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[1999] UKSSCSC CIS_3559_1997 (10 November 1999)

R(IS) 6/00

Mr. J. Mesher CIS/3559/1997
10.11.99

Person from broad - habitual residence - European Union nationals - self employed person - when a right to reside pursuant to Council Directive 73/148/EEC arises

The claimant, a French national, came to the United Kingdom in 1982 to get married. After her marriage broke down in 1988, she went to Cyprus in 1992 with a new partner to escape her husband who had been charged with robbery and other offences of violence. Her fear diminished eventually and she returned to the United Kingdom on 2 December 1996 in order to have her baby. Her new partner, who was running a restaurant, remained in Cyprus. She claimed income support on 17 December 1996. On 14 February 1997, she placed an advertisement in the local press offering French tuition. The adjudication officer decided that she was not habitually resident in the United Kingdom. The claimant appealed. Firstly, she argued that as her stay in Cyprus had been temporary, she never lost her habitual residence in the United Kingdom. Alternatively, she had acquired habitual residence immediately on arrival or shortly thereafter upon re-establishing her home. Lastly, as a person who wished to establish herself in the United Kingdom to pursue activities as a self-employed person or to provide services here under Article 1(1)(a) of the Directive, she should be deemed to be habitually resident as a person with a right to reside in the United Kingdom pursuant to Council Directive 73/148/EEC. The tribunal rejected the arguments but decided that the claimant was habitually resident from 5 March 1997 i.e. the date of hearing. Her baby had been born about five weeks earlier. The claimant appealed to the Commissioner. The adjudication officer submitted that following the European Court of Justice's ruling in Swaddling v. Adjudication Officer (case C-90/97) [R(IS) 6/99], the tribunal had erred by not considering Article 10a(1) of Council Regulation (EEC) 1408/71. He also submitted that the Commissioner could substitute a decision that the claimant was resident in the United Kingdom from 17 December 1996 for the purposes of Article 10a and was not precluded from entitlement by the habitual residence rule.

Held, allowing the appeal, that:

the claimant fell within the personal scope of Council Regulation (EEC) 1408/71 by virtue of her previous work and social security contributions in the United Kingdom and her French nationality. The effect of the principles laid down by the European Court of Justice in Swaddling was that the claimant was potentially entitled to the protection of Article 10a(1) of the Regulation prior to 5 March 1997. Even though the point was not argued before the tribunal, it was an error of law to have failed to deal with it. The tribunal's decision had to be set aside although the Commissioner was unable to give a final decision on Article 10a(1) on the basis of the evidence before him, in particular because of the lack of evidence about the state of the claimant's relationship with her partner and their intentions (paras. 10 to 16);

the tribunal did not err in law in their application of the actual habitual residence test. The argument that an appreciable period of residence was unnecessary in the light of Swaddling and the Court of Appeal's decision in Nessa [1998] 2 All ER 728 was wrong. As the habitual residence rule was not introduced to implement any European Community obligation, it could not be interpreted generally by reference to Community legislation. Swaddling did not decide the meaning of the English habitual residence test, it decided the meaning of "residence" in the context of Article 10a, which could affect the circumstances in which a claimant in the United Kingdom could be denied income support on the basis of the habitual residence test. The Court of Appeal and the House of Lords had endorsed the general meaning of habitual residence in English law incorporating the requirement of an appreciable period of residence. It was doubted that Lord Slynn's obiter remarks (at [1999] 1 WLR 1943) about a person "resuming a habitual residence previously had" were intended to apply whenever the person in question had previously been habitually resident here (paras. 17 to 22);

the tribunal erred in its interpretation of Council Directive 73/148/EEC. A person has the right of residence when taking steps towards offering services to the public (or otherwise setting up as self employed). It is not necessary to reach the stage of actually providing services. A mere intention to become established was not sufficient. Exactly what steps will be sufficient will depend on the circumstances of individual cases (paras. 31 to 33). C10/95 (IS), a Northern Ireland decision, was considered at paragraph 27.

The Commissioner remitted the appeal to a new tribunal for a complete rehearing of the issues.

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The claimant's appeal is allowed. The decision of the Bolton social security appeal tribunal dated 5 March 1997 is erroneous in point of law, for the reasons given below, and I set it aside. The claimant's appeal against the adjudication officer's decision issued on 17 December 1996 is referred to a differently constituted social security appeal tribunal for determination in accordance with the directions given in paragraphs 36 to 38 below (Social Security Administration Act 1992, section 23(7)(b)).

The general circumstances of this case are set out in the appeal tribunal's findings of fact:

"The claimant is a separated woman aged 33. On 17 December 1996 she claimed income support in respect of herself only. She stated she had no income or savings and lived in private rented property. She entered the UK on 2 December 1996. She is expecting a baby on 15 January 1997.

She is a French national. She was born in France and the majority of her family live there. She came to the UK in 1982 to get married. The marriage ended in 1988 but the claimant remained in England until 1992 with her partner. Her husband was charged on 22 September 1991 with robbery and two counts of blackmail. He was subsequently charged with other offences of violence. Due to ill health, her husband's case had not been heard by 22 February 1994. There was a hearing fixed for 11 March 1994 to ensure he was fit to stand trial. There are no details of the outcome. The claimant stated she was frightened of her husband with the result that she and her partner left England to get away from him. The claimant stated that it was now her intention to apply for a residence order in respect of her children who have been looked after by her in-laws while she has been in Cyprus. The claimant [was] initially a self-employed linguist and teacher in Cyprus. She then ran a restaurant with her partner for two years and for the last six months in Cyprus reverted to teaching. It was only after three years her fear of her husband diminished and she decided to return. Her reason in returning to England was to live here and have her baby in England. Her partner did not return to England with her. He remained in Cyprus and still has the restaurant. She was not initially able to work because of her pregnancy. On 24 January 1997 she earned £20 working for Marbro Promotions Ltd. She has placed an advert in the local press advertising French tuition (14 February 1997)."

It seems from what was said at the hearing on 5 March 1997 that the claimant's baby had been born about five weeks earlier.

The adjudication officer's decision on the claim was, according to the form AT2, that the claimant was not habitually resident in the United Kingdom. That would have led to the disallowance of the claim, as the claimant was on that basis a "person from abroad", with an applicable amount of nil.

The claimant appealed. At the hearing on 5 March 1997 (following an earlier adjournment) the claimant's solicitor put forward three grounds that: (1) her stay in Cyprus was temporary, so that she never lost the habitual residence in the United Kingdom which she undoubtedly had before she left in 1992; (2) if ground (1) was not accepted, she was habitually resident in the United Kingdom from 2 December 1996, having immediately, or shortly afterwards, re-established her home in the United Kingdom; and (3) the claimant was to be treated as habitually resident in the United Kingdom as she was a person with a right to reside in the United Kingdom pursuant to Council Directive No. 73/148/EEC, being a person who wished to establish herself in the United Kingdom to pursue activities as a self-employed person or who wished to provide services here under Article 1(1)(a) of the Directive. The adjudication officer's written submission was that: (1) the claimant had lost her habitual residence in the United Kingdom prior to 2 December 1996, her stay in Cyprus not having been described as temporary until 5 February 1997; (2) she was not habitually resident here on 2 December 1996 or the date of claim as there had not been an appreciable period of residence (relying on Commissioners' decision CIS/1067/1995 [R(IS) 6/96] and CIS/2326/1995 [R(IS) 2/00]); and (3) the claimant's wish to pursue activities as a self-employed person was not accepted as at the date of claim and in any case such a wish did not give rise to a right to reside in the United Kingdom under Directive 73/148 (relying on the decision of the Northern Ireland Commissioner in C10/95 (IS)).

The appeal tribunal's decision was that the claimant was habitually resident in the United Kingdom from 5 March 1997. Its reasons were as follows (correcting an error in the typed version):

"The claimant on entering the UK sought self-employment. She did not enter the UK to pursue activities as a self-employed person. The tribunal do not accept that the word pursue can be interpreted as seek.

The claimant went to Cyprus to get away from her husband. There was no representation when she went that the stay would only be temporary and this was only put forward on 5 February 1997.

The most important factors to be looked at in deciding whether a person has become habitually resident is the length, continuity and general nature of her actual residence here rather than her intentions as to the future. On the facts the claimant had not become habitually resident by 2 December 1996.

The claimant has now been in the UK approximately three months and from the facts the tribunal accept that by the 5 March 1997 the claimant had become habitually resident in the UK.

At the date of the AO's decision the claimant was not a worker for the purposes of Reg. (EEC) No. 1612/68 or 1251/70.

She did not have a right to reside in the UK by virtue of Council Directives 68/630 or 73/148.

She had not been granted exceptional leave to remain in the UK.

Nor is she habitually resident in the UK, the Republic of Ireland, the Channel Islands or the Isle of Man.

On the date of the AO's decision the claimant is a person from abroad under reg. 21 of the General Regulations. Her applicable amount of income support will therefore be nil as in para. 17 of Schedule 7 to the General Regulations."

The claimant now appeals against the appeal tribunal's decision, with leave granted by a Commissioner. The adjudication officer did not initially support the appeal and an oral hearing was directed, particularly on the question of when a right to reside arose under Directive 73/148. However, after the ruling of the European Court of Justice in Swaddling v. Adjudication Officer (Case C-90/97) [1999] ECR I-1075 [R(IS) 6/99], the adjudication officer submitted that the appeal tribunal had erred in law in not considering Article 10a(1) of Council Regulation (EEC) No. 1408/71 and that the Commissioner could substitute a decision that the claimant was resident in the United Kingdom from 17 December 1996 for the purpose of Article 10a and so was not precluded from entitlement by the habitual residence rule. Since I did not find that argument persuasive in its entirety, I directed that the oral hearing should proceed.

The oral hearing took place at Manchester Crown Court. The claimant did not attend. She was represented by Mr. Simon Abbott, of her solicitors, Krivinskas & Company. The adjudication officer was represented by Mr. Steven Kovats of counsel. I am grateful to both representatives for their very helpful written skeleton arguments and their detailed oral submissions.

There was some discussion at the oral hearing of the imminence of the decision of the House of Lords in Nessa v. Chief Adjudication Officer (the appeal from the Court of Appeal's decision upholding my decision in CIS/2326/1995). The opinions in that case were handed down on 21 October 1999, before I had finished writing this decision, and are now reported ([1999] 1 WLR 1937) [R(IS) 2/00]. I have taken the speech of Lord Slynn into account, but, on the view which I take of the present case, I have not found it necessary to seek further submissions on its effect.

The three possible issues on which the appeal tribunal could have erred in law are actual habitual residence under English law; Article 10a of Regulation 1408/71 and Swaddling, and Directive 73/148. I have found it easiest, even though it may not be the logical order, to deal first with Article 10a, then with actual habitual residence and finally with Directive 73/148.

Article 10a of Regulation 1408/71 and Swaddling

Mr. Kovats in effect submitted that there was now no difference between the results produced under Article 10a and under the English law on habitual residence. To explain why I reject that submission, I need to deal with the limits of the ECJ's ruling in Swaddling.

I need not repeat in any detail what I said in decision CIS/15484/1996 [R(IS) 3/00], which is copied in the papers. In the present case, the claimant clearly falls within the personal scope of Regulation 1408/71, by virtue of her previous work and social security contributions in the United Kingdom and her French nationality. Although her most recent absence from the United Kingdom had been outside the European Community, there is a sufficient Community element to the case to bring the claimant within the scope of Regulation 1408/71. Income support is a special non-contributory benefit for the purposes of Article 10a(1) of the Regulation. Therefore, income support must be awarded to her under Article 10a(1), if she is otherwise entitled to it, if she is resident in the United Kingdom within the Community wide meaning of "residence" in that Article.

The ECJ in Swaddling decided that for that purpose the length of time for which the person in question has been in the state in question is one of the relevant factors in deciding if the person is resident, but that it is not a necessary condition in all cases that some period of time must have elapsed. The ruling given required that, on the facts of Mr. Swaddling's case, he was to be treated for the purpose of Article 10a(1) as resident in the United Kingdom immediately on his return, with the result that his immediate entitlement to income support could not be disallowed on the basis of the habitual residence rule including a test of an appreciable period of residence. My decision in Mr. Swaddling's case (CIS/7201/1995) following the ruling gave effect to that result. In CIS/15484/1996 [R(IS) 3/00] I decided that the ECJ's ruling in Swaddling could only be relied on directly in cases which are substantially on all fours with that case. In other cases, the general principles laid down by the ECJ have to applied.

In the present case, the circumstances are clearly not substantially on all fours with those in Swaddling's case. The claimant had not been working within the European Community, but it is hard to see why that should weaken her case. But crucially, as I see it, she did not return to live with or be close to any members of her family (although she hoped to re-establish contact with her children by her husband) and she left her partner running the restaurant in Cyprus. Nevertheless, the effect of Swaddling is that the claimant here was potentially entitled to the protection of Article 10a from some date earlier than 5 March 1997. Although the point was not argued before the appeal tribunal, it was an error of law to fail to deal with it.

That requires me to set the appeal tribunal's decision aside. On the evidence which was before the appeal tribunal (and in the absence of the opportunity to seek further evidence from the claimant at the oral hearing before me) I am unable to give a decision based on Article 10a that the claimant's entitlement to income support is not precluded by the habitual residence rule from the date of claim.

Mr. Kovats submitted that there was evidence to support such a conclusion, and Mr. Abbott did not disagree. Emphasis was placed on the claimant's answers on the habitual residence test questionnaire which she signed on 17 December 1996. In particular, the answer to the question "How long do you intend to stay in this country?" was "Forever". She also said that she had returned to the United Kingdom because she had decided to have her baby in this country and that all her possessions would be coming here from Cyprus. In answer to the question "Do you intend to look for work whilst in the UK?", she answered "I am expecting a baby in January". It was argued, in terms of the factors mentioned in paragraph 29 of the judgment in Swaddling, that her intentions were clear, that given her pregnancy her employment situation was not relevant, and that her family situation and the reasons for her move indicated that her centre of interests as soon as she arrived was in the United Kingdom. Those factors, in conjunction with her past habitual residence here, were said to indicate residence at least by 17 December 1996, even though the length of residence was short.

I cannot accept that argument, fundamentally because of the evidence about the claimant's partner. On the questionnaire, she described him as her new partner when saying what she had been doing in Cyprus. Nothing was said to indicate that she was estranged or separated from him or about what his intentions were or about any arrangements for the support of their forthcoming baby. All that tends to undermine the force of the factors put forward in the previous paragraph and (in the absence of further evidence) means that the length of residence cannot be discounted as a relevant factor. As it would be wrong for me to reach a decision without giving the claimant an opportunity to provide further evidence, in particular on her and her partner's relationship and intentions at the relevant time, the case must be referred to another appeal tribunal for rehearing, unless I can give a decision completely in the claimant's favour on some other basis.

Actual habitual residence

Mr. Kovats submitted that the appeal tribunal erred in law in acting on the principle that in English law an appreciable period of residence is always necessary. He submitted that there was nothing in the decision in Nessa in the Court of Appeal [1998] 2 All ER 728, to indicate that the meaning in English law was any different from that in Community law. He also pointed to passages in the judgments in the Court of Appeal which he said contemplated that an appreciable period of residence might not be necessary in the case of a person returning to a country in which she had previously been habitually resident. I reject those submissions.

I agree with Mr. Kovats that it would be odd, as Mr. Commissioner Walker QC put it in decision CJSA/4026/1997, if the habitual residence test was to be interpreted differently in the case of a person returning from abroad who falls within the scope of Regulation 1408/71 and in the case of such a person who is outside the scope of Regulation 1408/71. But such oddities are commonplace. The oddity might indicate a need for amending legislation, but it does not in itself show that the meaning of habitual residence in English law is anything other than it was thought to be before Swaddling. The habitual residence rule was not introduced into the income support legislation to implement any European Community obligation. There is therefore no ground to interpret it generally by reference to Community legislation. The rule adopted the concept of habitual residence, which has a history in several other areas of English law and international law. It is that general meaning which has to be applied in English law, unless some provision of European Community law requires that meaning to be disapplied. It is constitutionally fundamental that English domestic law is affected by European Community law only in respect of those persons who are entitled to the protection of the relevant Community provision. Mr. Kovats did not (quite) go so far as to suggest that Swaddling had altered the general English law on habitual residence, although others appear not to have appreciated the fundamentals of the constitution. Swaddling was not a decision directly about the meaning of the English habitual residence rule. It was a decision about the meaning of "residence" in Article 10a of Regulation 1408/71, which affected the circumstances in which a claimant in the United Kingdom can be denied entitlement to income support on the basis of the habitual residence rule.

The majority of the Court of Appeal in Nessa endorsed the general meaning of habitual residence in English law incorporating the requirement of an appreciable period of residence. The passages cited by Mr. Kovats do not support the second submission mentioned in paragraph 17. Some concern ordinary residence in a family law context, or the special circumstance of a child joining a parent with an established habitual residence. The strongest passage is at the end of Morritt LJ's judgment, where he said that the principle accepted by the Court of Appeal would not necessarily cause injustice in other cases, such as a returning national who had been habitually resident in the United Kingdom previously. But Morritt LJ did not suggest that the appreciable period test did not apply in such cases. He said at [1998] 2 All ER 743c:

"What is an appreciable period will depend on the facts of each individual case for all that is required is what is necessary to give to the fact of residence the quality of being habitual in accordance with the normal meaning of that word. There is no reason why in the three cases relied on [by Mrs. Nessa] 'the appreciable period' should be so long as to cause hardship or injustice."

For those reasons, I conclude that, on the authorities available when I heard oral submissions, the appeal tribunal did not err in law in relation to the application of the test of actual habitual residence. As the appeal tribunal's decision has to be set aside for the reason given in paragraph 14 above, I must consider whether I could substitute a decision on the actual habitual residence test which leads to entitlement from the date of claim. I have already decided that I cannot do that under Article 10a(1) of Regulation 1408/71 (see paras. 13 and 16 above). On any basis, the claimant cannot satisfy the actual habitual residence test more easily than the residence test under Article 10a(1). Thus, the case must be referred to a new appeal tribunal unless the claimant succeeds completely on the third element of the appeal.

I do not consider that the decision of the House of Lords in Nessa alters that position. Lord Slynn, in the speech adopted by the other members of the Appellate Committee, again endorses at [1999] 1 WLR 1942, the principle that a person:

"must show residence in fact for a period which shows that the residence has become 'habitual' and, as I see it, will or is likely to continue to be habitual."

Lord Slynn had earlier accepted that in other contexts, as for founding jurisdiction, it might be necessary that there not be a gap in a person's habitual or ordinary residence somewhere, and went on to say in the income support context at [1999] 1 WLR 1943:

"There may indeed be special cases where the person concerned is not coming here for the first time, but is resuming a habitual residence previously had: Lewis v. Lewis [1956] 1 WLR 200; Swaddling v. Adjudication Officer (Case C-90/97), The Times, 4 March 1999. On such facts the adjudication officer may or of course may not be satisfied that the previous habitual residence has been resumed. This position is quite different from that of someone coming to the United Kingdom for the first time."

Those deciding other cases will have to grapple with the problem of what effect to give to those obiter remarks. In the present case, as the appeal tribunal's decision has to be set aside on another ground, it does not matter whether or not the remarks mean that the appeal tribunal erred in law in applying a principle that there must always in the income support context be an appreciable period of residence for habitual residence. And since I have already decided that I cannot give a decision completely in the claimant's favour under Article 10a(1) of Regulation 1408/71 and Swaddling, I cannot do so even if (which I doubt) the remarks were intended to apply whenever the person in question had previously been habitually resident here.

Council Directive 73/148/EEC

This was the point of law most strongly relied on by the claimant, and raises difficult questions. The point arises because the additional definition of "person from abroad" in regulation 21(3) of the Income Support (General) Regulations 1987 provides that no person shall be treated as not habitually resident in the United Kingdom who inter alia is "a person with a right to reside in the United Kingdom pursuant to Council Directive ... No. 73/148/EEC" (my emphasis).

Article 1(1) of the Directive, in the English text, provides that:

"(1) The Member States shall, acting as provided in this Directive, abolish restrictions on the movement and residence of:

(a) nationals of a Member State who are established or who wish to establish themselves in another Member State in order to pursue activities as self-employed persons, or who wish to provide services in that State;"

Article 2 requires Member States to grant persons referred to in Article 1 the right to leave their territory and Article 3 requires Member States to grant such persons the right to enter their territory. Then sub-paragraph 1 of Article 4(1) provides:

"(1) Each Member State shall grant the right of permanent residence to nationals of other Member States who establish themselves within its territory in order to pursue activities as self-employed persons, when the restrictions on these activities have been abolished pursuant to the Treaty."

The rest of Article 4 and Article 5 refer to "the right of residence". There is also reference to a "right of abode" under sub-paragraph 5 of Article 4(1), but as the circumstances in which that right might arise are obscure and the sub-paragraph has not been relied on in any submissions, I say no more about it.

Mr. Abbott repeated the submission which had failed before the appeal tribunal, that the claimant, as a person who wished to establish herself in the United Kingdom to pursue activities as a self-employed person, had at the date of claim a right to reside in the United Kingdom pursuant to the Directive, even if she did not have the right of permanent residence under Article 4(1). He supported that submission with carefully reasoned argument. He relied on the principle that restrictions and derogations from the fundamental Community principle of freedom of movement should be interpreted strictly. He also submitted that the decision of the Chief Commissioner in Northern Ireland in C10/95 (IS), although of persuasive authority, should not be followed.

Mr. Kovats did not adopt the straightforward approach of the adjudication officer before the appeal tribunal, that until a person was actually engaged in activities as a self-employed person there was no right of residence pursuant to the Directive. He put forward a subtler view. Neither he nor Mr. Abbott had been able to discover any directly relevant Community case-law.

Let me first deal with decision C10/95 (IS). As a Northern Ireland decision it is of persuasive authority only, but as a reasoned decision by the then Chief Commissioner on legislation in terms identical to the United Kingdom legislation it demands considerable respect. An appeal tribunal had concluded that a Spanish textile designer who it found had come to Northern Ireland in the honest belief that he would be able to set up a partnership with a Northern Irish firm had a right to reside under the Directive. It held that since the claimant had a genuine desire to establish himself he came within Article 1(1) as a person who wished to establish himself. On appeal, the adjudication officer argued that in Article 1(1) "pursue" did not mean "seek". The Chief Commissioner agreed. He said that "pursue" there means "engage in" or "carry on" or "follow as an occupation or profession". I think that that must be right, but, with respect to the Chief Commissioner, it does not in itself indicate that the appeal tribunal in that case erred in law, because its decision was based on the claimant's wish to establish himself and then to go on and pursue activities. The Chief Commissioner suggested that a person cannot be accepted as having set himself up to offer services until he had taken steps to do so, rather than merely making enquiries. There may possibly be a confusion there between the notion of establishment in another Member State and the notion of providing services in a different Member State from that in which the person is established, where the right of residence under the Directive is clearly restricted by Article 4(2) to the period during which the services are provided. The Chief Commissioner was also doubtful of the evidential basis for the appeal tribunal's finding about the claimant's beliefs or desires. All those factors seem to me to cast some doubt on the persuasive force of C10/95 (IS), such that I should make an independent examination of the issues.

Mr. Abbott's submission was in essence a simple one, based on the words of Article 1(1) of the Directive. He accepted that the claimant would not have a right of permanent residence under Article 4(1) until she had established herself in order to pursue activities, although arguing that that had happened no later than 14 February 1997, when she put her advertisement in the local newspaper. But he submitted that, if the requirement in Article 1(1) for Member States to abolish restrictions on the residence of persons who wished to establish themselves was to have any meaning, it had to entail that a person has some kind of right of residence before actual establishment if there is a genuine wish to become established.

Mr. Kovats submitted that the Directive had to be construed not by English methods of statutory interpretation, seeking to give some force to every word, but by adopting the Community approach of looking at the purposes of the legislation. As his submission became refined at the oral hearing, I think that it came down to the following. In order for freedom of establishment under the Directive to have any reality, a right of residence has to be recognised before the person actually begins to trade. If a person were not allowed to be resident in order to carry out the necessary preparation to begin trading, the right of establishment might be illusory. Therefore, whether the right of residence was under Article 4(1) or Article 1(1)(a), it should cover persons who have a present wish to pursue activities as self-employed persons and who are presently taking some steps to fulfil that wish. Mr. Kovats submitted that where a person merely has a wish to pursue activities at some time in the future, there is no right of residence, and suggested that the claimant was in that position when she arrived in the United Kingdom in December 1996 at least until her baby had been born.

This is an issue of some difficulty, where there is no direct guidance in Community case-law. However, neither Mr. Abbott nor Mr. Kovats supported a reference to the ECJ. I agree that a reference would not be appropriate at the present stage of the proceedings, because the relevant facts have not been fully established.

I broadly accept and adopt Mr. Kovats' submission on the interpretation of Directive 73/148, which, as Mr. Abbott pointed out, went a significant distance further towards the claimant's position than had hitherto been accepted by the adjudication officer. The seventh paragraph of the preamble to the Directive is as follows:

"Whereas freedom of establishment can be fully attained only if a right of permanent residence is granted to the persons who are to enjoy freedom of establishment; whereas freedom to provide services entails that persons providing and receiving services should have the right of residence for the time during which the services are being provided;"

Construing the Directive as a whole in the light of the purpose of securing freedom of establishment, there must be some right of residence (I do not need to decide whether it is a right of permanent residence or not) pursuant to the Directive in the circumstances identified by Mr. Kovats. The difficult question is whether the right extends not merely to those who are taking steps towards offering their services to the public (or whatever final step is appropriate to the nature of the business) in a Member State, but also to those who wish to do that, but have not yet taken any steps beyond arriving in the Member State concerned. In my judgment, it does not. It would be going further than justified by the purposes of the Directive to extend a right of residence, rather than the mere right of entry to the Member State under Article 3, to such persons. It also seems to me that the crucial factor is not so much whether the person's intentions are for the present or for the future or are conditional in some way, but whether the person is taking steps towards offering services to the public, or otherwise setting up as a self-employed person. But exactly what steps will lead to the conclusion that there is a right of residence pursuant to the Directive will depend on the particular circumstances of individual cases and I should not attempt to give any further guidance.

That conclusion seems to be consistent with Article 6 of the Immigration (European Economic Area) Order 1994, to which I had referred the representatives. Article 6(1) defines a "qualified person", who by virtue of Article 4(1) is entitled to reside in the United Kingdom, to include an European Economic Area national who undertakes in the United Kingdom the activities of a self-employed person. Article 6(2)(b) then defines "a self-employed person" to include a person who seeks to pursue activity as a self-employed person. Only slight assistance can be got from that, because of course the Order might go further than the United Kingdom's Community obligations require or might be based on a misunderstanding of those obligations, but it does give some assistance. My conclusion is also consistent, I think, with the result of C10/95 (IS) and with the principles stated there, provided that the notion of being actually engaged in activities as a self-employed person includes the taking of steps as identified above.

Accordingly, I hold that when the additional definition of "person from abroad" in regulation 21(3) of the Income Support (General) Regulations 1987 refers to a person with "a right of residence" pursuant to Directive 73/148 it includes a reference to persons who meet the criteria identified in paragraph 31 above. If the draftsman's intention had been to limit the deeming of habitual residence to those with the right of permanent residence in the United Kingdom pursuant to the Directive, that could easily have been expressed.

The result is that the appeal tribunal erred in law in apparently applying a different interpretation of Directive 73/148. The appeal tribunal apparently considered that the claimant could not have a right of residence until she had actually started teaching someone French. Alternatively the appeal tribunal may have thought that, because the claimant's immediate reason for entering the United Kingdom was not to pursue activities as a self-employed person, but to have her baby here, she was

precluded from later being entitled to a right of residence pursuant to the Directive. Both of those approaches are wrong in law. That is an additional reason for setting the appeal tribunal's decision aside. However, the consequence of my approach is that I cannot substitute a decision entirely in the claimant's favour on the current evidence. There is evidence in the placing of the advertisement in the local newspaper of the offering of services to the public (although some further corroborative detail would have been desirable), but no evidence of earlier preparatory steps. The claimant should have the opportunity to put forward such evidence.

Conclusions and directions to the new appeal tribunal

For the reasons given above, the appeal tribunal's decision of 5 March 1997 is set aside as erroneous in point of law. The claimant's appeal against the adjudication officer's decision issued on 17 December 1996 must be referred to a differently constituted social security appeal tribunal for determination in accordance with the following directions (although no doubt by the date of the rehearing the appeal will fall to be heard by a tribunal constituted under section 7 of the Social Security Act 1998 following the bringing into force of that Act in relation to income support cases).

There must be a complete rehearing of the appeal on the evidence produced and submissions made to the new appeal tribunal, which will not be bound by any findings made or conclusions expressed by the appeal tribunal of 5 March 1997. As the appeal was made before 21 May 1998, the new appeal tribunal must apply the "down to the date of the decision" principle in determining the period in issue on the appeal, unless the Commencement Order in relation to income support cases validly makes provision to the contrary (see Commissioner's decision CIB/213/1999).

The new appeal tribunal must apply the principles of law set out above to the three possible bases on which the claimant might be able to escape exclusion from entitlement by the habitual residence rule. It would be particularly assisted by the presence of the claimant to give direct oral evidence, including on the points identified above as ones where evidence is currently lacking. The claimant may of course submit documentary evidence in addition or in the alternative. The evaluation of all the relevant evidence will be entirely a matter for the judgment of the member or members of the new appeal tribunal.

The adjudication officer should state in the written submission for the rehearing whether or not the claimant was awarded income support with effect from 5 March 1997, following the decision of the appeal tribunal of 5 March 1997, and (briefly) what the subsequent course of the claimant's entitlement to income support has been. It should also be stated whether or not it is accepted that, if not excluded by the habitual residence rule, the claimant satisfies all the conditions of entitlement to income support from and including 17 December 1996.

Date: 10 November 1999 (signed) Mr. J. Mesher Commissioner