England and Wales Court of Appeal (Civil Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CLERKENWELL AND SHOREDITCH COUNTY COURT
HIS HONOUR JUDGE JOHN MITCHELL
9EC05435

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/07/2010

Sir Anthony May President of the Queen's Bench Division:

This is the judgment of the Court

1. Part VII of the Housing Act 1996 concerns homelessness. Section 193 of the 1996 Act, which has been much amended since its original enactment, imposes duties on local housing authorities who are satisfied that an applicant for accommodation is homeless, eligible for assistance and has a priority need and are not satisfied that he became homeless intentionally. Section 189 provides that among those who have priority need for accommodation is a person with whom dependent children reside or might reasonably be expected to reside.
2. Before it was amended (with other sections) by section 314 and Schedule 15 of the Housing and Regeneration Act 2008, section 185(4) of the 1996 Act provided that a person from abroad who is not eligible for housing assistance should be disregarded in determining whether another person is homeless or threatened with homelessness or has a priority need for accommodation. Section 185(2) provided that a person who is subject to immigration control within the meaning of the Asylum and Immigration Act 1996 is not eligible for housing assistance unless he is of a class prescribed by regulations. Thus a dependent child subject to immigration control residing with an applicant for housing accommodation could not supply the element of priority need for the applicant to come within section 189(1)(b). As Buxton LJ demonstrated in paragraph 4 of his judgment in Ismail v Barnet London Borough Council [2006] 1 WLR 2771, a person is subject to immigration control if he requires leave to enter or remain in the United Kingdom and a national of Member States of the European Union does not require such leave under the Immigration Act 1971 if he is entitled to enter or remain in the United Kingdom by virtue of an enforceable community right or of any provision made under section 2(2) of the European Communities Act 1972.
3. The unamended version of section 185(4) of the 1996 Act was subject to a declaration of incompatibility under section 4 of the Human Rights Act 1998 in R (Morris) v Westminster City Council [2006] 1 WLR 505. This gave rise to the amendments in section 314 of the 2008 Act to which we have referred.
4. The effect of section 185(4) was restricted to persons falling within a new subsection (5), which comprised persons falling within a class prescribed by regulations but who are not nationals of an EEA state or Switzerland. A new section 184(7) introduced a definition of "a restricted person" meaning a person:

"(a) who is not eligible for assistance under this Part,

(b) who is subject to immigration control within the meaning of the Asylum and Immigration Act 1996, and

(c) either –

(i) who does not have leave to enter or remain in the United Kingdom, or

(ii) whose leave to enter or remain in the United Kingdom is subject to a condition to maintain and accommodate himself, and any dependents, without recourse to public funds."

A new section 193(3B) introduced a definition of "a restricted case" meaning

"… a case where the local housing authority would not be satisfied as mentioned in sub-section (1) without having had regard to a restricted person."

5. Section 193(2) requires a local housing authority to secure that accommodation is available for occupation by an applicant who comes within section 193(1). This is commonly referred to as the full housing duty. Section 193(3) provides that the authority are subject to this duty until it ceases by virtue of any of the following provisions of the section. Section 193(7AA) applies to a restricted case to the effect that the authority shall cease to be under the duty if the applicant, having been informed of certain matters, accepts or refuses a private accommodation offer. A private accommodation offer is defined by section 193(7AC) essentially as an offer of an assured short hold tenancy by a private landlord for a period of at least 12 months.
6. What this all amounts to is that, under the unamended legislation, an applicant for accommodation could not establish a priority need because a dependent child was residing with her, if the dependent child was an EEA national from abroad who was subject to immigration control. Under the amended legislation, such an applicant can thus establish priority need, but the case is a restricted case. The local housing authority's duty is not the full housing duty, but that provided for in section 193(7AA). Under either version of the legislation, the local housing authority would owe a full housing duty, if the child was an EEA national having a right of permanent residence in the United Kingdom. The relevant amendments to the legislation were brought into operation on 2^nd March 2009 by order made on 26^th August 2008.
7. The appellant, Theresa Lepko-Bozua, is a British citizen living in London. She is married but without children of the marriage. Her niece, Océane Behiman, a French citizen, has lived with the appellant in the United Kingdom for about 9 years. Océane was born on 20^th October 1991 and is now 18. She was 16 in August 2008, when the appellant and she became homeless because of domestic violence. The appellant then applied to Hackney for accommodation. In a letter dated 5^th January 2009, Hackney accepted that the appellant was homeless and eligible for assistance. She was not, they wrote, in priority need because, although Océane was a dependent child residing with her, Océane was an ineligible person. The appellant asked for a review, which Hackney's Reviewing Officer determined on 18^th June 2009, holding that Océane was a restricted person within the amended section 184(7). The letter contended that Hackney's duty was not the full housing duty, but the more limited duty in section 193(7AA).
8. The essence of the relevant part of the review decision was that Océane did not have a right to reside in the United Kingdom, because she was not a student and therefore not a qualified person under regulations 4 and 6 respectively of the Immigration (European Economic Area) Regulations 2006. She was not therefore entitled to reside in the United Kingdom under regulation 14(1) of these regulations and had not therefore acquired a right to reside in the United Kingdom permanently under regulation 15(1) because, although she is an EEA national, she had not resided in the United Kingdom "in accordance with these Regulations" for a continuous period of five years. The 2006 Regulations implement and are to the same substantial effect as Directive 2004/38/EC (OJ 30.4.2004 L158) which we analyse later in this judgment. It will not be necessary to refer to the Regulations further.
9. The review decision concluded that Hackney's duties were restricted to those in section 193(7AA) of the amended 1996 Act. It is agreed that this was technically incorrect because, although the amendments to the 1996 Act were in force on the date of the review decision, they were not in force at the date of the appellant's application or of Hackney's original decision letter, and the amendments did not have retrospective effect. If the reasoning in the review decision was correct, the appellant was not in priority need by virtue of the unamended section 185(4) and Hackney would have owed no duty under section 193. The review decision was therefore more favourable than it might have been, although a less favourable decision might have been subject to a compatibility challenge, as in Morris. That distinction is, however, immaterial to this appeal, because the appellant was afforded the benefit of section 193(7AA), and the grounds of appeal apply equally to either version of the decision.
10. The appellant appealed against the review decision. Her appeal was heard in the Clerkenwell and Shoreditch County Court by HH Judge John Mitchell, who gave judgment dismissing the appeal on 9^th October 2009. This is a second appeal against the judge's decision brought by permission of Moore-Bick LJ.
11. The first question which the judge addressed was whether Océane had a right to reside in the United Kingdom under Article 18(1) of the EC Treaty (we retain what is now the former numbering of the Treaty Articles). The judge decided that she did not with reference to the 2006 Regulations and upon the same essential analysis as that in the review decision. Océane did not have a right to reside permanently in the United Kingdom under regulation 15(1) because she had not resided in the United Kingdom in accordance with the regulations for a continuous period of 5 years. She was not a qualified person for the purpose of regulation 14(1) because, although she may have been at a private or public educational establishment for the principal purpose of following a course of study, including vocational training, she was not a student within regulation 4(1)(d), because she did not have comprehensive insurance cover in the United Kingdom and was unable to give an assurance that she had sufficient resources not to become a burden on the social assistance system of the United Kingdom. This was accepted before the judge by her counsel – see paragraph 26 of the judgment. The submission on her behalf which the judge recorded was that there was a lacuna in the Directive and the Regulations which any reasonable reviewing officer would have recognised so as to conclude that a proportionate response was to treat Océane as having the right to reside freely in the United Kingdom. Reference was made to Baumbast v Secretary of State of Home Department (Case C-41399 [2002] ECR 1-701). Maurice Kay LJ had recognised in paragraph 1 of his judgment in Kaczmarek v Secretary of State for Work and Pensions [2008] EWCA Civ 1310 that a right of residence can emerge from between the interstices of Article 18 where it would be disproportionate to deny a right of residence so as to undermine the direct application of Article 18. We note that in Baumbast the only impediment to the application of Article 18 noted by the European Court of Justice was that the social security adjudicator had found that Mr Baumbast's German comprehensive sickness insurance could not cover emergency treatment given in the United Kingdom. However, Maurice Kay LJ had endorsed as correct the view of Mr Commissioner Rowland that to rely on Article 18(1) where the Council of the European Communities had apparently deliberately excluded a class of persons from the scope of a Directive would be to attack the Directive. The judge in the present case rejected the applicant's submission, holding that no reasonable housing officer could conclude that there was a lacuna in the Regulations which applied to Océane. The application of Regulation 15 was plain.
12. It is now convenient to address the issue in this appeal with reference to Article 18(1) of the Treaty and Directive 2004/38/EC. This Directive had been preceded by Council Directive 90/364/EEC of 28^th June 1990. Under that Directive, the right of residence to nationals of other Member States was conditional on them having sickness insurance in respect of all risks in the host Member State and having sufficient resources to avoid becoming a burden on the social assistance system of the host Member State. The policy was and remains that the Member State of a person in need of health care or social assistance should remain responsible for that burden.
13. Article 18(1) (EC) provided that every citizen of the Union should have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in the Treaty and by measures adopted to give it effect. Directive 2004/38/EC is such a measure. It was made explicitly having regard to Article 18 of the Treaty, among others.
14. Recital 3 of the Directive tells us that Union citizenship should be the fundamental status of nationals of Member States when they exercise their rights of free movement and residence; and that it is necessary to codify and review the existing community instruments dealing with students among others. Recital 10 tells us that persons exercising their right of residence should not become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence. The right of residence in excess of 3 months should therefore be subject to conditions. Recital 16 provides that, as long as the beneficiaries of the right of residence do not become an unreasonable burden on the social assistance system of the host Member State, they should not be expelled. An expulsion measure should not be the automatic consequence of recourse to the social assistance system. Recital 17 provides that:

"A right of permanent residence should therefore be laid down for all Union citizens and their family members who have resided in the host Member State in compliance with the conditions laid down in this Directive during a continuous period of 5 years without becoming subject to an expulsion measure." (Our emphasis)

15. Article 6 of the Directive provides for a right of residence in the territory of another Member State for a period of up to 3 months without conditions. Article 7 provides a right of residence after 3 months for students (to put it shortly) who have comprehensive sickness insurance cover in the host Member State and who assure the relevant national authority that they have sufficient resources not to become a burden on the social assistance system of the host Member State during their period of residence. Océane has fulfilled neither of these conditions. She has in fact been the beneficiary of National Health Service medical care and has been the indirect beneficiary of social assistance. She has not therefore had a right of residence in the United Kingdom under Article 7 after her initial 3 months.
16. Article 14.2 of the Directive provides that Union citizens shall have the right of residence provided for in Article 7 so long as they meet its conditions. The clear corollary of this is that they do not have that right of residence if they do not meet its conditions. Article 16.1 provides that Union citizens who have resided "legally" for a continuous period of 5 years in the host Member State shall have the right of permanent residence there, not subject to the conditions for those who have resided for shorter periods. The respondent's case and that of the Secretary of State is that Océane has never, after the first 3 months, resided in the United Kingdom "legally" because she has never fulfilled the self-sufficiency conditions in Article 7. If this is, as we consider it is (see below), correct, there is no possible basis for discerning a Baumbast lacuna, because the conditions which she has failed to fulfil are explicitly a central and intentional part of the policy of the Directive. A submission, which Mr De Mello unpersuasively advanced on the appellant's behalf, that a right of residence can be derived from a free-standing application of Article 18 (EC) fails for circularity. Article 18 (EC) sends you straight back to the measures in the Directive. It is agreed that the issue in this appeal turns on the application of EU law, although we have already noted that an equivalent analysis of the domestic 2006 Regulations produces the same conclusion.
17. The original grounds of appeal asserted an infringement of Article 8 of the European Convention on Human Rights and attacked the human rights compatibility of the relevant provisions of the 1996 Act. This ground is not pursued. Mr De Mello addressed the remaining grounds compositely. As we understand him, his essential submission was as follows. Océane has a right of residence in the United Kingdom under EC Law, even if she is not a student who has fulfilled the self-sufficiency conditions in Article 7 of the Directive. She is entitled by Article 18 (EC) to claim a permanent right of residence under Article 16 of the Directive. She has resided freely in the United Kingdom for more than 5 years receiving indirectly during that time social assistance. The state has taken no steps to remove her during that period, and her residence should not be regarded as illegal. The stark submission appears to be that any person who succeeds in remaining in the United Kingdom for 5 years acquires a right of permanent residence whether their intervening residence was legal or not. Legality, it is said, is derived from the fact that the state has not taken steps to remove the person even though the residence did not meet the conditions of Article 7 of the Directive. So long as the state takes no steps to remove, the residence is to be regarded as lawful. Mr De Mello submits that, once there has been 5 years continuous residence, the only limitation is that in Article 16.3 of the Directive (which does not apply in Océane's case). Asked by the Court for the legal principle on which his submission rested, Mr De Mello struggled to answer. He was not promoting a kind of prescription, but was promoting a variety of waiver. He pointed to Recital 21 of the Directive which provides for host Member States to decide whether to grant social assistance before a person has acquired a right of permanent residence. He struggled to rationalise the selection of a period of 5 years for the operation of his variety of waiver, when Océane does not come within Article 16 of the Directive which is the origin of a period of 5 years. It might just as well on his argument be 2 years or 20. He did not begin to establish a basis in EC law for the variety of waiver for which he contended.
18. It is, in our view, plain that residing "legally" in Article 16 of the Directive means "in compliance with the conditions laid down in this Directive". This was the view of Pill LJ in paragraph 31 of his judgment in McCarthy v Secretary of State for Home Department [2008] EWCA Civ 641, where he said that the Directive creates and regulates rights of movement and residence for Union citizens. The lawful residence contemplated by Article 16 of the Directive is residence which complies with Community law requirements specified in the Directive and does not cover residence lawful under domestic law by reason of United Kingdom nationality. The expression "resided legally" in Article 16 should be read consistently with, and in the sense of, recital 17 of the Directive, that is residence "in compliance with the conditions laid down in this Directive". We respectfully agree with this. The focus is on community law and lawful residence under domestic law would not by itself amount to residing "legally" under Community law. In the present case, domestic law and Community law are materially to the same substantial effect. In our judgment, a failure to enforce Océane's removal after 3 months did not graduate by waiver to her acquiring a permanent right to residence after 2 years or 5 years or any other period. She remained upon tolerance subject to immigration control with no right to remain.
19. There is a number of authorities which supports this conclusion and none which on examination suggests that it is wrong. In Abdirahman v Secretary of State for Work and Pensions [2008] 1 WLR 254, the claimants were European Economic Area nationals whose claims to social assistance under welfare regulations depended on whether they had a right of residence in the United Kingdom for the purpose of those regulations. This court held that there is a distinction in United Kingdom law between a right to reside and lawful presence, and that a right to reside did not extend to an EEA national who was not a qualified person under the regulations. It was not open to the claimants to invoke the United Kingdom's treaty obligations as aids to the construction of the regulations. Lloyd LJ, with whose judgment Moses LJ and Sir Andrew Morritt C agreed, expressed the view at paragraph 25 that the claimants, though lawfully present in the United Kingdom, did not have a right to reside under United Kingdom law because they were not qualified persons. As to European law, Lloyd LJ referred to a number of authorities including Trojani v Centre Public d'aide social de Bruxelles (Case C – 456/02, [2004] All ER (EC) 1065. He considered in paragraph 33 that Article 18 (EC) did not create a right of residence for an EU citizen in another Member State where the limitations in Directive 90/364/EEC were not satisfied and that those limitations were proportionate to the legitimate objective of protecting the public finances of the host Member State. The distinction between lawful presence and a right to reside does not assist Mr De Mello's waiver submission, especially when there was no examination in the present case of specific facts which might have supported the submission. The decision itself in Abdirahman relating to Article 18(EC) directly supports the judge's conclusion in the present case. We note that one authority to which Lloyd LJ referred to (in paragraph 32) and took account of was R (Badar) v Ealing London Borough Council (Case C-209/03, [2005] QB 812 where, as Lloyd LJ said, it was not in dispute but that the claimant had a right to residence. We refer to Badar later in this judgment.
20. We have already mentioned Kaczmarek. In that case, an economically inactive EEA national from Poland was held not to be entitled to income support. It was agreed that she had no entitlement under the domestic legislation. She claimed an entitlement under Articles 12 and 18 of the EC Treaty. Maurice Kay LJ, with whose judgment Stanley Burnton LJ and the Master of the Rolls agreed, observed in paragraph 1 that a similar contention had been advanced without success in Abdirahman. Maurice Kay LJ explained the labyrinthine provisions of domestic legislation as providing that the claimant's presence in the United Kingdom was lawful, but that she did not enjoy the right to reside because she was not a qualified person under the relevant regulations. Those who do not qualify are able to remain here lawfully but subject to removal. Maurice Kay LJ observed in paragraph 14, as we have already indicated, that Baumbast stands as the high watermark of resort to proportionality under Article 18 (EC).
21. In paragraph 23 of his judgment in Kaczmarek, Maurice Kay LJ said that the Directive in issue in Baumbast, Abdirahman and Kaczmarek had now been replaced by Directive 2004/38/EC, with which the present appeal is concerned, which did not strictly apply in Kaczmarek. Maurice Kay LJ said that this provided for a right of permanent residence after 5 years lawful presence which was not conditional on the claimant being economically active or self-sufficient. This statement was unnecessary to the decision and not in our judgment, taken literally, correct. Article 16 of the 2004 Directive uses the word "legally" not "lawfully", and Maurice Kay LJ had himself drawn a distinction between these. Furthermore, as we have explained in agreement with Pill LJ in McCarthy, the words "resided legally" in Article 16 have to be read in the light of the second sentence of Recital 17.
22. Mr De Mello did not explicitly rely on this passage in Kaczmarek, but he did rely on Badar. In that case, a French national had lived with his grandmother in the United Kingdom for more than 3 years before he began a university course in London. He applied for a loan for maintenance assistance during that course. A requirement in the relevant regulations that he be "settled" in the United Kingdom within the meaning of the Immigration Act 1971 was submitted to be discriminatory on the ground of nationality. The European Court of Justice held, with reference to the introduction among others of Article 18 (EC), that the matter fell within the scope of Article 12 (EC). The court held that it was legitimate for a Member State to ensure that assistance to students from other Member States did not become an unreasonable burden which might affect the overall level of assistance provided by the state, and to reserve maintenance assistance for students with a certain degree of integration into the society of that State. But the court held that the condition of being settled in the United Kingdom could never be met by a student who was a national of another Member State and that the provision was discriminatory under Article 12 (EC). The court referred in its judgment at paragraph 6 to the self-sufficiency provisions in Directive 90/364/EEC. At paragraph 36, the court said:

"Furthermore, a national of a Member State who, like the claimant, lives in another Member State where he pursues and completes his secondary education, without it being objected that he does not have sufficient resources or sickness insurance, enjoys a right of residence on the basis of Article 18 EC and Directive 90/364."

In our judgment, this passage should not be read as support for Mr De Mello's waiver submission, since

(i) the right of residence under Directive 90/364/EEC subsisted as long as the beneficiary fulfilled the self-sufficiency conditions in Article 1 – see Article 3;

(ii) if the beneficiary did not fulfil those conditions, the right of residence did not subsist – see W v Secretary of State for Home Department [2007] 1 WLR 1514, [2006] EWCA (Civ) 1494;

(iii) Directive 90/364/EEC is now replaced by Directive 2004/38/EC; and

(iv) in Badar, the right of residence of the applicant for assistance was not contested and it was immaterial to contend that those who were not self-sufficient could be removed – see paragraph 47 of the court's judgment. Paragraph 36 of the judgment is to be read as saying no more than that those who are self-sufficient enjoy a right of residence under Article 18 (EC) and the Directive, which is uncontentious in the present appeal.

23. We do not understand Mr De Mello to maintain (or at least to advance with any enthusiasm) a submission that the appellant can succeed in this appeal on the basis of proportionate filling of a lacuna, as in Baumbast. For the sake of completeness, we confirm our view that the judge was correct to hold that there is no such lacuna. Océane does not come within Article 18 (EC) because she does not fulfil the conditions prescribed by the Directive, not because the Directive does not cover her case.
24. For these reasons, in our judgment this appeal fails. Océane may have been lawfully in the United Kingdom as a student, but she never fulfilled the self-sufficiency conditions in Article 7 of the Directive. She had not therefore resided legally in the United Kingdom for a continuous period of 5 years (or any period) and had not acquired an unconditional permanent right of residence under Article 16. She remained subject to immigration control. She did not have a right of residence in the United Kingdom under Article 18 (EC) because she did not fulfil the conditions in measures made under it. She was not a child on whom the appellant could rely to establish priority need under the unamended version of the 1996 Act. Under the amended version, she would have been a restricted person such that Hackney's section 193 duty to provide accommodation would have come within section 193 (7AA). Under neither version did Hackney owe the appellant the full housing duty.