a self-employed person's status, but by 75/34 and later by 90/365 it was sought to approximate their status, when out of work, to that of employed persons. When the present directive was being prepared, nothing in the travaux suggests that it was intended to take a new or different course (nor, for that matter, that it was not). So far I see no reason to differ.
17. One then comes to the recitals of the eventual directive. They include these:

(3) Union citizenship should be the fundamental status of nationals of the Member States when they exercise their right of free movement and residence. It is therefore necessary to codify and review the existing Community instruments dealing separately with workers, self-employed persons, as well as students and other inactive persons in order to simplify and strengthen the right of free movement and residence of all Union citizens.

(4) With a view to remedying this sector-by-sector, piecemeal approach to the right of free movement and residence and facilitating the exercise of this right, there needs to be a single legislative act to amend Council Regulations (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community, ….

18. For my part I consider that the recitals are capable of introducing either a pure consolidation or a modified version of the antecedent measures. So they send one back to the substantive text. As to this, I have dealt above with article 7 itself. To it Mr Cox adds the first part of article 14.

Retention of the right of residence

1. Union citizens and their family members shall have the right of residence provided for in Article 6, as long as they do not become an unreasonable burden on the social assistance system of the host Member State.

2. Union citizens and their family members shall have the right of residence provided for in Articles 7, 12 and 13 as long as they meet the condition set out therein.

This, Mr Cox submits, reinforces the policy aim of generating a right of residence in all but those who seek to exploit the benefit system.

19. Mr Coppel, however, founds part of his argument on article 17, which follows the general grant by article 16 of a right of permanent residence after 5 continuous years:

Exemptions for persons no longer working in the host Member State and their family members

1. By way of derogation from Article 16, the right of permanent residence in the host Member State shall be enjoyed before completion of a continuous period of five years of residence, by:

(a) workers or self-employed persons who, at the time they stop working, have reached the age laid down by the law of that Member State for entitlement to an old-age pension or workers who cease paid employment to take early retirement, provided they have been working in that State for at least the preceding twelve months and have resided there continuously for more than three years.

If the law of the host Member State does not grant the right to an old-age pension to certain categories of self-employed persons, the age condition shall be deemed to have been met once the person concerned has reached the age of 60;

(b) Workers or self-employed persons who have resided continuously in the host Member State for more than two years and stop working there as a result of permanent incapacity to work. If such incapacity is the result of an accident at work or an occupational disease entitling the person to a benefit payable in full or in part by an institution in the host Member State, no condition shall be imposed as to length of residence;

(c) Workers or self-employed persons who, after three years of continuous employment and residence in the host Member State, work in an employed or self-employed capacity in another Member State, while retaining their place of residence in the host Member State, to which they return, as a rule, each day or at least once a week.

For the purposes of entitlement to the rights referred to in points (a) and (b), periods of employment spent in the Member State in which the person concerned is working shall be regarded as having been spent in the host Member State.

Periods of involuntary unemployment duly recorded by the relevant employment office, periods not worked for reasons not of the person's own making and absences from work or cessation of work due to illness or accident shall be regarded as periods of employment.

20. This, Mr Coppel submits, contains a distinction from article 7 which corresponds with a true difference: by speaking distinctly of "unemployment" and "periods not worked" it explicitly covers both the employed and the self-employed. Article 7, by contrast, speaks only of "unemployment" in the relevant parts of paragraph 3. This point seems to me to be well taken and to corroborate the meaning which article 7 at first sight conveys.
21. Turning from the text itself to its antecedents, Mr Coppel points out that these too distinguished between workers, who retained their status when involuntarily unemployed, and the self-employed, who did not, and for whom periods without work were described not as unemployment but as inactivity.
22. Although the argument ranged a great deal wider than this, in my judgment the foregoing is sufficient to defeat Mr Cox's endeavour to enlarge the apparent and natural meaning of article 7(3)(c). It is perfectly true, as Mr Cox pointed out, that Mr Coppel's meaning will have the unedifying result that if X is working on his own account as a taxi driver and employing his brother Y in his business, and if their vehicle is wrecked, putting them both out of work, Y will have rights under the Directive which X will not have. But few bright-line rules (and the present distinction is such a rule once employment status has been ascertained) do not throw up anomalies at the margins. Such anomalies as this cannot in my judgment undo or qualify what is otherwise the rule's plain meaning.
23. I stress that in deciding this we are deciding nothing about where on the relevant spectrum Mr Tilianu stands or stood. I confine myself to concluding that Mr Cox is not entitled to the declaration he seeks.

Lord Justice Moore-Bick:

24. I agree.

Lord Justice Elias:

25. I also agree.