England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London. WC2A 2LL
		15/02/2010

Christopher Symons QC:

1. This case raises issues concerning the right of European Union citizens, who have worked as self-employed workers but have ceased to be in work, to be paid jobseeker's allowances and crisis payments. The central issue turns on whether there is a practical distinction, for the purposes of obtaining certain benefits, between a worker who, prior to becoming unemployed, has been employed and a worker who has been self-employed.
2. This application for Judicial Review is brought by Mr. Tilianu, the Claimant, following the grant of permission by Belinda Bucknall Q. C. sitting as a Deputy High Court Judge on 11^th September 2009. The Claimant seeks orders from the Court quashing a decision of the Social Fund Inspector made on the 6^th August 2009 to refuse to direct the Secretary of State for Work and Pensions ("the Secretary of State") to pay a crisis loan to the Claimant and the quashing of the decision of the Secretary of State dated 4^th September 2009 disallowing payment of jobseeker's allowance. In addition certain declaratory relief is sought.

The History

3. The Claimant is a citizen of Romania. In June 2008 he arrived in the United Kingdom and began working under the Construction Industry Scheme. There are some pay slips under that scheme which provide evidence that he worked from at least July until early December 2008. Thereafter the Claimant alleges that he worked for his uncle from 2^nd January 2009 until his admission into hospital on 26^th February 2009. However there is no supporting evidence of that work in the form of documentation and nothing to assist as to whether he was employed by his uncle as an employee or worked as a self-employed person.
4. The Claimant's admission to hospital was due to his suffering from multi-resistant tuberculosis. He remained in hospital until 13^th July 2009 and will remain on medication for some time to come.
5. The Claimant's first application for social security benefits was made for employment and support allowance, a means-tested benefit for persons incapable of work. That application was refused by the Secretary of State on 22^nd April 2009 on the basis that the Claimant did not have the right to reside in the United Kingdom and consequently was not habitually resident for benefit purposes. There was no appeal against that decision and I need to say no more about it at this stage.
6. Shortly after leaving hospital the Claimant made an application to the Secretary of State for income-based jobseeker's allowance (JSA). A decision on that application was not made until the 22^nd August 2009 and in the meantime the Claimant had run out of funds. He therefore applied to the Secretary of State for a social fund crisis loan to purchase essential items while waiting for the JSA decision. That application was refused at the end of July 2009.
7. There is a right to have a decision refusing a crisis loan reviewed by a Social Fund Inspector (SFI). A review duly took place and on the 4 August the SFI decided that the Claimant was not entitled to a crisis loan because he was "a person from abroad". It is apparent on the face of the decision that the SFI relied, in making his decision, on the fact that the Secretary of State in refusing employment and support allowance on the 22^nd April 2009 found that the Claimant failed the habitual residence test.
8. The Claimant requested a further review. The Claimant contended that he had a right to reside as a person who had retained self-employed status under Article 7(3)(c) of EC Directive 2004/38. The further review also produced a negative decision for the Claimant. On 6^th August 2009 Mrs Gough, the SFI, allowed the previous decision to stand. She relied on the earlier decision concerning habitual residence. She said:

"As he has had a recent decision, refusing benefit on the basis of being a person from abroad, no crisis loan can be paid for living expenses. "

9. That decision is challenged by the Claimant. Two criticisms are made. First it is said that the decision is wrong as a matter of law and second that the approach taken by the SFI was wrong since it was apparent that she made no independent decision of her own in refusing the crisis loan but instead merely followed the decision of the Secretary of State. That was in spite of the fact that the Claimant had alleged that the decision of the Secretary of State was wrong by reference to the EC Directive 2004/38. There is no right of appeal from the decision to refuse a crisis loan.
10. In Mrs Gough's decision letter of 6^th August 2009 it is not clear to me whether she was agreeing with the arguments of the Claimant or reciting them but in my judgment that is not critical either way. She rejected the application for a crisis payment and in doing so appears to have relied on the earlier decision of the Secretary of State.
11. On 20^th August 2009 the Secretary of State decided that the Claimant was not entitled to JSA because he lacked a right to reside in the United Kingdom. That decision was reviewed by the Secretary of State on 4^th September 2009 and a new decision issued. The decision was that the Claimant was not habitually resident in the United Kingdom since he had no relevant right to reside in the United Kingdom. The decision appears to have been made on both the law and the facts. The submission made on behalf of the Claimant under the Directive was not addressed. This is the other decision which the Claimant seeks to quash as being wrong and unlawful.
12. On the application for permission the Secretary of State initially opposed the grant of permission at least in part on the basis that there was a right of appeal^[1] to a Tribunal from this decision of the Secretary of State, and therefore an alternative remedy. However it was argued on the part of the Claimant that since there was an Upper Tribunal decision against the Claimant's submission under the Directive it would be a waste of time and resources to follow that alternative route knowing that the first-tier tribunal would reject the submission. In any event since permission was granted to the Claimant to pursue the SFI by the learned Deputy Judge a decision was taken by the Secretary of State not further to oppose permission being granted in the case against him. I have no doubt that was a sensible decision in the circumstances.

The Legal Background

13. JSA is provided for by the Jobseekers Act 1995 (JSA Act) and the Jobseekers Allowance Regulations 1996 (JSA regulations). Under section 1 of the JSA Act a claimant is entitled to JSA if he is not engaged in remunerative work but is available for, and is actively seeking, employment. Section 3 of the JSA Act provides for income based JSA to be paid to persons whose income does not exceed the prescribed applicable amount.
14. Under section 4(12) of the JSA Act regulations may prescribe an applicable amount of nil. Under regulation 85 and schedule 5 paragraph 14 of the JSA regulations a "person from abroad" has a nil applicable amount and is therefore not entitled to income-based JSA. By regulation 85A a person from abroad is someone who is not habitually resident in the United Kingdom and a claimant cannot be habitually resident unless he has a right to reside in the United Kingdom. That regulation by subparagraph (4) provides:

"(4) A claimant is not a person from abroad if he is -

a worker for the purposes of Council Directive No 2004/38/EC^[2];

a self employed person for the purpose of that Directive;

a person who retains a status referred to in sub-paragraph (a) or (b) pursuant to Article 7(3) of that Directive. "

15. Income-based Employment and Support Allowance (ESA), provided for under the Welfare Reform Act 2007 and the Employment and Support Allowance Regulations 2008 (ESA regulations), is subject to the same residency requirement as income-base JSA. Under section 4(3) of the Welfare Reform Act, regulations may prescribe an applicable amount of nil and under regulation 69 of the ESA regulations a "person from abroad" has a nil applicable amount. Thus such a person is not entitled to income-based ESA.
16. Social fund crisis loans are provided for under section 138 of the Social Security Contributions and Benefits Act 1992 which provides:

"(1) There may be made out of the social fund, in accordance with this Part of this Act -

...

(b) payments by way of... crisis loan... to meet other needs in accordance with directions given or guidance issued by the Secretary of State. "

17. Social fund direction 3 provides

"3(i) Subject to directions 14, 16 and 17, a social fund payment may be made to assist an applicant to meet expenses (except those excluded by these directions)-

(a) in an emergency, or as a consequence of a disaster, provided that the provision of such assistance is the only means by which serious damage or risk to the health or safety of that person, or to a member of his family, may be prevented;..."

18. Social fund direction 16 provides:

"A social fund payment under direction 3 shall be awarded only in order to alleviate the consequences of a disaster where the applicant is:

...

(b) a person who is treated (or would be treated if he were to claim one of the benefits below) as:

(i) a person from abroad for the purposes of income support, income- based jobseeker's allowance or income-related employment and support allowance...

and as a result, falls into a category whereby he is not entitled to income support, income-based jobseeker's allowance, state pension credit; income-related employment and support allowance"

19. Guidance has been issued making clear that crisis loans are for short term needs in an emergency or due to a disaster and would not normally provide living expenses for more than 14 days. Loans can be made to cover a period prior to the first payment of benefit.
20. The decision-making processes for all three of these benefits fall under Chapter II ("social security decisions and appeals") of the Social Security Act 1998. Section 8 of that Act provides for the Secretary of State's decisions on "relevant benefits" which are defined to include ESA and JSA but not social fund crisis loans. Section 12 provides for a right of appeal to the first-tier tribunal from the Secretary of State's decisions under section 8. There is no right of appeal from the refusal of a crisis loan.
21. Crisis loans decisions are provided for under sections 36-38 of the Social Security Act 1998: -

"36. - Appropriate Officers

(1) In this section and section 38 below, "appropriate officer" means an officer of the Secretary of State who, acting under his authority, is exercising functions of the Secretary of State in relation to such payments out of the social fund as are mentioned in section 138(l)(b) of the Contributions and Benefits Act.

(2) The Secretary of State may nominate for an area an appropriate officer who shall issue general guidance to other such officers in the area about such matters relating to the social fund as the Secretary of State may specify.

(3) In relation to any decision of an appropriate officer, section 38 below shall apply in substitution for sections 9 and 10 above.

37. - The social fund Commissioner and inspectors.

(1) There shall continue to be an officer known as "the social fund Commissioner".

(2) The social fund Commissioner shall be appointed by the Secretary of State.

(3) The social fund Commissioner-

(a) shall appoint such social fund inspectors; and

(b) may appoint such officers and staff for himself and for social fund inspectors, as he thinks fit, but with the consent of the Secretary of State as to numbers.

(4) Appointments under subsection (3) above shall be made from persons made available to the social fund Commissioner by the Secretary of State.

(5) It shall be the duty of the social fund Commissioner -

(a) to monitor the quality of the decisions of social fund inspectors and give them such advice and assistance as he thinks fit to improve the standard of their decisions;

(b) to arrange such training of social fund inspectors as he considers appropriate and

(c) to carry out such other functions in connection with the work of social fund inspectors as the Secretary of State may direct.

(6) The social fund Commissioner shall report annually in writing to the Secretary of State on the standards or reviews by social fund inspectors, and the Secretary of State shall publish his reports.

38. Reviews of determinations.

(1) An appropriate officer -

(a) shall review a social fund determination, if an application for a review is made, within such time and in such form and manner as may be prescribed, by or on behalf of the person who applied for the payment to which the determination relates;

(2) The power to review a social fund determination conferred by subsection (1) above includes power to review a determination made on a previous review.

(3) A social fund determination which has been reviewed under subsection (1) above shall be further reviewed by a social fund inspector if an application is made, within such time and in such form and manner as may be prescribed, by or on behalf of the person who applied for the payment to which the determination relates.

(4) On a review under subsection (3) above a social fund inspector shall have the following powers -

(a) power to confirm the determination made by the appropriate officer;

(b) power to make any determination which an appropriate officer could have made;

(c) power to refer the matter to such an officer for determination.

(5) A social fund inspector may review a determination under subsection (3) above made by himself or some other social fund inspector.

22. The remaining subsections require the appropriate officer, or the SFI, to act in accordance with any directions and take account of guidance issued by the Secretary of State. While there is power under section 17(2) of the Social Security Act 1998 to make Regulations providing for any finding of fact or other determination embodied in or necessary to such a decision, or on which such a decision is based, to be conclusive for the purpose of further such decisions no relevant regulations have been made.
23. I have set out JSA Regulation 85A(4) in paragraph 14 above. Directive 2004/38 in the

English text provides so far as relevant; -

"

.....

(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.

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. "

24. The Claimant is a citizen of Romania and is therefore subject to regulation 6(2) of the Accession (Immigration and Worker Authorisation) Regulations 2006. This regulation provides a derogation from article 45 of the new Treaty for the Functioning of the European Union (TFEU) (formerly Article 39 of the EC Treaty). That derogation has the effect that EU Nationals from these countries, including Romania, cannot base a right of residence on their job-seeker status, that is while looking for work. Thus the right to reside arises while unemployed only if the person has retained the right to reside as an employed or self-employed person.

The Issues that fall for decision

25. As I said at the outset of this judgment the central issue turns on whether there is a practical distinction, for the purposes of obtaining certain benefits, between a worker who, prior to becoming unemployed, has been employed and a worker who has been self-employed. That turns on the correct interpretation of Council Directive No 2004/38/EC.
26. It seems to me that in relation to both decisions before me, namely the decision of Mrs Gough, the SFI, on 6^th August 2009 refusing a social fund crisis loan and the decision of the Secretary of State on 4^th September 2009 refusing the Claimant JSA the critical question is whether the Claimant has a right to reside under the Directive. If there is no such right then the Claimant's application must fail since both the Secretary of State and the SFI will have reached the right conclusion.
27. This matter comes before me by way of judicial review, rather than by an appeal against the refusal of JSA, and the underlying facts are not yet ascertained. Thus while a finding that the Claimant has no right to reside will be determinative against him a decision in his favour can go no further than finding that formerly self-employed persons do have a right to reside after they cease that employment. The matter would then have to go back for a determination on the facts as to whether the Claimant qualifies. Various points have been taken as to the unsuitability of this matter for judicial review in advance of the facts being determined and as to the failure of the Claimant to take the appeal route in relation to the refusal of JSA but at the end of the day it seems to me we are where we are and it is better for me to determine the application before me rather than worrying about what might have been.
28. Mr Cox, who appears for the Claimant, submits that just as sub-paragraph (a) of Article 7(3) of the Directive applies to both employed workers and self-employed workers so also do sub-paragraphs (b) to (d). He points to the importance of this matter particularly to those nationals belonging to the States that acceded to the EU in 2004 (A8) and to Bulgaria and Romania acceding in 2008 (A2). Self-employed nationals from these countries have full free movement while, due to the derogation from Article 45 (formerly Article 39), those nationals have no right of residence based on their job seeker status. In addition Article 7(3) does not apply to these workers unless they have completed 12 months continuous work in the UK. Thus the argument advanced by the Secretary of State has the effect that those A8 and A2 nationals who are self-employed lose their right to reside when they cease to be self-employed even if they are seeking to re-establish themselves or are looking for employed work.
29. Mr Cox accepts that the language used in Article 7(3)(c) and (d) provides linguistic support for the Secretary of State's contention that sub-paragraphs (b)-(d) are concerned only with the those who have been employed workers and not also those who have been self-employed. However one of his submissions is that if the other language versions of the text of the Directive are considered then the position is different. He referred the Court to the recent Court of Justice decision in the case of Vorarlberger Gebietskrankenkasse 17 September 2009 where at paragraph 26 of the judgment the Court said;

"... it is settled case-law that the need for a uniform interpretation of Community law makes it impossible for the text of a provision to be considered, in case of doubt, in isolation; on the contrary, it requires that it be interpreted also in the light of the versions existing in the other official languages... "

30. Two matters seem to me to arise. First, is there any real doubt as to the correct meaning and second does reference to the other language versions of the Directive assist? I shall return to these two questions when I have considered the other submissions made.
31. Mr Cox, for the Claimant submitted that the purpose, or at least one of the purposes, of the Directive was to strengthen the rights of Union citizens. That word was used in the recital I have set out in paragraph 23 above. Thus he submits that the argument that the Directive was doing no more than consolidating existing rights is not correct. Further in a modern labour market there is good reason not to make distinctions between employed workers and self-employed workers particularly when the line between them was often a fine one. Conversely, providing a distinction leads to anomalies for which it is difficult to see any justification.
32. The Secretary of State supported in this argument by Mr Gordon Q. C, for the SFI, submitted that the Claimant's arguments were misconceived. The first point made was that the pre-Directive law drew a clear distinction between the rights of workers and of the self-employed in relation to involuntary unemployment. There is a clear distinction in EU law between workers and the self-employed. The workers derive their rights from Articles 45-48 (Title IV Chapter 1) of the TFEU while the self- employed derive their rights from Articles 49-53. The central provision for them is Article 49, which prohibits discriminatory restrictions on the freedom of establishment, which includes "the right to take up and pursue activities as self- employed persons". The ECJ has drawn the line between the two categories according to whether or not the individual is in a relationship of subordination with his putative employer: see, for example, the case of Meeusen v. Hofdderectie van de Informatie Beheer Groep case C-337/97 [1999] ECR I-3289.
33. Prior to the enactment of the Council Directive No 2004/38/EC, EU law rights to move to, and reside in, other Member States were contained in secondary legislation which was specific to particular categories of person and adopted under different provisions of the Treaty relating to those categories. Thus the right of residence for workers was contained in Directive 68/360/EC while the right of residence for self- employed persons was contained in Directive 73/148. While Article 7 of the former directive gave workers protection not only when they were ill or had been the subject of an accident but also when they were "involuntarily unemployed" there was no similar protection given to the self-employed in Article 4 of the latter directive. In that article protection was only given if the self-employed person was temporarily incapable of work as a result of illness or accident.
34. In recital 4 of the Directive 2004/38/EC the intention was to have a single legislative act to bring together what had previously been dealt with piecemeal:

"(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... "

35. The reference to sector-by-sector was a reference back to the previous recital to workers, self-employed persons, students and other inactive persons with the intention of having a single instrument dealing with them all. There were certain new rights provided in the new directive but where new rights were provided for they were referred to in the recitals. There was nothing in the recitals or in the travaux preparatories to suggest that the self-employed were to acquire a new and significant right to retain their status upon "involuntary unemployment". Thus the Secretary of State submits that there was no intended change to the previous distinction between the employed and the self-employed.
36. Next it was submitted that the plain language of Article 7(3) does not provide for self- employed persons to retain that status in circumstances other than when they are temporarily unable to work as a result of illness or accident. Reference was made to the distinction between workers and self-employed persons followed by references to "involuntary unemployment", "fixed term employment contracts", "job-seeker" and finally, expressly to "status of worker" being retained none of which lend themselves to covering persons who were formerly self-employed. In addition Article 7(1) also draws a distinction between workers and the self-employed. It was submitted that it was unlikely that the legislature could have failed to recognise that very distinction in Article 7(3)(c) by referring to "the status of worker" whilst meaning "the status of worker or of a self-employed person". There is no difficulty in the fact that of the subparagraphs in Article 7(3) only (a) deals with the self-employed while each of (a)-(d) deal with workers and no reason why each sub-paragraph should deal with both categories merely because the opening words of Article 7(3) deal with both.
37. In addition the Secretary of State submitted that the reference to "job-seekers" in Article 7(3)(b) and (c) is to those seeking employment (not self-employment) and is focussed exclusively on those who have been in employment and are now seeking further employment.
38. My attention was drawn to Article 7(1) where a policy was apparent that the Member States should not, in general, be required to provide social assistance to migrants from other Member States. The argument advanced by the Claimant would have the effect of providing social assistance to a whole new category of EU migrants notwithstanding there is no mention of this made in Article 7 itself.
39. There is a decision of the Upper Tribunal by an experienced Judge directly on point. Judge Rowland in CJSA/2687/2007 held that sub-paragraphs 7(3)(b)(c) and (d) do apply only to former workers and not to those formerly self-employed. The learned Judge made the point that has been made to me that:

"It would be surprising if the rights of self-employed persons had been aligned to those of workers without any indication of an intention to do so being included in the lengthy preamble to the Directive. "

40. Finally the Secretary of State drew my attention to the fact that the Directive had been transposed into UK law by the Immigration (European Economic Area) Regulations 2006. Regulation 6 of those Regulations gives effect to Article 7 of the Directive:

"6. - "Qualified person

(4) In these Regulations, "qualified person" means a person who is an EEA national and in the United Kingdom as -

(a) a jobseeker;

(b) a worker;

(c) a self-employed person;

(d) a self-sufficient person;

(e) a student.

(5) A person who is no longer working shall not cease to be treated as a worker for the purposes of paragraph (1)(b) if -

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

(b) he is in duly recorded involuntary unemployment after having been employed in the United Kingdom, provided that he has registered as a jobseeker with the relevant employment office and-

(i) he was employed for one year or more before becoming unemployed;

(ii) he has been unemployed for no more than six months; or

(iii) he can provide evidence that he is seeking employment in the United Kingdom and has a genuine chance of being engaged;

(c) he is involuntarily unemployed and has embarked in vocational training; or

(d) he has voluntarily ceased working and embarked on vocational training that is related to his previous employment.

(6) A person who is no longer in self-employment shall not case to be treated as a self-employed person for the purposes of paragraph (1)(c) if he is temporarily unable to pursue his activity as a self-employed person as the result of an illness or accident.

For the purposes of paragraph (1)(a) "jobseeker" means a person who enters the United Kingdom in order to seek employment and can provide evidence that he is seeking employment and has a genuine chance of being engaged. "

41. Regulations 6(2) and 6(3) draw the distinction between the rights of workers and self- employed persons which existed under the EC legislation which preceded the Directive and which the Secretary of State submitted continues to be drawn in Article 7(3) of the Directive.

The correct interpretation of the Directive

42. In my judgment there is no doubt as to the meaning of the Directive. There has been historically a distinction in the way those who have been in employment and those that have been self-employed are treated under EU law. It does not seem to me to be credible that a change which would have the effect of bringing a new group of people into the social assistance system would have been introduced without mention either in the recitals or in the travaux preparatories. Other changes that were made were signalled as one might expect.
43. Further the 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).
44. I must not attach too much importance to what might be called an over-English approach to the construction of words but in my view the Claimant gets no assistance from looking at the matter in a more contextual and purposive way. The reference in Recital 9 to "more favourable treatment of jobseekers as recognised by the case-law of the Court of Justice" appears to be a reference to the case of Antonissen C-292/89, a UK reference where the Court of Justice recognised that jobseekers had a right to reside but permitted Member States to impose a six month limit on job seeking after which they lost that right. But there is nothing in the Recitals or the travaux preparatories which assists the Claimant's argument.
45. The Directive appears largely to consolidate into one document that which had been contained in a number of different "instruments". Where the Directive goes beyond those existing instruments, whether to "strengthen" or otherwise alter rights, it lays the ground for such change in the Recitals. The meaning of worker in the EU is wider than would be accepted in the UK. Many people who would be considered to be self- employed in the UK would fall under the EU definition of "worker" since they work "for and under the direction of another person"^[3]. There is in Europe a very real distinction between a worker and someone who is genuinely in business on their own account and in control of their own activities. It is therefore unsurprising that the two are treated differently.
46. I am comforted by the fact that Judge Rowland reached a similar conclusion. It is also clear that the English legislators are of the same opinion and hence the Regulations that have been made and which I have set out in paragraph 40 above.
47. In the light of the fact that I do not feel there is any genuine doubt about the matter it is not necessary to look at the other language texts. However, even if I had felt some doubt the matter I am not satisfied that the Claimant gets any assistance from looking at those texts. There is no dispute that the Portuguese and the Dutch texts support the position of the Secretary of State. I also agree with the submission of the Secretary of State that the Italian text appears to also be supportive of his position using the term "lavoratore subordinato" in Article 7(3)(c) and (d) which is the narrow term for "worker" in Italian.
48. The Claimant claims support from the French, Spanish and Romanian texts of Article 7(3)(c) for their use of the broader terms "travailleur" "trabajador" and "lucrator". However if a comparison is made between the texts of Article 45 of the TFEU where these words are used meaning "worker" with the terms used in these languages in Article 49 for "activities as self-employed persons" it can be seen that the terms used are "activities non salariees", "las actividades no asalariadas" and "la activitdti independente There is a clear distinction recognised in these languages as well and I do not believe the Claimant gets any support from looking beyond the English text.
49. In conclusion on this point in my judgment the Secretary of State was right to treat the Claimant as a person not having a right to reside and was therefore right to reject the application for JSA. The challenge to the decision of 4^th September 2009 therefore fails.

The Decision of the SFI

50. There was no dispute that if the Claimant was wrong in his submissions in relation to the Secretary of State's decision on JSA then it followed that the challenge to the decision of the SFI of 4^th August 2009 must also fail for the same reason namely that the Claimant, not having a right to reside, had no right to a social fund crisis loan in the absence of a disaster. Mere emergency is insufficient. It follows that this application for judicial review also fails.
51. However I received submissions during the hearing and thereafter some further written submissions, on the issue as to the correct role of an SFI on a review under section 38 of the Social Security Act 1998. The question arises as to the extent to which an SFI is bound to follow decisions of the Secretary of State on whether a person does or does not have a right to reside. Thus in this case the Secretary of State rejected the Claimant's first application for social security benefits, for employment support allowance on 22^nd April 2009, on the basis that the Claimant did not have the right to reside in the United Kingdom and consequently was not habitually resident for benefit purposes. In a later application for a social fund crisis payment is that finding binding on the SFI such that he or she is bound to refuse the crisis fund payment?
52. I have set out the provisions of section 38(4) of the Social Security Act 1998 above and I repeat them here for convenience:

"(4) On a review under subsection (3) above a social fund inspector shall have the following powers -

(a) power to confirm the determination made by the appropriate officer;

(b) power to make any determination which an appropriate officer could have made;

(c) power to refer the matter to such an officer for determination. "

53. The appropriate officer is bound to refuse a crisis payment in the absence of a disaster if the claimant has no right to reside. In this case the Claimant applied for a crisis payment and took the matter to the SFI on the basis that the Secretary of State had erred in failing to have any proper regard to the Directive No 2004/38/EC. Was the SFI bound to follow the Secretary of State's decision? I will consider the situation first in the absence of any Upper Tribunal decision on point.
54. In my judgment the SFI was not bound to follow the Secretary of State's decision. First, the SFI is under a duty to review the decision that has been made by the social fund officer and can make any determination that officer could have made. If, as here, a claimant suggests that in determining a different application the Secretary of State has erred in reaching a conclusion and the officer, or the SFI, having carefully considered the matter agrees then I can see no reason why they should not determine the application in what they consider to be the correct way. Since the SFI is determining a different application to that decided by the Secretary of State I do not consider that any presumption of validity requires the SFI to decide the application in a way he or she considers incorrect.
55. There is power under section 17(2) of the Social Security Act 1998 to make Regulations providing for any finding of fact or other determination embodied in or necessary to such a determination, or on which such a determination is based, to be conclusive for the purpose of further such decisions but as I have set out above no relevant regulations have been made. It seems to me that such a provision would be unnecessary if decisions made by the Secretary of State were to be conclusive for the purposes of later decisions. Further, having this power, if the Secretary of State wished decisions made by him to be conclusive he could have made regulations to say so.
56. In addition in this case there was no evidence that the Secretary of State had considered and rejected the argument under the Directive in spite of the fact that it had been raised by the Claimant. Certainly there was no reasoning for the SFI to follow.
57. However while in my judgment the earlier decision is not binding it must be given due weight by the SFI. If the issue in dispute has been considered and rejected by the Secretary of State then, in my judgment, before an SFI declined to follow that decision he or she would have to be of the view, having received submissions on the matter, that the decision of the Secretary of State was obviously wrong. If the point does not appear to have been considered, and/or has been over-looked while the decision of the Secretary of State should be given some weight in my judgment the test would not be so high. Obviously if there has been a material change in circumstances the SFI will be free to decide the application in the light of those new circumstances.
58. The SFI must act rationally and reasonably in not following a decision of the Secretary of State. Thus there must be a good reason to depart from the earlier decision otherwise the SFI will be open to attack on the grounds of acting Wednesbury unreasonably. I was referred to the decision of the Court of Appeal in R (Bradley) v Work and Pensions Secretary [2009] QB 114 from 174-176 in the judgment of Sir John Chadwick, with which the remainder of the Court agreed, where the issue related to findings of fact rather than to an issue of law. While this is a different situation to the one in that case it seems to me the approach set out above accords with the rationale adopted by the Court of Appeal. I find it difficult to see how the SFI could ever have been criticised in this case for merely following the decision of the Secretary of State.
59. It was argued by the Secretary of State that the wording of social fund direction 16^[4]was conclusive in this matter since the Claimant was a person who had been "treated" as a person from abroad in his application for ESA and therefore he could only get a crisis loan in the event of a disaster. I am not persuaded that is the right approach. While it would avoid conflicting decisions it would also work a real injustice where an obvious mistake or oversight had occurred. I do not believe that was the intention of the drafter.
60. In practice I do not believe an SFI is likely to be in the position postulated other than on rare occasions. Normally decisions of the Secretary of State will be followed because the view will be taken that they are right or probably right. However if on that rare occasion the SFI is satisfied that something has gone wrong then in my judgment the SFI is free to determine the crisis payment as he or she believes correct.
61. However in this case the position of the Claimant was different because there existed at the relevant time an Upper Tier Tribunal decision on point which was against the Claimant. The Secretary of State and the first-tier tribunal were bound by that decision^[5]. It seems to me that the SFI was equally bound. It does not appear as though the decision of Judge Rowland was in any decision maker's mind at the material time but it does seem to me that the decision of the Upper Tribunal is fatal to the Claimant's argument in this case.
62. The Claimant invited me to make a reference to the ECJ in this case to resolve the issue of law arising from the Directive. I decline to do that for two reasons. First it seems to me for the reasons that I have attempted to explain that the answer is clear. However I would in any event have declined to refer this matter since there are a number of critical factual issues undecided. While I accept, had I had doubts about this matter, there was a point of law which could be referred it would have been on hypothetical facts. While the challenge before this Court has proceeded in that way (which was inevitable in the absence of an appeal to the tribunal) in my opinion it would not have been appropriate to refer the case in this form to the ECJ. On that matter the case of Wienand Meilicke v. Adv/Orga AG Case C-83/91 [1992] ECR I-4871 is very much in point.

Conclusion

63. It follows that this application for judicial review in relation to both decisions fails and the application is dismissed.

Note 1   Section 12 of the Social Security Act 1998    [Back]

Note 2   For this Directive see paragraph 23 below    [Back]

Note 3   Martinez Sala v. Freistaat Bayern Case C-86/96 [1998] ECR I-2691. And see Allonby v. Accrington and Rossendale College [2004] ICR 1328 at 1360 paragraph 71.    [Back]

Note 4    Set out in paragraph 18 above    [Back]

Note 5    See Dorset Healthcare NHS Trust v. MH [2009] UKUT 4 at p. 11 paragraph 37.    [Back]