England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL ( CIVIL DIVISION )
ON APPEAL FROM UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
Mr Justice Walker and Upper Tribunal Judges Stephen Pacey and Edward Jacobs
[2009] UKUT 200 (AAC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		21st January 2011

Lord Justice Rimer:

Introduction

1. The appellant is Sister Isobel Mary Scott. The respondent is the Secretary of State for the Department of Work and Pensions. In 2005 Sister Isobel made a claim to the DWP for the payment of a state pension credit. By a decision dated 22 April 2005, her claim was refused on the ground that it was excluded by the fact that she was fully maintained by a religious order of which she was a member. Sister Isobel appealed to the Appeal Tribunal (now the First-Tier Tribunal) and on 7 December 2006 Mrs D Gough allowed her appeal. With the permission of Mr Commissioner Rowland, the Secretary of State in turn appealed against that decision to the Social Security Commissioner, whose jurisdiction passed in mid-appeal to the Upper Tribunal (Administrative Appeals Chamber). By a decision dated 8 October 2009 the Upper Tribunal (Walker J and Upper Tribunal Judges Stephen Pacey and Edward Jacobs) allowed the appeal, set aside the decision below and re-made the decision itself. Its decision was to refuse Sister Isobel's claim on the same ground upon which it had originally been refused, namely that she was fully maintained by the religious order of which she was a member.
2. With the permission of Pill LJ, Sister Isobel now appeals against that decision on two grounds. First, that the Upper Tribunal was wrong in law to find that she was fully maintained as aforesaid; and, secondly, that when re-making the decision it proceeded on a mistaken factual basis as to a material matter. Mr Knafler QC and Mr Rutledge represented Sister Isobel and Ms Demetriou represented the Secretary of State. Both Mr Rutledge and Ms Demetriou also appeared before the Upper Tribunal.

Entitlement to a state pension credit

3. The statutory scheme is contained in the State Pension Credit Act 2002 and the State Pension Credit Regulations 2002 (SI 2002/1792). The Act introduced a new state pension credit ("the pension credit") for persons aged 60 and over. The pension credit comprises two elements: (i) a guarantee credit to ensure a minimum level of income to those aged 60 and over (this replaced the minimum income guarantee); and (ii) a savings credit providing, from age 65, income for pensioners with low or modest private incomes in addition to the basic state pension (this was a new form of benefit).
4. Sections 1 to 3 of the Act set out the basic conditions of entitlement to the pension credit. Sections 1(2)(c)(i) and (ii) provide that the guarantee credit is payable to a claimant who has no income or whose income does not exceed the "appropriate minimum guarantee"; that if he has no income, the guarantee credit shall be the appropriate minimum guarantee; and that if he has income, the guarantee credit shall be the difference between the appropriate minimum guarantee and his income. Section 2(3) provides that the "appropriate minimum guarantee " shall be the total of (a) the standard minimum guarantee, and (b) such prescribed additional amounts as may be payable. The purpose of the guarantee credit is to ensure that the claimant has income equal to at least the amount of the "standard minimum guarantee", being a prescribed amount that the government decides is necessary to cover a pensioner's basic living needs. In April 2005 the guarantee credit was £109.45 per week for a single person.
5. Section 2(6) of the Act provides that:

"Regulations may provide that, in prescribed cases, subsection (3) [summarised in [4] above] shall have effect with the substitution for the reference in paragraph (a) to the standard minimum guarantee of a reference to a prescribed amount."

6. The 2002 Regulations have so provided. Regulation 6(3) provides that:

"In a case to which this paragraph applies—

(a)section 2(3) [of the Act] has effect with the substitution for the reference to the standard minimum guarantee in section 2(3)(a) of a reference to a nil amount; and

(b)except in the case of a person who is a remand prisoner, nil is the prescribed additional amount for the purposes of section 2(3)(b)."

7. The issue in the appeal derives from regulation 6(2) which provides that regulation 6(3) applies "in the case of— (a) prisoners; and (b) members of religious orders who are fully maintained by their order." (Emphasis added). The practical consequence is that members of religious orders falling within the provisions of regulation 6(2)(b) are not entitled to any guarantee credit. The issue in the proceedings is whether or not Sister Isobel is so disentitled. That turns on whether she is a "[member] of [a] religious order who [is] fully maintained by [her] order". She says she is not. The respondent claims that she is. The Upper Tribunal agreed.

The procedure

8. Sister Isobel's appeal to the Appeal Tribunal led to the making of findings of fact by that tribunal. The Secretary of State's appeal to the Upper Tribunal lay only on a point of law arising from the Appeal Tribunal's decision (section 11(1) of the Tribunals, Courts and Enforcement Act 2007). By section 12, if the Upper Tribunal were to find that the decision involved the making of an error of law, it (a) could set the decision aside, and (b) either remit the case to the First-Tier Tribunal with directions for its reconsideration, or re-make the decision itself. In this case the Upper Tribunal set the decision below aside and re-made it. Sister Isobel's appeal to this court is also limited to an appeal on a point of law arising from the Upper Tribunal's decision (section 13(1) of the 2007 Act).

The facts found and decision by the appeal tribunal

9. Sister Isobel did not attend the hearing before the Appeal Tribunal, the tribunal explaining that she was too frail to do so and was represented by Sister Mary Lucy. The Secretary of State was not represented. The tribunal found, as is accepted, that Sister Isobel is a member of the Order of St Benedict, a religious community ("the community") based at Oulton Abbey in Staffordshire. Unlike other religious orders, Benedictines do not have a system of centralised authority or a common superior living either in Rome or in a Mother house. Rather, the order is represented by a number of houses observing the Benedictine rule. The community at Oulton Abbey is an autonomous religious community. Neither the Abbey nor the individuals living there receive any financial assistance from the Archdiocese.
10. There is also another Benedictine community at Oulton Abbey, the Fernham Community, but it is distinct from the community. The sisters of the Fernham Community are supported by their own charitable trust but they pay the community for their keep. There are no circumstances in which their funds could be distributed to the community. Apart from charitable donations and the payments made by the Fernham Community for their living expenses, the community's only income is from the earnings of its two business ventures, namely a nursing home and a playgroup. Residents in the nursing home are funded either by the local authority or privately. They include some elderly Fernham Community nuns who pay for their care from their own trust fund. Sister Isobel works in both ventures in order to produce an income for the community. She does no other work. The proceeds of her work are received by the community generally and are used to provide her with maintenance and accommodation. Sister Isobel is not obliged to pay any money to any other community.
11. The Appeal Tribunal's reasons for allowing Sister Isobel's appeal against the decision refusing her pension credit claim were as follows:

"12. It follows from the lack of centralised structure within the Benedictine Order and the autonomous nature of each house, including Oulton Abbey, that no funds are provided by the order for the appellant. The community at Oulton Abbey must be self-supporting and insist it is for that reason that the appellant works in the nursing home and playgroup. I accept that the proceeds of her effort are received by the community generally and used to provide her with maintenance and accommodation. However, I find there is a qualitative difference between funds which are earned by the appellant's own efforts which are subsequently applied to her maintenance and funds which come from an outside source sufficient for her complete maintenance, which are available to her by reason only of her membership of the Order."

12. The reasoning was, therefore, that as the community was an autonomous community whose financial resources applied in her maintenance were earned by her own efforts, she was not being maintained -- or therefore fully maintained -- by her religious order. She was being maintained by a self-maintaining religious community of which she was a member. The position would have been different if the funds for her maintenance had come from an outside source and were available to her by reason only of her membership of the order. I presume that the tribunal must have had in mind an outside source that was part of the same order of which Sister Isobel was a member.

The decision of the Upper Tribunal

13. The reasons of the Upper Tribunal add briefly to the facts found by the Appeal Tribunal. They explain that Sister Isobel was born on 21 February 1936 (and so is now 74) and that she has no property or personal income, including no retirement pension or social security benefit. The tribunal also explained that the Benedictine house, or community, of which she is a member is not the same as Oulton Abbey. The Abbey is merely the physical place where the house is situated. There may be more than one house based at the same location for convenience. The Fernham Community at the Abbey is such another house.
14. The Upper Tribunal's reasons for allowing the appeal were set out as follows (they were also ruling on another appeal that they heard at the same time and I exclude from paragraph 24 the references to that appeal):

"19. As regards the expression 'religious order', the claimant argued that this connoted the existence of centralised authority and control. If this is right, it would dispose of these appeals. We do not accept that it is right. Lord Hoffmann said in Moyna v Secretary of State for Work and Pensions [2003] 1 WLR 1929 at [24]: 'meaning … depends not only upon the conventional meaning of the words used but also upon syntax, context and background.' As to conventional meaning, 'religious order' may be used in the narrow, technical sense relied on by the claimants. But it is also used in a broader, less technical sense, as dictionary definitions (in so far as they are relevant) confirm. So Chambers 21st Century Dictionary gives: 'a religious community living according to a particular rule and bound by vows'. And the Shorter Oxford English Dictionary gives: 'A society of monks, nuns or friars living under the same religious, moral and social regulations and discipline'. As to context and background, regulation 6 [of the 2002 Regulations] is concerned with financial matters. The focus is on the body that provides for the maintenance of its members. It has to be a religious body, but there is nothing to suggest that it is limited to those religious bodies that are religious orders within the narrow, technical sense. If there is a natural meaning of 6(2)(b), it is, in our view, that 'religious order' is used in the broader sense found in the dictionaries. There may be some logic in distinguishing certain types of community from others. But it is difficult to see why centralised authority or control should be a distinguishing feature when identifying communities whose members may not be entitled to a guarantee credit. We consider that this would introduce a distinction without any discernible rationale to explain or justify it.

20. At various stages of their argument, the claimants appear to suggest that 'religious order' connoted financial support. This seemed to us to elide with the arguments on the meaning of 'fully maintained'. To the extent that there was a separate argument in this regard on the meaning of 'religious order', we do not accept it. It is clear from the face of regulation 6(2)(b) that it contemplates that a 'religious order' may not be one which fully maintains its members. The purpose of the latter part of (b) is to make clear that subparagraph (b) will only have effect in those cases.

21. Accordingly to the extent that the appeal tribunals accepted the claimants' contentions on the meaning of 'religious order', they made an error in point of law in doing so.

22. That brings us to the claimants' contentions on the meaning of 'fully maintained by their order'.

23. We accept that the claimants by their own work (or any entitlement to benefits) contribute to the funds that support their orders. But that does not prevent the claimants being fully maintained by their orders. The focus is on who it is that maintains the claimants, not where the money comes from. Both claimants are bound by vows of poverty and take no personal benefit from the income they generate (or any benefits they may receive). That money is held by the community for the use of the community as a whole. Leaving aside the niceties of legal ownership of the funds at particular stages, the claimants have no power of their own to meet any of their needs and are maintained by their religious orders. Neither claimant maintains herself nor is either maintained by anyone other than her religious order.

24. [Sister Isobel] does not receive a state retirement pension ...

25. Accordingly, the appeal tribunals made an error in point of law in not deciding that regulation 6(2)(b) applied to the claimants."

The giving of permission to appeal in this court.

15. The Upper Tribunal refused Sister Isobel's application for permission to appeal. So also, on the papers on 1 July 2010, did Elias LJ, whose view was that the Upper Tribunal's decision was apparently right. Pill LJ granted permission on a renewed oral application on 2 September 2010. He identified the central point advanced by Sister Isobel as being that the Upper Tribunal had not explained:

"… why the two sisters were not supporting themselves. They were running a home for good social purposes, and were maintaining themselves by their enterprise."

16. The reference to "the two sisters" reflects the further agreed fact that the community consists merely of two sisters, Sister Isobel and Sister Mary Peter Smith. The Fernham Community consists of about five members. Pill LJ also said this:

"6. In granting a second appeal, I have in mind that this is an issue of statutory construction; moreover it is one on which the liability of the state towards a considerable number of people may apply. One aspect that concerns me is the very limited findings of fact that have been made. Points have been raised in the skeleton arguments which may depend on what facts are held to be applicable; for example, the nature of the Benedictine Order, and whether it is different from other Roman Catholic religious orders for present purposes.

7. I am told that this is not an order which, if the nuns are unable to continue with their work and, as they would put it, to maintain themselves, they would be maintained by the Benedictine Order. But on that, as on other points, it may be difficult for this court, which of course only considers issues of law, to decide upon what factual basis the decision should be reached. Mr Knafler submits that the absence of more detailed findings of fact is in his favour. That may be arguable, but my concern is that in granting leave, as I do, because of the generality of the point, this court would normally expect clear findings of fact upon which to base a legal analysis. My concerns may be unfounded, but I do suggest that consideration be given by the parties before the appeal is heard to compile an agreed statement of facts so that the court can more readily construe the regulation on a specific factual basis."

17. Following that suggestion, Mr Knafler and Mr Rutledge prepared an 11-page Statement of Facts based on instructions from Sister Isobel and attaching a witness statement from Jonathan Deacon dated 22 December 2010. The Statement of Facts is dated 12 January 2011, nine days before the hearing of the appeal. The respondent had indicated previously that he had no objection to the Statement of Facts being filed but that he was not in a position to agree its contents. His position prior to the hearing, as explained in an addendum dated 14 January 2011 to Ms Demetriou's skeleton argument, was that to the extent that the witness statement and evidence sought to introduce new facts they were not agreed; and it was too late in the appeal process to ask the court to make further findings.

The appeal

18. Before coming to the grounds of appeal, I should say that the basis on which both tribunals below approached the question as to whether Sister Isobel was being maintained by a religious order caused me some concern. Neither tribunal made any reference to the fact that is common ground before us, namely that the source of the maintenance that Sister Isobel enjoys as a member of the community derives from a charitable trust established in July 1963 and known as "the English Benedictine Order of Oulton Abbey" trust. Sister Isobel is herself one of the trustees and it is the trust that runs the nursing home and playgroup. When, therefore, Sister Isobel performs the undoubtedly valuable administrative services that she does in managing those two ventures, she is doing so not for her own personal benefit or for the purpose of generating funds that do or will in any sense belong to her, but exclusively for the benefit of the trust. In return for her efforts she does, however, receive the benefit of bed and board at the Abbey and no one suggests that she is not properly entitled to do so under the trust arrangements in place. That her maintenance is, therefore, correctly to be regarded as provided by the trust rather than, as the Appeal Tribunal appeared to accept, directly by her own efforts and for her own benefit, appears to me to confirm the correctness of the Upper Tribunal's decision that she was at the time of her claim being maintained by a religious order of which she was a member, although the Upper Tribunal made no direct reference to the trust.
19. Turning to the grounds of appeal, the abandonment earlier this week of a ground based on the Human Rights Act 1988 left just two grounds, of which Mr Knafler developed orally only the first. That ground is that the Upper Tribunal misdirected itself as to the proper construction in the phrase "fully maintained" in regulation 6(2)(b). The point is based on the assertion that, even if Sister Isobel may on the one view be regarded as having been "fully maintained " by the religious order at the time that she made her claim in 2005, that view would not be correct. What is said is that the assessment of whether she was in fact being so maintained at that time depended on a recognition that within the foreseeable future she would become too frail to continue to work either at the same pace or at all, leading to the likelihood that the nursing home would be unable to continue to operate and the further consequence that there would be insufficient funds in the trust to continue to maintain her either fully or at all. Mr Knafler's submission was that a member of a religious order such as Sister Isobel will be "fully maintained" by that order only if it is able to maintain her independently and irrespective of her own contributions to the generation of the income that enables the maintenance to be provided. On that basis Sister Isobel was not being "fully maintained" by the order when she made her pension credit claim, nor is she now.
20. With all respect to Mr Knafler's argument, this ground of appeal appears to me to be unsound. The proposition that "full maintenance" is only conceptually possible if the recipient is making no such contribution as I have just described appears to me to find no support in the language of the regulations, nor can I see why in principle such a qualification should be read into such language. To do so would be likely to give rise to the potential for a very considerable factual uncertainty and dispute as to whether or not in any particular case the qualification was satisfied.
21. Subject to this point, which I would reject, the case is one in which there appears to be no dispute that Sister Isobel was being "fully maintained" by the order at the time she made her claim. That seems to me to mean that her claim was doomed to fail, as it did. Save for the two well known exceptions, nothing in this earthly world is certain, and that includes the prospect that a particular source of maintenance will continue at the requisite level for as long as the recipient may need it. If hereafter the order is unable to continue fully to maintain Sister Isobel, then the position will or may be different and a claim may be capable of being made. Ms Demetriou, for the Secretary of State, expressly accepts as much. There is in my judgment nothing in the first ground of appeal.
22. The only other ground of appeal is that it is said that when the Upper Tribunal decided to re-make the decision, it proceeded on the mistaken basis that the community received payments from the Fernham Community. It is said, however, that the Appeal Tribunal's findings of fact showed that the two communities were financially independent. There is nothing in this ground of appeal either, which is itself based on a material mistake. The two communities at Oulton Abbey are indeed financially independent, but the Appeal Tribunal also found, in paragraph 8, that the Fernham Community paid for its keep at Oulton Abbey, by which it meant it made payments to the trust. There is nothing inconsistent between those findings. Mr Knafler anyway accepted that if the first ground of appeal did not succeed, this ground would be of no help to Sister Isobel.
23. I would dismiss the appeal.

Lord Justice Sullivan:

24. I agree.

Lord Justice Carnwath:

25. I also agree.

Order: Appeal dismissed