Subject: CommDec - Decision
Author: ROWLAND
Last saved by: joe.ury
Company: MDK Innovation Ltd

[2007] UKSSCSC CIS_2358_2006 (25 October 2007)

CIS/2358/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER
  
1.	I allow the Secretary of State’s appeal.  I set aside the decision of the Hounslow appeal tribunal dated 20 February 2006 and I substitute a decision that the claimant is not entitled to income support from 26 May 2005 because she had no right to reside in the United Kingdom and so cannot be treated as having been habitually resident with the result that her applicable amount is nil.

REASONS

2.	I held an oral hearing of this appeal, at which the Secretary of State for Work and Pensions was represented by Ms Deok Joo Rhee of counsel, instructed by the Solicitor to the Department of Health and the Department for Work and Pensions, and the claimant was represented by Mr Ranjiv Khubber of counsel and Mr Desmond Rutledge of counsel, instructed by Hounslow Law Centre.  I am grateful to counsel for both their written submissions and their oral submissions, which have been admirably clear and succinct.

3.	The facts of the case can be shortly stated.  The claimant is a Polish national who came to the United Kingdom in April 2002 as a student.  She was employed part-time as a kitchen assistant in a nursing home from 17 July 2003 to 30 April 2004, becoming full-time from 1 May 2004 to 31 July 2004 and then being on maternity leave from 1 August 2004 to 26 February 2005, her daughter being born on 5 October 2004.  I think she originally intended to return to work soon after her daughter was born but practical difficulties led her not to do so.  This was in part because she had no family in the United Kingdom to help her and she felt she could not afford a childminder and partly because her child was often ill, was intolerant of foods and refused to take formula milk with the result that the claimant breastfed her for nearly two years.  It was only then, in September 2006, that she started looking for employment again.

4.	Meanwhile, on 26 May 2005, she claimed income support.  On 11 August 2005, the Secretary of State decided that she did not have a right to reside in the United Kingdom and that she therefore could not be treated as habitually resident in the United Kingdom and so was a “person from abroad” with an applicable amount of nil, which in practical terms meant she was not entitled to payments of income support.  She appealed and, on 20 February 2006, the Hounslow appeal tribunal allowed her appeal on the ground that the “right to reside” test imposed by regulation 21(3G) of the Income Support (General) Regulations 1987 (S.I. 1987/1967 as then in force) was not relevant to people who were actually habitually resident in the United Kingdom and that, as the claimant was actually habitually resident in the United Kingdom, she was not a “person from abroad” as that term was defined in regulation 21(3).  In the decision notice, but not the statement of reasons, it was also stated that the claimant was to be treated as a “worker” under, or for the purposes of, regulation 3(1)(a) of the Immigration (European Economic Area) Regulations 2000 (S.I. 2000/2326).  The Secretary of State now appeals with the leave of a salaried tribunal chairman.

5.	It is common ground that the tribunal’s decision is erroneous in point of law because the tribunal misunderstood the relationship between the “habitual residence” test and the “right to reside” test.  It is clear that a person who has no right to reside in the United Kingdom cannot be treated as habitually resident in the United Kingdom even if he or she is actually habitually resident in the United Kingdom (see paragraphs 14-17 of CIS/3573/2005 which has been upheld by the Court of Appeal in Abdirahman v. Secretary of State for Work and Pensions [2007] EWCA Civ 657).

6.	It is also common ground for the purposes of this appeal that the claimant has no right of residence under the 2000 Regulations or any other domestic legislation or under any directives or regulations issued by the Council of the European Communities (although the claimant reserved the right to argue, if this case were to go further, that the claimant did have a right of residence under regulation 5(2) of the 2000 Regulations (giving effect to Article 7(1) of Council Directive 68/360/EEC) and that CH/3314/2005 and CIS/3182/2005 were wrongly decided to the extent that I held the claimants in those cases not to have rights of residence under regulation 5(2)).

7.	Before me, the claimant seeks to rely on the direct effect of Articles 12 and 18 of the EC Treaty, which respectively prohibit discrimination on grounds of nationality and guarantee the freedom of movement of citizens of the Union within the territory of Member States.

8.	There is no doubt that the “right to reside” test means that the claimant is treated less favourably than a British citizen would be as far as access to social assistance is concerned.  Article 12 of the Treaty provides –

“Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on the grounds of nationality shall be prohibited.”

9.	However, in Abdirahman, Lloyd LJ, with whom the other members of the Court of Appeal agreed, said –

“44.	I accept Mr Sales’ proposition that the European cases show that, in this area, the scope of application of the Treaty, for the purposes of Article 12, includes both cases where a right of residence arises directly under the Treaty and those where it arises separately under the law of the member state.  It does not extend to cases where no right of residence exists under either the Treaty or the relevant domestic law.

45.	It follows from this that the right claimed by Ms Abdirahman and Mr Ullusow is not within the scope of the application of the Treaty.

46.	On that basis, the need to justify the discrimination on the grounds of nationality which is involved in the use of the right to reside test does not arise.”

10.	Mr Khubber sought to distinguish Abdirahman on the ground that the issue in that case arose in the context of a general attack on the “right to reside” test in relation to economically inactive EEA nationals, whereas the claimant in the present had been a worker in the past and had been resident in the United Kingdom for some considerable time.  I accept that there is a distinction on the facts but it does not seem to me to be material in relation to Article 12.  In CIS/3182/2005, I suggested in paragraph 24 that arguments arising under Article 12 as to whether discrimination can be justified were more or less the same arguments that arise under Article 18 when considering the proportionality of limitations or conditions imposed on rights of residence.  What Abdirahman makes clear is that one must always approach a case by considering rights of residence first.  If a person does have a right of residence, discrimination is unlawful under Article 12.  On the other hand, unequal treatment is permissible if it is a consequence of a person not having a right of residence.  This is entirely consistent with what was said by the European Court of Justice at paragraphs 40 to 46 of Trojani v. Centre public d’aide sociale de Bruxelles (Case C-456/02), although Mr Khubber sought to rely on paragraph 42 of Trojani, where the Court held that –

… with regard to [certain social assistance] benefits, a citizen of the Union who is not economically active may rely on Article 12 EC where he has been lawfully resident in the host Member State for a certain time or possesses a residence permit”.  

In my judgment, reading the paragraph in its context, the reference to “a certain time” is to a sufficient time to qualify for a right of residence and so it does not assist the claimant.  The paragraph is probably phrased as it is because, as was held in Martinez-Sala v. Freistaat Bayern (Case C-85/96) [1998] E.C.R. I-2691, a Member State is not entitled to require nationals of other Member State to produce formal residence permits when they have been authorised to reside in the state and its own nationals are only required to be permanently or ordinarily resident there.  I accept Ms Rhee’s submission that both Trojani and Martinez-Sala were decided on the basis that the claimant had a right of residence recognised by the host state.

11.	I turn to Article 18(1) of the Treaty, which provides –

“Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in this Treaty and by measures adopted to give it effect.”

12.	In Baumbast v. Secretary of State for the Home Department (Case C413/99) [2002] E.C.R. I-7091, it was held that –

“A citizen of the European Union who no longer enjoys a right of residence as a migrant worker in the host Member State can, as a citizen of the Union, enjoy there a right of residence by direct application of Article 18(1) EC.  The exercise of that right is subject to the limitations and conditions referred to in that provision, but the competent authorities and, where necessary, the national courts must ensure that those limitations and conditions are applied in compliance with the general principles of Community law and, in particular, the principle of proportionality.”

That proportionality is material when considering Article 18(1) was accepted by the Court of Appeal in Abdirahman.

13.	The “limitations and conditions” mentioned in Article 18(1) are largely to be implied from directives that confer rights of residence, it generally being implicit that, where a right of residence is not conferred, there is no right of residence under Community law unless, in the light of Baumbast, the denial of a right of residence would offend against the general principles of Community law and, in particular, the principle of proportionality.  Where denying a right of residence would offend against those principles, there may be a freestanding right of residence under Article 18(1).  As far as I am aware, Baumbast is the only case where the European Court of Justice has held a person to have such a right on the facts of the case, although the possibility of a claimant having such a right has been recognised in other cases (including Grzelczyk v. Centre public d’aide sociale d’Ottignes-Louvain-la-Neuve (Case C-184/99) [2001] E.C.R. I-6193 and Trojani).  Mr Baumbast was a German national who had formerly been an employee and then a self-employed person in the United Kingdom, during which period his wife, who was not a citizen of the Union, and daughter and step-daughter had been installed in the United Kingdom.  Mr Baumbast himself then went to work outside the Union, while being employed by a German company.  He had medical insurance in Germany and went there for medical treatment but his home remained in the United Kingdom where he did not have medical insurance.  As he was not a worker in the United Kingdom, he had no right of residence as a worker under Article 39 of the Treaty, Regulation (EEC) No. 1612/68 and Council Directive 68/360/EEC and, as he did not have medical insurance in the United Kingdom, he did not have a right of residence as a self-sufficient person under Article 1 of Council Directive 90/364/EEC.  However, in view of the facts, the Court held that it would be disproportionate to refuse to allow Mr Baumbast to exercise the right of residence he had by virtue of Article 18(1) of the Treaty merely because his lack of health insurance meant he did not fall within the scope of Council Directive 90/364/EEC (see paragraph 93 of the judgment).  

14.	The need to take that approach was clearly explained by Mr Advocate General Geelhoed, who argued that the subordinate legislation had not kept pace with social developments (see paragraphs 19 to 36 of his opinion).  In particular, he made the point in relation to the rights of residence of family members that the legislation was more concerned with how rights of residence were established than with how they were terminated (see paragraph 29).  Similarly, I would add, the legislation made little provision for people who had ceased to work as employees or, as in Mr Baumbast’s case, had ceased to work in one Member State while continuing to be employed by a company based in another Member State.  Relying on that background, the Advocate General said –

“120.	The reason why Mr Baumbast cannot derive any rights from Article 39 EC and Regulation No 1612/68 has to do with the fact that the rules on freedom of movement for persons have not kept up with the pace of developments. Those rules came into force at the end of the 1960s and have since then not been brought up to date to reflect changes in society. I discussed this situation in some detail above (point 22 et seq.). On adoption of the regulation manifestly no account was taken of a case in which a person is ordinarily resident in one Member State whilst working for short periods and in different places for an undertaking which is established in another Member State.

121.	This is a case which was not provided for by the Community legislature. There is no regulatory framework within which the right to remain may be exercised. On those grounds I apply by analogy the regulatory framework applicable to economically active persons. Save for the circumstance not provided for by the Community legislature that Mr Baumbast is not employed in the host country, he satisfies all the other requirements for residence in the United Kingdom; he is the national of a Member State of the European Union, he is a worker, he is resident in another Member state of the European Union (United Kingdom) and his family has a right to remain under Regulation No 1612/68.

122.	I therefore also conclude that Mr Baumbast has a right to remain in the United Kingdom based on Article 18 EC in conjunction with Article 39 EC.”

15.	One can derive from the judgment in Baumbast, therefore, the principle that, where a right of residence is not expressly conferred by subordinate Community legislation, Article 18(1) confers a right of residence where it would be disproportionate to imply from the subordinate legislation that there is no right of residence.  However, it seems to me that to rely on Article 18(1) where the Council of the European Communities has apparently deliberately excluded a class of persons from the scope of a directive would be to attack the directive and, if such an attack had any substance, it would be necessary to consider referring the case to the European Court of Justice because only that Court has the power to hold a directive to be incompatible with the Treaty.  On the other hand, one can derive from the Advocate General’s opinion in Baumbast the idea that there may be a lacuna in a directive, in which case there is no implication that exclusion from the scope of a right of residence was deliberate because the situation of the claimant in question simply was not considered by the Council.  In other words, Article 18(1) may be relied upon to supplement a directive but, in proceedings before a national court or tribunal, it cannot be relied upon to remove limitations necessarily implicit in a directive.

16.	The Court of Appeal in Abdirahman considered that Article 18(1) did not assist the claimants before it, who had never been economically active in the host Member State, were not looking for work, were not students, were not members of the family of such a person and were not self-sufficient.  Mr Khubber seeks to distinguish Abdirahman, relying on my comment in CIS/3182/2005 that –

“It is one thing to apply a “right to reside” test to put pressure on people to leave the United Kingdom when they have never been economically active here and have not been here very long but it may be less clear that the blanket application of the test represents a proportionate response to the problem that concerns the Government if it results in pressure to leave the United Kingdom being placed on people who have been economically active in the past or have been established here for many years but for some reason or other have not acquired a permanent right of residence.”

He observes that the claimant in the present case had been a student and then a worker in the United Kingdom and had lived here for three years before making her claim for benefit.

17.	However, Ms Rhee points out that the directives in issue in Baumbast, in Abdirahman and, indeed, in the present case have been replaced by Council Directive 2004/38/EC, which was adopted on 29 April 2004, before the claim for income support was made in this case, although it did not come into force until 30 April 2006.  That directive remedies many of the defects in the earlier directives and, in particular, provides by Article 16 for a right of permanent residence that is not conditional on the claimant being economically active or self-sufficient after five years legal residence, dealing with what could properly have been regarded as a lacuna in the earlier directives.  Thus five years is the period that must elapse (subject to exceptions set out in Article 17) before such an unconditional right of residence is acquired under the directive.  At the hearing, I suggested to Mr Khubber that that sets a benchmark to which regard must be had in any assessment of proportionality and that there was nothing exceptional about the present case to suggest that the claimant should have a right of residence under Article 18(1) when she was not economically active, was not self-sufficient, was not a student and had been resident in the United Kingdom for less than five years.

18.	Mr Khubber asked for, and I granted, a short time in which to make a written submission on this point.  In his submission, he points out that, while there is no obligation under Council Directive 2004/38/EC to provide social assistance to people in the position of this claimant, the directive does not preclude such assistance being provided.  He then goes on to suggest that a proportionality assessment would normally be appropriate where certain threshold criteria are met and he gives as examples that the claimant has been lawfully resident in the United Kingdom for at least a year, that he or she has been a qualified person for a considerable period before applying for social assistance, that the period of inactivity was of a temporary nature and that the claimant intended to return to the labour market.  The proportionality test, he suggests, would entail consideration of a number of factors including the extent to which the claimant has established economic and social links with the United Kingdom.  He accepts that the United Kingdom government enjoys a margin of appreciation in deciding what criteria are to be used when assessing a claimant’s degree of connection to United Kingdom society but submits that the “right to reside” test is intended to limit benefit to those economic migrants who have a sufficient link with the population of the United Kingdom and that a condition of residence which applied automatically whenever someone ceases to be economically active goes beyond what is necessary in order to achieve that aim.  He suggests that it is obviously impermissibly rigid to have a rule having the effect that a claimant who has been resident for four years and eleven months should be refused benefit on the same basis as someone who has been resident for only eleven months, given the obvious difference in the level of integration it could be assumed there would be.  He submits that Article 18(1) of the Treaty, Article 1 of Council Directive 90/364/EEC and, now, Articles 14 and 24(2) of Council Directive 2004/38/EC do require an additional exercise of discretion in cases where a sufficient degree of integration with United Kingdom society can be shown.

19.	I have not called upon Ms Rhee to reply to that submission.  However, at the oral hearing, she drew my attention to paragraph [48] of Lloyd LJ’s judgment in Abdirahman, where he said, admittedly in the context of a discussion of Article 12, –

“It seems to me that it would be disproportionate to insist on individual consideration, as a matter of immigration control, of each claimant’s circumstances, in order to decide whether social security benefits should be payable.”

She accepted that individual consideration might have to be given to cases that were exceptional and “at the edges”, like Baumbast, but not otherwise.  She submitted that the present case was not exceptional and did not give rise to any suggestion that there was a lacuna in the directive.

20.	I do not agree that the approach suggested by Mr Khubber is required by Community law.  The directives make no relevant reference to any exercise of discretion and a Member State is not required to confer any right of residence beyond those set out in the directives, save insofar as the Treaty may require it to do so.  I accept that, given the failure of the directives in force before 30 April 2006 to make adequate provision for rights of residence in the light of the introduction of the concept of citizenship of the Union, Article 18(1) of the Treaty may often be relied upon in cases arising before that date.  However, whatever approach might have been permissible before Council Directive 2004/38/EC was adopted, I do not consider that Article 18(1) can confer rights of residence that go beyond those that would have been conferred by the directive had it come into force, except where it can be shown there is a lacuna in that directive.  In other words, the new directive sets a standard by reference to which proportionality must be judged for the purpose of Article 18(1) in a case arising before the directive came into force.  I do not consider that Article 18(1) assists the claimant in the present case.

21.	I am not sure why Mr Khubber refers to Articles 14 and 24(2) of Council Directive 2004/38/EC.  Article 14(2) makes it plain that the right of residence for more than three months conferred on workers by Article 7(1)(a), which they retain in circumstances outlined in Article 7(3) (part of which effectively re-enacts Article 7(1) of Council Directive 68/360/EEC), is retained for as long as they meet the conditions of Article 7.  It does not say “only” for that long, but that is because a Member State may choose to accept that a right of residence is retained for longer; it is the inevitable implication that the right of residence is guaranteed by the directive only for that long.  Apart from that, Articles 14 and 24(2) seem irrelevant to the present case, or at least unhelpful to the claimant.  Until a person obtains a right of permanent residence under Article 16 (or 17), the directive does not confer a right of residence on a person who ceases to be a worker within the scope of Article 7 and who does not fall within any of the other provisions of Articles 7, 12 or 13.  I accept that, where Article 16 applies rather than Article 17, a person who has been resident for four years and eleven months is not given any more rights than a person who has been resident for eleven months.  However, there is nothing irrational or disproportionate about such an approach to the general run of cases.  It is evident that, in adopting the directive, the Commission of the European Communities did not regard the sort of flexible approach suggested by Mr Khubber to be necessary for compliance with Article 18(1) of the Treaty and I can see nothing in the case-law of the European Court of Justice or in common sense to suggest the contrary.  Rigid lines are obviously more administrative convenient than a flexible test and residence and contribution conditions are usually rigid.  As was recognised in Abdirahman, administrative convenience is relevant when considering proportionality, although it is not, of course, determinative.  Moreover, the directive does in fact provide in Article 7(3) for circumstances in which a person who has ceased to be a worker retains that status and in Article 17 for circumstances in which there is a shorter qualifying period for permanent residence than the usual five-year period.  I accept that a more flexible approach could be adopted by a Member State but, once again, I emphasise that the question for a court or tribunal is whether such an approach is required, not whether it might be desirable.  To hold the approach suggested by Mr Khubber to be essential as a matter of Community law would, in my judgment, be inconsistent with the directive.

22.	I am satisfied that the claimant would not have had a right of residence under Council Directive 2004/38/EC had it been in force and I agree with Ms Rhee that this is not a case that suggests there is a lacuna in the directive.  I am therefore satisfied that denying the claimant a right of residence in the present case is not inconsistent with Article 18(1) of the Treaty.

23.	At the material time, Community law did not confer on the claimant any right of residence in the United Kingdom or any entitlement to income support.

24.	In his skeleton argument, Mr Khubber also raised the question whether the application of the “right to reside” test gave rise to discrimination contrary to Article 14 of the European Convention on Human Rights.  He did not pursue the point at the oral hearing.  In my judgment, it has no merit.  Even assuming in the claimant’s favour and contrary to the submissions of the Secretary of State that Articles 8 and 14 of the Convention are potentially engaged, the unequal treatment of the claimant in this case by comparison with a national of the United Kingdom seems plainly justified.  

25.	Accordingly, I am satisfied that the Secretary of State’s appeal must be allowed and his original decision restored.

	(signed on the original)	MARK ROWLAND
		Commissioner
		25 October 2007

CIS/2358/2006