Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CDLA/669/2012

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge Robin C A White

 

Decision: The decision of the tribunal of 13 January 2012 is erroneous in law. I set it aside. I remake the decision of the tribunal to the same effect.

My substituted decision: There were no grounds to supersede the decision dated 6 September 2007 which decided that the appellant is not entitled to either component of a disability living allowance from and including 16 June 2007.

 

REASONS FOR DECISION

Contents

A. Some preliminary remarks: paras 1-5

B. Background and context: paras 6-23

C. The grounds of appeal: paras 24-25

D. Did the tribunal err in law?: paras 26-27

E. Relevant provisions of national law: paras 28-30

F. Relevant provisions of European Union law: paras 31-57

G. The arguments of the parties: paras 58-64

H. The Upper Tribunal’s assessment: paras 65-115

A. Some preliminary remarks 

1.         This appeal concerns the question of whether the appellant was entitled to retain her entitlement to both components of a disability living allowance when she and her husband moved permanently to Germany in June 2007.[1] Determining the answer to that question has proved to be a difficult task in relation to the care component.

2.         I am very grateful for the patience of the parties in this long-running appeal, which raises a complex point on the proper interpretation of Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, [1997] OJ L28/4 as amended (“Regulation 1408/71”).

3.         The determination of this appeal has been delayed while awaiting the outcome of another case: Secretary of State for Work and Pensions v LT [2012] UKUT 282 (AAC) (referred to in the papers for this appeal as CDLA/735/2009). The Secretary of State’s further appeal to the Court of Appeal in this case was dismissed by the Court of Appeal on 23 October 2013 and permission to appeal to the Supreme Court was refused.[2] I understand that the Secretary of State is in the process of seeking permission to appeal from the Supreme Court. However, I see no reason now to delay further the consideration of this appeal, since there is a crucial factual distinction between the circumstances of the claimant in that case and the circumstances of the appellant in this appeal.[3]

4.         There have also been delays as I have attempted to clarify a number of factual aspects about the German social security system in response to points made by or on behalf of the appellant.

5.         In this decision, I will refer for ease of comprehension to the respondent as “the Secretary of State”.

B. Background and context

6.         The appellant, who was born on 5 December 1975, has been hemiplegic on the left hand side since she was six months old. She has never worked and has never paid any national insurance contributions. She has a national insurance number.

7.         The appellant is married to a United Kingdom national who was born on 9 October 1941. The couple have lived in the United Kingdom, where the husband worked and paid national insurance contributions. It would seem that the husband last worked in 1992. So far as relevant to this appeal, the couple were resident in Germany from 1 June 1999 to 31 May 2002.

8.         The appellant has been in receipt of a disability living allowance for some years. It would seem that the first award of a disability living allowance was made in 1994. Entitlement to a disability living allowance was ended when the couple were resident in Germany between 1999 and 2002, but a further claim on their return resulted in an award of a disability living allowance. Accordingly, it has been established that there has not been continuous entitlement to the allowance since 1 June 1992 such that transitional protection would arise under Article 95b(8) of Regulation 1408/71.

9.         The appellant has also been in receipt of a severe disablement allowance from 21 January 1993.

10.      The appellant’s husband reached State pensionable age in 2006 and is said to be in receipt of a United Kingdom pension.  He also has what is described as a German State pension from 1 July 1992.

11.      The appellant and her husband moved to Germany to live there permanently on 15 June 2007. On 6 September 2007 a decision maker superseded a decision dated 27 March 2003 to remove entitlement from and including 16 June 2007 to the higher rate of the mobility component and the middle rate of the care component of a disability living allowance.

12.      The severe disablement allowance continued in payment following the move to Germany since it is an invalidity benefit within the scope of Article 10 of Regulation 1408/71.

13.      Neither the appellant nor her husband has worked in Germany since their move there in June 2007.

14.      There followed something of an hiatus after the September 2007 decision, which appears to have been caused in part by the Department’s considering the effect of the decision of the Court of Justice of 18 October 2007 in Case C‑299/05 Commission v European Parliament and Council [2007] ECR I-8695 on the export of the care component of a disability living allowance. Certainly in this period, there were further enquiries made by the Department of the appellant.

15.      By letter dated 25 August 2009, the Department offered the following explanation for refusing to supersede the decision dated 6 September 2007 terminating the award of a disability living allowance:

We cannot pay your Disability Living Allowance (care component) This is because you are not in receipt of State Pension, long term Incapacity Benefit or bereavement benefit. Nor are you insured to receive sickness benefits from the UK and you are not a family member of a person insured to receive sickness benefits from the UK.

Disability Living Allowance (mobility component) can only continue to be paid if you have been in receipt of this component continually since before 1^st June 1992. Your Disability Living Allowance (mobility component) cannot continue to be paid because you do not meet this requirement and there are no other provisions to enable you to continue to be paid the mobility component when you are living in another EEA state or Switzerland. The recent European Court of Justice decision of 18/10/2007 does not change this.

16.      On 23 November 2009, the appellant appealed against the decision on the grounds that it was wrong.

17.      It seems that, when the couple moved to Germany in June 2007, a Form E121 was issued valid from 1 August 2007. Form E121 was a form used under Regulation 1408/71 and was entitled “Certificate for the registration of pensioners and the updating of lists”. In order to have access to healthcare in the Member State of residence, pensioners had to register in the host State through the E‑121 form issued by the Member State which paid the pension. Only persons in receipt of a statutory pension from a Member State and the members of their family were entitled to the E‑121 form.[4]

18.      However, there is an undated note in the file I have in connection with this appeal (p.120) which states that the appellant’s husband “has a German pension, his E121 was cancelled as UK are not competent”.

19.      On 10 November 2011, the Department noted in response to the appeal:

[The appellant] has been in receipt of SDA since 21/01/1993. As she has never worked or paid any national insurance contributions in the UK, she cannot export her DLA care component on the back of her SDA award. We accept that she is within the scope of 1408/71 and has exported her SDA as an invalidity benefit, however as she has never worked she is not classed as a pensioner to assist her to export her DLA. She is not a worker nor in receipt of a benefit that could help.

20.      On 14 December 2011 the Secretary of State’s representative filed the following further response to the appeal:

[The appellant] was entitled to the highest rate of mobility and the middle rate of care prior to her move to Germany in June 2007. She was disallowed from and including 16/06/2007 as she was not in receipt of state pension, long term incapacity benefit or sickness benefits from the GB, nor was she a family member of a person insured for sickness benefits from GB. [The appellant] is unable to benefit from being a family member of a pensioner under Reg 883 as she moved to another EEA country prior to 01/05/2010. Her husband is in receipt of a UK retirement pension but Doc 120 indicates that he is also receiving a German pension which is from his current state of residence, as such the UK is not the competent state to pay sickness benefits for [the appellant].

21.      The appeal came before a tribunal on 13 January 2012. Neither party attended for understandable reasons (though It might have considerably assisted the tribunal if the Secretary of State had provided a representative for this complex appeal).The outcome of the appeal was confirmation of the Secretary of State’s decision. A combined decision notice and statement of reasons was issued.

22.      The appellant subsequently sent in a State pension estimate which showed that, as at 3 January 2012, the pension estimate was for a basic state pension of £68.10 and an additional state pension of £12.00 which would become payable at the earliest from 5 December 2042. The estimate says:

This estimate is based on your National Insurance record at 5 April 2011—it is not a forecast of how much State Pension you may get when you reach State Pension age.  

23.      The appeal now comes before me with the permission of a judge of the Upper Tribunal.

C. The grounds of appeal

24.      The material grounds of appeal are that Article 28 of Regulation 1408/71 has not been considered, that the decision to terminate the award of a disability living allowance was premature, and that the appellant has no “rights to German benefits”.

25.      In giving permission to appeal, the judge of the Upper Tribunal noted:

I have given permission to appeal, because there is a realistic prospect that the decision involved the making of an error of law. It is arguable that, as a recipient of a severe disablement allowance, the claimant was a pensioner in her own right for the purposes of Regulation 1408/71.  

D. Did the tribunal err in law?

26.      It is implicit in the way in which argument has been presented by both the appellant and the Secretary of State that both parties acknowledge that the explanation given by the tribunal was inadequate because it did not address aspects of the application of provisions of Regulation 1408/71 which are relevant to this appeal. I agree. The tribunal’s reasons are inadequate and for this reason I set their decision aside. Given the complexity of this case and the length of time it has subsequently taken to try to resolve some of the issues raised, I express no criticism of the tribunal for its error in this case.

27.      The remainder of this decision constitutes my assessment of the appellant’s argument that the Secretary of State was wrong to terminate her entitlement to a disability living allowance when she and her husband moved permanently to Germany in June 2007.

E. Relevant provisions of national law

28.      I do not need to set out in much detail the national provisions on the award of a disability living allowance and its payment. The key provision of national law relevant to this appeal concerns the effect of the departure abroad of a person in receipt of a disability living allowance.

29.      The relevant part of Regulation 2 of the Social Security (Disability Living Allowance) Regulations 1991 provides:

Conditions as to residence and presence in Great Britain

2.—(1) Subject to the following provisions of this regulation, the prescribed conditions for the purposes of section 71(6) of the Act as to residence and presence in Great Britain in relation to any person on any day shall be that—

(a) on that day—

(i) he is ordinarily resident in Great Britain; and

…

(ii)        he is present in Great Britain; and

(iii)       he has been present in Great Britain for a period of, or for periods amounting in the aggregate to, not less than 26 weeks in the 52 weeks immediately preceding that day; … .

(2) For the purpose of paragraph (1)(a)(ii) and (iii), notwithstanding that on any day a person is absent from Great Britain, he shall be treated as though he was present in Great Britain if his absence is by reason only of the fact that on that day—

…

(d)        his absence from Great Britain is, and when it began was, for a temporary purpose and has not lasted for a continuous period exceeding 26 weeks; or

(e)        his absence from Great Britain is temporary and for the specific purpose of his being treated for incapacity, or a disabling condition, which commenced before he left Great Britain, and the Secretary of State has certified that it is consistent with the proper administration of the Act that, subject to the satisfaction of the foregoing condition in this sub-paragraph, he should be treated as though he were present in Great Britain.

30.      Since the appellant left the United Kingdom permanently on 15 June 2007, the savings provisions in Regulation 2(2) can have no application to the appellant, who was thereafter neither ordinarily resident nor present in the United Kingdom and the absence from the United Kingdom was for an indefinite period. It follows that any continuing entitlement to payment of a disability living allowance can only be grounded on the application of rules of European Union Law.

F. Relevant provisions of European Union law

31.      I refer throughout this decision to European Union Law even though the period in issue predates the entry into force of the Treaty of Lisbon which might render it more appropriate to refer at times to European Community Law.

32.      The parties in this appeal have taken different views on the proper interpretation of the relevant provisions of Regulation 1408/71.

33.      Regulation 1408/71 concerns the co-ordination of differing national social security systems in order to avoid social security rules operating as a barrier to the free movement of workers. Over time its terms have been extended beyond workers (employed persons) to include self-employed persons, students, and civil servants. The latter extension is only relevant in those Member States which have separate social security systems for civil servants. It also concerns members of the family, such as a spouse, of those covered.

34.      Article 1 of Regulation 1408/71 contains a long list of terms defined in the Regulation.

35.      The terms “employed person” and “self-employed person” are defined in Article 1(a). Only the definitions in Article 1(a)(i) to (ii) have any relevance to this case:

employed person and self-employed person mean respectively:

(i)      any person who is insured, compulsorily or on an optional continued basis, for one or more of the contingencies covered by the branches of a social security scheme for employed or self-employed persons or by a special scheme for civil servants;

(ii) any person who is compulsorily insured for one or more of the contingencies covered by the branches of social security dealt with in this Regulation, under a social security dealt with in this Regulation, under a social security scheme for all residents or for the whole working population, if such person:

—    can be identified as an employed or self-employed person by virtue of the manner in which such scheme is administered or financed, or

—   failing such criteria, is insured for some other contingency specified in Annex I under a scheme for employed or self-employed persons, or under a scheme referred to in (iii), either compulsorily or on an optional continued basis, or where no such scheme exists in the Member State concerned, complies with the definition given in Annex I.

36.      The words “under a social security dealt with in this Regulation” are otiose, and appear to have been introduced as a typographical error when Council Regulation (EC) No 118/97, [1997] OJ L28/1, was adopted. That was an amending regulation which included in its Annex an updated version of Regulation 1408/71 and introduced these words. I have ignored them. I observe that, when the Court of Justice cited the definitions of these terms in Case C‑516/09 Borger, [2011] ECR I-1493, it simply omitted the words from the definition.

37.      Annex I spells out the persons included for each Member State for which there is an entry in Annex I in relation to the definitions provided for in Article 1(a)(ii). These statements are required because of the many different ways in which the Member States organise their social security systems. The entry for the United Kingdom reads:

Any person who is an “employed earner” or a “self-employed earner” within the meaning of the legislation of Great Britain or of the legislation of Northern Ireland shall be regarded respectively as an employed person or a self-employed person within the meaning of Article 1(a)(ii) of the Regulation. …..

38.      “Member of the family” is defined in Article 1(f) as follows:

(i) “member of the family” means any person defined or recognized as a member of the family or designated as a member of the household by the legislation under which benefits are provided or, in the cases referred to in Articles 22(1)(a) and 31, by the legislation of the Member State in whose territory such person resides; where, however, the said legislations regard as a member of the family or a member of the household only a person living under the same roof as the employed or self-employed person or student, this condition shall be considered satisfied if the person in question is mainly dependent on that person. Where the legislation of a Member State does not enable members of the family to be distinguished from the other persons to whom it applies, the term “member of the family” shall have the meaning given to it in Annex I.

(ii) where, however, the benefits concerned are benefits for disabled persons granted under the legislation of a Member State to all nationals of that State who fulfil the prescribed conditions, the term “member of the family” means at least the spouse of an employed or self-employed person or student and the children of such person who are either minors or dependent upon such person;

39.      The Annex I entry in relation to the United Kingdom reads:

UNITED KINGDOM

For the purpose of determining entitlement to benefits in kind, the term “member of the family” means:

1. As regards the legislation of Great Britain and Northern Ireland:

(1) a spouse, provided that:

(a) that person, whether employed or self-employed, or another person entitled under the Regulation, is:

(i) residing with the spouse; or

(ii) contributing to the maintenance of the spouse; and

(b) the spouse does not:

(i) have earnings as an employed or self-employed person or income as a person entitled under the Regulation; or

(ii) receive a social security benefit or pension based on the spouse’s own insurance;

(2) a person having care of a child, provided that:

(a) the employed or self-employed person or person entitled under the Regulation is:

(i) living together with the person as though husband and wife;

or

(ii) contributing to the maintenance of the person; and

(b) the person does not:

(i) have earnings as an employed or self-employed worker or income as a person entitled under the Regulation; or

(ii) receive a social security benefit or pension based on that person’s own insurance;

(3) a child in respect of whom that person, the employed or self employed person, or another person entitled under the Regulation is or could be paid child benefit.

40.      “Competent authority” under Article 1(l) means “in respect of each Member State, the Minister, Ministers or other equivalent authority responsible for social security schemes throughout or in any part of the territory of the State in question.”

41.       “Competent institution” is defined in Article 1(o) as:

(i)      the institution with which person concerned is insured at the time of the application for benefit; or

(ii)     the institution from which the person concerned is entitled or would be entitled to benefits if he or a member of members of his family were resident in the territory of the Member State in which the institution is situated; or

(iii)    the institution designated by the competent authority of the Member State concerned; or

(iv)    in the case of a scheme relating to an employer’s liability in respect of the benefits set out in Article 4(1), either the employer or the insurer involved or, in default thereof, a body or authority designated by the competent authority of the Member State concerned;

42.      Article 1(q) of Regulation 1408/71 defines “the competent State” as the “Member State in whose territory the competent institution is situated.”

43.      Article 1(r) defines periods of insurance as follows:

periods of insurance means periods of contribution or periods of employment or self-employment as defined or recognized as periods of insurance by the legislation under which they were completed or considered as completed, and all periods treated as such, where they are regarded by the said legislation as equivalent to periods of insurance … ;

44.      Article 1(t) defines benefits and pensions as follows:

“benefits” and “pensions” mean all benefits and pensions, including all elements thereof payable out of public funds, revalorization increases and supplementary allowances, subject to the provisions of Title III, as also lump sum benefits which may be paid in lieu of pensions, and payments made by way of reimbursement of contributions;

45.      “Residence” means “habitual residence”, while “stay” means “temporary residence”: Article 1(h) and (i).

46.      Article 2 of Regulation 1408/71 entitled “Persons covered” provides, so far as relevant to this appeal:

1. This Regulation shall apply to employed and self-employed persons and to students who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States … as well as to members of their families and their survivors.

47.      Article 3 of Regulation 1408/71 prohibits discrimination on grounds of nationality between nationals affected by the terms of the Regulation, subject to its special provisions.

48.      Article 4 of Regulation 1408/71 spells out the matters covered. It is accepted by both parties that the care component of DLA is a cash sickness benefit falling within Article 4(1)(a): Case C-299/05 Commission v European Parliament and Council, [2007] ECR I-8730.

49.      Title II of Regulation 1408/71 contains provisions for determining the legislation applicable to any given claim for a benefit falling within the material scope of the Regulation. For any given claim, the legislation of a single Member State only will apply.

50.      There are two provisions in Article 13(2) possibly relevant to this appeal:

(a) a person employed in the territory of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State or if the registered office or place of business of the undertaking or individual employing him is situated in the territory of another Member State;

…

(f)         a person to whom the legislation of a Member State ceases to be applicable, without the legislation of another Member State becoming applicable to him in accordance with one of the rules laid down in the foregoing subparagraphs or in accordance with one of the exceptions or special provisions laid down in Articles 14 to 17 shall be subject to the legislation of the Member State in whose territory he resides in accordance with the provisions of that legislation alone.

51.      The primary rule is that the applicable legislation is that of the Member State in which a person works. The other rules are subsidiary to that primary rule. Article 13(2)(f) was inserted to alleviate concerns by some Member States that a Member State in which a person last worked would, where the person concerned undertook no further work, remain the competent State forever thereafter regardless of the Member State of residence of the person concerned. The effect would be that the burden of funding all future awards of benefit would fall on the Member State in which the person last worked. The application of Article 13(2)(f) avoids that consequence.

52.      Article 10b of Council Regulation (EEC) 574/72 of 21 March 1972 laying down the procedure for implementing Regulation 1408/71 provides:

Formalities pursuant to Article 13(2)(f) of the Regulation

The date and conditions on which the legislation of a Member State ceases to be applicable to a person referred to in Article 13(2)(f) of the Regulation shall be determined in accordance with that legislation. The institution designated by the competent authority of the Member State whose legislation becomes applicable to the person shall apply to the institution designated by the competent authority of the former Member State with a request to specify this date.

53.      Article 89 and Annex VI of Regulation 1408/71 contain special procedures for applying the legislation of certain Member States. There are relevant entries relating to the United Kingdom in Annex VI as follows:

19. Subject to any conventions concluded with individual Member States, for the purpose of Article 13(2)(f) of the Regulation and Article 10b of the Implementing Regulation, United Kingdom legislation shall cease to apply at the end of the day on the latest of the following three days to any person previously subject to United Kingdom legislation as an employed or self-employed person:

(a) the day on which residence is transferred to the other Member State referred to in Article 13(2)(f);

(b) the day of cessation of the employment or self-employment, whether permanent or temporary, during which that person was subject to United Kingdom legislation;

(c) the last day of any period of receipt of United Kingdom sickness or maternity benefit (including benefits in kind for which the United Kingdom is the competent State) or unemployment benefit which

(i) began before the date of transfer of residence to another Member State or, if later,

(ii) immediately followed employment or self-employment in another Member State while that person was subject to United Kingdom legislation.

20. The fact that a person has become subject to the legislation of another Member State in accordance with Article 13(2)(f) of the Regulation, Article 10b of the Implementing Regulation and point 19 above, shall not prevent:

(a) the application to him by the United Kingdom as the competent State of the provisions relating to employed and self-employed persons of Title III, Chapter 1 and 2, Section 1 or Article 40(2) of the Regulation if he remains an employed or self-employed person for those purposes and was last so insured under the legislation of the United Kingdom;

(b) his treatment as an employed or self-employed person for the purposes of Chapter 7 and 8 of Title III of the Regulation or Article 10 or 10a of the Implementing Regulation, provided United Kingdom benefit under Chapter 1 of Title III is payable to him in accordance with paragraph (a).

54.      Articles 18 to 36 of Regulation 1408/71 contain special provisions concerning sickness and maternity benefits, and constitute Chapter 1 of Title III of the Regulation. The application of Articles 27 and 28 is at the heart of this appeal.

55.      Article 18 provides for the aggregation of periods of insurance, employment or residence in relation to sickness and maternity benefits.

56.      Article 22 applies both to cash sickness benefits and to sickness benefits in kind. So far as possibly relevant to the claimant’s circumstances, the Article provides:

1. An employed or self-employed person who satisfies the conditions of the legislation of the competent State for entitlement to benefits, taking account where appropriate of the provisions of Article 18, and:

(a) …

(b) who, having become entitled to benefits chargeable to the competent institution, is authorised by that institution … to transfer his residence to the territory of another Member State,

(c)  …

shall be entitled:

(i) …

(ii) to cash benefits provided by the competent institution in accordance with the provisions of the legislation which it administers. … .

2. The authorisation required under paragraph 1(b) may be refused only if it is established that movement of the person concerned would be prejudicial to his state of health or the receipt of medical treatment.

57.      Section 5 of Chapter 1 of Title III on sickness and maternity is entitled “Pensioners and members of their families”. Articles 27 and 28 provide:

Article 27

Pensions payable under the legislation of several States where there is a right to benefits in the country of residence

A pensioner who is entitled to draw pension under the legislation of two or more Member States, of which one is that of the Member State in whose territory he resides, and who is entitled to benefits under the legislation of the latter Member State, taking account where appropriate of the provisions of Article 18 and Annex IV, shall, with the members of his family, receive such benefits from the institution of the place of residence and at the expense of that institution as though the person concerned were a pensioner whose pension was payable solely under the legislation of the latter Member State.

Article 28

Pensions payable under the legislation of one or more States, in cases where there is no right to benefits in the country of residence.

1. A pensioner who is entitled to a pension under the legislation of one Member State or to pensions under the legislation of two or more Member States and who is not entitled to benefits under the legislation of the Member State in whose territory he resides shall nevertheless receive such benefits for himself and for members of his family, in so far as he would, taking account where appropriate of the provisions of Article 18 and Annex VI, be entitled thereto under the legislation of the Member State or of at least one of the Member States competent in respect of pensions if he were resident in the territory of such State. The benefits shall be provided under the following conditions:

(a) benefits in kind shall be provided on behalf of the institution referred to in paragraph 2 by the institution of the place of residence as though the person concerned were a pensioner under the legislation of the State in whose territory he resides and were entitled to such benefits;

(b) cash benefits shall, where appropriate, be provided by the competent institution as determined by the rules of paragraph 2, in accordance with the legislation which it administers. However, upon agreement between the competent institution and the institution of the place of residence, such benefits may be provided by the latter institution on behalf of the former, in accordance with the legislation of the competent State.

2. In the cases covered by paragraph 1, the cost of benefits in kind shall be borne by the institution as determined according to the following rules:

(a) where the pensioner is entitled to the said benefits under the legislation of a single Member State, the cost shall be borne by the competent institution of that State;

(b) where the pensioner is entitled to the said benefits under the legislations of two or more Member States, the cost thereof shall be borne by the competent institution of the Member State to whose legislation the pensioner has been subject for the longest period of time; should the application of this rule result in several institutions being responsible for the cost of benefits the cost shall be borne by the institution administering the legislation to which the pensioner was last subject.

G. The arguments of the parties

58.      Neither party has collected together their arguments following the various submissions which have been made in connection with this appeal into a single submission, but the following is a summary of what I understand their positions to be.

A summary of the appellant’s submissions

59.      The appellant was in receipt of a disability living allowance and a severe disablement allowance in the United Kingdom. She had never worked and paid national insurance contributions. However, her status as a recipient of a severe disablement allowance means that she is a pensioner in her own right entitled to continue to receive the disability living allowance on the couple’s move to Germany.

60.      Furthermore, it has been established that the appellant is not entitled to German sickness benefits as the family member of a pensioner residing in Germany. This means that under Article 28 of Regulation 1408/71 the appellant remains entitled to sickness benefits from the United Kingdom.

61.      In support of this argument, the appellant has submitted letters from an official of the Federal Ministry for Work and Social Affairs and the AOK purporting to confirm that there is no entitlement to sickness benefits in Germany.[5]

A summary of the Secretary of State’s submissions

62.      The Secretary of State accepts that the appellant is within the personal scope of Regulation 1408/71, but receipt of a severe disablement allowance does not enable her to claim the status of a pensioner under the Regulation since she has never been an employed or self employed person.

63.      The appellant and her husband are resident in Germany and the husband is in receipt of a pension from Germany. He is a pensioner under Regulation 1408/71. Accordingly Article 27 of Regulation 1408/71 applies with the result that Germany is the competent State in relation to the entitlement to sickness benefits of the appellant as a family member of the husband.

64.      In support of this argument, the Secretary of State has submitted an email exchange with an official of the Federal Ministry for Work and Social Affairs purporting to show that there is an entitlement to sickness benefits in Germany.

H. The Upper Tribunal’s assessment

65.      There have been a number of references in the submissions to me to Regulation (EC) No 883/2004 on the coordination of social security systems [2004] OJ L200/1. However, the decision under appeal is dated 25 August 2009 and relates to a disallowance effective from 16 June 2007. Regulation 883/2004 came into force on 1 May 2010. Accordingly this appeal is determinable solely on the basis of the provisions of Regulation 1408/71.

66.      There are suggestions in the papers (which seem to be refuted elsewhere in the papers) that the appellant might have an entitlement to the care component of a disability living allowance payable in Germany under Regulation 883/2004. However, I have no decision of the Secretary of State on that issue before me and so have no jurisdiction to make any decision on possible entitlement following the entry into force of Regulation 883/2004. For this reason, I do not concern myself at all with the interpretation of provisions of Regulation 883/2004 in this decision. I am concerned solely with the application of provisions of Regulation 1408/71.

The mobility component of a disability living allowance

67.      I can deal briefly with the mobility component of a disability living allowance.

68.      Case C-299/05 Commission v European Parliament and Council [2007] ECR I‑8695 established that the care component of a disability living allowance constituted a cash sickness benefit under Regulation 1408/71, but left open the status of the mobility component of a disability living allowance.

69.      In Case C-537/09 Bartlett, Ramos and Taylor v Secretary of State for Work and Pensions [2011] ECR I‑3417, the Court of Justice ruled that the mobility component of a disability living allowance is a special non-contributory benefit whose payment can be limited to those in the territory of the United Kingdom.

70.      It follows that the mobility component of a disability living allowance is not exportable and so the appellant had no entitlement to this component of the benefit following her move to Germany.

The care component of a disability living allowance

71.      The position in relation to the care component, which is classified as a cash sickness benefit under Regulation 1408/71, is, however, much more complex.

72.      The Secretary of State accepts that the appellant has at all material times been within the personal scope of Regulation 1408/71. This must, on the facts, be on the basis that she is a member of the family of a person who falls within Article 2 of Regulation 1408/71 as an employed or self-employed person. The appellant is the spouse of a person who has worked and paid national insurance contributions in the United Kingdom.

73.      The next question to determine is which provision of Regulation 1408/71 applied to the appellant when she moved permanently to Germany in June 2007.

74.      As the Upper Tribunal explained in relation to Articles 19 to 22 of Regulation 1408/71 in Secretary of State for Work and Pensions v LT [2012] UKUT 282 (AAC), these provisions are mutually exclusive. It would follow that the provisions in Articles 27 and 28 of Regulation 1408/71 cannot apply at the same time as earlier provisions in the chapter of the regulation on sickness benefits. In my view the rules in Section 5 of this chapter are a separate code applicable to pensioners and members of their families.

75.      As at the date of the decision under appeal, the appellant’s husband was, on any view of the terms of Regulation 1408/71, a pensioner. He was in receipt of pensions from institutions in both the United Kingdom and Germany.

76.      I take the view that Article 22 of Regulation 1408/71 cannot apply to the appellant as the family member of an employed or self-employed person, since the reference to an “employed or self-employed person” in Article 22 must be referring to an employed or self-employed person who is not a pensioner for the purposes of the Regulation. There are specific rules for pensioners in Section 5 which preclude the application of Article 22.[6]

77.      But is the appellant a pensioner for the purposes of Regulation 1408/71?

78.      The Secretary of State has argued that she is not because the severe disablement allowance she receives is not a benefit based on her having paid contributions as an employed or self-employed person, and the appellant has never worked and paid national insurance contributions. This would appear to be the basis for the reference to State pension, long term incapacity benefit and sickness benefits in one of the explanations provided for the appellant. In this context, the term sickness benefits would seem to have been used to refer to contribution-based sickness benefits.

79.      Article 1(t) defines benefits and pensions widely, but provides no guidance to distinguish between benefits and pensions. However, it is logical to conclude that where a person is in receipt of a benefit that can properly be characterised as a pension, he or she can properly be described as a “pensioner” for the purposes of provisions in Section 5 of Chapter 1 of Title III in Regulation 1408/71.

80.      In JS v Secretary of State for Work and Pensions (DLA) [2012] AACR 7,[7] Judge Mesher said:

14. It may be that in some other cases difficult questions might arise about who is a “pensioner” for the purposes of Article 28(1). For instance, although it appears, especially from the definition of “benefits” and “pensions” in Article 1(t), that pensions would include payments of incapacity benefit or now employment support allowance, would they include payments of DLA? Paragraph 13 of the judgment of the ECJ in Case C-215/00 Chief Adjudication Officer v Twomey [1992] ECR I-1823, R(S) 3/92, suggests that the answer is yes in so far as they are payments of sickness benefit.

81.      Since the United Kingdom has continued to pay severe disablement allowance to the appellant as an exportable invalidity benefit under Article 10 of Regulation 1408/71, I am satisfied that the severe disablement allowance constitutes a pension under Article 1(t) and that the appellant is a pensioner for the purposes of Regulation 1408/71.

82.      I am not sure, however, that this advances her position much. Plainly only Article 28 of Regulation 1408/71 would apply to the appellant, since Article 27 is predicated upon entitlement to draw pensions under the legislation of “two or more Member States”.

83.      Article 28 of Regulation 1408/71 only applies where the pensioner “is not entitled to benefits under the legislation of the Member State in whose territory he resides”.

84.      I do not consider that the terms of Article 28 require me to isolate the entitlement of the appellant in her own right from any entitlement she might have as the member of the family of a pensioner.

85.      This brings us to the nub of the argument when we consider the position of the appellant’s husband. He is entitled to draw pensions under the legislation of two Member States: the United Kingdom and Germany.

86.      The Secretary of State argues that Article 27 applies. The appellant’s husband is entitled to drawn pensions from two Member States and is entitled to benefits under the legislation of the Member State of residence, which is Germany, and his wife would be entitled to benefits as a member of his family.

87.      The appellant argues that Article 28 applies since she has been advised that she has no entitlement to benefits in Germany, and that therefore the United Kingdom remains the competent state in relation to her entitlement to sickness benefits.

88.      The interpretation of Article 28 of Regulation 1408/71 was considered in some detail by Judge Mesher in JS v Secretary of State for Work and Pensions (DLA) [2012] AACR 7 in circumstances similar to those before me. A significant difference, however, is that in JS the claimant was a person who had worked in the United Kingdom and paid national insurance contributions. In this case, the appellant has never been an employed or self-employed person, nor has she paid any national insurance contributions.

89.      I agree with Judge Mesher in JS where he said:

20. I find [Article 28] difficult to interpret and have not got much help from searching in the ECJ case law. However, in my judgment the reference to not being entitled to benefits is to the type of benefit provision which is being considered. Thus, in so far as provision of sickness benefits in kind under sub-paragraph (b) is being considered, the condition is whether the claimant is entitled to sickness benefits in kind under the legislation of the State of residence. In so far as provision of cash sickness benefits is being considered, the condition is whether the claimant is entitled to cash sickness benefits under the legislation of the State of residence. That seems to me consistent with the words of Article 28(1) read as a whole and to avoid what would be illogical differences in outcome if entitlement to one type of benefit excluded the operation of Article 28(1) in relation to the other type.

90.      So, it seems to me that, in order to determine whether the appellant can sustain the argument that the United Kingdom remains the Member State whose legislation on sickness benefits applies to her so that she can export the care component of her disability living allowance, it is necessary to determine whether her husband is entitled to cash sickness benefits for himself and for members of his family in Germany.

91.      Here there is a conflict of evidence which is not easy to resolve.

92.      I have received only rather limited information about the German system of cash sickness benefits. 

93.      I have been told (pp.218-219) that in Germany long-term care benefits are provided under a statutory long-term care scheme. It is an independent branch of social security which is said to cover the risk of long-term care in a similar manner to sickness benefits. I am then told:

Everyone who is covered by statutory or private sickness insurance is automatically and mandatorily covered by the statutory or private long-term care insurance. For entitlement to benefits under the statutory long-term care insurance a qualifying period of two years is required

94.      It seems that a claimant has a choice of taking benefits in kind or cash benefits. The benefits are said to have an unlimited duration as long as the entitlement conditions are fulfilled.

95.      I was initially a little concerned about the reference to a qualifying period. However, Article 18 of Regulation 1408/71 which is a provision of general application in relation to Chapter 1 of Title III of Regulation 1408/71 provides:

The competent institution of a Member State whose legislation makes the acquisition, retention or recovery of the right to benefits conditional upon the completion of periods of insurance, employment or residence shall, to the extent necessary, take account of periods of insurance, employment or residence completed under the legislation of any other Member State as if they were periods completed under the legislation which it administers.

96.      I also note that Articles 27 and 28 both refer to the requirement to take account of Article 18.

97.      I am still left with an apparent conflict between information supplied by the Secretary of State and information provided by the appellant. I have decided to prefer the evidence provided by the Secretary of State. The question posed by an official in the EU Social Security Coordination section of the Department for Work and Pensions is:

I come to you (again) because we have another case before the Courts in the UK where the position under German legislation has been raised.

I attach the Direction from the Court for your information.

What we need to clarify for the Judge is whether a German pensioner living in Germany and for whom Germany are the competent state for sickness, would get sickness benefit (healthcare) cover for their wife, where that wife has no other competent state.

The situation of the case is that the claimant is claiming long term care benefit in cash from the UK. She and her husband live in Germany. A UK national, the husband is in receipt of German and UK pensions. Due to other factors (that I won’t go into now) the UK accepts that we can pay LTC benefit to the claimant under Reg 883. However, we do not accept that we can pay it under Reg 1408. the claimant has never worked and is, under our understanding, part of the family of her husband and Germany are the competent state for her sickness benefits due to the fact that the husband receives a pension from his Member State of residence.

Can you verify that, in such a situation, Germany will provide the wife of the German pensioner with healthcare?

98.      The Direction to which this query referred is that at page 211 of the documents I have.

99.      The reply from an official in the Coordination of social security schemes section of the Federal Ministry of Labour and Social Affairs is as follows:

Indeed, where a pensioner who receives a German pension, resides in Germany, and his/her family member (spouse) will be covered by the German sickness and LTC-insurance. I see no reason, why the UK—in such a situation—shall pay such benefit to them. This applies to both reg. 883 and Reg. 1408.

100.   The appellant has submitted two letters in German which I have had translated.

101.   The first is from an official in the Federal Ministry of Labour and Social Affairs, and is headed “Care insurance benefits”. It contains the caveat that the Federal Ministry is not allowed to provide information about the law in individual cases. It then goes on to address the general position under Article 21 of Regulation 883/2004. This is a provision in the section of Regulation 883/2004 dealing with insured persons and members of their families, except pensioners and members of their families. There is separate provision in later articles of the regulation dealing with the situation of pensioners and members of their families. This letter is, accordingly, of very limited assistance to me, and certainly does not establish that there is no entitlement to benefits in Germany.

102.   The second letter is from an official in the Allgemeine Orts Krankenkasse Rheinland/Hamburg (general healthcare system for Rhineland and Hamburg) and is again headed “Care insurance benefits”. This refers to Case C-160/96 Molenaar [1998] ECR I-853.[8] The letter concludes with the proposition that cash care benefits have to be claimed from the “institution with which you are insured.” Again I find this letter to be of limited assistance in resolving the conflict.

103.   I have concluded that the appellant appears to be entitled to cash benefits under the German sickness insurance scheme. This arises at the material time under Article 27 of Regulation 1408/71. The appellant’s husband is entitled to draw pensions from two Member States of which one is the Member State in which he resides. He is within the German sickness insurance scheme and as a consequence he, and members of his family, shall receive benefits from the competent institutions in Germany as though he were a pensioner whose pension was payable solely under the legislation of Germany.

104.   This would appear to be confirmed by observations in Case C-388/09 Joao Filipe da Silva Martins v Bank Betriebskrankenkasse—Pflegekasse, [2011] ECR I-5737, where the Court of Justice said:

68. … . It follows that, where a former migrant worker is entitled to pensions under the legislations of two or more Member States, including that of his Member State of residence, it is in principle for the latter State, in accordance with Article 27 of [Regulation 1408/71] to provide, if necessary, benefits relating to the risk of reliance on care.

105.   I have considered whether the appellant can derive any assistance from the United Kingdom provisions in Annex VI on the operation of Article 13(2)(f) of Regulation 1408/71. These provisions are discussed in some detail in JS v Secretary of State for Work and Pensions (DLA) [2012] AACR 7 (at paras 26-30), and were also considered in depth in Secretary of State for Work and Pensions v LT [2012] UKUT 282 (AAC) (at paras 96-107).

106.   My conclusion is that the appellant cannot derive any assistance from these provisions, since she is in a very different position from the claimants in the two cases cited. The claimant in both those cases had been an employed or self-employed person at some time, whereas the appellant has never been an employed or self-employed person. The Annex VI provisions almost all require the person taking the benefit of those provisions to have been at some time an employed or self-employed person.

107.   There is the possibility that Point 19(c)(i) extended the competence of the United Kingdom until the date of the initial decision of 6 September 2007 terminating entitlement to a disability living allowance, but this does not address the appellant’s underlying grievance, which is the ongoing loss of entitlement to both components of a disability living allowance.

108.   The result of my assessment of the appellant’s appeal is that the Secretary of State was able to terminate the entitlement to both components of a disability living allowance following the move by the appellant and her husband to live permanently in Germany. The transfer of competence to Germany which arose under Article 27 of Regulation 1408/71 justified their decision, and I am satisfied that the appellant did not find herself in the position of not being entitled to benefits in Germany.

109.   The appellant might be in a worse position in relation to such entitlement as she has to benefits under the German system when compared with benefits under the British system. However, Regulation 1408/71 is a co-ordinating and not a harmonising provision. It enables different social security systems to work together.

110.   The Court of Justice has consistently stressed the distinction between co‑ordination and harmonisation in its judgments concerning the provisions of Regulation 1408/71. For example, in Case C-222/07 Petersen, [2008] ECR I-6989, the Court said:

41. It must be pointed out, however, that Regulation No 1408/71 does not set up a common scheme of social security, but allows different national social security schemes to exist and its sole objective is to ensure the coordination of those schemes (Case 21/87 Borowitz [1988] ECR 3715, paragraph 23, and Case C‑331/06 Chuck [2008] ECR I‑1957, paragraph 27).

111.   The purpose of the co-ordinating regulations has always been to build bridges in order to allow connections to be made between different social security systems. The objective is to minimise the obstacles to free movement of persons which might otherwise arise. Each Member State remains free to set the level of the benefits awarded under its scheme, and to organise benefits in the manner of its choosing, subject to a requirement of equal treatment of citizens of the European Union within its own system and in respect of benefits falling within the material scope of Regulation 1408/71.

112.   In relation to sickness benefits, Regulation 1408/71 makes a distinction between cash sickness benefits and sickness benefits in kind, but each Member State remains free to determine how it will deliver sickness benefits. The result is that there are situations in which for the same need one Member State provides a sickness benefit in cash but another Member State provides that benefit in kind.

113.   Entitlement to benefits in the sense in which that term is used in Article 27 of Regulation 1408/71 does not mean that the claimant should be paid benefits equivalent to those to which she had been entitled when she was subject to the legislation of the United Kingdom. It means that she is entitled to be paid those sickness benefits (including long-term care benefits) for which the German social security system makes provision.

114.   Finally, I would comment on the significance of the United Kingdom State pension estimate which the appellant has adduced in support of her appeal. I was at first thrown by this showing a potential entitlement arising in 2042, when the appellant will reach the age of 67. However, this estimate is likely to be in relation to a Category B retirement pension based on the contribution record of the appellant’s husband. As such, it does not assist the appellant at all in relation to this appeal.

115.   My formal decision in substitution for that made by the tribunal appears at the top of this decision.

 

 

Signed on the original Robin C A White

on 17 January 2014 Judge of the Upper Tribunal