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[2007] UKSSCSC CP_633_2006 (21 March 2007)

CP/633/2006

CP/634/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER

The decisions of the Retirement Pension Appeal Tribunal both dated 17 October 2005 on Case No. U/44/229/2004/01017 (file CP/633/2006) and Case No. U/44/229/2004/01018 (file CP/634/2006) are erroneous in law. I set those decisions aside and, as empowered by section 14(8)(a)(i) of the Social Security Act 1998, I give the decisions which I consider the tribunal should have given which are:-

1. In Case No. U/44/229/2004/01017, the decision of the adjudication officer awarding retirement pension from 28 April 1986 does not fall for supersession.

2. In Case No. U/44/229/2004/01018 the adjudication officer's decision awarding retirement pension from 2 December 1985 does not fall for supersession.

The claimants both appeal, with the leave of a District Chairman of the Tribunal Appeal Service, against the tribunal's decisions that the claimants, by reason of their having moved permanently to France on 26 February 2004 are, from 1 March 2004 not entitled to payment of Retirement Pension at 100%.

I shall refer to the claimants as Mr and Mrs B. Mr B's appeal is on file CP/633/2006 and Mrs B's is on file CP/634/2006. Mr B claimed retirement pension from 28 April 1986. By reason of his having lived in Australia he was credited with National Insurance contributions for his years of Australian residence in addition to contributions which he had made while employed in the United Kingdom. With that contribution record he was entitled to a retirement pension at the rate of 100%. Mrs B, whose appeal is on CP/634/2006 applied for an award of retirement pension at some time before Mr B. She also was credited with National Insurance contributions in respect of her years of residence in Australia and on that basis was awarded a retirement pension at 100% from 2 December 1985.

The crediting of the National Insurance contributions and the award of the 100% pensions were in compliance with the provisions of the Family Allowance and National Insurance (Australia) Order 1958 (S.I. 1958/422) which gave effect to a reciprocal agreement between the United Kingdom and Australia about the payment of social security benefits. Paragraph (1) of Article 3 of the agreement provides that –

"For the purposes of any claim to receive a retirement pension, a person who is permanently resident in the United Kingdom shall be treated as if he, or, in the case of a claim made by a married woman or a widow by virtue of her husband's insurance, her husband, had paid contributions under the legislation of the United Kingdom for any period during which he was resident in Australia … .".

Paragraph (5) of Article 3 provides that:-

"Subject to the provisions of Article 21, any pension which is awarded by virtue of this Article shall cease to be payable if the pensioner ceases to be permanently resident in the United Kingdom.".

The 1958 Australia Order was replaced by the Social Security (Australia) Order 1992 (S.I. 1992/1312) which gave effect to a new reciprocal agreement made in 1990. It did that, in Article 2, by modifying the Social Security Act 1975 and Part I of the Child Benefit Act 1975 and any regulations made under it as might be required for that purpose insofar as the agreement related to England, Wales and Scotland. The new agreement did not alter the position of claimants who were in receipt of benefit by virtue of the 1958 Order. It included Article 26 which provided:-

"(1) Subject to paragraph (2), this Agreement shall remain in force until the expiration of twelve months from the date on which either Party receives from the other written notice through the diplomatic channel of the intention of the other Party to terminate this Agreement.

(2) In the event that this Agreement is terminated in accordance with paragraph (1), the Agreement shall continue to have effect in relation to all persons who by virtue of this Agreement:

(a) at the date of termination, are in receipt of benefits; or

(b) prior to the expiry of the period referred to in that paragraph, have lodged claims for, and would be entitled to receive, benefits.".

The 1990 agreement was terminated at the instigation of Australia with effect from 1 March 2001. The 1992 Australia Order was revoked by the Social Security (Australia) Order 2000 (S.I. 2000/3255) with effect from that date. Article 2(2) of the 2000 Order continued in effect the modifications to the Social Security Contributions and Benefits Act 1992 and the Regulations made under that Act in implementation of the 1990 Agreement in relation to any person who:-

"(a) Was on 28 February 2001 in receipt of benefit by virtue of those modifications; or

(b) made a claim on or before 28 February 2001 for benefit to which he was entitled on or before that date by virtue of those modifications.".

Both of those sub-paragraphs apply to both claimants.

On 26 February 2004 Mr and Mrs B moved to Paris to live near their son who had earlier moved to that city to work. On 24 and 25 June 2004 the Secretary of State made the decisions under appeal on the grounds that under Article 3(1) and (5) of the 1992 Agreement pension ceased to be payable under the agreement when the couple ceased to be permanently resident in the United Kingdom. Pension was now payable to Mr B on the basis of the contributions which he had actually paid in the United Kingdom and Mrs B was entitled to a pension based on those same contributions.

The claimants' son appealed on their behalf to the tribunal. He argued that the claimants had moved from one member state of the European Union to another member state and, therefore, their right to social security payments was protected by the regulations of the European Community. He argued also that the reduction in the pensions paid was a breach of the European Convention on Human Rights.

The tribunal heard the claimants' cases on 4 January 2005 and adjourned with a direction to their representative to specify the Articles of the European Convention on Human Rights which he argued had been breached by the decision under appeal. The representative complied with that direction. The cases then came before the tribunal of 17 October 2005 which made the decision under appeal to me.

The Secretary of State's representative, in a written submission of 17 October 2005 (document 70 of the appeal bundle), supports the appeal to the limited extent that he considers that the statement of the tribunal's reasons for its decision (document 41) gives no explanation of what the tribunal made of the human rights issues raised by the appeal. I agree that the statement of reasons is silent on that matter and it is on account of that error in law that I have set the tribunal's decision aside. However, the Secretary of State's representative goes on in his submission to argue that the arguments for the claimants as to the effect of European Community legislation and as to breaches of the European Convention on Human Rights are misconceived and that the tribunal's decision is the only one which the tribunal could have made in the light of the evidence before it and having regard to the relevant statutory provisions. He submits that I should make my own decision to the same effect as that of the tribunal.

The claimant's representative argues that Council Regulation (EEC) No. 1408/71 and Council Regulation (EEC) No. 859/2003 both provide that the claimants are entitled to be paid retirement pension while they are resident in Paris and that the European Regulations override the disqualifying provision effected by the Australia Order. Apart from that, he argues, the claimants' right to payment of retirement pension at the full rate is a property right the benefit of which has been denied to them by the operation of the Australia Order. Article 14 of the European Convention is engaged. It is discriminatory to treat the claimants differently from other former residents of Australia who are credited with national insurance contributions in the United Kingdom merely because those other beneficiaries are resident in the United Kingdom and the claimants are not.

I shall say no more about the human rights argument than this. Having regard to the judicial precedents cited by both the claimants' and the Secretary of State's representatives, there does not seem to me to be any breach of Article 14 of the European Convention. Payment of National Insurance contributions, which are not hypothecated to any particular benefit, does not create a proprietorial right to any particular rate of any particular benefit. That is even more so in the claimants' case where the contributions which gave rise to entitlement to the full rate of the pensions are notional contributions credited to the claimants by reason of their former residence in Australia. Moreover, the right to a benefit which accrues from payment of contributions is the right specified in the relevant legislation. In the claimants' case that is the right conferred by the United Kingdom legislation as modified from time to time by the 1958, 1992 and 2000 Australia Orders which is the right to payment of retirement pension on the basis of the notional contributions while permanently resident in the United Kingdom and not at any other time. Therefore there is no interference with a property right, Article 14 is not engaged by reason of discrimination in that respect and, in any case, I do not see that there is any identifiable group of people from whom the claimants are being treated differently. All beneficiaries under the Australia Order lose the right to payment arising from the Order if they leave the United Kingdom permanently.

I have entertained the possibility that the reduction in pension suffered by the claimants could be interference with their right to respect for their family life, and therefore a breach of Article 8 of the Convention, if it inhibits their ability to live near their son in order to have his moral and physical support in their old age. Before that could be pursued further I think there would need to be evidence of the claimants' overall financial position and the practical effect on the claimants of the reduction in the rate of their retirement pension. However, I do not propose to go into that matter further for the same reasons as those for which I have dealt briefly with the claimants' human rights arguments. Those reasons are, firstly, that even if the Australia Orders do operate in such a way as to breach Article 1 of protocol 1 to the Convention and Articles 8 and 14 of the Convention the terms of the Order are unambiguous and cannot be construed to have any effect other than the cessation of payability of pension while the claimants are not permanently resident in the United Kingdom. I cannot, therefore, apply section 3 of the Human Rights Act 1998.

Secondly, the Australia Orders, being Orders in Council which amend primary legislation, are themselves primary legislation for the purposes of the Human Rights Act (section 21 of that act). Therefore, notwithstanding any incompatibility of the Orders with the Convention, I do not have the authority to make a declaration of incompatibility in terms of section 4 of the 1998 Act because a Social Security Commissioner is not one of the courts empowered to make such a declaration by subsection (2) of that section as read with subsection (5). The claimants would, therefore, have to find their remedy in the Court of Appeal or in the European Court of Human Rights at Strasbourg. Thirdly, I think that Council Regulation (EEC) 1408/71 does apply in the case of the claimants.

In both the submissions to the tribunal and in the submissions to me it is argued for the Secretary of State that there is a derogation from the effect of Council Regulation (EEC) 1408/71 in paragraph 7 of section Y of Annexe VI to that regulation. Paragraph 7 provides:-

"The Regulation does not apply to those provisions of United Kingdom legislation which are intended to bring into force any social security agreement concluded between the United Kingdom and a third state.".

The Social Security (Australia) Order 1992 is, it is argued, clearly an agreement between the United Kingdom and a third state.

I agree that the 1992 Australia Order brought into force the reciprocal agreement of 1990 between Australia and the United Kingdom. It did that by modifying the Social Security Contributions and Benefits Act 1992 and the Regulations made under that Act. However, as I have narrated above, the 1990 agreement was terminated with effect from 1 March 2001 and the 1992 Order was revoked with effect from that date by the 2000 Order. The latter order and its modifications to the 1992 Act and the regulations thereunder was the United Kingdom legislation in force when the Secretary of State made the decision of 25 June reducing the rate of pension payable to the claimants. As the reciprocal agreement had been terminated on 28 February 2001 the 2000 Order could not be bringing that agreement into force. What it was, and is, doing is protecting the position of beneficiaries of the limited classes specified in Article 2(2)(a) and (b) of the Order, which classes, as I say above, include both claimants. Paragraph 7 of section Y does not, therefore, save from the direct effect of regulation 1408/71 the provisions of the Social Security Contributions and Benefits Act 1992 and the associated regulations, as modified by the 2000 Order, which authorise the reduction of the rate at which retirement pension is paid to the claimants.

For the foregoing reasons the appeals succeed and my decisions are in paragraph 1 above.

(Signed) R J C Angus

Commissioner

(Date) 21 March 2007