UK Social Security and Child Support Commissioners' Decisions

[2008] UKSSCSC CPC_1072_2006 (11 June 2008)

CPC/1072/2006

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I allow the Secretary of State's appeal. I set aside the decision of the Fox Court appeal tribunal dated 2 December 2005 and I give the decision the tribunal should have given. The claimant is not entitled to state pension credit on the claim she made before 7 September 2005.

REASONS

2. I held an oral hearing of this appeal. The Secretary of State was represented by Mr Jason Coppel 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 Simon Cox of counsel, instructed by Hackney Law Centre. I am grateful to both Mr Coppel and Mr Cox for their clear submissions.
3. Section 1(2)(a) of the State Pension Credit Act 2002 makes it a condition of entitlement to state credit pension that the claimant "is in Great Britain". At the material time, regulation 2 of the State Pension Credit Regulations 2002 (S.I. 2002/1792), made under section 1(5)(a) of the Act, provided –

"(1) Subject to paragraph (2), a person is to be treated as not in Great Britain if he is not habitually resident in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland ….

(2) For the purposes of treating a person as not in Great Britain in paragraph (1), no person shall be treated as habitually resident in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland if he does not have a right to reside in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland."

4. The claimant is a citizen of Latvia, of Russian origin, born in 1938. In June 2000, she arrived in the United Kingdom and claimed asylum. She was granted temporary admission but her claim for asylum was unsuccessful and by 2005 she had exhausted her appeal rights. However, although asylum support was withdrawn, no steps were made to deport her. In or about August 2005, she claimed state pension credit. On 7 September 2005, the Secretary of State disallowed the claim on the ground that the claimant had no right of residence in the United Kingdom and so could not be treated as habitually resident in the United Kingdom by virtue of regulation 2(2) of the 2002 Regulations. That in turn meant that she could not be treated as being in Great Britain for the purposes of regulation 2(1) with the result that she was not entitled to state pension credit by virtue of section 1(2)(a) of the 2002 Act.
5. She appealed. On 2 December 2005, the case came before the President of appeal tribunals, who allowed her appeal. It was not disputed before the President that the Secretary of State's decision was correct if domestic law alone was considered. However, the claimant relied on Article 3(1) of Council Regulation (EEC) 1408/71, which provides –

"Subject to the special provisions of this Regulation, persons to whom this Regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State."

(The President was referred to that provision as it stood when the words "resident in the territory of one of the Member States" appeared after the word "persons", which was the position only until 5 May 2005. However, the removal of those words merely makes paragraph 10 of the President's decision unnecessary and does not affect the core of his reasoning.)

6. The President allowed the claimant's appeal, reasoning that, as all United Kingdom nationals, without exception, possessed a right to reside in the United Kingdom, they did not need to satisfy regulation 2(2) of the 2002 Regulations and the effect of Article 3 was that the claimant did not need to do so either. That was not quite the way the case had been argued before him. Counsel had argued that Article 3 prohibited discrimination on the ground of nationality but the President appears to have taken the view that the language of Article 3 enabled it to be applied without considering whether the national legislation was in fact discriminatory. If, contrary to his primary view, it was necessary to consider the discrimination argument, the President concluded that, because all United Kingdom nationals satisfied the condition in regulation 2(2), that provision gave rise to direct discrimination that could not be justified and was therefore unlawful and of no effect. In any event, he reasoned, a residence requirement may be justified only "on the basis of objective considerations that are independent of the nationality of the persons concerned and proportionate to the legitimate aim of the national provisions" (Collins v. Secretary of State for Work and Pensions (Case C-138/02) [2005] QB 145 (also reported as R(JSA) 3/06)) and, although there might have been a legitimate aim, regulation 2(2) was "certainly not independent of the nationality of the persons concerned". He suspected that the same result could have been achieved by reference to Article 12 of the EC Treaty which 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."

7. The Secretary of State now appeals against the President's decision with the President's leave. The appeal was stayed to await proceedings that culminated in the decision of the Court of Appeal in Abdirahman v. Secretary of State for Work and Pensions [2007] EWCA Civ 657; [2008] 1 WLR 254 (also reported as R(IS) 8/07) that a condition of a right of residence for entitlement to income support was legitimate notwithstanding Article 12 of the EC Treaty. Mr Cox argues that I am not bound to, and should not, follow Abdirahman because this case is distinguishable from Abdirahman or, alternatively, Abdirahman was decided per incuriam, without reference to all the relevant issues of European Community law. Before I consider those arguments in more detail, there are two preliminary points to be made.
8. First, the President's first line of reasoning, which Mr Cox did not attempt to defend, is, with respect, clearly flawed. If all United Kingdom nationals possess a right of residence in the United Kingdom, it is not right to say that they do not need to satisfy the condition of having a right of residence imposed by regulation 2(2) of the 2002 Regulations; rather they do satisfy it. The question whether it is lawful for the United Kingdom to make citizens of other Member States "subject to the same obligations" as United Kingdom nationals when all United Kingdom nationals necessarily satisfy one of the obligations is the same as the question whether the imposition of that obligation amounts to unlawful discrimination. The President was wrong to regard it as a question that could be answered separately and with less difficulty. The live issue on this appeal, therefore, is whether, in the light of Abdirahman, the President was right to conclude in his second line of reasoning that regulation 2(2) involved discrimination that was unlawful either simply because all United Kingdom nationals could satisfy the statutory condition whereas nationals of other Member States might not or because that difference in the impact of the condition was not justified.
9. Secondly, although Mr Coppel submitted that there are some United Kingdom nationals who do not have a right of residence and that the President erred in holding otherwise, Mr Cox has persuaded me that that is not so. Mr Coppel had in mind British Overseas Citizens who do not have a right of abode, but, as Mr Cox submits, they are not United Kingdom nationals for the purpose of the EC Treaty (see the Declaration of the United Kingdom Government on the term "nationals" (OJ 1983 C 23 p.1), made after the British Nationality Act 1981 was passed, and Declaration No. 2 on nationality of a Member State, annexed to the Treaty itself (OJ 1992 C 191 p.98), both of which documents were considered in Regina v. Secretary of State for the Home Department, ex parte Kaur (Case C-192/99) [2001] ECR I-1237). Accordingly, the question whether there is unlawful discrimination arises as starkly as the President stated it.
10. I turn, then, to Abdirahman. Mrs Abdirahman was a Swedish citizen who came to the United Kingdom and, while without any right of residence in the United Kingdom under either national law or Community law, claimed income support. Income support had conditions of entitlement similar to those in issue in the present case and it was argued on her behalf that the condition that the claimant have a right of residence gave rise to discrimination on the ground of nationality that was unlawful under Article 12 of the EC Treaty and therefore of no effect. At paragraph [44] of his judgment, Lloyd LJ said –

"I accept Mr Sales's 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.

At paragraph 50, he said that there was support for the view that, "if there is discrimination which requires to be justified (contrary to my view), the justification existed". Moses LJ and Sir Andrew Morritt C agreed with Lloyd LJ's reasons for dismissing Mrs Abdirahman's appeal.

11. In CIS/3182/2005, I held that the arguments as to justification that arise in relation to Article 3 of Regulation (EEC) 1408/71 were the same as those arising under Article 12 of the EC Treaty. In the present case, the President inclined to the same view. On that basis, Abdirahman appears to conclude the present case in the Secretary of State's favour. However, Mr Cox submits that the Court of Appeal did not fully consider justification in Abdirahman, because it decided that the right the claimant claimed was outwith the scope of Article 12 of the EC Treaty altogether. That approach, he submits, cannot be taken in relation to Article 3 of the Regulation (EEC) 1408/71 because the Secretary of State has conceded both that the claimant falls within the personal scope of the Regulation and that state pension credit falls within the material scope of the Regulation.
12. State pension credit falls within the material scope of the Regulation because it is listed in Annex IIa as a special non-contributory benefit within the scope of Article 4(2a). Mr Coppel submits that listing a benefit in Annex IIa is frequently a matter of policy and is not determinative, but I cannot disregard the listing and, for reasons that will appear, it in no way weakens the Secretary of State's case. In my judgment, the Secretary of State is right to concede that state pension credit is within the scope of the Regulation and, in particular, Article 3. Article 10a limits the application of the Regulation as regards special non-contributory benefits, but Article 3 undeniably applies. I therefore accept Mr Cox's submission that at least part of the reasoning of the Court of Appeal in relation to Article 12 of the EC Treaty cannot be applied in relation to Article 3 of Regulation (EEC) 1408/71.
13. Mr Cox next argues that, as all United Kingdom nationals have a right to reside in the United Kingdom, making a right of residence a condition of entitlement amounts to direct discrimination and, he submits, direct discrimination cannot be justified. A similar argument was advanced in CIS/3182/2005, where I said –

"The language used to describe types of discrimination is not always employed consistently. Indeed the term "discrimination" itself is sometimes used to refer to unequal treatment that is potentially unlawful and is sometimes used to refer to unequal treatment that is actually unlawful. However, the principles are clear. Where discrimination on the ground of nationality is prohibited, the prohibition applies to both overt and covert discrimination. Discrimination that is based on nationality and no other related or unrelated consideration can never be justified and is always unlawful. Any attempt to justify unequal treatment that appears to be discrimination on the ground of nationality must identify some other consideration that is the real basis of the inequality. Then, an attempt may be made to justify the unequal treatment and show that it is the consequence of a proportionate means of implementing a legitimate social policy and not truly discrimination on the prohibited ground of nationality. It seems to me to be wholly unnecessary to have a two stage process in which one first decides whether an attempt may be made to justify the discrimination or not. Referring to "direct discrimination" is usually simply a way of describing overt discrimination on the prohibited ground that is obviously unjustifiable in practice, rather than being unjustifiable in principle."

14. Against that, Mr Cox relies upon Commission v. Ireland (Case 61/77) [1978] ECR 417 for the proposition that a test that is always satisfied by nationals of the Member State in question but not necessarily by nationals of other Member States is one that is not capable of being justified in the light of Article 3 of Regulation (EEC) 1408/71. In Commission v. Ireland, the Irish government imposed a ban on fishing in its waters by boats of a certain size, which happened to have no practical effect on boats from Ireland or the United Kingdom but had the effect of banning a quarter of those French boats, and all those Dutch boats, that had until then regularly fished in Irish waters. This case does appear at first sight to lend some support to Mr Cox because the Court not only regarded the ban as amounting to covert discrimination by reason of nationality but did so while taking the view that it was unnecessary to consider the argument advanced by the Commission and the French and Dutch Governments that the ban could not be regarded as a genuine conservation measure. However, it seems to me to be important to note that the Irish Government made no attempt to suggest that its ban represented the most efficient conservation measure that it could have devised. There was clear evidence of other measures that could have been taken and might more effectively have advanced the conservation aim claimed by the Irish Government as the motivation for its ban. Had the Irish Government been able to show not only that its ban was for conservation purposes but also that it was the most effective conservation measure possible, it is difficult to envisage the Court finding the measure to be unlawful merely because the French and Dutch fishing fleets operating in Irish waters were less environmentally friendly than the Irish fleet and only for that reason were affected to a greater extent. The case is therefore authority for the proposition that, in the absence of any relevant accepted justification, the Court may infer that a measure that affects only nationals of other Member States amounts to covert discrimination on the ground of nationality even though the measure is ostensibly based on technical considerations unrelated to nationality. However, it is not authority for the proposition that justification of such a measure is impossible.
15. Mr Coppel referred me to Regina (Bidar) v. Ealing L.B.C. (Case C-209/03) [2005] QB 812. In that case, the European Court of Justice held that a Member State is entitled to insist on a student demonstrating a certain degree of integration into the society of the State before becoming entitled to financial assistance to cover maintenance costs even though that affects nationals of other Member States to a greater extent than its own. Therefore, it would have been legitimate for the United Kingdom to have insisted that a student be settled in the United Kingdom, even though that condition would be more likely to be satisfied by a United Kingdom national than by nationals of other Member States, had it not been for a provision that prevented nationals of other Member States from acquiring the status of settled person while receiving full-time education. That may lend some support to Mr Coppel's case but I am inclined to accept Mr Cox's submission that it is not conclusive.
16. Mr Coppel also referred me to paragraph 64 of Martinez-Sala v. Freistaat Bayern (Case C-85/96) [1998] ECR I-2691, where the Court said –

"Since the unequal treatment in question thus comes within the scope of the Treaty, it cannot be considered to be justified: it is discrimination directly based on the appellant's nationality and, in any event, nothing to justify such unequal treatment has been put before the Court."

That, he submitted, supports the submission that "direct" discrimination may, in some circumstances, be justified. It certainly shows that the Court did not exclude the possibility that that might be so, but I am again inclined to agree with Mr Cox that the paragraph is equivocal in that regard.

17. Nonetheless, Mr Cox has failed to persuade me to resile from what I said in CIS/3182/2005. I have no doubt that a requirement that is always satisfied by citizens of the Member State but not necessarily by citizens of other Member States will rarely prove justifiable in practice, but I am not satisfied that there is any principle that forbids an attempt to justify such a requirement, particularly where the case touches upon an issue that is beyond the European Community's sphere of competence.
18. In Abdirahman, Lloyd LJ drew attention to Mr Advocate-General Geelhoed's observation in Trojani v. Centre public d'aide sociale de Bruxelles (Case C-456/02) [2004] ECR I-7573) that –

"The basic principle of Community law is that persons who depend on social assistance will be taken care of in their own Member State".

That principle is of key importance in the present case, because the necessary implication is that Member States have greater obligations to their own citizens than to nationals of other Member States. It cannot be expected that, in modern Europe, a state should not have a social assistance scheme for its citizens and it logically follows from the principle to which Mr Advocate-General Geelhoed drew attention that a Member State may provide social assistance to its own citizens without being under any obligation to provide social assistance to the same extent to nationals of other Member States. A Member State is obliged to provide social assistance to nationals of other Member States on the same basis as to its own nationals only where such people have a right of residence, which is usually a consequence of them, or a relative, having exercised a Community right of freedom of movement for economic purposes or, alternatively, having exercised a Community right of residence as a self-sufficient person for a sufficiently long period.

19. Therefore, the fact that, in many other contexts, the European Court of Justice has said that unequal treatment must be justified on grounds independent of nationality, does not lead to the conclusion that nationality must always be a totally irrelevant consideration where social assistance is concerned. Collins, upon which the President relied, was concerned with the legality of a requirement that a claimant of an income-related benefit with a right of residence be habitually resident; it was not concerned with drawing a distinction between those with rights of residence and those without. In the circumstances of that case, a requirement that a condition be justified by considerations independent of nationality makes sense, although it may be noted that the habitual residence condition in issue was held lawful even though more likely to be satisfied by nationals of the host Member State, because it was legitimate to expect a claimant to demonstrate some connection with the state from whom he was claiming the income-related benefit. A condition that confines entitlement only to nationals of the Member State concerned is unlawful, but a condition designed to confer entitlement on all such nationals and some nationals of other member states may be justified to the extent that it is consistent with the Community's approach to social assistance. Having regard to the principle identified by Mr Advocate-General Geelhoed, a condition included in a British social assistance scheme that a claimant have a right of residence in the United Kingdom is justified because such a condition distinguishes between those guaranteed equal treatment in relation to social assistance by Community law and those for whom Community law provides no such guarantee.
20. Mr Cox submits that this reasoning cannot be applied in relation to Regulation (EEC) 1408/71 because that Regulation is concerned with social security. It is true that Article 4(1) applies the Regulation to certain branches of social security, including old-age benefits and that Article 4(4) – consistently with the principle identified by Mr Advocate-General Geelhoed – provides that the Regulation does not apply to social assistance. Originally, that distinction was sharply maintained. However, the Regulation is no longer concerned only with social security. Article 4(2a) brings within the scope of the Regulation a benefit that "has characteristics both of the social security legislation referred to in paragraph (1) and of social assistance" and that is listed in Annex IIa.
21. Therefore, while I accept that Article 3 of Regulation (EEC) 1408/71 might preclude the imposition of a condition of a right of residence in the host Member State in respect of a social security benefit within the scope of the Regulation, I do not accept that it precludes the imposition of such a condition in respect of a special non-contributory benefit within the scope of the Regulation, at least in the case of a benefit that is income-related and thus may be said to have particularly strong characteristics of social assistance.
22. The present case concerns state pension credit, which is an income-related benefit similar to income support, and the condition that a claimant have a right of residence that is imposed by regulation 2(2) of the 2002 Regulations is clearly intended to distinguish between those guaranteed equal treatment in Community law in relation to social assistance and those who are not. That may be said with some confidence because the concept of a right of residence is a concept that is relatively new to the law of the United Kingdom and is clearly derived from Community law with that purpose in mind. Drawing that distinction is clearly a legitimate aim, as the President himself indicated he would accept, and the means chosen are proportionate because the condition that a person have a right of residence in the United Kingdom accurately identifies those whose rights are guaranteed under Community law. In CIS/3182/2005, I suggested that arguments about proportionality in relation to equal treatment under Article 3 of Regulation (EEC) 1408/71 or Article 12 of the EC Treaty in cases concerned with social assistance mirrored those in relation to rights of residence under Article 18 of the EC Treaty. What Abdirahman helpfully makes clear is that the arguments fall to be raised under Article 18 first. Whether or not the claimant has a right of residence in the host Member State then determines whether or not he or she is entitled to be treated in the same way as nationals of the Member State in relation to social assistance.
23. In effect, the approach that satisfied the Court of Appeal in Abdirahman that the claimed right was outside the scope of Article 12 of the EC Treaty satisfies me that the imposition of a condition of a right of residence in respect of state pension credit is justified and is not contrary to Article 3 of Regulation (EEC) 1408/71.
24. There is one final complication. Regulation 2(2) of the 2002 Regulations refers not just to those with a right of residence in the United Kingdom, but also to those with a right of residence in the Republic of Ireland, which naturally favours Irish nationals by comparison with the nationals of other Member States. Mr Cox argues that this amounts to unequal treatment that cannot be justified under Article 3 of Regulation (EEC) 1408/71. I am not persuaded that the treatment of Irish nationals is material to this case. If, in relation to social assistance benefits, a Member State is entitled to treat differently those who have a right of residence and those who do not, it is open to the United Kingdom to treat Irish citizens more favourably than Latvian citizens to the extent that the former always have rights of residence whereas the latter may not, because the question who does or does not have a right of residence in a Member State is a matter for that Member State as long as it recognises a right of residence in those within the scope of the relevant EC Directives and those others who, as in CIS/408/2006, have rights of residence through the direct operation of Article 18 of the EC Treaty. I agree with Mr Coppel that Regina v. Secretary of State for Social Security, ex parte Sarwar and Getachew [1997] 3 C.M.L.R. 648, which may have been overtaken in some other respects by subsequent decisions of the European Court of Justice, remains good law on this issue. In that case, the Court of Appeal followed Belgium v. Humbel (Case 263/86) [1988] ECR 5365, in which it was held that Belgium was entitled to levy a charge for education on a French national living in Luxembourg, notwithstanding that no charge was levied in respect of either its own nationals or Luxembourg nationals. (Regina (Couronne) v. Crawley BC and Secretary of State for Work and Pensions [2007] EWCA Civ 1086, upon which Mr Coppel also relied, was decided in the different context of the European Convention on Human Rights and is of doubtful relevance here.)
25. For all these reasons, I allow this appeal.

(signed on the original) MARK ROWLAND

Commissioner

11 June 2008