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Cite as: [2011] UKUT 157 (AAC)
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CP v Secretary of State for Work and Pensions [2011] UKUT 157 (AAC) (07 April 2011)
Capital
Disregards: personal injury/other compensation
DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
The DECISION of the Upper Tribunal is to dismiss the appeal.
The decision of the Sheffield First-tier Tribunal dated 26 June 2009 under file reference 138/08/03205 does not involve any error of law.
This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007.
REASONS FOR DECISION
The issues in this appeal
1. The claimant (C) is a young woman with Down’s Syndrome. She received a substantial payment of compensation, now held on her behalf by the Court of Protection, after her mother (and primary carer) was killed in a road traffic accident (RTA) when C was a child. Later, at the age of 22, C claimed income support. The principal legal issues in this appeal concern the proper interpretation of the capital disregards in paragraphs 12 and 44 of Schedule 10 to the Income Support (General) Regulations 1987 (SI 1987/1967; “the 1987 Regulations”) and a related human rights argument.
The facts of the case
2. The essential facts of the case were set out with admirable brevity and clarity by Tribunal Judge (now District Tribunal Judge) Ennals in his statement of reasons for the tribunal’s decision. I simply record them here in their entirety to set the context:
· C was born on 17 June 1985, with significant learning disabilities and sight problems.
· There is no specific diagnosis available as to the causes of this condition.
· She has not received any injury since birth.
· Her mother was her carer, who was killed in an RTA when C was 14.
· In 2004 C was awarded compensation for loss of her mother’s care of over £237,000.
· C is now 24 years old.
· She is a patient of the Court of Protection, and her compensation funds are held by the Court on her behalf.
· The compensation payment did not derive from any personal injury to C.
3. There was ample evidence to support those findings of fact. The First-tier Tribunal had before it copies of: (i) the Court of Protection medical certificate for C; (ii) her local authority Statement of Special Educational Needs; (iii) the High Court consent order settling the claim against the driver concerned, recording that the sum of £335,000 was apportioned as to £97,793 to C’s father and £237,207 to C herself; (iv) the Loss of Dependency Report, which detailed the significant contribution made by C’s late mother both to C’s care and the general running of the family household.
The claim for income support
4. On 25 April 2008 a partner at Irwin Mitchell (C’s solicitors), who had been appointed her receiver by the Court of Protection, made a claim for income support on behalf of C, then aged 22. Total capital of £243,781.68, held by the Court of Protection for C, was disclosed. In correspondence with the DWP, Irwin Mitchell summarised C’s case as follows:
“It is submitted that the compensation she has received for lost care services can be ignored under Schedule 10 paragraphs 12, 44 and 45 of the Income Support Regulations 1987. The compensation held by the Court of Protection is for lost care services for the claimant who suffers from Down’s Syndrome. The care services that have been lost are directly due to the death of the parent who was the main carer.”
5. On 11 June 2008 one of the Secretary of State’s decision makers concluded that C was not entitled to income support. The DWP’s letter to Irwin Mitchell explained that decision as follows:
“The payment held in trust has been made to ensure that the customer can pay for the care that she needs to support her independent living following the death of a parent and not to her for personal injury to herself.
The customer is over the age of 18 years and therefore there is no provision in Schedule 10 for disregarding the capital.
As the customer has capital held in trust in excess of £16,000 there is no entitlement to income support.”
6. C’s solicitors appealed on her behalf against that decision to the First-tier Tribunal. The grounds of appeal were essentially an elaboration of the points made in the extract quoted in paragraph 4 above. At this point the terms of the two capital disregards in issue should be noted.
The statutory provisions in issue
7. Paragraph 12 of Schedule 10 to the Income Support (General) Regulations 1987 (as amended in square brackets) reads as follows:
“12. Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant [or the claimant’s partner], the value of the trust fund and the value of the right to receive any payment under that trust.”
8. Paragraph 44 of Schedule 10 to the Income Support (General) Regulations 1987 (as amended) provides a disregard where:
“44.—(1) Any sum of capital to which sub-paragraph (2) applies and—
(a) which is administered on behalf of a person by the High Court or the County Court under Rule 21.11(1) of the Civil Procedure Rules 1998 or by the Court of Protection;
(b) which can only be disposed of by order or direction of any such court; or
(c) where the person concerned is under the age of 18, which can only be disposed of by order or direction prior to that person attaining age 18.
(2) This sub-paragraph applies to a sum of capital which is derived from—
(a) an award of damages for a personal injury to that person; or
(b) compensation for the death of one or both parents where the person concerned is under the age of 18.”
9. It is agreed that paragraph 45 of Schedule 10 was not in issue, as that disregard relates solely to Scotland and is essentially an equivalent provision to paragraph 44 but modified for that jurisdiction.
The First-tier Tribunal’s decision and reasons
10. The First-tier Tribunal heard C’s appeal on 26 June 2009. Tribunal Judge Ennals dismissed the appeal. On the Decision Notice he recorded that two arguments had been put to him, relating to paragraphs 12 and 44 respectively of Schedule 10 to the 1987 Regulations.
11. On the argument that the disregard in paragraph 12 applied, the tribunal judge held as follows:
“I accept that the reason for the compensation is her high care needs, which were no longer being met by her mother, who had sadly died. However, I have no evidence before me that C’s disabilities are the result of personal injury. It was put to me that learning disabilities may result from a genetic abnormality that should be regarded as a personal injury. There is actually no specific evidence before me to clarify precisely the cause of C’s disabilities. Even if there was, I am not satisfied that that would properly mean that her disabilities could be said to result from a personal injury.”
12. On the argument that the disregard in paragraph 44 applied, the tribunal judge ruled in these terms:
“For this to succeed I would have to find that C was under 18. I do not consider that the regulation applies to someone who was under 18 when she lost her parent, but is now over 18. Nor do I think it applies to someone who may have a mental age of under 18. Incidentally, there is no reliable evidence before me as to C’s mental age at present. While I can see the possible desirability of reading the above meanings into the wording of para. 44, I cannot see that either of those meanings can actually be found within the wording as it is.”
13. Irwin Mitchell, on behalf of C, lodged an application for permission to appeal to the Upper Tribunal, raising in addition a human rights argument based on Article 1 of Protocol 1 to the European Convention that does not appear to have been advanced before the First-tier Tribunal hearing. A District Tribunal Judge gave permission to appeal for the following reasons:
“It is not clear whether paragraph 44(2)(b) applies an age limit of 18 for entitlement to the disregard, or whether it describes the nature of the compensation – payments to under 18 year olds for the death of a parent.
There is no age limit for compensation for personal injury under paragraph 44(2)(a). In C’s case and where paragraph 44(1) is satisfied, could the interpretation of paragraph (b) as applying an age limit be unjustifiable discriminatory deprivation of a possession?”
The proceedings before the Upper Tribunal
14. There have been detailed written submissions on behalf of the Secretary of State (by A. Myers) and for C (by Mr Desmond Rutledge of Counsel). Given the complexity of the issues, I held an oral hearing of the appeal at Harp House on 4 March 2011. The Secretary of State’s representative was Mr Stephen Brown of the Solicitor’s Office and C was represented by Mr Rutledge. I am grateful to them all for their various written and oral submissions.
A preliminary issue: the decision in R(IS) 9/04
15. Mr Commissioner Howell QC (as he then was) ruled in reported decision R(IS) 9/04 that “assets being administered on a patient’s behalf either at the Court of Protection or by his or her receiver are still the patient’s own assets: and a fund of capital held in Court for such a patient remains as a matter of law his or her absolute beneficial property” (at paragraph 14). Applying that analysis to the present case, the £243,700 or so held by the Court of Protection was C’s capital and the only issue was whether one or more of the statutory disregards applied.
16. There was no mention of R(IS) 9/04 in the proceedings before the First-tier Tribunal; its first reference was in the grant of permission to appeal by the Upper Tribunal. Mr Rutledge’s original written submission on behalf of C stated an intention “to proceed on the basis that R(IS) 9/04 on funds held by the Court of Protection on a bare trust is correctly decided”. Mr Rutledge sought to withdraw, or at least modify, that concession at the oral hearing. Mr Brown, for the Secretary of State objected on the basis that the change of position was extremely late and without notice.
17. This is an inquisitorial jurisdiction and so I decided to hear Mr Rutledge’s argument on the point. In the circumstances of this case any unfairness to the Secretary of State could have been cured simply by allowing Mr Brown the opportunity to make further written submissions on this issue after the hearing. In the event I have not found it necessary to adopt that course of action.
18. Mr Rutledge’s argument, as I understood it, was not so much that R(IS) 9/04 was wrongly decided but rather that it did not apply on the particular facts of the present case. He submitted that the cases were distinguishable in that R(IS) 9/04 concerned a capital sum representing an inheritance whereas in the present case the capital was derived from compensation paid to the claimant following the death of her parent. In my view, from a legal perspective, this is a distinction without a difference – in R(IS) 9/04 the learned Commissioner was dealing with funds held for the claimant by the Court of Protection. The origin of those funds was irrelevant to the principle summarised at paragraph 15 above.
19. In the alternative, Mr Rutledge contended that R(IS) 9/04 was decided on the basis of an erroneous concession by the receiver in that case that the funds were held on a bare trust. I cannot accept that submission. Mr Commissioner Howell QC expressly stated that this concession had been rightly made (at paragraph 16), and accepted the argument made on behalf of the Secretary of State in that case that “The fact that the Court had discretionary powers of control over the management of the patient’s property for his or her benefit did not mean that the patient’s absolute beneficial ownership had suddenly disappeared, or that its existence became a matter of discretion” (at paragraph 13, emphasis in the original). Furthermore:
“it is implicit throughout the Court of Appeal's judgment in R(IS) 10/01 Beattie v. Secretary of State [2001] EWCA Civ 498, where the matter was fully argued by leading and junior Counsel, that assets under the control of the Court of Protection belong beneficially to the patient and the only issue is whether their (actual) value is disregarded under Schedule 10” (at paragraph 18).
20. In those circumstances Mr Rutledge’s original position was correct. There are no grounds for either distinguishing or doubting R(IS) 9/04. Accordingly the First-tier Tribunal was right to proceed on the assumption that the £243,700 was C’s capital and so the only issue was whether any of the statutory disregards applied.
The disregard in paragraph 12 of Schedule 10
21. The terms of the disregard in paragraph 12 of Schedule 10 to the 1987 Regulations are set out at paragraph 7 above. Mr Rutledge’s argument was that the statutory phrase “a payment made in consequence of any personal injury to the claimant” was broad enough to encompass a payment of compensation under the Fatal Accidents Act (FAA) 1976, as on any basis C had suffered a loss or injury. Furthermore section 3(1) of the FAA 1976, which governs the assessment of damages, provides that damages “may be awarded as are proportioned to the injury resulting from the death to the dependants respectively”. Mr Rutledge also referred me to various commentaries which use the terms “damage”, “loss” and “injury” interchangeably (e.g. McGregor on Damages at §1-021).
22. Mr Brown, however, relied on the plain meaning of the words used in paragraph 12 of Schedule 10, and noted the distinction between the phraseology used there (“any personal injury to the claimant”) and that deployed in regulation 51(1)(a) of the 1987 Regulations relating to notional capital (simply “any personal injury”, with no further qualification). He also observed that there was no evidence that C had suffered a “personal injury”; her Down’s Syndrome was a condition from birth and she was not the direct victim of the tortfeasor’s act that had resulted in her mother’s death.
23. I agree with Mr Brown that paragraph 12 cannot apply in the present circumstances. I note that in R(IS) 3/03 Mr Commissioner Turnbull (as he then was) was concerned with the interpretation of the previous version of paragraph 12 of Schedule 10 to the 1987 Regulations, which had been in place since 1 October 1990. That version was identical save for the omission of the words “or the claimant’s partner” (in square brackets at paragraph 7 above), which were added by amending regulations on 2 October 2006. Mr Commissioner Turnbull rejected an argument that the reference to “claimant” in paragraph 12 of Schedule 10 must be read as including a reference to the claimant’s partner or former partner (at paragraph 8 of his decision). He added that “[P]aragraph 12 of Schedule 10 looks not at who was beneficially entitled to the cause of action, but at who suffered the personal injury” (at paragraph 12).
24. The representatives’ submissions touched on a number of other authorities, e.g. Malekout v Secretary of State for Work and Pensions [2010] EWCA Civ 162 and Wakefield v Secretary of State for Social Security [2000] 1 FLR 761 (also reported as R(CS) 2/00). The issues there were whether certain types of pension payments amounted to either “a payment made in consequence of any personal injury” (Malekout) or to “any compensation for personal injury” (Wakefield). However, the cases were to some extent decided on points which do not arise in the present case – for example, in Malekout the central question for the Court of Appeal was whether the payments were received under an “agreement” to make payments “in consequence of any personal injury to the claimant”, with the focus being on whether there was an agreement. Insofar as these cases are relevant, they tend to support Mr Brown’s approach. The real problem for Mr Rutledge is that the expression “a payment made in consequence of any personal injury to the claimant” (emphasis added) cannot bite on a FAA award to a dependant in the light of the plain meaning of the language used and the analysis adopted in R(IS) 3/03. It follows that paragraph 12 of Schedule 10 cannot apply in the circumstances of the present case, where the personal injury (or rather the fatality) was suffered by the claimant’s parent.
25. Since the oral hearing in this matter, Judge Levenson has issued his decision in KQ v Secretary of State for Work and Pensions (IS) [2011] UKUT 102 (AAC), in which he held that paragraph 12 of Schedule 10 covered a payment received in settlement of a professional negligence claim against solicitors who had missed a limitation period for bringing proceedings against a surgeon, whose negligence in turn had caused the claimant personal injury. Judge Levenson held that the payment in question was still “made in consequence of any personal injury to the claimant”. However, he also accepted that “the chain of causation does not go on for ever” (at paragraph 13). I considered whether to seek further submissions from the parties on the potential relevance of this decision. However, I regard KQ v Secretary of State for Work and Pensions (IS) as a case decided on its own very special facts. It does not require me to reconsider the conclusions reached above.
The disregard in paragraph 44 of Schedule 10
26. The terms of the disregard in paragraph 44 of Schedule 10 to the 1987 Regulations are set out at paragraph 8 above. Mr Rutledge’s principal submissions on the construction of this provision were essentially two-fold. First, he argued that C’s capital fell to be disregarded under paragraph 44(2)(a) as being “an award of damages for a personal injury to that person”. He relied on Peters v East Midlands Strategic Health Authority and another [2009] EWCA Civ 145; [2009] 3 WLR 737, a case turning on the construction of the National Assistance (Assessment of Resources) Regulations 1992 (SI 1992/2977, as amended), which incorporate by reference the disregards in paragraphs 12 and 44 of Schedule 10 to the 1987 Regulations. Secondly, and if not, he contended that C’s capital was covered by paragraph 44(2)(b) as being “compensation for the death of one or both parents where the person concerned is under the age of 18”.
27. Mr Brown submitted that there had been no error of law in the tribunal’s approach to the interpretation and application of paragraph 44. In reply to Mr Rutledge’s first submission, he relied for the most part on his submissions on the construction of the related phrase in paragraph 12 of Schedule 10. So far as Mr Rutledge’s second point was concerned, Mr Brown focussed on the plain meaning of the language used. In his submission, the phrase “where the person concerned is under the age of 18” in paragraph 44(2)(b) (emphasis added) referred to C’s age at the date of the decision, not her age when she lost her parent or when the compensation was awarded. The key word, he argued, was “is”.
28. Before turning to these respective submissions, it is important to appreciate the structure of paragraph 44, which must be read as a whole. The initial parameters of the disregard are set by the opening words of paragraph 44(1) (“Any sum of capital to which sub-paragraph (2) applies”) and paragraph 44(2) – the capital in question must fall within (a) or (b). However, it is only a sub-set of such capital assets which benefit from the disregard; this is because additionally one of the three conditions in paragraph 44(1) must be satisfied. These conditions are all concerned with the administration or disposal of such capital assets. In the present case paragraph 44(1)(a) appears to have been satisfied, as the funds in question were and are administered on C’s behalf under the Court of Protection. So the real issue was whether either paragraph 44(2)(a) or (b) was met.
29. Mr Rutledge’s first submission, relating to paragraph 44(2)(a), runs into the same difficulties as his argument on the construction of paragraph 12. The expressions “any personal injury to the claimant” in paragraph 12 and “an award of damages for a personal injury to that person” in paragraph 44 both demonstrate that the “personal injury” must be “to” the claimant. The action in this case was brought by C’s father, as personal representative of the mother’s estate, in respect of a fatality, not a personal injury as such. C herself is undoubtedly disabled but she did not receive compensation for any personal injury to herself – the award covered the loss of care previously provided by her mother. The terms of paragraph 44(2)(a) do not include an award under the FAA for loss of dependency for the reasons also explained at paragraphs 23 and 24 above.
30. The Court of Appeal’s decision in Peters v East Midlands Strategic Health Authority does not take Mr Rutledge any further forward. True, Dyson LJ (as he then was), giving the Court’s judgment, ruled that the phrase “an award of damages for a personal injury” is “clear, unambiguous and unqualified” (at paragraph 30). This observation was made in the context of the issue which the Court had to decide, which was whether the statutory term was confined to general damages. It was held that the expression included all heads of damages, including e.g. damages for loss of earnings. However, there was no dispute in Peters that the claimant herself had suffered personal injury (being born with congenital rubella syndrome) as a result of the defendant health authority’s negligence. Thus the issue in Peters was the meaning of the underlined part of the phrase “an award of damages for a personal injury to that person”. In the present case, however, the award of compensation was in settlement of a fatal accidents claim, and not “for a personal injury to that person” (being C).
31. Mr Rutledge’s second and alternative submission was that C was covered by paragraph 44(2)(b), namely that the sum of capital in question was derived from “compensation for the death of one or both parents where the person concerned is under the age of 18.” His submission was that this disregard “refers to the claimant’s age at the time the compensation was paid into the Court of Protection rather than the age when the claim for Income Support is made”. This submission faces a fundamental difficulty at the outset, which I must confess that I only noticed in the course of writing up this decision. C was, in fact, already aged 18 when the compensation was actually paid. She was born on 17 June 1985; her mother was killed on 10 October 1999 (when C was 14) and the High Court consent order was dated 12 February 2004 (when C was 18). The payment of the bulk of the funds to the Court of Protection Account for C’s benefit occurred after that date (clause 7 of the consent order).
32. However, given the otherwise careful arguments from both representatives it would be wrong to decide this issue on that basis alone. In addition the consent order reveals that there had been an interim payment of compensation to C, but the file is unclear as to the date on which that payment was made. For present purposes I shall assume it was made before C’s 18th birthday and in circumstances that satisfied one of the criteria in paragraph 44(1). On that basis, I turn to Mr Rutledge’s three subsidiary arguments in support of his second submission on the scope of paragraph 44(2)(b), which concerned the immediate statutory context, the wider statutory context and an argument based on consequences.
33. The immediate statutory context of paragraph 44, Mr Rutledge contended, showed that the scope of the disregard was concerned with the origins of the capital sum (see e.g. paragraph 44(1)(c) and also the use of the phrase “derived from” in paragraph 44(2)). I agree with Mr Brown that in doing so Mr Rutledge was seeking to read in to paragraph 44 a meaning beyond that which the language could reasonably sustain.
34. The wider statutory context, according to Mr Rutledge, indicated that if the intention had been to confine the scope of paragraph 44 to those actually under the age of 18 at the current date, then a specific social security term would have been used, e.g. defining its application by reference to the concept of a “young person” (see regulations 2 and 14 of the 1987 Regulations). I am far from convinced. First, the disregard in paragraph 44 may also apply to certain awards of damages held by persons over the age of 18. Second, the overall focus of the administration and disposal criteria in paragraph 44(1) is on those who may not be able to look after their own funds. This strongly suggests that (subject to issues around the Mental Capacity Act 2005) the key distinction is between infancy and adulthood. That presumably justifies the use of the bright line of “18” rather than the fuzzier social security concept of a “young person”.
35. The argument based on consequences was that if the Secretary of State’s view was correct, and the disregard ceased to apply as soon as the claimant reached 18, then it would have very little application in practice, given that young people under this age can only claim income support in their own right in very limited circumstances. Again, I am not persuaded. As Mr Brown observed, the fact that a rule may affect only a small group of people does not of itself invalidate the rule. I also agree with Mr Brown that the disregard in paragraph 44 had its origins in the income support scheme at a time when capital held by a claimant’s child was taken into account in assessing entitlement to income support. The original version of paragraph 44 of Schedule 10, inserted by regulation 33(b) of the Income-related Benefits Schemes (Miscellaneous Amendments) (No. 5) Regulations 1994 (SI 1994/2139) read as follows:
“44. Any sum of capital administered on behalf of a person under the age of 18 by the High Court under the provisions of Order 80 of the Rules of the Supreme Court, the County Court under Order 10 of the County Court Rules 1981, or the Court of Protection, where such sum derives from—
(a) an award of damages for a personal injury to that person; or
(b) compensation for the death of one or both parents.
However, since the implementation of the Tax Credits Act 2002 children have, for most purposes, been “taken out of the equation” as regards income support claims. Indeed, save for transitional cases, the former regulation 44 of the 1987 Regulations (“Modifications in respect of children and young persons”) was repealed with effect from 6 April 2004.
36. I accept that the drafting of paragraph 44 is less than crystal clear, as Sir David Keene acknowledged in Malekout (at paragraph 8) is often the case with secondary legislation. In particular the language of paragraph 44(2)(b) – “compensation for the death of one or both parents where the person concerned is under the age of 18” – might conceivably be read in one of two ways. The Secretary of State submits that the disregard only lasts as long as the person is aged under 18; once they reach adulthood, the disregard ceases. Mr Rutledge argues that if the payment was made while the claimant was under 18, it continues indefinitely so long as one of the conditions in paragraph 44(1) continues to be met. For the reasons above I do not accept Mr Rutledge’s submissions on the construction of paragraph 44.
37. The meaning of a word as simple as “is” will depend on the statutory context. There are certainly situations where it does not necessarily mean the present time but looks to a point in the past (see e.g. Re M (a minor) (care order: threshold conditions) [1994] 2 AC 424) and/or the word cannot be given a strictly literal meaning (see e.g. McCann v Wright [1995] 1 WLR 1556). Equally, however, “is” may often be used as the “legislative present”, looking to the future (per Staughton LJ in Re Barretto [1994] QB 392 at 402). The context in the present case is of a means-tested benefit of last resort which is based on a person’s current circumstances on a week by week basis. Viewed in that light, both the language of the statutory provision and the context support the Secretary of State’s position. There are two other matters I should deal with before leaving paragraph 44 of Schedule 10 and turning to the human rights argument.
38. The first is that I have also considered whether paragraph 44(2)(b) might be concerned with the claimant’s age at the date at which they lost their parent. There is no doubt that C was aged only 14 when her mother was killed. If that were the intention, however, the terms of the disregard would have had to refer to “compensation for the death of one or both parents where the person concerned was under the age of 18” (emphasis added). The use of the present tense in paragraph 44(2)(b) is again a strong indication that the Secretary of State’s construction is to be preferred.
39. The second matter concerns the argument run before the First-tier Tribunal – but understandably not with any great enthusiasm by Mr Rutledge before the Upper Tribunal – that the reference to the claimant being “under the age of 18” in paragraph 44(2)(b) referred to her “mental age” in the light of her acknowledged developmental difficulties. There was little evidence on this before the First-tier Tribunal, although I do note that the Statement of Special Educational Needs, prepared when C was 16, assessed her as having a reading age of 5¼ and a number age of 4¼. I do not think the tribunal can be criticised for failing to adjourn (again) for more evidence on this point, given that section 173 of the Social Security Contributions and Benefits Act 1992 expressly defines “age” as a chronological concept, as “the time at which a person attains a particular age expressed in years is the commencement of the relevant anniversary of the date of his birth”.
The human rights argument
40. The submissions to the First-tier Tribunal turned solely on the construction of paragraphs 12 and 44 of Schedule 10 to the 1987 Regulations. The human rights argument was advanced for the first time in the application for permission to appeal to the Upper Tribunal. At that time it was put in rather generalised terms as a claim that C had been deprived of her right under Article 1 of Protocol 1 of the European Convention on Human Rights to peaceful enjoyment of her possessions, namely her right to income support, as the compensation was to pay for her substantial care needs and not for her basic living costs.
41. Mr Rutledge has refined that argument somewhat to run as follows. As a matter of principle, all social security benefits based on defined statutory criteria fall within the potential scope of Article 1 of Protocol 1. C has a claim for unlawful discrimination based on that provision in conjunction with Article 14. In particular, the Secretary of State’s construction of paragraph 44 unjustifiably discriminates between two groups of young people. The first group (Group 1) are young people aged under 18 with no disability who have lost a parent on whom they depended for care. The second group (Group 2) are young people with a disability who have lost a parent on whom they depended for care and would have continued to depend on for their care into adulthood. Paragraph 44 (on the Secretary of State’s construction) in effect treats those two groups as the same, whereas in fact the rule has a markedly more adverse impact on those in Group 2. Mr Rutledge further submits that the failure to address this inequality through some form of differential treatment of the two groups amounts to a breach of Article 14, given the requirement established by Thlimmenos v Greece (2001) 31 EHRR 15, as acknowledged and approved by the Court of Appeal in AM (Somalia) v Entry Clearance Officer [2009] EWCA Civ 634.
42. Mr Brown, on the other hand, building on Mr Myers’s earlier written submission, argued that Mr Rutledge’s argument did not get past first base. He argued that the claimant simply had no sustainable right that fell within the scope of Article 1 of Protocol 1, relying on paragraph 51 of the decision of the Grand Chamber in the admissibility decision in Stec and Others v United Kingdom [2005] ECHR 924, where the Court ruled that where “an individual has an assertable right under domestic law to a welfare benefit, the importance of that interest should also be reflected by holding Article 1 of Protocol No. 1 to be applicable.” However, as Mr Rutledge argued, that contention failed to have regard to the Court’s subsequent conclusion (at paragraph 55) that “the relevant test is whether, but for the condition of entitlement about which the applicant complains, he or she would have had a right, enforceable under domestic law, to receive the benefit in question”. On that basis, I accept Mr Rutledge’s submission that Article 1 of Protocol 1 is engaged in the circumstances of this case.
43. Mr Brown’s next argument was that even if he was wrong on the proprietary interest point, then Mr Rutledge needs to show that the claimant has a relevant status within Article 14 to get a potential discrimination argument off the ground. I did not understand Mr Brown to be suggesting that the claimant is other than seriously disabled and that, in principle, a disability is a personal characteristic such that it may fall within the concept of “status” in Article 14. That last proposition, of course, was common ground before the Court of Appeal in AM (Somalia) v Entry Clearance Officer (see Maurice Kay LJ at paragraph 9 and Elias LJ at paragraph 36).
44. However, Mr Brown’s main point in this context was that there was no real linkage between the disregard in paragraph 44 and the claimant’s disabled status. As he put it, the statutory provision was silent on the issue of disability; the alleged discrimination had no flavour of a “personal characteristic” in Article 14 terms, as it was concerned solely with the status of certain capital funds held by claimants. The issue under paragraph 44 was simply how a particular pot of money relating to compensation for personal injury, or for a parent’s death where the claimant was aged under 18, should be dealt with under the income support scheme. Mr Brown noted that it would have been open to the legislator to have made particular provision for people in the claimant’s position. He drew attention to the fact that in contrast Schedule 10 did provide for a special capital disregard to those disabled persons who received payments under the Macfarlane Trust (paragraph 22) or as a result of Creutzfeldt-Jakob disease (paragraph 64).
45. In resolving this issue I have gained benefit from (as well as being bound by) the reasoning of the Court of Appeal in AM (Somalia) v Entry Clearance Officer. Elias LJ made a helpful distinction between what he described as indirect discrimination “in its traditional form” and discrimination based on a Thlimmenos argument. The former “recognises that a rule … might in practice adversely affect a particular group notwithstanding that it is neutral in form” (at paragraph 41). In such cases the applicant will be asking for the rule to be disapplied in their case because of its adverse effect, which in the absence of justification will amount to unlawful discrimination. However, C’s case comes unstuck when one looks for adverse differential treatment – anyone with this amount of capital which did not fall within the terms of the capital disregard would be barred from entitlement to income support. I therefore echo Judge Howell QC’s observation in IB v Birmingham CC and Secretary of State for Work and Pensions and EHRC [2011] UKUT 23 (AAC) (at paragraph 35):
“This it seems to me is the point at which the complaint of adverse differential treatment of the claimant as a disabled person comes to grief since it is not possible to identify on the facts any relevant way in which a non-disabled person in otherwise similar circumstances would get any more money than the claimant.”
46. I therefore agree with Mr Brown’s analysis on this point. The key issue in determining the application of paragraph 44 is the nature of the funds owned by the claimant; there is no direct link between the capital held and the claimant’s disability. The real question is whether large amounts of capital held by the claimant should dislodge a claim for a means-tested benefit such as income support. I conclude that paragraph 44 of Schedule 10 does not operate as a form of indirect discrimination in the conventional sense as between different groups in the way that Mr Rutledge seeks to show. As such, I do not need to consider the issue of justification in this context – but, if I did, I would find the differential treatment justified for the reasons explained further below.
47. As Elias LJ explained, a discrimination argument based on Thlimmenos is rather different in nature to a traditional claim of indirect discrimination. The European Court of Human Rights recognised in that case (at paragraph 44) that Article 14 may be invoked where “states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different”. Elias LJ drew the following distinction (at paragraph 44):
48. This, in a nutshell, was the core of Mr Rutledge’s argument on this point – that C’s circumstances were such that, assuming the Secretary of State’s submission on the construction of paragraph 44 was correct, then the material difference between the position of C and non-disabled people otherwise in the same position was such that the failure to make special provision amounted to unlawful discrimination within the Thlimmenos principle. He sought to persuade me that although such an argument failed in IB v Birmingham CC, the case here was materially different and much stronger.
49. I agree with the view expressed by Judge Howell QC in IB v Birmingham CC that in a case involving a Thlimmenos challenge the principal, if not the entire, focus must be on the question of whether there is objective and reasonable justification:
“Ex hypothesi there is no differential treatment in the provision the claimant is complaining about, because the nature of his complaint is that there should be: a special rule more favourable to him than the one that applies to others” (at paragraph 43).
50. The parameters of a justification defence are reasonably well-established. In particular, of course, the state has a wide margin of appreciation in matters of social policy and the allocation of public resources. Indeed, I understood Mr Rutledge to concede (rightly) that the case law suggested that it would have to be a strong case for a rule to be questioned on this basis by a court or tribunal. Indeed, as Judge Howell QC observed in IB v Birmingham CC, in no case cited to him had Article 14 “so far been held actually applicable to make such differentiation mandatory, other than in Thlimmenos itself” (at paragraph 43).
51. In AM (Somalia) v Entry Clearance Officer the unsuccessful challenge was to the provision in the Immigration Rules which requires parties “to maintain themselves and any dependants adequately without recourse to public funds” (paragraph 281(v)), a rule which made no allowance for the situation where the appellant’s spouse (and sponsor) was unable to work because of disability. In IB v Birmingham CC the issue was whether the Local Housing Allowance (LHA) limits on eligible rents for housing benefit should differentiate more generously in favour of severely disabled people. The Upper Tribunal judge decided that Article 14, as applied by Thlimmenos, could not be used to require positive discrimination by way of giving the claimant an additional allowance for an extra bedroom in the LHA calculation to be used by the claimant’s rotating team of carers. Mr Rutledge submitted that the unsuccessful challenges in IB v Birmingham CC and AM (Somalia) v Entry Clearance Officer could be distinguished on three principal grounds.
52. The first is that the claim in IB v Birmingham CC was for an award of an additional cash benefit outside the then rules, whereas C’s case concerns a negative exclusionary rule. That is, of course, a distinction on the facts, but I am not convinced it takes Mr Rutledge very far, not least as AM (Somalia) v Entry Clearance Officer concerned an exclusionary rule.
53. The second ground is that whereas in AM (Somalia) v Entry Clearance Officer there were real uncertainties as to the definition of the class of individuals seeking special treatment, in C’s case the relevant category was much more tightly defined by reference to the nature and effect of their disability. I am not persuaded on that point. As Mr Brown pointed out, there would be undoubted definitional problems, not least in determining precisely what degree of disability and need for dependency would qualify for special treatment.
54. Mr Rutledge’s third ground for distinguishing those cases is that there were no obvious administrative costs involved in applying a disability exemption for paragraph 44 to claimants who cannot care for themselves due to a long-term disability. Again, I am not sure that is right, for the reasons Mr Brown advanced in relation to the second point. As Elias LJ held in AM (Somalia) v Entry Clearance Officer (at paragraph 68):
55. I also agree with Mr Brown that C’s challenge is actually broadly akin to that in IB v Birmingham CC. True, paragraph 44 involves an exclusionary rule, but the cases are in other respects similar: the challenge to the existing rule is based on a severe disability, the existing rule in both cases is silent on any link with disability, and the claim is one for additional provision on the basis of Article 14, as applied by Thlimmenos, which was in many ways an unusual case. In addition, as Judge Howell QC observed was the case in IB v Birmingham CC, the provision under challenge is one part of a much larger benefits jigsaw:
“50. The benefits system is intricate and complicated, and as has been seen contains many detailed provisions that interact and interconnect with one another. Of course in such a massive and complex system there will be apparent anomalies and cases where deserving people, as I am sure this claimant is, will find themselves on the wrong side of some detailed distinction or with amounts they consider unfairly fail to reflect their special needs so that more should as a matter of social justice be done for them. But the evaluation, and if necessary correction, of such matters and the provision of the extra resources for the purpose are questions for the legislature and the executive, and in my judgment well within the principle emphasised by both the ECtHR and the Court of Appeal in the cases I have cited, that these are areas from which courts applying the Convention must stand back, as outside the proper scope of intervention under Article 14.”
56. Finally, in AM (Somalia) v Entry Clearance Officer Elias LJ helpfully set out seven specific factors which led him to the conclusion that the state’s failure to make special provision for people with spouses who cannot work by reason of disability was justified (see paragraphs 65-71). Judge Howell QC found those or corresponding considerations to apply equally in IB v Birmingham CC (at paragraph 47). I have to say that I regard the first six of Elias LJ’s seven considerations to apply with equal force in the present case (the seventh factor concerning the Secretary of State’s discretionary powers being irrelevant in the present context). Despite his valiant efforts, I therefore reject Mr Rutledge’s argument that the failure to make special provision for people in C’s position is unreasonable and disproportionate.
Conclusion
57. For the reasons explained above, the Upper Tribunal dismisses the appeal.
Signed on the original Nicholas Wikeley
on 7 April 2011 Judge of the Upper Tribunal