IN THE
UPPER
TRIBUNAL
Case No. CDLA/0735/2009
ADMINISTRATIVE
APPEALS CHAMBER
Before Judges Patrick Howell QC, Elisabeth A Jupp and
Robin C A White
Attendances:
For the
Appellant: Mr Thomas de la Mare
For the Respondent
Mr Richard Drabble QC
Decision:
The decision of the tribunal of 21 August 2008 is erroneous in law and we
set it aside.
It is appropriate for us to make the
decision which the tribunal should have made.
Our substituted decision: The
respondent remained entitled to receive the care component of disability living
allowance following her permanent move to Spain on 5 November 2002. The
decision of 8 January 2007 under appeal, purporting to supersede and terminate
her previous indefinite award from 6 November 2002, is set aside as
ineffective.
REASONS FOR DECISION
A.
Introduction
1.
For ease of comprehension, we will refer in this decision to the
appellant as “the Secretary of State” and to the respondent as “the claimant.”
2.
There was an oral hearing before a three-judge panel on 2 April 2012.
The Secretary of State was represented by Mr de la Mare, and the claimant by Mr
Drabble QC. We are grateful to both of them for their submissions and
assistance to us in determining this appeal.
B.
The issue in this appeal
3.
The issue arising in this appeal is whether the claimant could continue
to receive the care component of disability living allowance (DLA) when she
moved permanently from the United Kingdom to Spain in November 2002 having
regard to the provisions of Council Regulation (EC) 1408/71 of 14 June 1971 (as
amended) on the application of social security schemes to employed persons, to
self-employed persons and to members of their families moving within the
Community.
C.
The background
4.
The claimant, who was born on 17 April 1952, was in receipt of the
lowest rate of the care component of DLA on an open-ended award from 26 July
1993 on the grounds that she could not prepare a cooked main meal for herself.
5.
It subsequently came to the attention of the Secretary of State that the
claimant had moved to Spain on 5 November 2002.
6.
On 8 January 2007, the Secretary of State superseded the award of DLA
determining that there was no entitlement to receipt of the benefit from 6
November 2002.
7.
The claimant appealed that decision on a number of grounds.
8.
The appeal came before a First-tier Tribunal for determination on 21
August 2008. That tribunal allowed the appeal applying Article 10 of Regulation
1408/71. A full statement of reasons was provided.
9.
The Secretary of State appealed against the tribunal’s decision on the
grounds that Article 10 of Regulation 1408/71 did not assist the claimant in
retaining any right to payment of DLA following her move to Spain.
10. The
appeal comes before us with the permission of a Judge of the First-tier
Tribunal.
11. The
claimant died on 10 May 2011, and the claimant’s husband has been made her
appointee by decision of the Secretary of State dated 2 August 2011 for the
purposes of proceeding with the present appeal in place of his deceased wife.
D.
Some common ground
12. It
is common ground that the First-tier tribunal was correct in holding that the
claimant had no further entitlement under the United Kingdom domestic law
provisions alone from 6 November 2002, and the only question was whether the
residence conditions that prevented this were themselves overridden by her
rights as a citizen of the Union under Regulation 1408/71. The First-tier
tribunal held that she continued to be entitled to her care component despite
leaving the United Kingdom by virtue of Article 10 of Regulation 1408/71, which
overrides residence conditions of that kind as regards “invalidity, old-age or
survivors’ cash benefits, pensions for accidents at work or occupational
diseases and death grants acquired under the legislation of one or more Member
States.”
13. Both
parties were agreed that this decision must be set aside as based on a
misdirection, since the benefit at issue in this case is not within any of the
categories to which Article 10 applies. For the purposes of Regulation 1408/71,
the care component of DLA has been held by the Court of Justice of the European
Union to constitute a cash sickness benefit whose exportability is governed by
the separate provisions of Chapter 1 of Title III of the Regulation. Both
parties accepted that this has been clearly established by the case-law of the
Court of Justice.
The facts on which this appeal
should proceed
14. We
accept that the appeal should proceed on the basis of a set of facts, most of
which have been found by the First-tier Tribunal. Those facts are as follows.
15. The
claimant, who was born on 17 April 1952, was a United Kingdom national. She was
in receipt of the lowest rate of the care component of DLA on an open-ended
award from 26 July 1993 on the grounds that she could not prepare a cooked main
meal for herself.
16. On
5 November 2002, the claimant moved permanently to Spain.
17. The
claimant’s national insurance contributions record indicated that, prior to
1975, she was insured from 21 July 1967 to 5 April 1975. Thereafter the record
is as follows:
Years 1975/76 to 1983/84:
paid Class 1 NICs
Year
1984/85:
38 NIC credits, Class 1 NICs
Year
1985/86:
25 NIC credits
Years 1986/87 to
1989/90: blank
record of NICs
Year
1990/91:
5 NIC credits
Year
1991/92:
53 NIC credits
Year
1992/93:
7 NIC credits
Years 1993/94 to
date
blank record of NICs
18. Invalid
Care Allowance was in payment from 4 March 1991 to 31 May 1992, which accounts
for the national insurance credits for this period.
19. The
claimant undertook no employment or self-employment in Spain.
20. The
claimant died on 10 May 2011.
E.
National law
21. We
do not need to set out in much detail the national provisions on the award of
DLA 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 DLA.
22. 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.
… .
23. It
is agreed that the determination of this appeal should proceed on the basis of
the finding of fact made by the First-tier Tribunal that the claimant left Great Britain on 5 November 2002 on a permanent and not any temporary basis, the savings
provisions in Regulation 2(2) can have no application to the claimant. It
follows that any continuing entitlement to payment of the care component of DLA
can only be grounded on the application of rules of European Union Law.
F.
European Union Law
24. We
refer throughout this decision to European Union Law even though the period in
issue includes a period prior to the entry into force of the Treaty of Lisbon
which might render it more appropriate to refer at times to European Community
Law.
25. The
parties in this appeal have taken very disparate views on the proper
interpretation of the provisions of Regulation 1408/71.
26. 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.
27. Article
1 of Regulation 1408/71 contains a long list of terms defined in the
Regulation.
28. 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.
29. 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. We have ignored them. We observe that when the Court of
Justice cited the definitions of these terms in Case C-516/09 Borger,
Judgment of 10 March 2011, it simply omitted the words from the definition.
30. 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. …..
31. Article
1(q) of Regulation 1408/71 defines “the competent State” as the “Member State in whose territory the competent institution is situated.” “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;
32. “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.”
33. 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
… ;
34. Note
also that “residence” means “habitual residence”, while “stay” means “temporary
residence.”
35. 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 … .
36. 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.
37. Article
4 of Regulation 1408/71 spells out the matters covered. It is common ground
between the parties that the care component of DLA is a cash sickness benefit
falling within Article 4(1)(a): see in particular Case C-299/05 Commission v
European Parliament and Council, [2007] ECR I-8730. We accept as entirely
consistent with the European authorities that the care component of DLA is a
cash sickness benefit falling within the provisions of Chapter 1 of Title III
of Regulation 1408/71.
38. 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.
39. There
are two provisions in Article 13(2) salient 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.
It is common ground that none of the exceptions or special
provisions of Title II applied to the claimant.
40. 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
41. 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.
42. 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).
43. 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 19 and 22 is at the heart of this
appeal.
44. Article
18 provides for the aggregation of periods of insurance, employment or
residence in relation to sickness and maternity benefits.
45. Article
19, so far as relevant to this appeal, provides:
Residence
in a State other than the competent State—General rules
1. An
employed or self-employed person residing in the territory of a Member State other than the competent State, 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, shall receive in the State
in which he is resident:
…
(b) cash benefits provided by the
competent institution in accordance with the legislation which it administers.
However, by 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.
46. Article
20 concerns frontier workers, while Article 21 concerns persons staying in or
transferring their residence to the competent State. Neither applies to the
circumstances with which we are presented in this appeal.
47. Article
22 is germane to this appeal; it applies both to cash sickness benefits and to
sickness benefits in kind. So far as 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.
48. None
of the subsequent articles in Chapter I of Title III applies to the claimant’s
circumstances.
G.
The parties’ arguments in a nutshell
The Secretary of State’s arguments
49. Mr
de la Mare argued that the claimant did not fall within the scope of Article 19
of Regulation 1408/71 because a particular meaning must be attached to the
words “An employed or self-employed person” in the opening words of that
provision, namely that at the material time (when she wanted to export the care
component of DLA) the claimant had a contribution record on which a claim to
United Kingdom contribution-based sickness benefit could be based. We refer to
the words “employed person” and “self-employed person” at a number of points in
this decision as “the defined terms”.
50. In
so far as the decision of the Court of Appeal in HMRC v Ruas, [2010] EWCA Civ 291, determined that the defined terms had a uniform meaning
throughout Regulation 1408/71, it was wrongly decided.
51. Mr
de la Mare acknowledged that the Ruas decision is binding upon us but
suggested that it might be distinguished in that the facts in Ruas
involved child benefit rather than sickness benefits, and that the claimant was
residing in the United Kingdom and claiming child benefit for children in Portugal.
52. However,
Mr de la Mare fairly noted that the terms of the decision of the Court of
Appeal could be read as applying to the interpretation of the defined terms in
all parts of the Regulation. He argued that, if we so concluded, we should make
a reference to the Court of Justice seeking advice on whether the defined terms
in Article 19 of Regulation 1408/71 included within their ambit a person who
had been in employment, but did not at the material time have a contribution
record on which a claim to a contribution-based sickness benefit could be
grounded.
53. In
the alternative, Mr de la Mare argued that there was no entitlement to a care
component of DLA from 6 November 2002, since the operation of Article 13(2)(f)
of Regulation 1408/71 as interpreted through provisions in Annex VI meant that
the United Kingdom ceased to be the competent State from the end of the day on
which the claimant left the United Kingdom.
The claimant’s arguments
54. Mr
Drabble QC argued that the decision in Ruas was correct and that the
claimant fell within the terms of Article 19 of Regulation 1408/71, and was prima
facie entitled to export sickness benefits acquired in the United Kingdom on her move to Spain.
55. Article
13(2)(f) applied to the claimant, but her entitlement was preserved by Point 20
in Annex VI.
56. If
that is wrong, then, applying conclusions in the Opinion of the Advocate
General in Case C-275/96 Kuusijärvi, [1997] ECR I-3419, the rules
on exporting sickness benefits were not defeated by the application of Article
13(2)(f). Article 22 of Regulation 1408/71 governed the claimant’s
circumstances. There were no grounds in the evidence before the Upper Tribunal
which would justify refusal of authorisation of the claimant to move to Spain as required by that provision. Accordingly, the claimant remained entitled to receive
the care component of DLA following her move to Spain.
H.
The definitions of “employed person” and “self-employed person” and
their significance
57. Article
2 of Regulation 1408/71 determines which persons are within the personal scope
of the Regulation.
58. The
definitions of “employed person” and “self-employed person” in various Articles
of Regulation 1408/71 are at the heart of the Secretary of State’s arguments.
59. It
is common ground between the parties that the claimant was within the personal
scope of the Regulation as set out in Article 2(1). That is, in our view,
plainly right on the words of Article 2(1). But Mr de la Mare argued that is
just the first step; a claimant must then go on to meet the specific
requirements of Article 19 which require the claimant to show that at the
material time she satisfied “the conditions for ‘insurance’ under the United Kingdom scheme for sickness benefits as a matter of national law.” Mr Drabble argued
that the claimant was at the material time insured against the risk of old age
and this was sufficient to give her the status of an “employed person” for the
purposes of both Article 2 and Article 19.
60. The
terms “employed person” and “self-employed person” are defined in Article 1(a),
and elaborated in Annex I (see paragraphs 28-30 above). Having regard to those
provisions, and in relation to the United Kingdom an “employed person” and a
“self-employed person” are persons defined as employed or self-employed earners
for the purposes of the system of national insurance contributions within the
United Kingdom.
61. In
Ruas the Court of Appeal considered in detail the proper interpretation
of the defined terms in the context of a claim made for child benefit by a
Portuguese national in the United Kingdom in respect of those of his children
who remained in Portugal. His entitlement rested on the proper meaning and
effect of Article 73 of the Regulation.
62. Both
Mr de la Mare and Mr Drabble took us through the Ruas case in some
detail, including the authorities from the Court of Justice referred to in the
judgment of the Court of Appeal. We do not consider it necessary to rehearse
all those points in detail here, since we are bound by that decision and find
the reasoning of the Court of Appeal compelling. We also note that the Supreme
Court on 28 June 2010 dismissed an application by Her Majesty’s Revenue and
Customs for permission to appeal against this decision.
63. After
consideration of the case-law of the Court of Justice, the Court of Appeal
concluded, in paragraph 57, that the defined terms could not mean different
things in relation to different articles in which the defined terms are used,
although the extent of their application may depend upon the particular
context. The Court of Appeal, referring to Case C-85/86 Martínez Sala, [1998] ECR I-2691, went on in the same paragraph:
The
ECJ plainly did not require, for the purposes of Mrs Sala’s entitlement as an
employed person within limb (ii), that she should be in current employment or
that there should be a link between the benefit she claimed and her previous
employment. That conclusion was the result of the jurisprudence, accepted by
the ECJ, that it was sufficient that Mrs Sala was insured against only one risk
mentioned in the Regulation; in her case, for example, compulsory retirement
pension insurance which had nothing to do with the benefit she was claiming.
64. Paragraph
62 of the judgment of the Court of Appeal provides:
I do
not consider that the Commissioners’ case is advanced by reference to other
parts of the Regulation, such as the different rights expressly conferred under
Title III, Chapter I, on employed or self-employed persons, on the one hand,
and unemployed persons on the other hand. The fact that express distinctions
are made in the Regulation for particular categories of claimant in the case of
particular categories of benefits does not help establish that “employed
person” in Article 73 means something other than its defined meaning in Article
1(a).
65. Any
conceivable lingering doubt about the general application of the principle
enunciated in the Martínez Sala case was definitively resolved in the
judgment of the Grand Chamber in Case C-543/03 Dodl and Oberhollenzer, [2005]
ECR I-5065, where the Grand Chamber ruled:
30.
Accordingly a person has the status of an ‘employed person’ within the
meaning of Regulation No 1408/71 where he is covered, even if only in respect
of a single risk, on a compulsory or optional basis, by a general or special
social security scheme mentioned in Article 1(a) of that regulation, irrespective
of the existence of an employment relationship (Martínez Sala, cited
above, paragraph 36, and Kuusijärvi, cited above, paragraph 21).
31.
Thus, as the Advocate General pointed out in paragraph 12 of his Opinion, in
the light of the case-law of the Court, it is therefore not the status of the
employment which determines whether or not a person continues to fall within
the scope ratione personae of Regulation No 1408/71, but the fact that
he or she is covered against risks under a social security scheme mentioned in
Article 1(a) of the regulation.
66. Our
view of the authorities is further supported by paragraphs 26-31 of the
judgment of the Court of Justice of 10 March 2011 in Case C-516/09 Borger.
67. Thus in
effect the authorities appear to establish that an “employed person” or a
“self-employed person” for the purposes of (and throughout) the Regulation
is someone who has at some point in the past paid national insurance
contributions (or is to be treated as having paid such contributions as a
result of the rules of aggregation of periods of contribution, insurance or
residence under the Regulation) and remains covered for at least one of the
risks listed in Article 4(1).
68. Mr
de la Mare did not argue that, if we so held, there was any escape from the
conclusion that the claimant was within the single meaning of “employed person”
merely by virtue of having, as she did, a past, although incomplete, record of
national insurance contributions giving her a contingent entitlement to a
reduced retirement pension. He accepted that this made her a “person who is
insured” (for old age benefit) under the general definition in Article 1 even
at a time when no current contributory period of insurance (as defined in
Article 1(r)) was still continuing. Although it is possible to identify
passages in the Court of Justice authorities that might be read as
suggesting, or at least consistent with, a more restricted meaning of “is
insured” as referring to a person in a current period of contributory or
credited insurance (for example, Martínez Sala, paragraphs 36-38, cf
A-G La Pergola ar paragraph 12, pp I-2698-9), this was not a point relied on by
Mr de la Mare and in the circumstances we are content to decide the appeal on
the basis on which it is argued.
69. We
can find no grounds for distinguishing the circumstances before us from those
before the Court of Appeal in the Ruas case, which is binding on us. We
have no doubts that the decision correctly establishes that the meaning of the
defined terms must be the same wherever they are used without qualification in
the Regulation. It is, however, important to appreciate, as the Court of Appeal
noted in paragraph 57, that the extent of the application of the defined terms
depends upon the particular context in which they are used. However, although
the general position set out in paragraph 68 is intended to ensure that those
who move employment and residence within the European Union should not be
denied the protection of benefits, some of us are uneasy that it must of
necessity also be applied to these particular circumstances, where the claimant
and her husband had definitively ceased all occupational activity some
considerable time ago, but were not yet of pensionable age, and did not fall
into any other category within the terms defined in the Regulation.
70. Our
conclusion is that the claimant in our case was an “employed person” on the
application of the definition contained in Article 1(a)(ii), first indent, and
that the definition of “employed person” has the same meaning wherever that
term is used without qualification throughout Regulation 1408/71.
I.
The special provisions relating to sickness benefits
71. The
conclusion we have reached would seem to defeat Mr de la Mare’s argument that
Article 19 of Regulation 1408/71 does not apply to the claimant, but that issue
requires consideration of the scheme set out in Regulation 1408/71 for cash
sickness benefits.
72. Three
paragraphs of the Preamble to Regulation 1408/71 assist in understanding its
special provisions in relation to sickness benefits:
Whereas
the provisions for coordination must guarantee that workers moving within the
Community and their dependants and their survivors retain the rights and the
advantages acquired or in the course of being acquired;
…
Whereas
in the field of sickness and maternity benefits, it is necessary to guarantee
the protection of persons living or staying in a Member State other than the
competent Member State;
Whereas
the specific position of pension claimants and pensioners and the members of
their families calls for the provisions governing the sickness insurance to be
adapted to their situation;
… .
73. Article
18 of Regulation 1408/71 applies the principle of the aggregation of periods of
insurance, employment or residence to sickness and maternity benefits.
74. In
Case 150/82 Coppola, [1983] ECR 43, the Court of Justice ruled as
follows:
10.
[The definition of competent institution] must be applied within the framework
of Article 18(1), in the light of the general rule contained in Article 13 of
Regulation No 1408/71, with regard to determination of the applicable
legislation. Article 13(1) establishes the principle that “A worker to whom
this regulation applies shall be subject to the legislation of a single Member State only”. Article 13(2)(a) provides that “a worker employed in the territory of
one Member State shall be subject to the legislation of the State even if he
resides in the territory of another Member State”.
11.
By virtue of that provision, and in the absence of contrary provisions
referring to the particular benefit in question, only the legislation of the
State in whose territory the worker is employed is therefore applicable.
Although that provision does not expressly mention the case of a worker who is
not employed when he needs sickness benefit, it is appropriate to interpret it
as meaning that, where necessary, it refers to the legislation of the State in
whose territory the worker was last employed.
12.
It follows from the fact that, by virtue of Article 13(2)(a), the legislation
of only one Member State is applicable, that the institution or institutions of
a single Member State in whose territory the worker is or was last employed,
must be considered competent for the purpose of the application of Article
18(1). That conclusion is moreover confirmed by Article 16 of Regulation 574/72
… regarding the application of the provisions of Regulation No 1408/71 relating
to sickness, and more particularly Article 18 of Regulation No 1408./71. By
providing that a certified statement specifying the insurance completed
previously under the legislation of other Member States must be issued by the
institution or institutions of the Member State to whose legislation the worker
was previously subject and must be submitted to the competent
institution, the provision is manifestly based on the principle whereby the
institution or institutions of the Member State in whose territory the worker
is or was last employed are alone competent to aggregate insurance periods.
75. Articles
19 to 22a of Regulation 1408/71 contemplate a number of different situations,
and deal with issues relating to the payment and receipt of sickness and
maternity benefits. These provisions were drafted at a time when the concept of
cash sickness benefits related to a risk against which a person was insured and
where the cash benefits were essentially income-replacement benefits. The view
that these provisions deal with particular situations is reinforced by the
provisions relating to the implementation of Articles 18 and 19 of Regulation
1408/71 in Articles 16 and 18 of Regulation 574/72 laying down the procedure
for implementing the provisions of Regulation 1408/71. In particular Article 18
of Regulation 574/72 on the implementation of Article 19(1)(b) of Regulation
1408/71 deals with the supervision of a recipient of cash sickness benefits in
the Member State of residence where that is different from the competent Member State.
76. Article
19 contemplates a situation in which a person is working in one Member State but residing in a different Member State. The Member State in which the person is
working is the competent State in respect of claims for sickness or maternity
benefits. Unless provision was made for payment of those benefits in the Member State of residence in appropriate cases, there could be hardship for a claimant.
Accordingly Article 19 makes provision for the payment of cash sickness
benefits to a claimant in the Member State of residence.
77. Since
Article 19 refers to satisfying the conditions of the legislation of the
competent State for entitlement to benefits, there may be a temporal aspect to
any claim. For example, in the United Kingdom where a person claims a
contribution-based sickness benefit, that person need not be actually in work
immediately prior to the date of claim but they must have the required
contribution record in the designated prior years of contribution in order to
qualify for the claimed benefit.
78. Article
20 of the Regulation contemplates a situation in which the claimant is a
frontier worker: that is, in broad terms, a person who commutes on a daily or
weekly basis from one Member State in which he lives to another Member State in which he works. Provision is made for frontier workers to receive cash
sickness benefits in the Member State in which they live under the legislation
of the Member State in which they work.
79. Article
21 of the Regulation contemplates a situation in which a claimant stays (is
temporarily present) in the Member State in which he or she works, or transfers
his or her residence (moves permanently) to the Member State in which he or she
works. Such a claimant remains entitled to receive cash sickness benefits from
the competent State.
80. Article
22 of the Regulation contemplates a situation in which a person has already
become entitled to cash sickness benefits in a Member State, but who then for a
variety of reasons moves to another Member State. The circumstances include in
paragraph 1(b) a situation in which the person is authorised to transfer
residence to the territory of another Member State. There are narrowly defined
limits on a Member State’s ability to refuse authorisation which are set out in
Article 22(2). However, the requirement of authorisation reflects the need for
some form of supervision by the competent State.
81. Article
22a was inserted to ensure, among other things, the entitlement of students to
benefits in kind. Article 22b was inserted to ensure the coverage of civil
servants where there is a special scheme for such persons, but was subsequently
revoked.
82. Both
parties argued the case on the basis that the provision in issue in the
claimant’s circumstances was Article 19, although Mr Drabble also relied on
Article 22.
83. The
application of the rules in Articles 19 to 22 becomes rather more complex now
that a progressively wider range of benefits under the legislation of the
Member States has been characterised as cash sickness benefits for the purpose
of Chapter 1 of Title III. For example, in Case C-160/96, Molenaar,
[1988] ECR I-880, and in Case C-215/99, Jauch, [2001] ECR I-1993, care
allowances were held to come within Article 4(1)(a). In Case C-299/05, Commission
v European Parliament and Council, [2007] ECR I-8730, the Swedish
disability allowance, and the United Kingdom attendance allowance, care
allowance, and the care component of DLA were held to be sickness benefits for
the purposes of Article 4(1)(a).
84. Our
conclusion is that the provisions of Articles 19, 20, 21 and 22 of Regulation
1408/71 are contemplating a number of different situations and that there is no
overlap between them. Where a person falls squarely within the provisions of
one of these articles, that excludes the operation of other articles which
might be argued to have more general application. Although at first glance,
Article 19 might appear to have wide application, on closer scrutiny it covers
only the situation of a person who works in one Member State and lives in a
different Member State.
85. We
conclude that the claimant did not come within the situation contemplated in
Article 19. At no time had she worked in one Member State while residing in
another. At the material time, she was resident in the competent State. This
view is supported by paragraph 22 of the judgment of a Grand Chamber in Case
C-145/03 Keller, [2005] ECR I-2529 (a case which concerned sickness
benefits in kind, but the principles are the same):
42. Before
answering the questions, it should be observed that, although the order for
reference refers to the institution of the place of residence to designate the
German social security institution and the doctors authorised by that
institution, it is common ground that at the material time Ms Keller was
resident in the competent Member State, namely Spain. As the defendants in the main
proceedings point out, Ms Keller's presence in Germany at that time thus corresponds
not to the case provided for in Article 19 of Regulation No 1408/71 but to that
mentioned in Article 22 of that regulation. It follows that there is no need to
answer the request for a preliminary ruling in so far as it relates to the
interpretation of Article 19(1)(a) of Regulation No 1408/71.
86. However,
the circumstances contemplated by Article 22 of the Regulation did apply to the
claimant. She was an employed person for the purposes of the Regulation; she
had become entitled to cash sickness benefits under the legislation of the United Kingdom; and she had transferred her residence to another Member State.
87. If
both Article 19 and Article 22 can apply to the same situation, there is an odd
result. Article 19 would permit export of the cash sickness benefits without
authorisation, whereas Article 22 only permits their export subject to
authorisation. That result cannot have been intended. The distinction makes
sense in the context of Article 19 applying to a situation in which the person
is working in the competent Member State, but residing in another Member State. Here the sickness benefits are exportable without qualification. However,
where a person is in the competent Member State and wishes to move elsewhere,
authorisation is required in order to ensure that there is no adverse impact on
the health of the claimant or his or her continuing treatment.
88. What
then is the significance of the authorisation requirement in the case before
us? Article 22(2) limits to a very considerable extent the circumstances in
which authorisation can be refused where cash sickness benefits are in issue.
There is no evidence before us suggesting that the transfer of residence was
prejudicial either to the health of the claimant (in so far as there is any
evidence, it is that it was beneficial for her health) or to the receipt of
medical treatment.
89. This
is a convenient point at which to address the arguments put by Mr de la Mare
that Article 22 was not factually engaged in the circumstances before us, since
the claimant had never sought any authorisation to move from the United Kingdom to Spain. Our view is that if the circumstances contemplated in Article 22 applied to
the claimant, her ability to rely on that provision cannot be defeated in
circumstances in which, had authorisation been sought, the United Kingdom could not have refused it. It would be otherwise if it could be shown that
grounds to refuse the authorisation existed. However, even then, we would be
applying the provisions of the article rather than accepting that they were not
engaged by the factual situation with which we are faced.
90. In
fairness to Mr de la Mare’s carefully put arguments that the scheme for
sickness benefits collapses on itself unless a different view is taken of the
defined terms in Article 19 (and it would follow in Article 22), we indicate
why we conclude that there is no merit in those arguments.
91. In
essence, Mr de la Mare argued that, if the defined terms in Article 19 referred
to a person who had been insured in the past for one of the contingencies
covered by the Regulation, then references elsewhere in Chapter I of Title III
were rendered redundant. In our view, the use of qualified or other terms
elsewhere in the Chapter on sickness and maternity benefits reflects specific
issues concerning a particular class of employed or self-employed persons.
92. Article
25(1) refers to “an unemployed person who was formerly employed or
self-employed” and deals specifically with entitlement for a period during
which unemployment benefit would otherwise be payable. Article 25(2) refers to
“a totally unemployed person who was formerly employed” and dovetails with
specific provisions relating to unemployment benefits in Article 71. The
provisions here mirror for sickness benefits provisions in Chapter 6 on unemployment
benefits and lay down a special regime for a certain class of employed or
self-employed persons.
93. Articles
27 and 28 refer to “pensioners”. Here again there is a specific subset of rules
applicable, in broad terms, to those whose working lives have come to an end
through the award of a pension either on normal retirement or on earlier
retirement as a result of ill-health, accident or injury. The normal rules are
in some way modified in their cases. In particular, sickness benefits become
payable in the manner prescribed by the provisions. This view is supported by
the paragraph in the Preamble cited above, and by the judgment of the Court of
Justice in Case 182/78 Pierik, [1979] ECR 1977.
94. It
follows from the reasoning set out above that we do not consider that there is
any question which needs to be referred to the Court of Justice on the
interpretation of the defined terms in Articles 19 and 22 of the Regulation.
95. Our
conclusion is that the claimant fell within the circumstances contemplated by
Article 22 of Regulation 1408/71 and that there were no grounds on which the
Secretary of State could have refused authorisation for a transfer of the
claimant’s residence to Spain. The claimant was accordingly entitled to export
the care component of her DLA unless some other provision of the Regulation
precluded this.
J.
The application of Article 13(2)(f) to the claimant’s circumstances
96. Mr
de la Mare’s alternative argument was that the claimant ceased to be entitled
to payment of United Kingdom sickness benefits because the United Kingdom ceased to be the competent State when the claimant moved permanently to Spain.
97. On
the accepted facts, the claimant moved permanently to Spain on 5 November 2002. She undertook no employment or self-employment in Spain, and so Article 13(2)(f) prima facie applied to her.
98. There
was considerable discussion of Points 19 and 20 in Annex VI which set out the
circumstances in which the United Kingdom will regard the legislation of the United Kingdom as ceasing, or not ceasing, to apply on the operation of Article 13(2)(f).
99. What
is the status of Annex VI? Article 89 makes provision for Annex VI; it is a
part of the Regulation which has been adopted by the European legislature. Mr
de la Mare has referred us to the Explanatory Memorandum to the United Kingdom’s entries in Annex VI. What is the status of the Explanatory Memorandum? We
conclude that it might produce useful guidance in the event of there being some
ambiguity in the text of the United Kingdom entries, but it cannot fix in time
the scope and meaning of the provisions of Regulation 1408/71, of which Annex
VI is a part.
100. Point 19 spells out
the date on which the United Kingdom will regard itself as ceasing to be the
competent State on the operation of Article 13(2)(f), while Point 20 preserves
the status of the United Kingdom as the competent State for certain purposes.
We have not found these provisions easy to understand and apply in the context
of the wider range of benefits now treated as sickness benefits under the
regime laid down by Regulation 1408/71.
101. Point 19 provides that
Article 13(2)(f) applies at the end of the day on the latest of one of three
days set out in Point 19. Point 19(a) is the default position if Points 19(b)
and (c) do not apply. Point 19(b) clearly has no application.
102. Does Point 19(c)
assist the claimant? Mr de la Mare said that the benefits to which reference is
made exclude the care component of DLA, since it was not regarded as a cash
sickness benefit when Annex VI was concluded, and is still not regarded as a
sickness benefit under the national classification of benefits.
103. Mr Drabble said that,
if a benefit is now a cash sickness benefit under the classification required
by Regulation 1408/71, it must be included within the term “United Kingdom
sickness benefit” The terminology used in Point 19 is that of the system of
classification used in the Regulation.
104. If Mr Drabble was
right, then the claimant would fall within Point 19(c)(i). She was in receipt
of a United Kingdom cash sickness benefit (the care component of DLA) as
classified by Regulation 1408/71 which began before the date of transfer of
residence to Spain. Since the award was an open-ended one, the effect of the
application of Point 19(c)(i) would be the cessation of the application of United Kingdom legislation only when the award of the care component of DLA was validly
superseded to produce a nil entitlement.
105. However, it is not
necessary to decide whether this is the effect of Point 19(c)(i) since in our
view Point 20(a) applied to preserve the application of United Kingdom legislation notwithstanding Article 13(2)(f) even if it was Point 19(a) which
governed the claimant’s position. We note that the purpose of Point 20 is
purported to be elaborated in the Explanatory Memorandum in relation to the
Annex. At the time, the United Kingdom took the view that its purpose was to
preserve the status of the United Kingdom as the competent State for the
purposes of a new claim for one of the benefits in the specified chapters where
the claimant could still qualify for that benefit on the basis of past national
insurance contributions.
106. Disability living
allowance is a non-contributory benefit, but the effect of the case-law of the
Court of Justice to which we have referred earlier in this decision—and which
has been accepted by both parties—is that the care component constitutes a cash
sickness benefit falling within the material scope of Chapter 1 of Title III of
Regulation 1408/71.
107. It follows that in our
judgment the circumstances of the appellant at the material time brought her
within the scope of Point 20(a). The claimant was an employed person who was
last insured under the legislation of the United Kingdom. It is the words in
Annex VI which have to be interpreted and their effect cannot be limited by the
Explanatory Memorandum in the manner for which Mr de la Mare contended. There
is no ambiguity in the application of the words to the circumstances presented
by the claimant.
Our
conclusion in the alternative on the application of Article 13(2)(f)
108. If we are wrong on the
proper interpretation of Point 20(a), and if Point 19(a) applied to the
claimant, there is an alternative route which produces the same result.
109. Mr de la Mare said
that Point 19(a) meant that Article 13(2)(f) brought an end to the claimant’s
entitlement to the care component of DLA from 6 November 2002. Mr Drabble
argued that, on the proper interpretation of Article 22 of Regulation 1408/71,
the entitlement to DLA continued.
110. We have already
concluded that the claimant was in a situation contemplated by Article 22 of
Regulation 1408/71. The issue here is whether the application of Article
13(2)(f) (applying Point 19(a) of the United Kingdom entry in Annex VI)
defeated the entitlement to export the care component of DLA under that provision.
111. Mr Drabble pointed out
that in Case C-275/96 Kuusijärvi, [1997] ECR I-3419, the Advocate
General explained that in circumstances analogous to those of the claimant, a
benefit claimant would retain an existing entitlement to payment of a benefit
falling within the scope of sickness and maternity benefits under Article 22
notwithstanding the operation of Article 13(2)(f).
112. The Kuusijärvi case
concerned a Finnish national who had worked in Sweden for eleven months. She
received unemployment benefit in Sweden when her employment ended, and
subsequently became entitled to a child allowance and parental benefit in Sweden. She then moved to Finland with the consequence that the Swedish authorities ended
her entitlement to the parental benefit.
113. In the course of
proceedings challenging that decision, a reference was made to the Court of
Justice. The Advocate General concluded that the operation of Article 13(2)(f)
was not restricted to cases in which a person had definitively ceased all
occupational activity. The Court agreed.
114. The Advocate General
classified the benefits in issue as falling within Chapter I of Title III as
maternity benefits, and noted, at paragraph 60 of his Opinion, that the
operation of Article 13(2)(f) did not mean that Anna Kuusijärvi could not
continue to receive the maternity benefits, since Article 22 preserved her
entitlement.
115. The Advocate General
explained:
64.
The national court’s third question essentially asks whether the requirement in
Article 22 that persons to whom it applies satisfy the conditions of national
legislation means that, where that legislation includes among such conditions a
requirement of residence on national territory, a recipient who moves to
another Member State ceases to be entitled to payment of the benefit.
65. Article
22(1)(b) by its terms applies where a person entitled to sickness or maternity
benefits returns to the Member State where he resides or transfers his
residence to another Member State and ensures that in such circumstances the
recipient retains his entitlement to the benefits in question. It is evident
that if that entitlement could be defeated by a national residence requirement
the provision would be entirely devoid of purpose, which can scarcely have been
intended. Article 22 is moreover one of a series of provisions of the
Regulation which seek to ensure that Member States may not in general refuse
payment of social security benefits within the Regulation solely because the
putative recipient resides in another Member State … . I accordingly conclude
that the right to continued payments of benefits conferred by Article 22 cannot
be defeated by a residence requirement imposed by national legislation as a
condition of entitlement to such benefits.
116. The Court of Justice
did not consider the interpretation of Article 22, since it concluded that the
benefits in issue were family benefits governed by separate provisions of the
Regulation.
117. In our case, the
parties agreed that we were dealing with cash sickness benefits; and they were
plainly right to do so. The claimant had transferred her residence from the United Kingdom to Spain. Article 22 does contain an authorisation procedure, but there is nothing in
the evidence to indicate that the move was prejudicial to the state of health
of the claimant; nor did the move have any adverse effect on the receipt of
medical treatment. These are the only grounds on which the authorities in a Member State could refuse authorisation of the move under Article 22.
118. We conclude that the
entitlement of the claimant to export the care component of her DLA under
Article 22 was not defeated by the application of Article 13(2)(f) of the
Regulation if Point 19(a) of the United Kingdom entry in Annex VI did apply to
the claimant.
K.
Does the judgment of the Court of Justice in Stewart assist us?
119. Both parties were
invited to make submissions on the impact of Case C-503/09, Lucy Stewart v
Secretary of State for Work and Pensions, Judgment of 21 July 2011, on the
issues presented in this appeal. After consideration of those submissions, we
have concluded that this case is of only marginal assistance, but we are
grateful to Mr de la Mare and Mr Drabble for their analyses of it.
120. Mr de la Mare noted
that the Court of Justice had concluded that the benefit in issue in the Lucy
Stewart case was an invalidity benefit, and did not address the question
relating to the claimant’s status as an “employed person” since it did not then
arise. Mr de la Mare conceded that the judgment was therefore of little
assistance to us, though he did make the point that the representative for the
European Commission appeared to accept, under questioning at the oral hearing,
that the concepts of “employed person” or “self-employed person” do not
necessarily have the same meaning throughout the Regulation.
121. Mr Drabble drew
attention to the conclusion in the Lucy Stewart case that the past
presence test was held to be in breach of European Union Law, and to the
observations in the Advocate General’s Opinion (summarised at paragraphs 47 and
48 of his Opinion) to the effect that it mattered little whether the benefit
was classified as an invalidity benefit or a sickness benefit since the same
principles essentially apply so that the same result should ensue regardless of
whether Article 10 or the provisions of Chapter 1 of Title III of Regulation
1408/71 applied.
122. We have concluded that
the judgment in the Lucy Stewart case is of only marginal relevance in
the determination of the appeal before us. We do not need to rely on it for any
of the propositions which ground our decision on this appeal.
L.
The outcome
123. The First-tier
Tribunal approached this case by applying the wrong provision of Regulation
1408/71. That was an error of law, and for this reason we set their decision
aside. This is plainly a case in which it is appropriate for us to remake the
decision of the First-tier Tribunal.
124. Our conclusion is that
the claimant remained entitled to receive the care component of DLA following
her transfer of residence to Spain on 5 November 2002 until such time as the
Secretary of State had validly superseded the award to reduce it to a nil
entitlement. Supersession purely on grounds of a change of residence would be
unlawful under European Union law. In the event, the claimant’s entitlement was
never validly superseded in her lifetime and continued until her death.
125. We set out our formal
decision in substitution for that of the First-tier Tribunal at the head of
this decision.
M.
A summary of our assessment
126. The claimant was
within the personal scope of Regulation 1408/71 and the benefit in issue was
within the material scope of the Regulation as a cash sickness benefit.
127. We find the reasoning
of the Court of Appeal in Ruas compelling; that decision is binding on
us. The defined terms “employed person” and “self-employed person” have the same
meaning throughout the Regulation wherever those terms are used subject to
their being read in context. Consequently, it is sufficient that the claimant
was an insured person by virtue of having paid national insurance contributions
in the past in order to come within the defined terms. She did not need to be
actually in employment or self-employment at the material time, or to have a
contribution record which would have entitled her to contribution-based cash
sickness benefits under United Kingdom legislation, for Article 22 to apply.
128. The claimant
accordingly fell within the scope of the rules in Chapter 1 of Title II of
Regulation 1408/71, and was entitled to the payment of the benefit in Spain under Article 22 of Regulation 1408/71.
129. When the claimant transferred
her permanent residence to Spain, Article 13(2)(f) of the Regulation had the prima
facie effect of making Spain the competent State from 6 November 2002, but
Point 20(a) preserved the status of the United Kingdom as the competent state
for the purpose of the application of the provisions of Chapter 1 of Title III
in relation to her award of DLA.
130. However, even if we
are wrong on that point and Point 19(a) applied to her, Article 22 of
Regulation 1408/71 preserved the right of the claimant to receipt of the care
component of DLA until such time as the Secretary of State validly superseded
that award to reduce it to a nil entitlement.
Patrick Howell QC
Elisabeth A Jupp
Robin C A White
Judges of the Upper Tribunal
19 July 2012
