ML v SSWP [2011] UKUT 390 (AAC)

UKUT-AAC
ML v SSWP
[2011] UKUT 390 (AAC) · 2011-07-29
[1]This case concerns how the provisions of Council Regulation (EEC) No 1408/71 apply. The legislation is complex and its impact obscure. I have to discuss the technical aspects in some depth and regret any difficulty this may cause for the claimant, who has participated by correspondence with the aid of a translator.[2]The claimant is a Polish citizen. He worked in England for the period 19 December 2005 to 20 October 2006. During that time he was paying national insurance contributions. In October 2006 he was taken ill and was admitted to a psychiatric hospital on 11 November 2006 with symptoms of a psychotic episode. He returned to Poland, with assistance, on 24 November 2006 and has, I believe, remained there ever since. I proceed on the assumption that at all material times the claimant was incapable of work. His disability is not what is in issue in this case.[3]The agency in Poland concerned with sickness benefit is known by the initials ZUS. On the evidence before me, it has not at any material time paid any sickness benefit to the claimant. I do not know, much less am in a position to comment upon, the grounds on which sickness benefit was not payable in Poland in the period 24 November 2006 to 17 January 2008, but the fact remains that it was not. During that period the claimant was provided for by his grandparents out of their pensions.[4]On 17 January 2008 the claimant claimed in Poland an invalidity pension (sometimes alternatively referred to as a disability pension), which it appears is handled by a different body from the ZUS. The evidence before me is that a person over 30 (as the claimant was at the material time) had to be able to establish a period of insurance (whether contributory or non-contributory) of five years at the date of claim. The claimant’s claim was rejected for failure to meet this condition. He appealed up to the Court of Appeal (Labour and Social Security Division) in Warsaw. As there are also courts concerned with social security matters at both district and regional levels, this was a court of considerable seniority. The only court above it is the Supreme Court of Poland, to which there is no indication that the claimant has appealed or could yet appeal, and I take the decision of the Polish Court of Appeal as definitive of the position under Polish law.[5]The claimant failed to meet the contribution condition even when his 11 months of insurance in the UK were taken into account. The particular reason was that under Polish law the amount of non-contributory periods which can be taken into account for this purpose may not exceed one-third of the contributory periods. So, because of the claimant’s limited employment record, he was unable to count enough of the periods when he was unemployed or studying to enable him, even with the UK period, to meet the Polish contribution condition.[6]The claimant has indicated that since 2008 he has been receiving an allowance from the “Social Welfare Institution” at the amount of 444.00 zloty. In view of what is known about the failure of his invalidity pension claim, I infer that this allowance is by way of some form of social assistance.[7]Around 12 February 2008, the Secretary of State, acting through the International Pension Centre (“IPC”), received a form E204 from the Polish authorities, attaching a Form E207. Form E204 is the standard form for EU social security purposes relating to “Investigation of a claim for an invalidity pension”. It showed that such a claim had been made, in Poland, on 17 January 2008. Form E207 set out details of the claimant's periods of study, work and unemployment, with details of when he had been insured.[8]On 16 June 2008 the IPC replied in form E205. This showed that the claimant had been insured in the tax year 2005-06 for 16 weeks, followed by 28 weeks in the tax year 2006-07. Section 9.1 of form E205 contains a box, completed as follows:
“An insured person showing proof that he has completed an insurance period of less than one year ( ) may receive (x) may not receive a pension under national legislation (Art.48.1 of Reg.1408/71).”
As will be apparent, I accept on the evidence now available that this decision was correct. Getting to that position has, however, proved a complex process.[9]The claimant appealed, pointing out that the only reason that he had been unable to complete one year's contributions was because he had suddenly been taken ill, as a result, he asserted, of stress at work.[10]The Secretary of State's submission to the First-tier Tribunal was unclear about whether the tribunal was required to address short-term incapacity benefit (“STIB”) or long-term incapacity benefit (“LTIB”). The tribunal rejected the claimant’s appeal. The key paragraph was that:
“As the requisite number of contributions have not been satisfied by [the claimant] during his period of employment in the United Kingdom... he... cannot qualify for United Kingdom based Incapacity Benefit.”
[11]The claimant appealed to the Upper Tribunal. The Secretary of State agreed that permission to appeal should be given, because of the complexity of the issues.[12]STIB in the United Kingdom was (apart from immaterial exceptions) subject to conditions requiring national insurance contributions to have been paid and/or credited: see Social Security Contributions and Benefits Act 1992 (“the 1992 Act”), s.30A(1) and (2) and schedule 3, part 1, paragraph 2. The effect of these provisions is that for a period of incapacity starting in November 2006, contributions would have had to have been paid by the tax year 2004/5, which did not happen in the present case. LTIB is not subject to contribution conditions, at any rate directly: it turns on whether a person has been entitled to STIB for more than 364 days: see 1992 Act, section 30A(4) and (5) and also the decision in R(IB)1/02.[13]It is common ground between the claimant and the Secretary of State that his claim, insofar as it was for a UK benefit, was for LTIB. E204 was the proper form for transmission of that claim. It is, accordingly, with the provisions of regulation 1408/71 (“the Regulation”) regarding long-term invalidity benefits that I need to be concerned. All references to “Articles” are to articles of the Regulation.[14]There are two types of invalidity benefits for the purposes of the Regulation: those where the amount of invalidity benefits is independent of the duration of periods of insurance and those where the amount does depend on such periods. The former are known as “Type A” and the latter as “Type B”. A list of the former appears at Annex IV, part A of the Regulation and includes, at point AA, the legislative provisions applicable to invalidity pension, the statutory predecessor to LTIB. The Annex does not refer to invalidity benefit in Poland (the entry would have been at point T), and the Polish scheme is, therefore, a Type B scheme.[15]Article 37 sets out the rules applicable where a person has completed periods of insurance exclusively under Part A schemes. It is Article 40 that sets out rules that apply where a person has been subject to the legislation of at least two Member States not all of whom have Type A schemes. As it stood at the time of the claimant’s claim, it provided:
“Article 40 General provisions 1. An employed person or a self-employed person who has been successively or alternately subject to the legislation of two or more Member States, of which at least one is not of the type referred to in Article 37(1), shall receive benefits under the provisions of Chapter 3, which shall apply mutatis mutandis , taking into account the provisions of paragraph 4. 2. However, an employed or self-employed person who suffers incapacity for work leading to invalidity while subject to a legislation listed in Annex IV, part A, shall receive benefits in accordance with the provisions of Article 37 (1) on the following conditions: — that he satisfies the conditions of that legislation or other legislations of the same type, taking account where appropriate of Article 38, but without having recourse to periods of insurance completed under legislations not listed in Annex IV, part A, and — that he does not satisfy the conditions required for the acquisition of the right to invalidity benefits under a legislation not listed in Annex IV, part A, and — that he does not assert any claims to old-age benefits, account being taken of the second sentence of Article 44 (2). 3. (a) For the purpose of determining the right to benefits under the legislation of a Member State, listed in Annex IV, part A, which makes the granting of invalidity benefits conditional upon the person concerned having received cash sickness benefits or having been incapable of work during a specified period, where an employed person or a self employed person who has been subject to that legislation suffers incapacity for work leading to invalidity while subject to the legislation of another Member State, account shall be taken of the following, without prejudice to Article 37 (1): (i) any period during which, in respect of that incapacity for work, he has, under the legislation of the second Member State, received cash sickness benefits, or, in lieu thereof, continued to receive a wage or salary; (ii) any period during which, in respect of the invalidity which followed that incapacity for work, he has received benefits within the meaning of this Chapter 2 and of Chapter 3 that follows, of the Regulation granted in respect of invalidity under the legislation of the second Member State. as if it were a period during which cash sickness benefits were paid to him under the legislation of the first Member State during which he was incapable of working within the meaning of that legislation. (b) The right to invalidity benefits under the legislation of the first Member State shall be acquired either upon expiry of the preliminary period of compensation for sickness, as required by that legislation, or upon expiry of the preliminary period of incapacity of work as required by that legislation, but not before: (i) the date of acquisition of the right to invalidity benefits referred to in subparagraph (a) (ii) under the legislation of the second Member State, or (ii) the day following the last day on which the person concerned is entitled to cash sickness benefits under the legislation of the second Member State. 4. [Not material]”
[16]As can be seen, Article 40(1) brings into play the provisions of Chapter 3, to be applied mutatis mutandis. These are Articles 44-51a, to which I return below. Suffice it to say for now that they include Article 48(1), the de minimis provision on which the Secretary of State originally relied. Though the Polish Court of Appeal appears to suggest that the claimant’s situation might fall to be determined under Article 39, which creates a different regime, that is a conclusion I am respectfully unable to accept given the express provision to the contrary made by Articles 37 and 40.[17]However, on my view that it is Article 40 which applies, Article 40(2) creates an exception from Article 40(1) and leads to a different set of rules altogether, so it is with Article 40(2) that we must start. Though the matter is not entirely clear, in my view the expression “suffers incapacity for work leading to invalidity” refers to the onset of the period of incapacity, not of the subsequent invalidity. That is the more natural reading of the English text: it is the incapacity that is suffered, not the invalidity. Further, Form E204 draws a distinction between “Date which has been determined as the commencement of invalidity” at 7.1 of the form and “Date of commencement of incapacity for work followed by invalidity“ at 7.2. This at any rate seems to suggest that the Administrative Commission (see article 90 of regulation 574/72) in approving the form took the same view as I do. I did earlier in this case additionally consider the French version “qui est atteint d’une incapacité de travail suivie d’invalidité” and the German “die im Anschluss an eine Arbeitsunfähigkeit invalide werden” but, both because they appear to point one in each direction and because of the reservations expressed by Sedley LJ in R (Tilianu) v Secretary of State for Work and Pensions [2010] EWCA Civ 1397 at [14] that “In my judgement the very equality of the various texts excludes the use of one to gloss another in this way” I place no reliance on the versions in other languages in order to determine the meaning of the Article.[18]Assuming for present purposes that it is the period of incapacity that is relevant, this commenced when the claimant had his sudden episode of mental illness. At that time he was in the United Kingdom. Does that make him “subject to a legislation listed in Annex IV, part A”? I interpret the words quoted as meaning “subject to the system of law of which the legislation listed in Annex IV, part A forms part” or possibly “to be capable of receiving benefit under the legislation listed in Annex IV, part A, if one were to meet the conditions of entitlement for it.” The Secretary of State argues that one has to look at the matter in conjunction with Article 13, which suggests that the claimant was subject to UK legislation whilst he was employed here and when he ceased to be employed here but still resided in the UK (Articles 13(2)(a) and (f)). However one gets there, on the view which I take, contrary to the Secretary of State, that it is the commencement of incapacity with which we are required to be concerned, there is no dispute that at that time the claimant was subject to UK legislation.[19]Potentially therefore the claimant would fall within Article 40(2), but to do so only helps him if he can meet the conditions in the three indents in that article.[20]Among the conditions which the first indent would require the claimant to satisfy would be the condition of having completed 364 days on STIB. The claimant had not done so and, under UK domestic law, was not in a position to do so. It is true that the indent refers to the need to take account where appropriate of article 38. That article provided:
“Article 38 Consideration of periods of insurance or of residence completed under the legislation to which an employed person or a self employed person was subject for the acquisition, retention or recovery of the right to benefits 1. Where the legislation of a Member State makes the acquisition, retention or recovery of the right to benefits, under a scheme which is not a special scheme within the meaning of paragraph 2 or 3, subject to the completion of periods of insurance or of residence, the competent institution of that Member State shall take account, where necessary, of the periods of insurance or of residence completed under the legislation of any other Member State, be it under a general scheme or under a special scheme and either as an employed person or as a self-employed person. For that purpose, it shall take account of these periods as if they had been completed under its own legislation. [2. and 3. not material]”
[21]What are “periods of insurance” is defined in Article 1(r), but I need not set this out in full. Even assuming in the claimant’s favour that his period of insurance following his return to Poland was to be equated under Article 38 to the necessary 364 days on STIB in the UK (which I do not necessarily accept), this would amount to “having recourse to periods of insurance completed under legislations not listed in Annex IV, part A”, which is expressly prohibited by the terms of the indent. The conditions in the indents are cumulative, so failing to meet any one of them has the consequence that Article 40(2) cannot assist the claimant.[22]The Secretary of State submits, correctly in my view, that Article 40(2) and 40(3) are concerned with different situations. Article 40(2) concerns the person who suffers incapacity for work leading to invalidity while subject to a legislation listed in Annex IV, part A. Though the application of Article 40(2) may only be of practical relevance to a person who has also resided in another Member State, it is not the involvement of the second Member State that determines the article’s scope. Article 40(3) by contrast is concerned with a person who has suffered incapacity for work leading to invalidity not in the Member State whose Type A scheme is being considered, but in “another Member State”.[23]If one turns to considering whether Article 40(3) can assist the present claimant, the first point is that he would have had to have “suffer[ed] incapacity for work leading to invalidity” while subject to the legislation of “another” (i.e. not the UK) Member State (in this case, Poland). For the reasons already given, I consider the better view is that the claimant “suffered incapacity…” in the UK and not in Poland. In case I am wrong in that, however, I consider the consequences if the claimant could rely on article 40(3). It would be necessary to take account of “any period during which, in respect of that incapacity for work, he has, under the legislation of the second Member State, received cash sickness benefits…” However, the evidence before me is that it is the ZUS who would make such payments and there have been none, certainly not in the period of 364 days leading up to the claimant’s claim for LTIB in January 2008.[24]It would also be necessary to take into account “any period during which, in respect of the invalidity which followed that incapacity for work, he has received [specified benefits] granted in respect of invalidity under the legislation of the second Member State.” However, whether or not the claimant’s allowance of 444.00 zloty is such a benefit (which I rather doubt), it was only granted from 2008, so once again, it would not be possible for him to rely on this to clock up the necessary 364 day period prior to his claim for LTIB in the United Kingdom.[25]I therefore conclude that Article 40(2) does not operate so as to disapply the general rules brought into play by Article 40(1); and that, in applying those general rules, the claimant does not on any view benefit from the special provisions of Article 40(3).[26]The rules brought into play by Article 40(1) are those in Chapter 3, i.e. articles 44- 51a. Of these, Article 45 provides for where the legislation of a Member State makes entitlement dependent on consideration of periods of insurance or of residence: this is not the case for LTIB, whose condition is, as already noted, linked to previous receipt of a cash sickness benefit (in the UK, STIB). As with the first indent of Article 40(2), discussed above, even if the scope of the provision is such that one should also take into account a period on Polish sickness benefit (and I do bear in mind both that Article 46 is a provision relating to other benefits which falls to be applied mutatis mutandis, so a degree of adjustment to the wording may be called for, and also the context of Treaty aims of promoting freedom of movement of workers), it makes no difference on the evidence in this case as the claimant had not been in receipt of Polish sickness benefit in the year leading up to his January 2008 claim.[27]Article 46 provides for rules applicable where “the conditions required by the legislation of a Member State for entitlement to benefits have been satisfied”. It then provides more detail, according to whether those conditions have been satisfied “without having to apply Article 45 or Article 40(3)” or “only after application of Article 45 and or Article 40(3).” The way in which this article is applied in practice by the United Kingdom goes beyond a strict reading of the words in order, it is said, to give practical effect to the United Kingdom’s international obligations. However, I do not need to go into the detail here if the Secretary of State is correct in saying that the provisions of Article 48 operate in this case so as to exclude any right to LTIB.[28]Article 48 provides:
“Article 48 Periods of insurance or of residence of less than one year 1. Notwithstanding Article 46 (2), the institution of a Member State shall not be required to award benefits in respect of periods completed under the legislation it administers which are taken into account when the risk materializes, if: — the duration of the said periods does not amount to one year, and — taking only these periods into consideration, no right to benefit is acquired by virtue of the provisions of that legislation. 2. The competent institution of each of the Member States concerned shall take into account the periods referred to in paragraph 1, for the purposes of applying Article 46 (2) excepting subparagraph (b). 3. If the effect of applying paragraph 1 would be to relieve all the institutions of the Member States concerned of their obligations, benefits shall be awarded exclusively under the legislation of the last of those States whose conditions are satisfied, as if all the periods of insurance and residence completed and taken into account in accordance with Article 45 (1) to (4) had been completed under the legislation of that State.”
[29]It seems to me that “when the risk materializes” in the context of the present case probably refers to the date of onset of the claimant’s mental illness making him incapable of work, i.e. on or around 20 October 2006. At that time, the only meaning that can be given to the expression “periods completed under the legislation it administers” is to refer to the claimant’s period of insurance, which totalled 44 weeks. The whole language of this provision addresses a period which was brought to completion by virtue of the risk materialising. Its structure is thus diametrically opposed to the claimant’s point that he was only unable to clock up the necessary year because he was taken ill. This conclusion is unaffected by the assertion that the illness was caused by stress at work, even if that could be established.[30]If, contrary to my view, the expression “when the risk materializes” is intended to refer to when the risk of invalidity (as opposed to incapacity) materialises, that does not help the claimant either, as on the facts of this case, having ceased work and returned to Poland very shortly after he was taken ill, there is no sense in which he could be said to have completed any materially additional period under the legislation administered by the UK.[31]I record that in my view the expression “periods completed” is intended to refer to actual periods completed. The United Kingdom has a somewhat odd system in that it is possible for an entire year to count for national insurance purposes without one having paid contributions throughout it if those which one did pay were at a sufficiently high level. Even if that were the case in relation to the claimant (which I do not know), in my view the European legislature would express law intended for application across Europe in terms (actual periods) which were capable of being applied anywhere, rather than dependent on the idiosyncrasies of a particular Member State’s system.[32]As stated above, no right to benefit was acquired by virtue of the claimant's contributions to date. There was no right to LTIB, because it was dependent on having been entitled to STIB for 312 days and there was no right to STIB, because the contribution conditions were not satisfied.[33]Clearly therefore on what is now known, the United Kingdom was prima facie entitled to rely on Article 48(1). Article 48(3) contains a provision for when both Member States concerned could rely on Article 48(1), aimed at stopping a claim, in the circumstances referred to in Article 48(3), from falling through the gaps. However, those are not the circumstances we are concerned with here. It is not that “the effect of applying paragraph 1 would be to relieve all the institutions of the Member States concerned of their obligations” so far as Poland is concerned. Rather, Poland, as the Polish Court of Appeal has held, does not have any obligations to be relieved of by Article 48(1), because the claimant does not satisfy the relevant Polish insurance conditions. Therefore, Article 48(3) does not apply.[34]With the benefit of more time to consider the case than was doubtless available to the First-tier Tribunal and with specialist input on behalf of the Secretary of State, I would conclude that the tribunal: either(a) failed to apply all the relevant provisions necessary before it was in a position to conclude that Article 48 applied; or(b) failed to set out sufficiently its reasons as to how these various provisions applied to enable the Upper Tribunal to see whether or not the law had been correctly applied (cf. Meek v Birmingham City Council [1987] ILR 250): “There should be sufficient account of the facts and of the reasoning to enable the [relevant appeal tribunal] or, on further appeal, this court to see whether any question of law arises …” ; and(c) failed to make sufficient findings on key matters, notably what benefits, if any, the claimant had been in receipt of in Poland in the year running up to his claim for LTIB.[35]For those reasons, it was in error of law. However, having found the further facts and worked through the provisions, I am satisfied that its decision was, in the outcome, correct and thus remake its decision in identical terms.[36]I am grateful to the claimant and those who have assisted him and to Mr Charnley of DWP Legal Services for their patience and thoroughness in connection with this case. CG Ward Judge of the Upper Tribunal 29 June 2011

Cited in 1 later judgment