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[1996] UKSSCSC CS_137_1993 (09 January 1996)

R(S) 1/97

Mr. M. J. Goodman CS/137/1993

9.1.96

Severe disablement allowance - residence condition prior to 6 April 1992 - whether within the powers of the Act - whether the reciprocal agreement with Germany is applicable

The adjudication officer and a tribunal decided that the claimant failed to satisfy the condition that she had been resident in Great Britain for ten years since birth as required by regulation 3(1)(c)(ii) of the Social Security (Severe Disablement Allowance) Regulations 1984. The claimant appealed to the Commissioner.

Held, dismissing the appeal, that:

the original regulation 3(1) of the Social Security (Severe Disablement Allowance) Regulations 1984 imposing both presence and residence requirements was within the powers conferred by section 36(4)(c) of the Social Security Act 1975 and was not within the powers of that Act;

the Family Allowances, National Insurance and Industrial Injuries (Germany) Order 1961 does not apply to severe disablement allowance.

DECISION OF THE SOCIAL SECURITY COMMISSIONER

I allow (to the limited extent indicated below) the claimant's appeal against the decision of the social security appeal tribunal dated 9 December 1992 as that decision is erroneous in law and I set it aside. My decision is as follows:

(a) The claimant is not entitled to severe disablement allowance for the inclusive period from 26 September 1990 to 5 April 1992 because:

(i) she was not resident in Great Britain for a period of or periods amounting in the aggregate to ten years since her birth (on
26 September 1974): Social Security (Severe Disablement Allowance) Regulations 1984, SI 1984 No. 1303, regulation 3. That regulation is not ultra vires;

(ii) the claimant cannot under Council Regulation (EEC) 1408/71, treat her period of residence in Germany as a period of residence in the United Kingdom, as the relevant provisions of that Regulation do not apply to her;

(iii) the claimant cannot under the provisions of the Family Allowances, National Insurance and Industrial Injuries (Germany) Order 1961, SI 1961 No. 1202, treat her period of residence in Germany as a period of residence in the United Kingdom.

(b) The claimant satisfies the residence and presence requirements for entitlement to severe disablement allowance from and including 6 April 1993 onwards because, as at 6 April 1992, she was ordinarily resident and present in Great Britain and had been present in Great Britain for a period of, or for periods amounting in the aggregate to, not less than 26 weeks in the 52 weeks immediately preceding that day: Social Security (Severe Disablement Allowance) Regulations 1984, SI 1984 No. 1303, regulation 3 as amended by SI 1993 No. 704 (from 6 April 1992).

This is an appeal to the Commissioner by the claimant, a woman born on
26 September 1974. The appeal is against the unanimous decision of a social security appeal tribunal dated 9 December 1992, which dismissed the claimants appeal from a decision of the adjudication officer issued an 24 June 1991. The actual decision of the tribunal read as follows:

"Appeal rejected. (1) [The claimant] is not entitled to severe disablement allowance from and including 26 September 1990. This is because she is under the age of 20 and has not been resident in Great Britain for a period of, or amounting in the aggregate to, at least 10 years between the date of her birth and 26 September 1990: Social Security Act 1975, Section 36(4) and Social Security (Severe Disablement Allowance) Regulations 1984, Regulation 3(2). For the avoidance of doubt, however, the tribunal have decided also that [the claimant] would be entitled to severe disablement allowance from and including 6 April 1992 assuming that a claim has been made and that all other relevant conditions were satisfied".

The claimant's appeal was on the ground that the tribunal did not advert in its findings of fact or reasons for decision to the Family Allowances, National Insurance and Industrial Injuries (Germany) Order 1961, SI 1961 No. 1202. It is not entirely clear to me whether that 1961 Order was in fact before the tribunal. It does not appear to be mentioned in the written submission of the adjudication officer to the tribunal. However, undoubtedly, it is relevant to consider the 1961 Order. As the tribunal did not do so in their written record, I have therefore set their decision aside on the ground that it is erroneous in law. However, my decision in paragraph 1 above is to the same practical effect as that of the tribunal though some of the matters referred to in my decision were not in fact raised until the stage of appeal to the Commissioner.

The appeal was the subject of three oral hearings before me. The first was on 29 November 1994 when the claimant was present together with her mother and was represented by Mr. R. Poynter, Solicitor. The adjudication officer was represented by Mr. L. Varley of the Office of the Solicitor to the Departments of Health and Social Security. The second hearing was on 30 March 1995 at which the claimant was unfortunately not, owing to indisposition, able to be present but her mother was present. The claimant was represented by Mr. Poynter. The adjudication officer was represented by Miss S. Ellis of Counsel, instructed by the solicitor to the Departments of Health and Social Security. The third hearing was on 5 January 1996, at which neither the claimant nor her mother were present, but the claimant was again represented by Mr. Poynter. The adjudication officer was represented by Mr. S. Cooper of the Office of the Solicitor to the Departments of Health and Social Security. I am indebted to all those persons for their assistance to me at the hearings.

The problem in this case is that, as at the date of claim by the claimant for severe disablement allowance i.e. 21 November 1990, she could not satisfy the residence conditions for an award of severe disablement allowance, contained in regulation 3 of the Social Security (Severe Disablement Allowance) Regulations 1984, SI 1984 No. 1303. Regulation 3 was then in its original form (it has since been amended, see below) and read as follows:

"Conditions relating to residence and presence

3(1) Subject to the following provisions of this regulation, the prescribed conditions for the purposes of section 36(4)(c) of [the Social Security Act 1975] as to residence and presence in Great Britain in relation to any person in respect of any day shall be-

(a) that he is present in Great Britain;

(b) that he has been present in Great Britain for 168 days or more in the 196 days immediately preceding that day, and

(c) that he has been resident in Great Britain for a period of or periods amounting in the aggregate to-

(i) 10 years in the 20 years immediately preceding that day; or

(ii) 10 years since his birth if he is under 20 years of age on that day."

The claimant was born on 26 September 1974. She left Great Britain for Germany with her parents in August 1977 and did not return to Great Britain until 1 July 1988. Consequently she could not show compliance with regulation 3(1)(c)(ii) i.e. she could not show she had been resident in Great Britain for ten years since the date of her birth on 26 September 1974. At this point it should be noted that regulation 3(1) was amended by SI 1992 No. 704 with effect from 6 April 1992 so as to make the residence requirement simply that the claimant should be "ordinarily resident in Great Britain". In addition, the claimant must be present in Great Britain and "have been present in Great Britain for a period of, or periods amounting in the aggregate to, not less than 26 weeks in the 52 weeks immediately preceding that day". The claimant was on 6 April 1992 able to comply with those conditions and the tribunal therefore noted that she did so. It appears that the claimant has been in receipt of severe disablement allowance as from 6 April 1992, so presumably in all other respects (she is profoundly deaf) she fulfils the conditions of entitlement to severe disablement allowance. I have nevertheless thought it right to record this matter in paragraph 1(b) of my decision.

I now turn to the issue in this case, namely what is the claimants legal position in relation to the residence requirement in force from 26 September 1990 (the first day for which the claimant claimed) to the day before the above cited amendment to regulation 3 i.e. 5 April 1992. During this period the original version of regulation 3(1) (set out in para. 5 above) was still in force. On the face of it, the claimant could not of course satisfy the requirement of regulation 3(1) of actual residence in Great Britain for ten years since her birth. However, Mr. Poynter on her behalf contended, first, that the residence requirement in the original regulation 3(1)(c) was ultra vires as it was outside the powers of the enabling Act (section 36(4)(c) of the Social Security Act 1975, see below). Alternatively Mr. Poynter contended that, even if regulation 3(1)(c) was not ultra vires, the claimant could nevertheless show that she satisfied the ten year residence requirement because her residence in Germany should be counted as residence in Great Britain under the provisions of the Family Allowances, National Insurance and Industrial Injuries (Germany) Order 1961, SI 1961 No. 1202 (see below). I deal with these contentions in paragraph 9 et. seq. below.

It was common ground between the parties that the claimant could not take advantage in this case of the provisions as to residence contained in Council Regulation (EEC) No. 1408/71 (see particularly Article 18) for the reasons given by the social security appeal tribunal in their decision and also, now because of a decision of the European Court in the case of Schmidt v. Belgium (reference c. 310/91). I will not go into detail because I am satisfied that the parties were correct in agreeing that the provisions of EC Regulation 1408/71 were not applicable to the present case. That is because the claimant herself was not a worker and she would not be able to claim a derived right from her parents (see also R(S)1/84).

The issues I therefore have to deal with are:

(i) was the original regulation 3(1) of the Severe Disablement Allowance Regulations 1984 ultra vires? and

(ii) if not, did the claimant nevertheless satisfy the ten year residence in UK requirement of regulation 3(1)(c) by virtue of the reciprocal agreement with Germany recorded in and given legislative force by the 1961 Order referred in paragraph 3 above? I deal with each of those issues in turn.

On the issue of ultra vires, the empowering provision for the original regulation 3(1) of the 1984 Regulations was section 36(4) of the Social Security Act 1975, which provided as follows:

"Severe Disablement Allowance

36(1)-(3) ...

(4) A person shall not be entitled to a severe disablement allowance if-

(a)-(b) [not relevant in this case]; or -

(c) he does not satisfy the prescribed conditions -

(i) as to residence in Great Britain; or

(ii) as to presence there; or

(iii) [not relevant in this case]."

The question of whether the original regulation 3(1) of the 1984 Regulations was within the powers thus conferred by section 36 (4) of the 1975 Act has been the subject of two conflicting Commissioner's Decisions, the first on file CS/118/1989, the later on file CS/46/1988. Although those decisions were "starred", it has been decided that neither of them should be reported. In CS/118/1989 Commissioner Reith held, possibly obiter that regulation 3(1) of the 1984 Regulations was ultra vires because he regarded section 36(4)(c) of the 1975 Act as not permitting cumulative residence and presence conditions to be imposed but only allowed the one or the other condition to be imposed. That was because sub-paragraphs (i) and (ii) of section 36(4)(c) were joined by the word "or" and not by the word "and". However, in a later decision on file CS/46/1988 Commissioner Sanders gave detailed reasons for holding that the use of the disjunctive word "or" did not mean that regulation 3(1)(c) of the 1984 Regulations was ultra vires, because section 36(4)(e) expressed the matter in a negative fashion "he does not satisfy" whereas regulation 3(1) was dealing with a positive imposition of presence and residence requirements.

In my judgment, the original regulation 3(1) of the 1984 Regulations in imposing both presence and residence requirements was not ultra vires and was within the powers conferred by section 36(4)(c) of the 1975 Act. I agree in fact with the reasoning of the learned Commissioner in CS/46/1988 (para. 4 to 5). In my view the word "or", used to join sub-paragraphs (i) and (ii) of section 36(4)(c) of the 1975 Act, merely indicates that there are two matters on which the Secretary of State could impose requirements by regulations. The word "or" is used in similar fashion to join sub-paragraphs (a), (b), (c) and (d) of section 36(4).

Similarly the new regulation 3(1)(a) of the 1984 Regulations, substituted from 6 April 1992 by SI 1992 No.704, which also imposes cumulative requirements for residence and presence (see para. 5 above), is, in my view intra vires, being also made under section 36(4)(c) of the Social Security Act 1975. It should be noted that regulation 3 of SI 1992 No. 704 preserves the original regulation 3(1) for those entitled under it on 5 April 1992 and not entitled under the new regulation 3(1). The issue of vires is still, therefore, very much alive.

I now therefore turn to the question of whether or not the claimant could satisfy the residence requirement of regulation 3(1)(c) of the 1984 Regulations (in its original form) by praying in aid the Order embodying the reciprocal agreement with Germany i.e. the Family Allowances, National Insurance and Industrial Injuries (Germany) Order 1961, SI 1961 No. 1202. Mr. Poynter contended that under that Order the claimant could satisfy the residence requirement by virtue of her residence in Germany. He referred to article 3(a) of the Convention, scheduled to the 1961 Order, reading as follows:

"PART II

GENERAL PROVISIONS

Article 3

(2) ... A person who is in, or resident in, the territory of one Party shall be treated as if he were, respectively in, or resident in, the territory of the other Party for the purpose of entitlement to claim, or receive payment of, any benefit under the legislation of the latter Party."

The adjudication officer contends that, in any event, article 3(2) could not have the effect Mr. Poynter attributes to it (see para. 21 below).

"Benefit" is defined by Article 1(13) of the Convention as meaning:

"Any pension, allowance, grant or other cash benefit provided under the legislation of one (or the other) Party, and includes any increase in the benefit and any additional allowance payable therewith"

(compare Article 1(13), (14) and (15) relating to sickness benefit and invalidity pension). However, the adjudication officer's argument is that the 1961 Order relates only to benefits that were in existence at the date of that Order except in so far as additional benefits have been subsequently added. The adjudication officer contends that a non-contributory benefit such as severe disablement allowance is not included in the 1961 Order because there were no relevant non-contributory benefits in existence in 1961 (severe disablement allowance was introduced only in 1984, see below). Family allowance, a non-contributory benefit, is the subject of special provision in the Order by Articles 3(3) and 31.

Those representing "the adjudication officer have drawn attention to the provisions of Article 2 of the Order which, so far as are relevant, are as follows:

"Article 2(1).

The provisions of the present convention shall apply-

(a) in relation to the United Kingdom to-

(i) the National Insurance Act, 1946 ... ;

(ii) the National Insurance (Industrial Injuries Act) 1946 ... ;

(iii) the Family Allowances Act, 1945 ... ;

(b) [relates to German benefits]:

(2) Subject to the provisions of paragraphs (3), (4) and (5) of this Article, the Convention shall apply also to any legislation which amends, supplements or consolidates the legislation specified in paragraph (1) of this Article.

(3) The Convention shall apply to any legislation which extends the existing legislation to new classes of persons, unless, within three months of the date when information concerning the said legislation is given in accordance with the provisions of paragraph (b) of Article 38 of the Convention, the competent authority of one Contracting Party gives notice to the competent authority of the other Party that it shall not so apply.

(4) The Convention shall apply to any legislation which relates to a branch of social security not covered by the legislation specified in paragraph (1) of this Article only if the two Parties make an agreement to that effect.

(5) [not relevant in this case]." (my emphasis)

The adjudication officers argument proceeded on the basis that the references in Article 2(1)(3) to the National Insurance Act 1946, the national insurance Act (Industrial Injuries) Act 1946 and the Family Allowances Act 1945 meant that only benefits in existence at that date or otherwise expressly brought within the Convention were covered. Severe disablement allowance was of course not in existence in 1945/6. By a direction given after the hearing on 30 March 1995, I asked for submissions on whether the provisions of the Social Security (Reciprocal Agreements) Order 1976, SI 1976 No. 225 and subsequent Orders of that title bear on this matter. At the hearing on 5 January 1996, Mr. Poynter and Mr. Cooper agreed that they did not affect the issues in this appeal. Having carefully examined the Orders, I agree that that is so.

Mr. Poynter referred to the creation of severe disablement allowance in November 1984 (by section 11 of the Health and Social Security Act 1984). That was a substitution for the non-contributory invalidity pension introduced for the first time by sections 5 and 6 of the Social Security Benefits Act 1975, referring to section 9(1) of the Social Security Act 1973. He contended that those sections were, to quote Article 2(3) of the Convention "legislation which extends the existing legislation to new classes of persons". If that were so, it would mean that, as no notice had been given by Great Britain to Germany that the Convention should not apply to non-contributory invalidity pension and severe disablement allowance, those benefits would be included within the Convention. He further argued that those sections were not, to quote Article 2(4) "any legislation which relates to a branch of social security not covered by the legislation specified in [Art. 2(1)]" and thus needed no agreement between the UK and Germany for incorporation in the order. There has been no such agreement.

Those representing the adjudication officer argued the contrary, citing reported Commissioner's decision R(S)7/81, where Commissioner Monroe decided that the then non-contributory invalidity pension was not within the reciprocal agreement with Germany. He gave the following reasons (para. 16 of R(S) 7/81):

"At the time of the Convention the only British benefits that were non-contributory were family allowances and guardian's allowance the latter of which was contributory only in so far as one of the parents of the child in respect of whom the allowance was paid had to have been an insured person. If the wide provisions of Article 3(2) of the Convention [i.e. the residence provision, set out in paragraph 14 above] applied to non-contributory benefits based an residence or physical presence in Britain then persons could in general satisfy the residence conditions for such benefits by residence or presence in West Germany. I find it impossible to believe that such an extension of non-contributory benefits was intended. I note that Article 3(3) excludes family allowances from the operation of Article 3(3) and that there was such a link between the family allowances law (now child benefit law) and guardian's allowance law as effectively to exclude guardians allowance for the benefit of Article 3(2). If it were to be suggested that the newer non-contributory benefits in general could be satisfied with the help of Article 3(2) I think it likely that the Convention would "either have been modified by agreement or "denounced" in accordance with Article 31."

Mr. Poynter argued that R(S)7/81 was erroneous in that it had not considered the provisions of sub-paragraph (3) of Article 2 which allow the Convention to apply automatically to "any legislation which extends the existing legislation to new classes of persons". It is true, as far as I can ascertain, that R(S)7/81 did not consider this particular point. I am, however, satisfied by a detailed examination of the legislation which introduced non-contributory invalidity benefit and then severe disablement allowance (cited in paragraph 18 above) that that legislation is not simply "legislation which extends the existing legislation to new classes of persons" [Art. 3(3)] but is "legislation which relates to a branch of social security not covered by the legislation specified in paragraph (1) of [Article 2]" I therefore hold that R(S) 7/81 is still good law and I follow it. I appreciate Mr. Poynteros submission that both contributory, and non-contributory invalidity benefit apply to the same category of risk but nevertheless, in my view, non-contributory invalidity benefit is a different and separate "branch of social security" (Art. 2(4)). The result is that, as there has apparently been no agreement to extend the Convention to those benefits, they are not, in my judgment within the 1961 Order.

As I have decided that the 1961 Order does not apply at all to severe disablement allowance, I need not rule finally on the submission, made ably by Mr. Cooper at the hearing on 5 January 1996, that, even if the 1961 Order did apply to that allowance, Article 3(2) of the Agreement (cited at para 14 above) could not enable the claimant to treat residence in Germany as residence in the United Kingdom, in order to comply with the residence qualification Mr. Cooper contended that Article 3(2) merely enabled a claimant to claim or be paid one country's benefit while resident in the other country and had no greater effect. I express no opinion on that contention, save to note (i) that it was vigorously opposed by Mr. Poynter and (ii) it does not appear to have been the view of Commissioner Monroe in R(S)7/81 (see the sentence I have underlined in para. l6 of that decision, cited at, para. 19 above).

Date: 9 January 1996 (signed) Mr. M. J. Goodman

Comissioner