Perry v. Chief Adjudication Officer  UKSSCSC CIS_863_1994 (15 October 1998)
Mr. J. Mesher CIS/863/199431.10.95
CA (Beldam, Millett and Mummery LJJ)
Residence condition - temporary absence from the United Kingdom - whether domestic legislation providing for withdrawal of benefit after four weeks absence is compatible with Article 10a of Council Regulation (EEC) 1408/71
The claimant was refused income support after the first four weeks in each of three periods he had spent in Portugal. A tribunal dismissed his appeal and he appealed to the Commissioner, contending firstly that, as his applicable amount included both a disability premium and sums in respect of his family, his income support was an invalidity benefit and a family benefit within Council Regulation (EEC) 1408/71 and was exportable under Article 10; secondly that he had a positive right to income support as a special non-contributory cash benefit within Article 10a of Council Regulation (EEC) 1408/71 as amended by Council Regulation (EEC) 1247/92; and thirdly that he was assisted by the transitional provisions in Article 2(4) of Council Regulation (EEC) 1247/92 because income support was a "special non-contributory benefit granted in addition to a pension" due to the existence of the disability premium within the income support scheme. The Commissioner rejected those submissions. He held (paragraphs 8 to 14) that income support did not fall within the scope of Council Regulation (EEC) 1408/71 before its amendment by Council Regulation (EEC) 1247/92 and he also rejected the claimant's second and third arguments. The claimant appealed to the Court of Appeal, challenging the Commissioner's conclusions on his second and third points.
Held, dismissing the appeal, that:
- the language of Article 10a recognised that special non-contributory benefits were granted in accordance with the legislation of the Member State in which the claimant resided and, as domestic legislation expressly provided for the withholding of income support during the periods of the claimant's temporary absence from the United Kingdom, the claimant could have no positive right to income support during his absence;
- Article 2(4) of Council Regulation (EEC) 1247/92 applied to a special non-contributory benefit which was paid as a complement or supplement to a pension and it was not enough that the claimant received income support in parallel to his invalidity benefit as there was not a sufficient nexus between the two benefits.
"1. There are before the tribunal three appeals lodged by [the claimant]. They all concern entitlement to income support for periods [the claimant] has spent in Portugal since 29 November 1991. Income support was withdrawn in December 1991, December 1992 and November 1993 when [the claimant], who is a person with disabilities, went abroad with his wife for therapeutic reasons.
"Notwithstanding the provisions of paragraph 3, any special non-contributory benefit granted in addition to a pension which has been refused or suspended on grounds of the claimant's or beneficiary's residence in the territory of a Member State other than the competent State shall, upon application of the claimant or beneficiary, be granted or reinstated from the date of entry into force of this Regulation with effect from the date of change of residence."
"I have reviewed the decision dated 24 November 1991 of the adjudication officer awarding income support from and including 15 November 1991. I am satisfied that there has been a relevant change in circumstances since the decision was given. My revised decision is that [the claimant] is not entitled to income support from 27 December 1991 because he is no longer in Great Britain."
The decision made on 17 December 1992 was as follows:
"I have reviewed the decision dated 15 December 1992 of the adjudication officer awarding income support from and including 27 November 1992. I am satisfied that there has been a relevant change in circumstances since the decision was given. My revised decision is that [the claimant] is not entitled to income support from 25 December 1992 because he is no longer in Great Britain."
The decision made on 26 November 1993 was as follows:
"I have reviewed the decision dated 6 August 1993 of the adjudication officer awarding income support from and including 2 July 1993. I am satisfied that there has been a relevant change in circumstances since the decision was given. My revised decision is that [the claimant] is not entitled to income support from 12 November 1993 because he is no longer in Great Britain."
"Article 3(1)(a) of Directive 79/7 does not refer to statutory schemes which are intended to guarantee any person whose real income is lower than a notional income calculated on the basis of certain criteria a special allowance enabling that person to meet housing costs.
The age and invalidity of the beneficiary are only two of the criteria applied in order to determine the extent of the beneficiary's financial need for such an allowance. The fact that those criteria are decisive as regards eligibility for the higher pensioner premium is not sufficient to bring that benefit within the scope of Directive 79/7.The premium is in fact an inseparable part of the whole benefit which is intended to compensate for the fact that the beneficiary's income is insufficient to meet housing costs, and cannot be characterized as an autonomous scheme intended to provide protection against one of the risks listed in Article 3(1) of Directive 79/7."
I apply that reasoning to the present case and to the place of the disability and carer premiums in income support.
"Article 3(1)(a) of Directive 79/7 does not refer to a statutory scheme which, on certain conditions, provides persons with means below a legally defined limit with a special benefit to enable them to meet their needs.
That finding is not affected by the circumstance that the recipient of the benefit is in fact in one of the situations covered by Article 3(1) of the directive.
Indeed, in the judgment in Smithson the Court held with regard to a housing benefit that the fact that some of the risks listed in Article 3(1) of Directive 79/7 were taken into account in order to grant a higher benefit was not sufficient to bring that benefit within the scope of the directive."
I would have applied that approach to Regulation 1408/71 on the basis of those cases. But it is specifically reinforced by two further cases.
"Although it is possible that because of the classes of persons to which they apply, their objectives and the detailed rules for their application, certain laws may simultaneously contain elements belonging to both of the categories mentioned and thus defy any general classification, it must be stated that in order to fall within the field of social security covered by Regulation No. 1408/71 the legislation at issue must in any event satisfy, in particular, the condition of covering one of the risks specified in Article 4(1) of the regulation. It follows that the list of risks contained in that paragraph is exhaustive and that as a result a branch of social security not mentioned in the list does not fall within that category even if it confers upon individuals a legally defined position entitling them to benefits.
As is clear from the documents before the Court, the "minimex" is characterized on the one hand by the fact that it confers upon recipients a legally defined position and on the other by the fact that it is granted to any person who does not have adequate means and is unable to 'obtain them either by his own efforts or in any other way' (Article 1(1) of the Law of 7 August 1974); it thus adopts need as an essential criterion for its application and does not make any stipulations as to periods of work, contribution or affiliation to any particular social security body covering a specific risk. A claimant need only show that 'he is prepared to accept work' unless prevented by his state of health or compelling social reasons; furthermore he is required to exercise his rights to social benefits or even any rights to maintenance if the public social welfare centre considers it necessary (Article 6(1) and (2) of the 1974 Law).
It follows that an allowance like the one at issue, being a general social benefit, cannot be classified under one of the branches of social security listed in Article 4(1) of Regulation No. 1408/71 and therefore does not constitute a social security benefit within the specific meaning of the regulation."
"This Regulation shall also apply to special non-contributory benefits which are provided under a legislation or schemes other than those referred to in paragraph 1 or excluded by virtue of paragraph 4, where such benefits are intended:
(a) either to provide supplementary, substitute or ancillary cover against the risks covered by branches of social security referred to in paragraph 1(a) to (h), or
(b) solely as specific protection for the disabled."
The substituted form of Article 5 provides:
"The Member States shall specify the legislation and schemes referred to in Article 4(1) and (2), the special non-contributory benefits referred to in Article 4(2a), the minimum benefits referred to in Article 50 and the benefits referred to in Articles 77 and 78 in declarations to be notified and published in accordance with Article 97."
The United Kingdom has not amended its declaration, last corrected in 1987, to specify any legislation as falling within Article 4(2a). If the purpose of and conditions of entitlement to income support are then considered there would be considerable doubt whether it falls within Article 4(2a). On the approach which I have adopted above, it could be argued that income support is not intended to provide supplementary, substitute or ancillary cover against the risks referred to in Article 4(1), even though in some cases the existence of such a risk may affect entitlement and income support may be paid as well as benefits within Article 4(1). However, Regulation 1247/92 also inserts a new Annex IIa into Regulation 1408/71, for the purpose of listing the special non-contributory benefits to which the new Article 10a applies. Income support is listed in the section of Annex IIa relating to the United Kingdom. The Council of the European Community therefore at least assumed that income support is a special non-contributory benefit. I think that the question of the effect of Annex IIa is a difficult one which may have to be explored in other cases, but in the present case I am prepared to assume in the claimants favour that income support falls within Article 4(2a).
"Notwithstanding the provisions of Article 10 and Title III, persons to whom this Regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4(2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and at the expense of the institution of the place of residence."
In Regulation 1408/71 "residence" means "habitual residence" (Article 1(h)). Since the claimant throughout remained habitually resident in the United Kingdom, Article 10a confers no rights for him to receive income support while outside the territory of the United Kingdom.
"3. This Regulation shall not give rise to any rights in respect of any period prior to the date of its entry into force.
The appeal tribunal took the view that arguably income support in the claimant's case was granted in addition to a pension in the form of invalidity benefit, but that Article 2(4) did not help the claimant because he had not changed his residence, in the sense of habitual residence, and his income support had not been withdrawn on the ground of his habitual residence in Portugal. It was withdrawn on the ground of his presence or stay in Portugal. Before me, Mr. Paines did not argue that Article 2(4) failed to help the claimant for that reason. He submitted that Article 2(4) only applies to special non-contributory benefits which are, like the means-tested French supplementary allowance payable to recipients of old age, survivors' or invalidity pensions discussed by the ECJ in Caisse Regionale d'Assurance Maladie Rhone-Alpes v Giletti (Case 379/85)  ECR 955, automatic supplements to a pension. He submitted that it does not apply to benefits like income support, which happen to be paid as well as a pension which falls within the category of an invalidity benefit. It would be extraordinary, he said, if Article 2(4) allowed the export of a benefit which, before 1 June 1992, was not covered by Regulation 1408/71 at all and, from 1 June 1992 onwards, could in the case of new claims be confined to the territory of the State of habitual residence. There was a reference to the French text of Article 2(4), which refers to a benefit "accordee a titre de complement a une pension". The claimant did not make any comments on the interpretation of Article 2(4).
Date: 31 October 1995 (signed) Mr. J. Mesher
The claimant appealed to the Court of Appeal. The decision of the Court of Appeal follows.
DECISION OF THE COURT OF APPEAL
Mr. R. Drabble QC (Instructed by Messrs Ward Dewhurst, Preston PR1 2JX) appeared on behalf of the Appellant.
Mr. N. Paines QC (Instructed by the solicitor to the Department of Social Security, London WC2A 2LS) appeared on behalf of the Respondent.
LORD JUSTICE MUMMERY:
Mr. Anthony Perry, who suffers from incapacitating disabilities, normally receives income support while he is living at home in Blackburn.
Since the end of November 1991 he has spent part of the winter in an apartment in Albufeira in the Algarve. His stays in Portugal in December 1991 and 1992 and in November 1993 were for therapeutic reasons. On each occasion his temporary period of absence from the United Kingdom was for more than four weeks, a period potentially relevant to his continuing entitlement to income support. On this appeal the issue, on which Mr. Perry was unsuccessful before both the Social Security Appeal Tribunal and the Social Security Commissioner, is whether he is entitled to be paid income support during periods of temporary absence from the United Kingdom lasting for longer than four weeks.
The point for decision is what impact, if any, do EC Regulations relating to special non-contributory benefits have on the conditions governing entitlement to income support contained in the domestic legislation - the Social Security Contributions and Benefits Act 1992 (the 1992 Act) and the Income Support (General) Regulations 1987 (the 1987 Regulations).
It is submitted by Mr. Richard Drabble QC, on behalf of Mr. Perry, that the provisions of domestic law, which he accepts preclude Mr. Perry from receiving income support after four weeks absence from the United Kingdom, are incompatible with, and are therefore displaced by, the applicable provisions of EC Regulation 1408/71, as amended by Regulation 1247/92. Alternatively, he contends that, if this submission is not accepted as "acte clair", then this court should make a reference to the European Court of Justice under Article 177 of the Treaty of Rome on questions of interpretation of the Regulations. During the course of the hearing of the appeal he helpfully produced a first draft of the proposed questions.
Mr. Nicholas Paines QC, on behalf of the Chief Adjudication Officer, submits that it is "acte clair" that no such incompatibility exists and that the relevant provisions of domestic law governing entitlement to income support are not displaced or modified by any provision of European Community law. He opposes a reference on the ground that it is not necessary to request preliminary rulings of the Court of Justice on the questions proposed by Mr. Drabble to enable this Court to give judgment on this appeal.
There is no dispute between the parties on the following points:-
(1) Throughout the relevant periods of temporary absence and stay in Portugal Mr. Perry continued to be habitually resident in Great Britain.
(2) While staying in Portugal Mr. Perry remained entitled to his contributory invalidity benefit and to his disability living allowance; and his wife, who accompanied him, was entitled to an invalid care allowance.
(3) Under section 124 of the 1992 Act and Regulation 4 of the 1987 Regulations Mr. Perry was not entitled to income support after four weeks' absence from Great Britain.
(4) Mr. Perry can only succeed on this appeal if his submissions on the effect of EC Regulation 1408/71, as amended by EC Regulation 1247/92, are accepted as correct. Regulation 1408/71 did not apply to income support before the amendments made by Regulation 1247/92 came into force on 1 June 1992.
(5) Mr. Perry is a "worker" who is entitled to have directly applicable Articles in the Regulations applied to his case.
Relevant Provisions of Domestic Law
Part VII of the 1992 Act governs income-related benefits, which include a prescribed scheme providing for income support: Section 123(1)(a). Under section 124 a person "in Great Britain" is entitled to income support if certain conditions of entitlement are satisfied relating to age, lack of income and lack of remunerative work.
Under section 137(2) of the 1992 Act Regulations may be promulgated, which make provision for the purposes of the Act,
"(a) as to circumstances in which a person is to be treated as being or not being in Great Britain;
(b) continuing a person's entitlement to benefit during periods of temporary absence from Great Britain."
Part II of the 1987 Regulations sets out the conditions of entitlement. Regulation 4 prescribes those conditions which apply in cases of temporary absence from Great Britain:-
"4 (1) Where a claimant is entitled to income support for a period immediately preceding a period of temporary absence from Great Britain, his entitlement to income support shall continue only -
(a) in the circumstances specified in paragraph (2), during the first four weeks of that period of temporary absence...."
Paragraph (2) specifies the circumstances in which a claimant's entitlement to income support is to continue during the first four weeks of a temporary absence from Great Britain. There are other circumstances, specified in paragraph (3),in which a claimant's entitlement to income support is to continue during the first eight weeks of temporary absence from Great Britain.
Under the 1987 Regulations Mr. Perry is entitled to have the disability premium provided for in regulation 11 reflected in the calculation of his income support.
Relevant Provisions of European Community Law
Article 51 of the Treaty of Rome provides:-
"The Council shall, acting unanimously on a proposal from the Commission, adopt such measures in the field of social security as are necessary to provide freedom of movement for workers; to this end, it shall make arrangements to secure for migrant workers and their dependants:
(a) aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries;
(b) payment of benefits to persons resident in the territories of Member States."
Regulation 1408/71, as amended, is the detailed and complex basic law giving expression to Article 51 of the Treaty on entitlement to social security benefits. The purpose of the Regulation is to facilitate and promote, in accordance with Article 51, the principle of free movement of workers, which might be impaired by the loss of benefits provided by Member States. The Regulation sets out to achieve this objective by a process of co-ordinating the different domestic social security systems applicable in the territories of Member States. Provision is thus made for the aggregation of qualifying periods for benefit and for the exportability of benefits on a move by a worker to another Member State.
The Regulation does not, however, establish a harmonised Community scheme or system of social security benefits. The relevant preambles to the Regulation, as amended, state the purposes of the Regulation as follows:-
"Whereas the provisions for co-ordination of national social security legislations fall within the framework of freedom of movement for workers who are nationals of Members States and should contribute towards the improvement of their standard of living and conditions of employment;
Whereas it is necessary to respect the special characteristics of national social security legislations and to draw up only a system of co-ordination;
Whereas it is necessary, within the framework of that co-ordination, to guarantee within the Community equality of treatment under the various national legislations to workers living in the Member States and their dependants and their survivors;
Whereas the provisions for co-ordination must guarantee that workers moving within the Community and their dependants and their survivors retain the rights and the advantages acquired and in the course of being acquired;
Whereas employed persons and self-employed persons moving within the Community should be subject to the social security scheme of only one single Member State in order to avoid overlapping of national legislations applicable and the complications which could result therefrom;
Whereas the instances in which a person should be subject simultaneously to the legislation of two Member States as an exception to the general rule should be as limited in number and scope as possible;
Whereas with a view to guaranteeing the equality of treatment of all workers occupied on the territory of a Member State as effectively as possible, it is appropriate to determine as the legislation applicable, as a general rule, that of the Member State in which the person concerned pursues employment or self-employment;
Whereas in certain situations which justify other criteria of applicability, it is possible to derogate from this general rule;
Whereas certain benefits foreseen under national laws may fall simultaneously within social security and social assistance, because of the scope of their application, their objective and their manner of application, it is necessary to lay down a system of co-ordination, which takes into account the special characteristics of the benefits concerned, that should be included in the Regulation in order to protect the interests of migrant workers in accordance with the provisions of the Treaty;
Whereas such benefits should be granted, in respect of persons falling within the scope of this Regulation, solely in accordance with the legislation of the country of residence of the person concerned or of the members of his or her family, with such aggregation of periods of residence completed in any other Member State as is necessary and without discrimination on grounds of nationality."
In Article 1(h) "residence" is defined as meaning "habitual residence." In Article 1(i) "stay" is defined as meaning "temporary residence." In Article 1(s) "periods of residence" are defined as meaning periods as defined or recognised as such by the legislation under which they were completed or considered as completed.
Article 4 sets out the branches of social security benefits to which the Regulation shall apply, such as sickness and maternity benefits, invalidity benefits, old-age benefits and so on.
Article 4.2a, as inserted by Regulation 1247/92, provides
"This Regulation shall also apply to special non-contributory benefits which are provided under legislation or schemes other than those referred to in paragraph 1 or excluded by virtue of paragraph 4, where such benefits are intended:
(a) either to provide supplementary, substitute or ancillary cover against the risks covered by the branch of social security referred to in paragraph 1(a) to (h)."
Article 10 and 10a are central to the submissions made on behalf of Mr. Perry. Article 10.1, which relates to the exportability of social security benefits, states:-
"Save as otherwise provided in this Regulation invalidity, old-age or survivors' cash benefits, pensions for accidents at work or occupational diseases and death grants acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated."
Thus the Article precludes the withdrawal of the specified benefits on the ground of the non-residence of the worker in the Member State in which he acquired the benefit in question.
Article 10a, which was introduced by the amendments in Regulation 1247/92 with effect from 1 June 1992, deals with "Special non-contributory benefits" which, it is agreed, include income support and are not exportable under Article 10:-
"1. Notwithstanding the provisions of Article 10 and Title III, persons to whom this Regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4 (2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and at the expense of the institution of the place of residence."
Annex IIa (Article 10a of the Regulation) includes in L. United Kingdom (e) "Income support."
Title II of the Regulation contains provisions for the "Determination of the Legislation Applicable." The general rules contained in Article 13 provide:-
"1. Subject to Article 14c, persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. That legislation shall be determined in accordance with the provisions of this Title.
(a) a person employed in the territory of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State or if the registered office or place of business of the undertaking or the individual employing him is situated in the territory of another Member State.
(f) a person to whom the legislation of a Member State ceases to be applicable, without the legislation of another Member State becoming applicable to him in accordance with one of the rules laid down in the aforegoing subparagraphs or in accordance with one of the exceptions or special provisions laid down in Articles 14 to 17 shall be subject to the legislation of the Member State in whose territory he resides in accordance with the provisions of that legislation alone."
Article 2 of 1247/92 contained transitional provisions:-
"(3) This Regulation shall not give rise to any rights in respect of any period prior to the date of its entry into force.
(4) Notwithstanding the provisions of paragraph 3, any special non-contributory benefit granted in addition to a pension which has been refused or suspended on grounds of the claimant's or beneficiary's residence in the territory of a Member State other than the competent State shall, upon application of the claimant or beneficiary, be granted or reinstituted from the date of entry into force of this Regulation with effect from the date of change of residence."
Mr. Perry's Appeals
Regulation 1408/71, as amended, was relied on by Mr. Perry in his appeals against three decisions of the Adjudication Officer dated 31 January 1992, 17 December 1992 and 26 November 1993 withdrawing his income support in respect of his periods of temporary absence in the Algarve in December 1991, December 1992 and November 1993.
On 19 September 1994 the Preston Social Security Appeal Tribunal dismissed Mr. Perry's appeals. The Tribunal held that the domestic legislation did not permit income support to be paid to Mr. Perry beyond the first four weeks of his stay in Portugal; that if income support was to be paid for later periods Mr. Perry would have to rely on European Community law; that Regulation 1408/71, in its original form, did not assist Mr. Perry because income support was not within its scope; that Article 10a, inserted in the basic Regulation by Regulation 1247/92, did not assist Mr. Perry, because it did not deal with "exportability" and only conferred entitlement to benefits exclusively in the territory of the Member State in which a claimant habitually resides in accordance with the legislation of that State; and that the transitional provisions in Article 2(4) of Regulation 1247/92 did not assist Mr. Perry, as income support had not been refused on the grounds of his residence in Portugal, but rather it had been taken away from him on the grounds of his presence in Portugal, while he remained habitually resident in the United Kingdom. (Although Mr. Paines QC defended this result, he did not seek on this appeal to support the reasoning of the Appeal Tribunal on the transitional provision point.)
Mr. Perry appealed to the Social Security Commissioner. On 31 October 1995 the Social Security Commissioner (Professor John Mesher) upheld the decision of the Social Security Appeal Tribunal. On 9 July 1996 he refused leave to appeal. Leave to appeal on a point of law was subsequently granted by the Court of Appeal on 6 June 1997.
The Social Security Commissioner noted the agreement of the parties that the decisions of the Adjudication Officer were correct in their application of purely domestic United Kingdom legislation and that Mr. Perry could only succeed in his appeals in reliance on some provision of European Community legislation. It was agreed that the only relevant legislation consisted of the two Regulations already cited. He agreed with the decision of the Appeal Tribunal that income support is not a benefit to which Regulation 1408/71, in its pre-June 1992 form, applied. The only question, therefore, was whether that position was changed by the amendments made by the 1992 Regulation. He assumed in Mr. Perry's favour that income support fell within Article 4.2a, but concluded that he was not assisted by Article 10a, on which Mr. Drabble QC relies in this appeal, as Mr. Perry throughout remained habitually resident in the United Kingdom; and Article 10a conferred no rights on him to receive income support while he was outside the territory of the country in which he habitually resided within the meaning of the Regulation.
He also rejected Mr. Perry's submissions on the transitional provisions in Article 2(4) of Regulation 1247/92. Although he did not agree with the reasoning of the Appeal Tribunal on this Article, he decided that the Appeal Tribunal had reached the correct conclusion on the application of the Article to Mr. Perry's circumstances. He accepted the submission on behalf of the Chief Adjudication Officer that Article 2(4) only applies to special non-contributory benefits payable as automatic supplements to pensions paid on grounds of old age or invalidity. The Article does not apply to additional benefits, like income support, which happen to be paid in parallel with a pension. He referred to the language of the French text of the Article in its reference to a benefit "accordee a titre de complement a une pension." He concluded that Article 2(4) was clearly intended only to apply to a limited category of special non-contributory benefits and not to every benefit within Article 4.2a of Regulation 1408/71. He said (paragraph 18):-
"The reference in Article 2(4) to a benefit granted in addition to a pension must have been intended to be limiting, not merely descriptive of special non-contributory benefits as a whole. The question is what kind of limitation is imposed."
Having regard to the French text, as an aid to interpreting what he regarded as an ambiguous English text, he stated:-
"Article 2(4) should be interpreted as meaning that the grant of the special non-contributory benefit must in some way be dependent on the entitlement to the pension in question. Entitlement to income support does not depend on entitlement to any other benefits. The amount of other benefits received may count as income to be taken into account in the calculation of the entitlement. Entitlement to other benefits may be relevant to whether certain premiums are or are not allowed. But entitlement to income support is not restricted to people who are also entitled to other benefits." (paragraph 19)
Issues on the Appeal
The notice of appeal states two grounds in support of the contention that the Social Security Commissioner erred in law in dismissing Mr. Perry's appeals.
(1) Article 10a Point
Did the Commissioner err in law in holding that Article 10a did not assist Mr Perry in his claims to income support during periods when he was habitually resident in the United Kingdom and therefore "resident" for the purpose of the regulation and the article, but was temporarily absent? This point relates only to the two periods for which income support is claimed after the amendments to the original Regulation came into force on 1 June 1992.
It is submitted on behalf of Mr. Perry that Article 10a defines a territorial test for entitlement to "special contributory benefits" The test is that of habitual residence, not of presence. Although Mr. Perry was present in Portugal during the periods in question, he remained habitually resident in the United Kingdom: that entitled him to continued payment of income support. It was emphasised that it was not a case of "exportability" of the income support in the conventional sense of a benefit paid by one Member State to an individual who was resident in another Member State. Mr. Perry never became resident in Portugal within the meaning of the Regulation.
(2) The Article 2(4) Point
Did the Commissioner err in law in holding that income support fell outside the transitional provisions of Article 2(4), because it could not be said to be "granted in addition to" a pension? This point relates only to the one period for which income support is claimed before the 1992 amendments came into force.
It is argued on behalf of Mr. Perry that Article 2 simply requires that the "special non-contributory benefit" be granted in addition to a pension, such as is invalidity benefit or disability allowance, or that, at the most, there must be some link between the purposes of the "special non-contributory benefit" and such a pension. There was such a link in this case in the existence of the disability premium within the income support scheme.
Submissions of Appellant - The Article 10a Point
Mr. Drabble QC developed the grounds of appeal in the following submissions:-
(1) Article 10a confers on Mr. Perry a positive Community right to be granted the special non-contributory benefit under the law of his country of residence. He is entitled to income support over the periods in question by virtue of that positive right and by virtue of his habitual residence in the United Kingdom, even during the periods of temporary absence in the Algarve. He is not, Mr. Drabble emphasised, claiming to be entitled under Article 10 to export income support. Confusion with the concept of exportability had crept into and coloured the decisions of the Appeal Tribunal and the Commissioner. Mr. Perry relies on Article 10a which is not concerned with the export of benefits on a change of residence from one Member State to another Member State: it is concerned with entitlement to special non-contributory benefits by virtue of continuing habitual residence in the Member State under the legislation of which those benefits are granted.
(2) It is not open to the United Kingdom, as a Member State, to deny to Mr. Perry, by the provisions of its domestic legislation, the benefit of income support on the ground that, although he satisfies the test of habitual residence in Article 10a of the Regulation, he fails to satisfy the narrow domestic test of presence in the 1992 Act and the regulations made under it. It would be contrary to the basic scheme introduced by Article 10a to allow a Member State to rely on its domestic law provisions concerning residence or presence so as to deny the special non-contributory benefit to a Community national who was resident in that State in the Community sense. The important point is that Article 10a prescribes the test of habitual residence in a Member State for entitlement to benefit, not a test of continuous presence. The presence test in the 1987 Regulations produces a different effect from Article 10a, is incompatible with the scheme of co-ordination created by the Regulation and is therefore displaced by the paramount provisions of Article 10a.
(3) The approach taken by the Appeal Tribunal and the Commissioner was incompatible with the purpose of the EC legislation, because it discriminated against migrant workers in the Community: they are more likely than nationals of a host Member State to be temporarily absent for short periods from the Member State in which they habitually reside.
(4) The expression "in accordance with the legislation of that State" means in accordance with the legislation other than that governing the required connection with the Member State. The expression also indicates that the legislation of other Member States is irrelevant in the context of special non-contributory benefits, entitlement to which is to be determined under the legislation of the state of residence, not, for example, the state in which the worker is employed. The expression does not permit the domestic law of a Member State to operate different residence conditions which are incompatible with the scheme of the Regulations.
In support of the these contentions Mr. Drabble QC cited decisions of the European Court of Justice.
In the case of Sociale Verzekeringsbank -v- Kuijpers  ECR 3027 the ECJ stated the purpose of the Regulation in these terms:-
"10. According to a consistent line of decisions of the Court the aim of the provisions contained in Title II of.... Regulation No. 1408/71, which determine the legislation applicable to workers moving within the Community, is to ensure that the persons concerned shall be subject to the social security scheme of only one Member State, in order to prevent more than one national legislation from being applicable and the complications which may result from that situation.
In Ten Holder -v- Nieuwe Algemene Bedrijfsvereniging  ECR 1821 the Court said this about Regulation 1408/71:-
"21. The provisions of Title II constitute a complete system of conflict rules the effect of which is to divest the legislature of each Member State of the power to determine the ambit and the conditions of the application of its national legislation so far as the persons who are subject thereto and the territory within which the provisions of national law take effect are concerned. As the Court pointed out in its judgment of 23 September 1982 in Case 276/81 (Kuijpers 1982 ECR 3027) and in Case 275/81 (Koks  ECR 3013)," the Member States are [not] entitled to determine the extent to which their own legislation or that of another Member State is applicable since they are "under an obligation to comply with the provisions of Community law in force."
Mr. Drabble QC also cited Pietro Pinna -v- Caisse d'allocations familiales de la Savoie Case 41/84 ECR 1. The Court held that an Article in the Regulation (Article 73(2)) was invalid in so far as it precluded the award to employed persons subject to French legislation of French family benefits for members of their family residing in the territory of another Member State. It was stated in paragraph 22 of the judgment that article 73 of the Regulation
"creates two different systems for migrant workers depending on whether they are subject to French legislation or to the legislation of another Member State. Accordingly, it adds to the disparity caused by national legislation and, as a result, impedes the achievement of the aims set out in Articles 48 to 51 of the Treaty.
Finally, the case of Snares -v- Adjudication Officer  CMLR 897 was cited. In that case the ECJ ruled that, on a proper construction of Article 10a of the Regulation, disability living allowance is a special non-contributory benefit within the meaning of Article 4.2a
"with the result that the position of a person such as the claimant, who satisfied the conditions for the award of that benefit, is governed exclusively by the system of co-ordination established by the said Article 10a."
Mr. Drabble QC referred in particular to passages in the opinion of the Advocate General (paragraphs 17 and 83 to 101). In paragraph 93 it is stated that
"....the Member States are required to grant special non-contributory benefits provided for by the legislation to all their residents who fall within the scope of the Regulation, whatever their nationality, provided they fulfil the conditions for entitlement laid down by national legislation and the benefits in question are specified in Annex IIa"
The Advocate General continued in paragraph 95:-
"In the present case, reference should therefore be made to the relevant provisions of Spanish legislation, the State of residence, without referring to the United Kingdom provisions, even if the latter provisions are more advantageous for Mr. Snares. Otherwise the principle that the legislation of a single Member State only is applicable, which underlies the relevant Community rules, would be impaired. The binding force of the rules on connecting factors contained in the Regulation undoubtedly flows from the primacy of Community law."
Mr. Drabble QC relied upon all these authorities in support of the proposition that under Community law there is a positive obligation on a Member State to pay a special non-contributory benefit as long as the claimant is resident in that State; the Regulation does not allow a Member State to refuse such a benefit to a person habitually resident in it on the basis of temporary presence or stay in another Member State; in other words, the relevant test of connection for the special non-contributory benefit must not be a more arduous one than Article 10a. The presence requirement in the United Kingdom Regulations is incompatible with that provision of European Community Law.
Article 10a - Conclusion
In my judgment Mr. Drabble's submissions should be rejected for these reasons:-
(1) Article 10a does not confer on Mr. Perry a positive right to income support claimed by him so as to displace the requirement of presence under the domestic income support system. The language of Article 10a recognises that special non-contributory benefits are granted "in accordance with the legislation of that state" i.e. the territory of the Member State in which the relevant person resides. The legislation of the United Kingdom expressly provides for the withholding of income support during periods of the claimant's temporary absence from Great Britain. Article 10a does not override or displace the conditions of entitlement to income support. On the contrary, it provides that the right to the special non-contributory benefit is determined in accordance with the domestic law of the Member State. This is reinforced by the preamble to Regulation 1247/92 which states
"Whereas benefits should be granted, in respect of persons falling within the scope of Regulation (EEC) No. 1408/71, solely in accordance with the legislation of the country of residence of the person concerned or of the members of his or her family, with such aggregation of periods of residence completed in any other Member State as is necessary and without discrimination on grounds of nationality;"
(2) This result is consistent with the purpose of the Regulation, which is to co-ordinate and not to harmonise the systems of social security, and with the purpose of a special non-contributory benefit, such as income support, which is to provide assistance in the form of an addition to income which is linked to the cost of living in that Member State.
(3) There is clearly no incompatibility between article 10a and the provisions in the United Kingdom legislation which disentitle Mr. Perry to income support during a period of temporary absence in another Member State. The Regulation requires the benefits to be granted "in accordance with the legislation of that State." That State is the one in which the person resides. In the case of Mr. Perry that State is the United Kingdom. The legislation of the United Kingdom does not entitle Mr. Perry to income support if he is out of Great Britain for more than four weeks. As there is clearly no incompatibility, there is no question to be referred to the European Court of Justice under Article 177.
The Article 2(4) Point –Appellant's Submissions
Mr. Drabble QC submitted that the transitional provisions of Article 2 (3) and (4) of Regulation 1247/92 prescribe that the special non-contributory benefit is "granted in addition to a pension." Mr. Perry fulfills that requirement because income support paid to him is "granted in addition to" his invalidity pension. That is a contributory benefit providing protection against the risk of invalidity. There is a close link or connection between income support and that invalidity pension. Indeed, receipt of that contributory benefit is reflected in the amount of income support by virtue of the premium referred to in regulation 11 of the 1987 Regulations.
Further, Mr. Drabble submits that the income support was paid as a complement or supplement to his invalidity pension. This is clear from the terms of Article 4.2a, as inserted by amendment with effect from 1 June 1992. The decisions of the Court of Justice, which are relied on by the Chief Adjudication Officer (and cited below) in his argument that income support is not a complement or a supplement to the invalidity pension, do not apply in view of the terms of Regulation 1247/92.
It is accepted by Mr. Paines that income support is listed in Annex IIa of the Regulation and that it falls within Article 4.2a. Mr. Drabble submits that it must follow from this concession and from the language of that Article that income support is intended to provide "supplementary...cover against the risks covered by the branches of social security referred to in paragraph 1(a) to (h)." Those "branches" include "invalidity benefits" (1.(b)),and they are such a "pension" as is referred to in Article 2(4) of No. 1247/92. Mr. Perry's income support for the December 1991 period was refused or suspended on the grounds of his temporary absence in Portugal, which is a Member State other than the competent State. As directed by Article 2(4), Mr. Perry's income support for the December 1991 period should be granted or reinstituted from 1 June 1992. (Mr. Drabble accepted that this argument, even if successful, would not assist Mr. Perry's claim for the two periods of absence in Portugal after 1 June 1992.)
Article 2(4) Point - Conclusion
On this point I am persuaded by the submissions of Mr. Paines that it is clear that there is no error of law in the construction and application of Article 2(4) by the Social Security Commissioner and that Mr. Drabble's construction should be rejected as erroneous.
Mr. Paines submitted, and I accept, that Article 2(4) applies to special non-contributory benefits which are paid as a complement or supplement to a pension. It is not sufficient that income support is in fact paid to Mr. Perry in parallel with an invalidity pension nor is it sufficient that there is a link of the kind relied on by Mr. Drabble between the purposes of the special non-contributory benefit and such a pension.
Support for this conclusion is, as the Social Security Commissioner held, to be found in the language of the French text in its reference to "complement" and also in the fact that non-contributory benefits, paid as a supplement to an invalidity or old-age pension, are well established in European Community social security law: see, for example, Case 379/86 Caisse Régionale d'Assurance Maladie Rhône-Alpes v. Giletti  ECR 955, a case concerned with a supplementary allowance to recipients of old-age or invalidity benefits where their resources are inadequate, so as to achieve what is regarded as the indispensable minimum level. It was an automatic supplement linked to an invalidity or old-age pension. That legislation was regarded by the Court of Justice as fulfilling a dual function, as it guaranteed both a minimum means of subsistence to persons in need and also provided additional income for the recipients of social security benefits which are inadequate. In so far as such legislation conferred a right to supplementary benefits designed to increase the amount of pensions paid by way of social security, without any assessment of individual needs or circumstances, which is a characteristic of assistance, it came within the social security scheme within the meaning of Regulation 1408/71. Income support payable under the 1992 Act and the 1987 Regulations is not a supplementary benefit of that kind.
The language and context of Article 2(4) indicate a reference to a subcategory of special non-contributory benefits of this automatic supplementary kind, and not to benefits in the form of assistance payments based on individual needs and circumstances, such as income support, received in parallel with a pension. Mr. Drabble's contrary construction would produce this irrational result: a transitional provision in an amending Regulation dealing with cases of entitlement to export benefits which had arisen under the provisions applicable before 1 June 1992 (being provisions which did not, prior to amendment, apply to income support at all) would create a new right to export income support in respect of a pre-1 June 1992 period; and, if Mr. Drabble is wrong on the Article 10a point, as I think he is, there would be no right under Article 10 or Article 10a to export income support after 1 June 1992, even though income support now falls within the Regulation. It is improbable, to put it at its lowest, that the framers of the transitional provisions intended to produce such a result.
It is more probable, as contended by Mr. Paines, that the reference to a special non-contributory benefit "which has been refused or suspended" before the entry into force of Regulation 1247/92 relates only to benefits which were covered by and were exportable under Regulation 1408/71. As already explained, income support was not a benefit which fell within Regulation 1408/71 until the amendments made by Regulation 1247/92 came into force on 1 June 1992 and even then it was not made an exportable benefit.
I would add that the European Court of Justice has held that the fact that income support schemes include premia based on certain specified risks is not sufficient to bring them within the scope of social security: see C-63/91 and 64/91 Jackson and Cresswell v. Chief Adjudication Officer ECR I-4737 and C-243/90 R v. Secretary of State for Social Security ex parte Smithson ECR I-467. Both cases were concerned with Council Directive 79/7 regarding the progressive implementation of the principle of equal treatment for men and women in matters of social security. According to Article 3(1) of the directive it applies to statutory schemes which provide protection against specified risks, such as sickness, invalidity, old age and so on and to social assistance in so far as it is intended to supplement or replace those schemes. The Court of Justice held that a benefit, if it is to fall within the scope of Directive 79/7, must constitute the whole or part of a statutory scheme providing protection against one of the specified risks or a form of social assistance having the same objective: the benefit must be directly and effectively linked to the protection provided against one of the specified risks. The fact that some of the risks listed in Article 3(1) are taken into account in order to grant a higher benefit is not sufficient to bring that benefit as such within the scope of the directive. Exclusion from the scope of the directive is "a fortiori" where the benefit in question is determined independently of any consideration relating to any of the listed risks. The result contended for by Mr. Drabble would be inconsistent with those decisions. He attempted to distinguish them by reference to the express provisions of Article 4.2a, which were inserted in the Regulation and are linked by the provisions of the Article itself to the specified benefits in Article 4.2. But, even if it is possible to distinguish those decisions on the language of the amended Regulation, Mr. Drabble's submission does not address the unacceptable irrational consequences of his construction of Article 2(4) which have already been noted.
For all those reasons I would dismiss this appeal on both points. The decision of the Social Security Commissioner is legally correct. It is not necessary to request the Court of Justice for a ruling on the interpretation of Regulation 1408/71, as amended by Regulation 1247/92.
LORD JUSTICE MILLETT:
LORD JUSTICE BELDAM:
I also agree.
Order: Appeal dismissed; no order for costs, leave to appeal to the House of Lords refused.