[2006] NISSCSC C1_03_04(SF) (08 September 2006)

Decision No:  C1/03-04(SF) & C2/03-04(SF)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

SOCIAL FUND

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 4 December 2001

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal by the Department against decisions dated 4 December 2001 of an appeal tribunal sitting at Belfast.  In the appeal to me the Department is represented by Mr Millar of its Decision Making Services branch and the claimants (who are husband and wife) by Ms Loughrey of the Law Centre (NI).  I am grateful to both for their assistance.  As a composite hearing was held I am issuing a composite decision. 

	Preliminary issue
2.	Ms Loughrey asked me to make reference to the European Court in this case on two questions:

(a)	Does the introduction of Article 13(2)(f) to Regulation (EEC) No 1408/71 prevent a person from acquiring new benefits such as a winter fuel payment (WFP)?

(b)	Given that the Department accepted that a WFP was an old age benefit and exportable by those already in receipt of the benefit could such a payment be exported by those who became entitled to retirement pension (RP) having left the United Kingdom?

3.	I decline to make such a reference as I consider:

(a)	there are already authorities from the superior courts which enable the issues relevant to this case to be dealt with;

(b)	because such references are to be made only where really necessary due to the expense and possible delay occasioned thereby.

	Factual Background
4.	The claimants went to live in the Republic of Ireland in 1978.  Neither has worked or resided in any part of the United Kingdom since then.  Prior to 1978 both were subject to the social security system of the United Kingdom.  Both are entitled to RP from the United Kingdom system (the wife from 24 January 1993 and the husband from 28 June 1999) on the basis of their contributions.  The husband worked in the Republic of Ireland after he went to live there (this may not have been known to the tribunal).  The wife has not worked there.  Neither has worked in the United Kingdom since going to live in the Republic of Ireland.

	Adjudication Background
5.	Both made application for the WFP in December 1999 and both were disallowed by decisions dated 14 October 2000 (for the wife) and 6 November 2000 (for the husband) on the basis that neither had been ordinarily resident in Great Britain or Northern Ireland on any day in the qualifying week of 20-26 September 1999.  Both appealed to a tribunal which on 4 December 2001 upheld the appeals and decided that each was entitled to the WFP.  The Department, with leave of the legally qualified panel member, appealed to me.

6.	Certain issues were in contention before the tribunal which are not in contention before me.  Before me Mr Millar accepted that the claimants were each covered by Article 2 of Regulation (EEC) 1408/71 and that the WFP fell within Article 4(1) thereof.  Ms Loughrey accepted that when the claimants moved to the Republic of Ireland they ceased to be subject to the United Kingdom social security system.  She accepted further that the only way that either claimant could be entitled to the WFP was if there was a link between that payment and the RP.  

7.	The tribunal’s very comprehensive decision comments on various decisions, many of which, in light of the narrowing down of the issues, are not relevant to what I have to consider.  The tribunal reasoned that, as Article 10(1) of Regulation (EEC) 1408/71 was concerned with the production of rights in the process of being acquired it was 

“irrelevant to the application of Article 10(1) to the present appeal, that the appellant was not resident in the United Kingdom (or Northern Ireland) at the time of the introduction of the legislative provisions relating to the Social Fund Winter Fuel Payment, nor that he has not been resident in the United Kingdom at any time since the introduction of the Social Fund Winter Fuel Payment.” (see the final page of its reasoning).

8.	Implicit in the tribunal’s conclusions was that the claimants were each in the process of acquiring a right to the WFP.  The tribunal appears to conclude (in my view correctly) that the WFP was a benefit aimed at protecting against the risks of old age.  As I understand it the Department concedes this.  It then moves directly to the conclusion that each claimant was in a position of acquiring a right to it.  The issue before me is whether the right to a WFP was a right in the process of being acquired when the claimants left the United Kingdom and accordingly was protected by the said Article 10(1).  I am unable to ascertain from its statement how the tribunal came to the conclusion that the claimants were each in the process of acquiring a right to the WFP.

9.	It is unfortunate that the tribunal does not appear to have had cited to it, the judgment of the Court of Appeal in England and Wales in the case of Harris v Secretary of State for Social Security (reported as R(DLA) 2/99) .  I have also derived considerable assistance from decision CIS/1491/2004, a decision of Mr Commissioner Rowland in Great Britain.  I will return to these decisions later.

10.	It is essentially on the basis of the tribunal’s implied conclusion that the claimants were each in the process of acquiring a right to the WFP when they left the United Kingdom that the Department appeals to me.  Ms Loughrey has conceded, in my view correctly, that the only way that either of the claimants could be found to have been acquiring a right to the WFP is if entitlement to that benefit is linked to the RP.  I deal later with why I consider her concession to be properly made.  Accepting the said concession, the matter becomes largely though not entirely one of domestic law.

	The Domestic Legislation
11.	The domestic legislation is contained in section 134 of the Social Security Contributions and Benefits Act (Northern Ireland) 1992 and Regulations made thereunder.  Section 134 permits payments to be made out of the social fund of prescribed amounts to prescribed descriptions of persons, in prescribed circumstances, to meet expenses for heating which appear to have been or to be likely to be incurred in cold weather.  The Regulations applicable at the time of claiming were the Social Fund Winter Fuel Payments Regulations 1998.  Regulation 2 thereof is the provision relevant to this case.  It provides for the prescribed descriptions of persons.  These include (paragraph (2)) those in receipt of the pensioner and higher pensioner premium of income support or jobseeker’s allowance.  They also include (paragraph (6)) men aged 65 or over and women aged 60 to whom in the qualifying week various benefits were payable.  These benefits include attendance allowance, disability living allowance and RP.  The Regulations provided for a “qualifying week” in each year.  The relevant week in the year of claiming being 20-26 September 1999.

	In the case of Regina v Secretary of State for Social Security, ex parte Taylor (Case C-382/98 [1999] ECR 1-8955) it was held that the scheme under the 1998 Regulations was inconsistent with European Directive 79/7/EEC on the progressive implementation of the principle of equal treatment for men and women.  The 1998 Regulations were repealed and replaced with the Social Fund Winter Fuel Payment Regulations (Northern Ireland) 2000 which abolished both the age differential and the requirement that a claimant be entitled to a specific benefit.  This case is, however, to be decided under the 1998 Regulations but subject of course to the decision in Taylor.  For reasons which will be apparent later I need not go further into the effects of that decision on the age differential.

	Reasoning
12.	As was decided in the Taylor case the WFP is a benefit within Article 4(1) of Regulation (EEC) 1408/71.  It is paid to safeguard against risks associated with old age.  It is, however, also apparent that Article 10(1) applies to benefits “acquired” under the legislation of the relevant Member State.  It has been stated by the European Court in the case of  Daalmeijer v Bestuur van de Sociale Verzekeringsbank (Case C-245/88) at paragraph 15 et seq:

“… as the Court has consistently held, it is for the legislature of each Member State to lay down the conditions creating the right or the obligation to become affiliated to a social security scheme or to a particular branch under such a scheme, which include the conditions governing the cessation of affiliation, provided always that in that connection there is no discrimination between nationals of the host State and nationals of the other Member States …

16.	Nor does Regulation No 1408/71 contain any provision whose application, whether directly or by analogy, would make it possible to set aside a residence requirement of that kind.”

13.	Regulation (EEC) 1408/71 relates to the application of social security schemes to (inter alia) employed persons and to members of their families moving within the Community.  It does not create rights to benefit.  Included amongst its titles are the following:

“Whereas employed persons … moving within the Community should be subject to the social security scheme of only one single Member State in order to avoid overlapping of national legislations applicable and the complications which could result therefrom;

Whereas the instances in which a person should be subject simultaneously to the legislation of two Member States as an exception to the general rule should be as limited in number and scope as possible;

Whereas with a view to guaranteeing the equality of treatment of all workers occupied on the territory of a Member State as effectively as possible, it is appropriate to determine as the legislation applicable, as a general rule, that of the Member State in which the person concerned pursues employment or self-employment;”

	A later title relates to the award of old age benefits and states:

“Whereas it is expedient that a system for the award of old-age benefits and survivors benefits be worked out where the employed or self-employed person has been subject to the legislation of one or more Member States.”

	There then follow titles relating to the determination of pension entitlements.

14.	It is therefore apparent (as indeed was conceded to be the case here) that a person is generally to be subject only to one State scheme and that is the one of the State in which the person pursues employment.  In the case of the husband here, as he worked in the Republic of Ireland after he went to reside there, the relevant scheme is that of the Republic of Ireland.

15.	Applicable to the wife who ceased economic activity when she left the United Kingdom (as it would have been to the husband had he not worked in the Republic of Ireland) is Article 13(2) of Regulation (EEC) 1408/71 which provides:

“Subject to Articles 14 to 17: … (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 aforegoing 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.”

	There is no indication that any of the exceptions is applicable so as to derogate from the general rule that the legislation applicable is that of the State of residence.  I therefore conclude that both the husband and wife were subject only to the Republic of Ireland scheme.

16.	Article 10(1), as previously mentioned, relates only to benefits “acquired”. This may include benefits in the process of being acquired.  I am unable to conclude, and indeed it has not been submitted, that Article 10(1) can give protection to benefits where the process of acquisition had not even begun when the claimant ceased to work or reside in the Member State responsible for payment of the benefit.

17.	The Court of Appeal in the case of Harris v Secretary of State for Social Security (R(DLA) 2/99) reviewed various decisions of the European Court - Bestuur der Sociale Verzekeringsbank v Smieja [1973] ECR 1213, Giuliani v Landsversicherungsanstalt Schwaben [1977] ECR 1857, Caracciolo (nee Camera) v Institut National d’Assurance etc., Caisse Régionale d’Assurance Maladie Rhône-Alpes v Anna Giletti [1987] ECR 955 and Daalmeijer.  Based on this review Evans LJ, giving the judgment of the Court concluded:

“It is clear from these authorities that Article 10(1) can have some application when a benefit is first acquired at a time when the beneficiary is not resident in the Member State whose institutions undertake to pay for it.  Additional and supplementary benefits cannot be denied on grounds of residence alone.  Cases of that kind, which have been the subject of particular decisions of the Court, necessarily imply some pre-existing or established benefit which has been added to or supplemented in some way.  Some further right has therefore been “acquired” but not without regard to the beneficiary’s previous rights which, as it was put in Smieja were “created within the confines of a particular scheme” (para. 21).

It does not follow from this inclusion of additional and supplementary benefits that Article 10(1) also disapplies a residence requirement in national legislation which “creates the particular scheme” in question.  In my view, the Court’s judgment in Daalmeijer holds expressly that it does not.  The Court there recognised that it is for the national legislature of each Member State “to lay down the conditions creating the right or the obligation to become affiliated to a social security scheme” (para.15), and Article 10 does not set aside a residence requirement “of that kind” (para.16).”

	It is unfortunate that the Harris case was not cited to the tribunal.

18.	Commissioner Rowland in CS/1491/2004 differs from Harris in his analysis of the Giletti case but states as follows: 

“37.	At one time, the idea that a person could receive old age benefits from two different Member States would have been regarded as inconsistent with Article 13(1) of Regulation (EEC) 1408/71.  In Ten Holder v. Nieuwe Algemene Bedrijsvereniging (Case 302/84) [1986] E.C.R. 1821, it was held that the effect of Article 13(1) in the case of a person to whom Article 13(2)(a) had formerly applied but who had ceased work was that that person continued to be subject to the legislation of the State where he was last employed, however long had elapsed.  It is noteworthy that Giletti was decided shortly after Ten Holder.  In subsequent cases, including Daalmeijer, it was held that the rule expressed in Ten Holder did not apply to a person who had permanently ceased all professional activity.  Article 13(2)(f) was then introduced in 1991 expressly to reverse Ten Holder, even in cases of temporary cessation of work (see Kuusijärvi v. Rijsförsäkringsverket (Case C-275/96) [1998] E.C.R. I-3419).

38.	This change in the way Article 13 is applied to those who have ceased employment necessarily, in my judgment, changes the way Article 10 must be construed.  That explains why the language used in Giletti is no longer appropriate and the new approach in Harris and Morvin has been adopted.  On the Ten Holder approach to Article 13, under which a person could broadly acquire entitlement to benefit under the legislation of only one Member State (albeit that residence, or contributions paid, in another Member State might be taken into account), the expansive approach to Article 10 suggested by the language of Giletti was required if Regulation (EEC) 1408/71 was sensibly to co-ordinate the different social security systems of Member States.  It could not have been right to prevent a person acquiring entitlement to any benefit available under the legislation of the only Member State from whom he could claim a benefit.  However, in the light of Article 13(2)(f), under which a person who has ceased employment becomes entitled to claim benefits from a Member State to which he has moved, it is logical that Article 10 should be construed so as not to permit the claimant also to qualify for new benefits in the Member State where he formerly lived.  What Article 10 does permit is the retention of entitlement to benefits he has already acquired, together with any new supplements to them.  Moreover, there is nothing in Article 12 that permits a Member State to withhold an old age benefit on the ground that an old age benefit is being paid by another Member State, unless the benefits are derived from the same period of compulsory insurance.  In Giletti itself, the fact that the supplementary allowance acted as a supplement to a widow’s pension was an important factor in the Court’s conclusion that the benefit fell within the scope of Regulation (EEC) 1408/71, but it formed no part of the reasoning of the Court on the Article 10 issue.  Now, the question whether the benefit in issue is a supplement to a benefit already in payment must be regarded as also being important when the application of Article 10 is being considered.”

	There is much in common between the analyses and both come to essentially the same conclusion which is that Article 10 Regulation (EEC) 1408/71 does not permit a claimant to qualify for new benefits in the Member State where he formerly lived.  I am in agreement with that conclusion which to me is apparent from the language of Article 10(1).  Article 13(2)(f) puts the matter beyond any doubt.  I am in agreement with CIS/1491/2004 where it states (at paragraph 38) that Article 10 permits the retention of entitlement to benefits already acquired together with any new supplements to them.
	Ms Loughrey is therefore correct when she concedes that it is only if there is a link between the WFP and the RP that either of the claimants could succeed.  I consider that the only possible link would be if the WFP was a supplement to the RP.  It is payable to anyone meeting the age and residency conditions whether or not that person has contributed to the United Kingdom social security scheme.

19.	It is unfortunate that the tribunal did not have the benefit of CIS/1491/2004 which post-dates its decision.  I agree with paragraphs 47 to 51 of CIS/1491/2004 which states:

“47.	Winter fuel payments, however are not contributory and, in my judgment, under the 2000 Regulations, they have no more connection with retirement pensions than disability living allowance had with incapacity benefit in Harris.  The fact that winter fuel payments are another form of old age benefit and are in fact claimed by a person entitled to retirement pension in this particular case – and, perhaps, in the majority of cases – is not sufficient to make them a supplement to a retirement pension so as to enable the claimant to acquire entitlement when already ordinarily resident in another Member State.  If this produces anomalies between people living in different Member States then that is the consequence of Regulation (EEC) 1408/71 being concerned only with co-ordination and not with harmonisation.

48.	Mr Wright, in his written submissions, makes the point that the 2000 Regulations replace the 1998 Regulations and that under the earlier legislation there was a direct link between retirement pensions and winter fuel payments.  In the absence of authority, it could certainly be argued that, in the case of a person in receipt of winter fuel payments under the 1998 Regulations by virtue of his entitlement to a retirement pension, the winter fuel payments were a supplement to that pension.  However, if that were the correct approach, it seems to me that Taylor would have been decided differently.

49.	In Taylor, the United Kingdom government argued that, if winter fuel payments were to be regarded as old age benefits, contrary to its principal submission, it was necessary to have the same qualifying age as for retirement pensions for the sake of coherence.   Mr Advocate General Mischo was not impressed by that argument and said:

“In the absence of a structural link between the state retirement pension and the payment provided for in the regulations, the argument invoking coherence amounts, in my opinion, to claiming that, at a theoretical, or indeed aesthetic, level, the choice of two different pensionable ages as a condition for granting the payment was the most satisfactory, even if there was no objective necessity to maintain that distinction rather than a single age of 60 which is applicable in the context of reg 2(2), or another.”

50.	The Advocate General’s view that the United Kingdom government’s argument was pitched at a theoretical or aesthetic level was, in my respectful opinion, well merited insofar as the argument related to cases where the claimant’s entitlement to winter fuel payments was based on entitlement to a benefit other than a retirement pension.  However, it could have been argued that the Court should regard winter fuel payments as supplements to the various benefits mentioned in regulation 2(6) of the 1998 Regulations.  The government could have conceded that the Court should strike down the reference to unequal ages but argued that it should uphold the condition that the claimant be entitled to one of the prescribed benefits, including retirement pensions.  Acceptance of that argument would have defeated Mr Taylor’s claim, because he was not entitled to any of the prescribed benefits and, on that approach, the disadvantage he suffered by comparison with a woman could properly have been said merely to have been the necessary consequence of the unequal pensionable ages legitimately used for retirement benefit purposes and so within the scope of the derogation permitted by Article 7(1)(a) of the Directive.

51.	In the event, no argument to that effect was put by the United Kingdom government, presumably because it was endeavouring to save the whole scheme, and the Court did not draw any distinction between claimants relying on entitlement to retirement pensions and those relying on entitlement to other benefits.  The Court simply held:

“34.	… if the benefit is designed to provide protection against the risk of old age and must, therefore, be paid only to those above a certain age, it does not follow that that age must necessarily coincide with the statutory age of retirement and, as a result, be different for men and women.

35.	In the light of the foregoing, it must be concluded that discriminatory treatment such as that at issue in the main proceedings is not necessarily linked to the difference in the statutory age of retirement for men and women and is therefore not covered by the derogation laid down by art 7(1)(a) of the directive.”

The necessary implication is that the Court did not regard winter fuel payments as mere supplements to other benefits but as a free-standing old age benefit.”

	The non-contributory nature of the WFP is obviously a very relevant factor in the conclusion that it is not a supplement to RP.  I am also in agreement with Commissioner Rowland’s views on the necessary implication of the decision of the European Court in Taylor.  I conclude that one is contribution based the other is not.  The WFP is not paid only to those in receipt of RP or indeed only to those who have contributed at all to the United Kingdom social security scheme.  I conclude that WFP even under the 1998 Regulations was not a supplement to RP.

20.	That being so, I agree with Commissioner Rowland that “… entitlement to winter fuel payments cannot be acquired by virtue of Article 10 where a claimant entitled to retirement pension has ceased to be ordinarily resident in the United Kingdom.  Article 10 permits entitlement to winter fuel payments to be retained when the claimant moves to another Member State after he has acquired it…”.  I do not even consider that the process of acquisition had begun.  The WFP is not contribution based.  The residence requirement is not based on a period of residence but on “ordinary” residence in the qualifying week.  That being so I fail to see how the process of acquisition could be said to have begun with relation to the WFP.

21.	Neither claimant in this case had acquired or was acquiring title to the WFP prior to leaving the United Kingdom.  Consequently neither can acquire entitlement to it by virtue of Regulation (EEC) 1408/71.  I consider the tribunal erred in concluding that the claimants were each in the process of acquiring a right to the WFP when they left the United Kingdom and that they therefore had the protection of Regulation (EEC) 1408/71 in relation to it.  I set its decision aside for that reason.  I consider it expedient that I give the decision which the tribunal should have given.  My decision is that neither claimant is entitled to the WFP for 1999/2000.  The Department wins its appeal.

(signed):  M F Brown

Commissioner

8 September 2006