Upper Tribunal (Administrative Appeals Chamber)

[2009] UKUT 17 (AAC) (27 January 2009)

 
Decision of the Upper Tribunal
(Administrative Appeals Chamber)

As the decision of the Fox Court appeal tribunal (held on 25 July 2007 under reference 242/07/05274) involved the making of an error in point of law, it is SET ASIDE under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007 and the decision is RE-MADE.

The decision is: on his claim for income support, made on 14 December 2006 and refused on 23 February 2007, the claimant was a person from abroad with an applicable amount of nil. He was, therefore, not entitled to income support.

Reasons for Decision

A. The issue

1. The issue in this case is whether the claimant has a right to reside that arises directly under Article 18 of the EC Treaty such that he may be entitled to income support.

B. The oral hearing

2. This was held in London on 17 October 2008. The Secretary of State was represented by Denis Edwards of counsel, instructed by the Solicitor to the Department for Work and Pensions. The claimant was represented by Desmond Rutledge of counsel, instructed by the Mary Ward Legal Centre, who represented the claimant before the appeal tribunal. Following the hearing, I delayed giving my decision until the judgment of the Court of Appeal in Kaczmarek v Secretary of State for Work and Pensions [2008] EWCA Civ 1310 was available. Both counsel then made written submissions on the relevance of that case. I am grateful to them both for their written and oral arguments.

C. The facts as they now appear

3. The claimant came to the United Kingdom in early 2005. He is Portuguese and was born on 7 June 1971. He has mental health problems, with a diagnosis of schizophrenia.
4. At the time of the claim and of the appeal before the appeal tribunal, it was understood that the claimant had received jobseeker's allowance after his arrival in this country. It is now known that he did not. There seems to have been a misunderstanding between the claimant, his social worker and his representative. No doubt, that occurred because of the state of his mental health at the time. It is now known that, following his arrival, he first lived on money he had been given by his mother and then relied on services that support homeless people. He had worked in the construction industry while he was in the United States and sought similar work here.
5. In December 2006, the claimant became acutely ill. This led him to be detained under the Mental Health Act 1983, first for assessment under section 2 and then for treatment under section 3. When he claimed income support on 14 December 2006, he was detained under section 2. When the claim was refused on 23 February 2002, it is not clear whether he was still subject to section 2 or had been detained under section 3. I do not consider that it matters.
6. Having been refused benefit, the claimant exercised his right of appeal. The tribunal decided in his favour on the ground that it was disproportionate to deny him a right to reside. The chairman gave two reasons for that decision. First, the claimant had lost his right to reside as a jobseeker through circumstances beyond his control, namely, his acute mental health problems. It is now known that that reason is incorrect, because the claimant was never technically a jobseeker, although he says he did look for work. Second, the claimant was unable to leave the United Kingdom because he was detained.
7. I gave the Secretary of State leave to appeal against the tribunal's decision.

D. Income support legislation

8. Income support was established by the Social Security Act 1986. The relevant provisions have been consolidated by the Social Security Contributions and Benefits Act 1992.
9. Section 124(1) of the 1992 Act provides:

'(1) A person in Great Britain is entitled to income support if-

…

(b) he has no income or his income does not exceed the applicable amount.'

10. Section 135 provides:

'(1) The applicable amount, in relation to any income-related benefit, shall be such amount or the aggregate of such amounts as may be prescribed in relation to that benefit.

(2) The power to prescribe applicable amounts conferred by subsection (1) above includes power to prescribe nil as an applicable amount.'

11. The Income Support (General) Regulations 1987 are made, in part, under that authority. Paragraph 17 of Schedule 7 to those Regulations prescribes that the applicable amount for a 'person from abroad' is nil. That expression is defined by regulation 21AA. The current version provides:

'Special cases: supplemental – persons from abroad

21AA.—(1) "Person from abroad" means, subject to the following provisions of this regulation, a claimant who is not habitually resident in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland.

(2) No claimant shall be treated as habitually resident in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland unless he has a right to reside in (as the case may be) the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland other than a right to reside which falls within paragraph (3).

(3) A right to reside falls within this paragraph if it is one which exists by virtue of, or in accordance with, one or more of the following—

(a) regulation 13 of the Immigration (European Economic Area) Regulations 2006;

(b) regulation 14 of those Regulations, but only in a case where the right exists under that regulation because the claimant is—

(i) a jobseeker for the purpose of the definition of "qualified person" in regulation 6(1) of those Regulations, or

(ii) a family member (within the meaning of regulation 7 of those Regulations) of such a jobseeker;

(c) Article 6 of Council Directive No. 2004/38/EC; or

(d) Article 39 of the Treaty establishing the European Community (in a case where the claimant is a person seeking work in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland).

(4) A claimant is not a person from abroad if he is …'

12. The claimant does not come within any head of regulation 23AA(4). In order to be entitled to income support, therefore, he must come within regulation 23AA(2). However, he does not satisfy the terms either of Directive 2004/38/EC or of the Immigration (European Economic Area) Regulations 2006 that seek to implement that Directive. If he has a right to reside, it must be derived directly from Article 18 of the EC Treaty.

E. Article 18 of the EC Treaty

13. This provides:

'PART TWO

CITIZENSHIP OF THE UNION

…

Article 18

1.   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 the measures adopted to give it effect.

…'

14. Under Article 18, two related questions arise. Are the terms of Directive 2004/38 'limitations' on the scope of the right to reside conferred on all Union citizens by Article 18? If they are, is it nonetheless disproportionate to apply the terms of the Directive to the claimant's circumstances?
15. Under recent case law, these questions merge into this composite question: do the claimant's circumstances identify a lacuna within the Directive? This follows from the analysis in Kaczmarek v Secretary of State for Work and Pensions. The claimant in that case was Polish. She applied for income support in May 2005 when she was prevented from working by her daughter's health. Previously, she had been a student, in employment (part-time at first and then full-time) and on maternity leave. Her appeal to the appeal tribunal was successful, but its decision was reversed by Mr Commissioner Rowland. His decision was confirmed by the Court of Appeal. The Court of Appeal analysed the application of Article 18 as turning on proportionality (paragraph 17). This in turn depended on whether there was a lacuna which has to be filled in order to avoid the disproportionate effect of applying the limitations and conditions contained in the Directive (paragraph 19). As expressed by Maurice Kay LJ, the Directive

'23. … provides an authoritative insight into the parameters of proportionality when applied to the economically inactive migrant. If, as we must assume, a five year qualification is proportionate in that context, it is all the more difficult to argue that it is disproportionate to exclude this appellant from income support when, at the time of her claim, she had been in this country for three years and had become economically inactive. Rights conferred by the Directive upon those whose lawful presence is less than five years are conditional upon, among other things, self-sufficiency. …'

16. Mr Rutledge has argued that the approach taken in Kaczmarek was inconsistent with that taken by the Court of Appeal in Jeleniewicz v Secretary of State for Work and Pensions [2008] EWCA Civ 1163. I reject that argument. The Court in Jeleniewicz rejected an argument that I should have investigated the issue of proportionality. It did not have to decide on the nature of that concept in the context of a right to reside.

F. Proportionality – an EC concept

17. As a notion in philosophy and legal theory, proportionality has a long history. The idea that ends should be proportionate to their means and the related idea of equity that rigid rules could not impede justice in individual cases has a continuous history in Western Europe that can be traced back to ancient Greece (see J.M. Kelly, A Short History of Western Legal Theory). As a specific legal concept of public law, it was developed by the Prussian judiciary in the nineteenth century as a way of controlling police authorities. It developed in the public law of the continental legal systems and was identified by the European Court of Justice as a general principle of law. It now has partial recognition in Article 5 of the EC Treaty:
'Article 5

The Community shall act within the limits of the powers conferred upon it by this Treaty and of the objectives assigned to it therein.

…

Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty.'

18. In the context of this case, proportionality is, therefore, an EC concept. It is applied to control the scope and operation of EC law. The justification for applying it must be found in the impact of EC law in the circumstances of the particular case. It must be given effect within EC law.
19. I accept Mr Edwards' argument at the hearing that a proportionality argument cannot be based on limitations imposed by national law. However, applying proportionality under EC law may bypass a limitation in national law. This is how a right to reside under Article 18 would operate in relation to income support.
20. Proportionality, as an EC concept, cannot be used as a means of remedying every apparent unfairness in the scope of a claimant's right to reside. I know from other cases that the immigration authorities, applying domestic immigration law in the name of the Secretary of State (for the Home Department), consider that all right to reside issues for Union citizens are to be resolved exclusively under EC law. For many cases, it may be that EC law renders other issues, such as asylum, irrelevant. However, it can have an impact where a claimant has no right to reside under EC law. In some cases, it may be that the proper approach is to apply to the Secretary of State for permission to remain rather than argue that EC law is not proportionate.

G. Proportionality – validity and application

21. Proportionality is used both as a test for the validity of secondary legislation and as a means of controlling the exercise of administrative power, including the way that legislation is implemented and applied. Its operation may differ according to the context.
22. In Zalewska v Department for Social Development [2008] UKHL 67, the House of Lords was concerned with the validity of the Accession (Immigration and Worker Registration) Regulations 2004 that made transitional provision for workers from the so-called A8 countries of Eastern Europe. Mr Rutludge has argued that the approach to proportionality in Kaczmarek is inconsistent with that of the House of Lords in Zalewska. I reject that argument. I do not consider that the two cases are comparable. The House of Lords had to determine the validity of the Regulations under the authority conferred by the Treaty of Accession. In Kaczmarek, the Court of Appeal was concerned with whether it was proportionate to apply the terms of the Directive to a Polish woman who was prevented from working by her child's health. It had to reconcile the broad right conferred by Article 18 with the detailed provisions of the Directive. Both used the same concept of proportionality. That they applied it differently reflects the nature of the issues.

H. Proportionality and the lacuna approach

23. Fromançais SA v FORMA (Case 66/82) [1983] ECR 395 contains the standard definition of proportionality used by the European Court of Justice:

'8. In order to establish whether a provision of Community law is consonant with the principle of proportionality it is necessary to establish, in the first place, whether the means it employs to achieve its aim correspond to the importance of the aim and, in the second place, whether they are necessary for its achievement.'

24. This has been adopted by the domestic courts. In Stoke-on-Trent City Council v B&Q plc [1991] Ch 48, Hoffmann J referred to these two elements as the balancing test and the necessity test. And in Zalewska, Baroness Hale cited Fromançais and said:

'48. One must first establish the aim which the measure sought to achieve, and then ask whether the means used were suitable to achieve that aim, and then whether they were necessary, in the sense that the adverse impact upon an interest worthy of protection was justified in view of the importance of the objective pursued.'

25. I do not read the Court of Appeal in Kaczmarek as overturning or disregarding a basic principle of EC law. There is nothing to suggest that this was the Court's intention and it would be astonishing if it had been, since the decisions of the European Court of Justice are binding on the Court of Appeal. I do not, therefore, accept Mr Edwards' written argument that following Kaczmarek, 'the principle of proportionality can have no meaningful effect at all.'
26. The Court of Appeal's use of a lacuna must, therefore, be reconciled with the traditional statement of the nature of proportionality. The key to the reconciliation lies in two factors.
27. First, as secondary legislation has to be proportionate (Article 5), it is to be expected that proportionality will imbue its content. It will then, under the case law of the European Court of Justice, control its interpretation and application. However, it is unlikely that there will be many opportunities to disapply a provision that has proportionality built into it. I, therefore, accept Mr Edwards' written argument that, following Kaczmarek, the 'relevance of the principle of proportionality is a very limited, residual one.' My recollection is that Mr Rutledge accepted at the hearing that it would only operate in exceptional cases.
28. Second, proportionality is based on an instrumental view of law. A law has a purpose and must only be used appropriately and necessarily in furtherance of that purpose. In identifying that purpose, it is necessary to take account of the legislative process and to show appropriate respect for the democratic process within the EU. Directive 2004/38 was issued by the European Parliament and the Council. It is in part a consolidation of previous EC legislation, in part a codification of decisions of the European Court of Justice and in part new. Although the preparatory materials that led to the Directive have never, as far as I am aware, been cited to the Commissioners or to the Upper Tribunal, it is fair to assume that the provisions represent the results of negotiation and compromise. That is especially so in the case of those who are neither economically active or students and who represent a potential cost for the social assistance system. This is a relevant consideration in identifying the purpose of those provisions.

I. Proportionality and access to social assistance

29. The terms of Directive 2004/38 show that one of its purposes is to control access to the social assistance system of the Member States. All Union citizens have a right to reside for three months under Article 6, but they lose that right if they 'become an unreasonable burden on the social assistance system of the host State' (Article 14(1)) and that State is not under a duty to confer entitlement to social assistance during that period (Article 24(2)). Workers and the self-employed are allowed access to social assistance and may retain the benefits of that status so long as they remain connected with the labour market. Others, including students must 'have sufficient resources for themselves and their family members not be become a burden on the social assistance system of the host Member State' (Article 7(1)(b) and (c)). And the fact a citizen has had recourse to social assistance may never lead automatically to expulsion from the host State (Article 14(3)). See also Preambles (10), (16) and (21).
30. These provisions have proportionality built in. The concept of 'burden', whether or not qualified by 'unreasonable', involves a judgment of degree. This is shown by Grzelczyk v Centre public d'aide sociale d'Ottignies-Louvain-la-Neuve Case C-184/99 [2001] ECR I-6193. The European Court of Justice was there concerned with the 'sufficient resources' conditions for students. The claimant was a French student studying in Belgium. He worked in order to support his studies, but the requirements of the final year of the course prevented this and he claimed benefit. This was awarded, but then withdrawn. The Court first interpreted Directive 93/96. It then said:

'42. That interpretation does not, however, prevent a Member State from taking the view that a student who has recourse to social assistance no longer fulfils the conditions of his right of residence or from taking measures, within the limits imposed by Community law, either to withdraw his residence permit or not to renew it.

'43. Nevertheless, in no case may such measures be the automatic consequence of a student who is a national of another Member State having recourse to the host Member State's social assistance system.

'44. While Article 4 of Directive 93/96 does indeed provide that the right of residence is to exist for as long as beneficiaries of that right fulfil the conditions laid down in Article 1, the sixth recital in the directive's preamble envisages that beneficiaries of the right of residence must not become an "unreasonable" burden on the public finances of the host Member State. Directive 93/96, like Directives 90/364 and 90/365, thus accepts a certain degree of financial solidarity between nationals of a host Member State and nationals of other Member States, particularly if the difficulties which a beneficiary of the right of residence encounters are temporary.'

Accordingly, the Court decided that Belgium was not entitled to apply an absolute bar on entitlement to social assistance for students from other Member States. The Court did not have to define what would amount to temporary difficulties or to say whether the claimant's difficulties in that case were temporary.

31. In the context of social security, this approach is unlikely to be helpful to claimants. The Secretary of State will have to decide on the information available at the date when benefit is refused. And tribunals are not allowed to take account of change of circumstances since that date (section 12(8)(b) of the Social Security Act 1998). The duration of the need for social assistance may have been clear at that date, as it was in Grzelczyk. However, in most cases it will not be known, with the result that the entitlement in issue is not merely open-ended but indefinite.
32. Although the provisions have proportionality built in, there is still scope for its further application. This is shown by Baumbast and R v Secretary of State for the Home Department (Case C-413/99) [2002] ECR I-7091. The European Court of Justice was there concerned with the 'sufficient resources' conditions for self-sufficient persons. Mr Baumbast had been a worker in the United Kingdom and then run his own company here. When that company failed, he found work abroad. He could only claim a right of residence under what is now Article 7(1)(b) of Directive 2004/38. It was accepted that he had sufficient resources, as he was employed abroad and neither he nor his family had claimed social assistance in the United Kingdom. He did not have comprehensive sickness insurance, but the Court held that it would be disproportionate for this to deny him a right to reside. It listed the factors taken into account: (i) he had sufficient resources; (ii) he had worked and resided lawfully in the United Kingdom for several years; (iii) his family resided with him and remained after he left; (iv) no member of the family claimed social assistance in the United Kingdom; and (v) he and his family had comprehensive sickness insurance in Germany. There are three ways of looking at that case. First, Mr Baumbast had considerable, lawful connection with the United Kingdom, both personally and through his family. He satisfied every requirement of being a worker except that his place of work was now outside the United Kingdom. Second, he satisfied the 'sufficient resources' conditions in substance, if not in form. And third, he was not seeking to rely on social assistance. The purpose of conditions is to control access to the social assistance budget of the host State. As Mr Baumbast was not trying to gain access to that budget, it was not necessary to insist on strict compliance.
33. Given those features, it is perhaps not surprising that in Kaczmarek the Court of Appeal said at paragraph 20:

'20. It is abundantly clear that the facts of Baumbast were more susceptible to "lacuna filling" than the facts of the present case where, at the material time, the appellant was no longer a worker and nor was she at all self-sufficient. …'

This comment also shows that the Court was not adopting a concept of proportionality that was fundamentally different from that previously applied domestically and in Europe.

J. Proportionality in the circumstances of this case

34. In his written argument, Mr Rutledge has argued that the tribunal was correct that the claimant was one of a class of claimant who should have the protection of EC law, but who were omitted from the Directive. He has given five reasons to support that argument. (i) It is not clear that this type of case was intentionally excluded from the right to reside. (ii) The claimant's mental illness arose after he had been residing in the United Kingdom for some time. (iii) There is no scope for abuse. (iv) Social assistance is only required for a temporary period until the claimant no longer required treatment. (v) A bout of mental illness is not predictable and cannot be planned for. I do not accept that argument.
35. (i) is correct as stated only in the absence of any reference to the preparatory materials. Those materials may, or may not, shed light on this issue. However, in their absence, all I can rely on is the content and structure of the Directive. The relevant features are these. First, it distinguishes between not having a right to reside and being expelled. The former does not necessarily entail the latter. The distinction allows host States to define access to certain services by reference to residence. The Preamble makes clear that one purpose of that power is to control access to social assistance. Second, it confers more favourable treatment on workers and the self-employed. For these categories, their status can survive unemployment and inability to work. They are allowed access to the social assistance system. Third, for those who are not workers or self-employed, access to that system is restricted. Given those features, it would be inconsistent with the purposes of the Directive to hold that it would be disproportionate to apply them to the claimant in the circumstances of this case. At best, he can only argue that he was someone looking for work who then became too ill to do so. As regards a right to reside, there is nothing to distinguish the claimant from a jobseeker who is unable to work. The exclusion of that category from the extension of status under Article 7(3) indicates that it is a limitation on the right to reside under Article 18.
36. (ii) is correct as a matter of fact. However, the claimant had not been economically active in accordance with the Directive at any stage during his time here. To the extent that he was active in seeking work, the Directive makes no provision for this status to survive ill health. That is in contrast to the position for workers and the self-employed under Article 7(3). A right to reside in the circumstances of this case would equate the claimant with a worker and put him in a better position that others who were seeking work or who were previously self-sufficient.
37. (iii) is correct in this case and will be in similar cases. The risk of abuse may be relevant to show that it would not be appropriate to apply proportionality to particular circumstances. But the absence of risk is not a positive reason for applying it.
38. (iv) is not correct in this case and may not be correct in similar cases. We now know that the claimant was released from hospital and able to qualify for a jobseeker's allowance within a matter of months. However, that was not known at the time when his claim for income support was refused. At that time, it was too soon to know when he might be fit to be released. Detention under the Mental Health Act can be long term.
39. (v) is correct in this case, but may not be in similar cases. Whether illness is or is not predictable will depend, in part, on the person's history. If an eventuality is unpredictable, it is relevant to consider what may legitimately be expected should it occur. I accept Mr Edwards' argument at the hearing that the legitimate expectation would be care and treatment free of charge, which is what the claimant received. That implies that the claimant would not be expelled. A right to reside, however, involves more than that. It confers positive rights, including in appropriate circumstances access to the social assistance budget.
40. My conclusion is this. Article 18 of the EC Treaty confers a right to reside on all Union citizens. That is subject to limitations. Those limitations are not expressed in Directive 2004/38, but they are implicit within it. I have identified some of the aims of those limitations. They show that, in part, they aim to restrict the duty on a host State to provide access to its social assistance system for those who are not and have not been part of the labour market of that State. They achieve this aim by limiting the Union citizen's right to reside, while leaving the citizen free to stay in the country, subject only to the limited powers of expulsion. The Directive thereby reconciles freedom of movement with control over the social assistance budget through the denial of a right to reside. It creates a comprehensive code of conditions and limitations for those who are not economically active. I can see no scope for arguing that there is a lacuna in that code either in the form of a general category of case to which the claimant belongs or in the particular circumstances of this individual case. In terms of the scope of EC law, his position is no different from anyone else who is unable for the time being to join the labour market on arriving in a host State. Nor are his circumstances marginal such that he satisfies the conditions for a right to reside in substance, if not in form.
41. The claimant has a legitimate interest to be protected. He is a vulnerable person who is entitled to the protection of the State. He has a legitimate expectation that he will be cared for and treated during his illness. That expectation has been fulfilled under the Mental Health Act 1983, regardless of the fact that he does not have a right to reside. However, that expectation operates outside the scope of EC law, just as other expectations that might be met under other domestic legislation, such as the National Assistance Act 1948.
42. In those circumstances, the tribunal was wrong to apply proportionality to confer a right to reside on the claimant.

K. Disposal

43. I allow the appeal and restore the Secretary of State's decision refusing the claim for income support.

Signed on original on 27 January 2009

Edward Jacobs Upper Tribunal Judge