Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CPC/3281/2014

ADMINISTRATIVE APPEALS CHAMBER

BEFORE UPPER TRIBUNAL JUDGE WARD

Attendances:

For the Appellant: Mr S Cooper, Solicitor

For the Respondent: Mr P Carey, Welfare Rights Officer, Cornwall County Council

Decision: The appeal by the Secretary of State succeeds.  The decision of the First‑tier Tribunal sitting at Truro on 19 February 2014 under reference SC247/14/00007 involved the making of an error of law and is set aside. Acting under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007 and having made further findings of fact, I remake its decision in the following terms:

The decision by the Secretary of State dated 24 September 2013 refusing the claimant’s claim for state pension credit from and including 2 September 2013 on the ground that he lacked the right to reside is upheld. 

REASONS

1. This is an appeal, with permission given by a judge of the First-tier Tribunal, by the Secretary of State against the decision of the First‑tier Tribunal which had allowed the claimant’s appeal against the Secretary of State’s decision dated 24 September 2013 which had refused his claim for state pension credit on the ground that he lacked the right to reside.  The relevant provisions are to be found in regulation  2 of the State Pension Credit Regulations 2002 and need not be set out here. 

2. The claimant was born on 11 September 1942 and is a national of Denmark.  He had lived in the United Kingdom between 1996 and 2000 but had most recently returned to it, having been working abroad, in 2007, at which point he had a substantial amount of capital.  The First‑tier Tribunal found that he met both limbs of the test in Article 7(1)(b) of Directive 2004/38, namely:

“1. All Union citizens shall have the right of residence on the territory of another Member State for a period of longer than three months if they:

(a) ...

(b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State;

...”

3. I need not dwell on whether the tribunal was correct to find that the claimant had sufficient resources for the purposes of Article 7(1)(b) as its decision insofar as it related to comprehensive sickness insurance (“CSI”) was in error of law for the reasons in [6] below. 

4. As a preliminary, however, the tribunal had recorded in its decision notice that the claimant had completed a continuous period of 5 years’ lawful residence on 2 January 2012.  In the statement of reasons the judge purported to “revise and correct” those dates to a 5 year period ending on 11 September 2012.  No review was carried out. The matter is a substantive change, not the correction of a slip, and relates to a central issue in the appeal.  The Secretary of State submitted (and Mr Carey for the claimant did not dissent) that purporting to make such a change without having carried out a review was itself an error of law and I so find.

5. Turning to the substance, the First‑tier Tribunal found that the claimant was entitled to receive a Danish state pension from 11 September 2007, his 65^th birthday, even though he had not claimed one, and that as the United Kingdom would then have been entitled to rely on Article 28a of Regulation 1408/71 to obtain reimbursement from Denmark of the costs of any medical treatment the claimant might have required, the claimant had sufficient CSI:  see SG v Tameside MBC (HB) [2010] UKUT 243 (AAC).  Article 28a provided:

“Where the pensioner entitled to a pension under the legislation of one Member State, or to pensions under the legislations of two or more Member States, resides in the territory of a Member State under whose legislation the right to receive benefits in kind is not subject to conditions of insurance or employment, nor is any pension payable, the cost of benefits in kind provided to him and to members of his family shall be borne by the institution of one of the Member States competent in respect of pensions, determined according to the rules laid down in Article 28(2), to the extent that the pensioner and members of his family would have been entitled to such benefits under the legislation administered by the said institution if they resided in the territory of the Member State where that institution is situated.”

6. However, the First‑tier Tribunal’s premise was wrong in law.  Foreign law is to be proved by evidence.  There was no evidence before the First‑tier Tribunal from which it could conclude that the claimant was entitled to a Danish pension from the age of 65 at all and in particular that he was entitled from that age despite having not made a claim for one, nor as to his entitlement under Danish law to healthcare as a “benefit in kind”. 

7. I would add that there were also clear indications in the bundle that there was more relevant evidence available than had been included.  The Secretary of State was required by rule 24(4) to include in his submission a copy of relevant documents and this ought to have included the letter in his possession dated 27 November 2013 from Utbetaling Danmark, the Danish body responsible for payment of state pensions.  The First‑tier Tribunal ought to have followed up this obvious evidential gap.  I do not need to decide whether I would permit the Secretary of State in what is an appeal by him in effect to rely on an error of law by the First‑tier Tribunal which had its origins in his own default as the tribunal’s decision was in any event in error of law for the reasons given in paragraphs 4 and 6 and it is on those grounds that it is set aside. 

8. There was further evidence before me.  The Secretary for State relies on the words in bold above, to submit that it was necessary to establish the extent to which the claimant would have been entitled to the provision of healthcare in Denmark during the period 11 September 2007 to 1 January 2010.  Uncontradicted evidence obtained from the Danish authorities showed that the claimant would not have been entitled to healthcare in Denmark during that period, because he was not under Danish law entitled to a pension until the 1^st of the month following his application for it.  From that it followed that Denmark would not have been obliged to bear the costs of any benefits in kind provided to the claimant by the UK during that time.

9. From 1 January 2010, when his Danish pension came into payment, the Secretary of State accepts that that the claimant did have CSI, until with effect from 11 July 2011 he began to receive a very small UK state retirement pension.  At that point the claimant encountered the provisions of Article 23 of Regulation 883/2004 which had come into force on 1 May 2010.  It provides:

“A person who receives a pension or pensions under the legislation of two or more Member States, of which one is the Member State of residence, and who is entitled to benefits in kind under the legislation of that Member State, shall, with the members of his family, receive such benefits in kind from and at the expense of the institution of the place of residence, as though he were a pensioner whose pension was payable solely under the legislation of that Member State. “

10. In Directions dated 23 June 2015 I identified that the apparent consequence was the UK lost its ability to recoup the cost of medical treatment from Denmark, with a potential negative effect on the claimant’s ability to establish a right to reside (as the principle in SG would no longer apply). This would put him, despite his links with the UK manifested through the past work in the UK which was reflected in the contributions record which entitled him to a (small) UK retirement pension, in a worse position than a person with no such links.  Nonetheless, though it might be thought surprising, this appeared to be the  consequence of the co‑ordination system for which Regulation 883/2004 provides. 

11. In a response to the Directions, on 14 August 2015 Mr Carey:  (a) conceded that the evidence from Denmark was “unequivocal”, (b) accepted that the wording of Article 23 of Regulation 883/2004 was “unequivocal but seem[ed] to produce a paradoxical result” but (c) sought to argue that the tribunal’s decision should be affirmed on wholly new grounds, namely that at the material time the claimant had been self‑employed by reason of writing a book of which particulars, and some evidence, were given.

12. On 24 August I gave permission to introduce point (c) and directions for the filing of evidence.  Those Directions also required Mr Carey either to abandon or develop any argument that it would not be proportionate to enforce the requirement for CSI against the claimant:  that point was then abandoned.

13. By a further submission faxed on 30 September  Mr Carey sought to a degree to depart from his earlier concession at (a) and (b) above.  I indicated that I would require an application to be made at the oral hearing for permission to do so and that I would only entertain it after I had made a ruling on the claimant’s asserted self‑employment as it appeared that on any view the claimant needed to rely on self‑employment for part of the period leading up to his claim.

14. At the oral hearing this point was put to both representatives, who indicated their agreement with it, and so the hearing proceeded to address that issue.  In that regard I note from C-53/81 Levin inter alia that the field of application of one of the fundamental freedoms guaranteed by the Treaty is not to be interpreted restrictively but that, while part-time working is not excluded as such, it is only activities which are “genuine and effective” rather than “marginal and ancillary” that are covered.  C-268/99 Jany applies these tests to self-employment also.  It is for the national court to make the necessary findings of fact: C-357/89 Raulin.

15. In 1997 the claimant wrote a book entitled “The Deafening Silence”.  To précis the rubric on the back cover, it deals with life in Kenya following the Mau Mau uprising in 1952.  The claimant was one of a handful of survivors of an Air Rhodesia flight that was shot down.  The book is described as charting his spiritual growth at a turbulent point of African history.  

16. The claimant wrote the book, as he confirmed in subsequent correspondence, “probably more for self‑therapy than anything else.”

17. He initially paid out £3,000 for the book to be published.  Two thousand copies were produced.  It is not known how many of these were sold.  In 2003 the publisher, Minerva, become insolvent.  Up to that point the claimant had received no royalties. 

18. Following his return to the United Kingdom on 2 January 2007 the claimant began to contemplate the preparation of a second edition.  As he put it, he felt he had a message to tell.  Between 2008 and 2010, as no typed copy existed any more, he began the laborious work of retyping page by page the book and re‑reading it some five or six times.  He estimates that typing took him three hours per page.  The book comprises some 400 pages.  He made minor sub‑editing changes as he went but no change of substance to the text.  He estimates he spent around two hours a day most evenings on this activity.  When carrying out this activity he had no publishing contract in place.  A contract, the terms of which were only partly in evidence, was entered into with United on 20 April 2014, after the date of the DWP’s decision under appeal.  In 2009 and 2010 the claimant was looking for possible publishers on the Internet. He wrote two letters to another publisher but their terms were not satisfactory to him.  The claimant had to arrange with the copyright holder of the proposed cover photo for the claimant’s book.  He also agreed with one KN to be interviewed for a DVD but that was to be released with KN’s book on an associated topic.  There is no evidence of any other activity in connection with the preparation of the second edition of the claimant’s book.

19. The terms of the contract with United provide for the claimant to receive 10% of each sale after the 251^st copy.  The selling price of the second edition on Amazon is £17.20, thus the royalty on qualifying copies would appear to be £1.72.  Although the contract has been running since September 2014 and provides for invoicing by 31 December each year the fact that this has not happened to date may be attributable to the way in which United operate the contract despite its wording and I draw no adverse inference from that.  There is no understanding between the claimant and United as to projected sales levels.  The claimant hopes the book will appeal to adventurers and people interested in spiritual issues.  There is no evidence that anyone is interested in taking up film rights even if (as with any book on such themes) the possibility cannot entirely be discounted.  Beyond what can be done on‑line for no cost, no steps are being taken to promote the book.  The publisher will not do so unless the claimant pays, which he is not willing to do.

20. Mr Cooper does not take any point based on the late emergence of the self-employed claim. He accepts that such activity as was carried out meets the test of self‑employment in C-268/99 Jany but that the activity ought to be viewed as marginal and ancillary rather than genuine and effective. 

21. Mr Carey submits the absence of royalties so far is not necessarily conclusive:  the activity could have been carried out in expectation of payment in the future, as must be the case for many authors.  Commercial and therapeutic purposes are not mutually exclusive.  The existence of the contract with United establishes the commercial aspect of the matter. 

22.  I have concluded that the writing of the book is essentially the exercise of a retired gentleman who has led a tumultuous life and understandably wishes to share those experiences with others as a retirement project – as he put it, it is “therapeutic”.  While I agree with Mr Carey that that need not of itself preclude it from being genuine and effective self‑employment, it may still be a relevant factor and one has to take into account a number of other factors.  The claimant paid Minerva a substantial sum in the first place in order to publish the book.  Between 1998 and 2003 he received not a penny back from the first edition.  Between 2008 and 2014 he was working on the second edition without a contract in place.  There is no indication of any projected level of sales of the second edition.  The level of remuneration under the contract signed post-decision is such that even if the second edition were to sell as many copies as were produced of the first it would produce a return of £3,050 (£3,480 less £430 for the first 250, royalty-free, copies), minimal recompense for working 14 hours a week between 2008 and 2010 and odd bits of work at other times, but even that level of return was and is speculative.  Minimal efforts were and are being made to promote the book.  Taking all these factors into account I have concluded that the self-employed activity involved is to be regarded as marginal and ancillary rather than genuine and effective.  It follows, as he accepts, that the other issues raised by Mr Carey in his submission of 30 September 2015 become academic.

(Signed on the Original)

C G Ward

Judge of the Upper Tribunal

Dated: 22 October 2015