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Summary

The claimant was an adult with severe disabilities, in receipt of DLA. In 2016 he was admitted to hospital, and after 28 days there, his DLA fell to be suspended under the so-called ‘hospitalisation rule’ (at relevant regulations 8–12B of the Social Security (Disability Living Allowance) Regulations 1991 No.2890). The claimant’s challenge to that was refused both by the First-tier Tribunal and the Upper Tribunal. His challenge was based on the argument that the hospitalisation rule was in breach of the anti-discrimination rule, and his rights as a disabled adult who currently lacked capacity at Article 14 of the European Convention on Human Rights (read with Article 1 of Protocol 1).

The Court of Appeal unanimously dismissed the claimant’s further appeal. In the preceding Upper Tribunal decision, Judge Ward had been right to hold that that the question of the claimant’s capacity as such is not a relevant ‘status’ for the purpose of Article 14. Secondly (even assuming that the claimant had a relevant status), no evidence that the hospitalisation rule affected a disproportionate number of people in that group had been advanced before the Upper Tribunal.

In any case, any differential treatment was justified. Applying a ‘conventional proportionality’ test for justification, the court considered that the rule did have an objective and reasonable basis, so that it satisfied the principle of proportionality. Relevant factors here were that public spending was at issue; this was not a case of direct discrimination; the alleged status of the claimant was not a ‘suspect ground’ such as ‘race, sex or disability as such’; the rule had been in place for many decades and had been approved by parliament, and: ‘This is a context in which a “bright line” rule is appropriate and necessary…The fact that a particular case may fall on the wrong side of the line simply illustrates that there are sometimes hard cases but that does not mean that the rule itself is unjustified’ (paragraph 74).

Summary

In this decision, the Inner House of the Scottish Court of Session rejected HM Revenue and Customs’ (HMRC) appeal against the decision of the Inner House (see Bulletin 283, p12), which had held that it is still possible for claimants awarded refugee status to backdate a tax credit claim to the date of their claim for asylum, where that was made before the introduction of universal credit (UC). The claimants were entitled to rely on the refugee backdating rule at regulation 3(6) of the Tax Credits (Immigration) Regulations 2003 No.653. Because their asylum claim had been made before the introduction of UC in their area, they were not prevented from claiming tax credits by Article 7 of the Welfare Reform Act 2012 (Commencement No.23 and Transitional and Transitory Provisions) Order 2015 No.634.

HMRC’s submission that Article 7 excluded the claim had three major difficulties. Firstly, it treated regulation 3 as being of no force or effect. The 2015 Order neither expressly revoked nor repealed the rule nor did it (as HMRC accepted) implicitly revoke or repeal it. The ‘clear language’ required for such an effect was absent here (paragraph 14).

Secondly, since the 2015 Order came into force, regulation 3 had been amended on three occasions: HMRC had failed to explain why amendments were being made to an allegedly redundant regulation. Thirdly, HMRC’s argument yielded an arbitrary result. A refugee’s ability to claim backdated child tax credit would turn on a random event – whether UC has been rolled out in a particular area. ‘In other words,’ held the court, ‘it would truly be a “postcode lottery”’ (paragraph 16).

Comment from CPAG

This decision has been applied and followed by the Court of Appeal in R (on the application of DK) v HM Revenue and Customs and Secretary of State for Work and Pensions, [2022] EWCA Civ 120 (8 February 2022). The case arose from an appeal against the decision on the High Court (Bulletin 282, p12) and involved in essence the same question as in Adnan and Adnan. Giving the lead judgment in the Court of Appeal, Lord Justice Singh said there was a well-established practice that the courts in the England and Wales jurisdiction will follow the decisions of courts in Scotland on the same point of interpretation in revenue matters, subject to there being a ‘compelling reason’ not to follow the Scottish decision. But there was no such compelling reason here. Indeed, Lord Justice Singh held (at paragraph 48) that: ‘the purpose of the 2003 Regulations was a benevolent one, to recognise that, in the meantime, a person had not received payments of child tax credits to which they were otherwise entitled…I can understand the reasoning that, if the intention of legislation is to remove that entitlement for the past and not merely to set out the legal position for the future, that could and should be made clear’. See also the article in Bulletin 287, p4.

Summary

The claimants were a couple employed by a company that they owned and of which the appellant was the managing director and his wife the sales director. The company’s income was derived from commissions based on fees paid by subscribers, the number of which had been in decline. In 2013, the HMRC made a decision that the claimants were not entitled to WTC during the tax year 2012–13, and that they were required to repay an overpayment (described by Upper Tribunal Judge Rowland as ‘very considerable’). The crucial part of the First-tier Tribunal decision, which dismissed the appellant’s appeal, was that it found that he had not worked ‘in expectation of payment’ during that year as ‘by 2012’ he had resigned himself to the fact that no profit was going to be made.

Judge Rowland set the tribunal decision aside and remitted the case to a new tribunal. The tribunal had erred in not giving adequate reasons, as the timing and nature of the appellant's resignation had not been investigated or explained (paragraph 10). The finding that he had resigned ‘by 2012’ did not mean that he might not have been working in expectation of payment for at least part of 2012–13. More generally, the judge accepted that ‘work may be done in expectation of payment notwithstanding that no profit is in fact made. Moreover, work may be done in expectation of payment even if it is known that no profit will be made for some time but it is expected that the relevant business will become profitable in the future…’ (paragraphs 11–12).

Summary

The claimant suffered from several medical conditions, including gynaecological problems and difficulties with bowel movements. She had been refused employment and support allowance (ESA) on a repeat claim (having already had a previous award terminated). Following an unsuccessful mandatory reconsideration, she appealed. She said that she found discussing her medical issues very distressing/embarrassing, and requested an all-female panel, a female clerk and a female presenting officer. That request was refused, and when on the day of the hearing the claimant did not turn up, the tribunal decided to proceed in her absence, and dismissed the appeal.

Judge Wikeley allowed the claimant’s further appeal and remitted the case to a new tribunal. The tribunal had erred by proceeding in the claimant’s absence when, due to the absence of the self-assessment questionnaire (ESA50) from the appeal papers, the tribunal had very little idea of what the claimant’s case was. Fairness required that she should have been alerted to that and given the chance to attend a hearing.

Strictly speaking, that meant the judge did not have to decide on whether the tribunal was wrong to proceed without agreeing to the claimant’s request regarding (among other things) an all-female panel. However (having noted the observation that the First-tier Tribunal rules do not give parties the right on demand to an all-female panel or even a single member of the same sex), he agreed that ‘the decisions in CIB/2620/2000 and CIB/2811/2008 are plainly authority for the proposition that, even in the absence of a request for at least one member of the panel to be of the same gender as the claimant, “a tribunal will nevertheless be under a duty to raise the matter of its own motion if there is a genuine reason to believe that in the circumstances of the particular case the absence of such a member may lead to injustice”’ (paragraph 20). There may be ‘exceptional cases’ in which fairness required that every member of the tribunal, and the clerk and presenting officer, be female as well (paragraph 21). In practice, such cases were likely to involve either appeals involving ‘sensitive and uniquely female’ medical conditions, or ‘cultural issues about the giving of evidence’. The common thread was the need, under rule 2 of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008, to apply the overriding objective of dealing with cases fairly and justly (paragraph 23).

Comment from CPAG

Although strictly obiter (not formally binding), the judge’s observations on when a tribunal should consider an all-female panel are likely to be persuasive authority. They may also be applied, in relevant cases, to contemplation of an all-male panel.

Summary

In this decision, the Court of Appeal reversed a decision of the Upper Tribunal which had held that the alleged spare bedroom in the bedroom tax rules had to be capable of use by the particular category of occupant or ‘family unit’ – eg, siblings of the same sex. Rather, ‘bedroom’ should be interpreted as meaning a room capable of being used as a bedroom by any of the listed categories (paragraphs 40–41).

The claimant lived with her husband and two sons in a property described as having three bedrooms. However, two of the bedrooms were small and awkwardly shaped, and not capable of being shared by the boys. The relevant rules were in regulation B13 of the Housing Benefit Regulations 2006, No.213. In Nuneaton and Bedworth Borough Council v RH and SSWP [2017] UKUT 471 (AAC), the Upper Tribunal held that the relevant issue was the ‘connection’ issue (ie, whether the room had to be capable of occupation by the particular individual or class of individual who may occupy it) and concluded that it did have to be so capable. Before the Court of Appeal, the claimant accepted that the individual characteristics of the occupants could not be taken into account, but their classification in the rules (in this case, as children of the same sex neither of whom were aged under 10) had to be taken into account, so that the suitability of the bedroom for that category of occupant was relevant. It was also argued that the differential treatment in the rules of children of the same sex and of those aged under 10 was unlawful discrimination under the European Convention on Human Rights (‘the Convention’).

Rejecting those arguments, the Court of Appeal held that the fundamental difficulty with the discrimination arguments was that the decision in R (Carmichael and others) v Secretary of State for Work and Pensions [2016] UKSC 58 had held that the rules were compatible with the Convention. Regarding the regulations, they were to be applied ‘in respect of a notionally vacant house’ and the ‘characteristics of the particular individuals are irrelevant’, with the result that the assessment was an ‘objective’ one (paragraph 38). Further, there is nothing in the regulations to indicate the assessment is required to take account of how the bedrooms would be used ‘by a particular family unit’. If they did, the underlying purpose of the regulations would be frustrated as a tenant could decide to use the property so as to reduce the relevant number of bedrooms. The Upper Tribunal had wrongly ‘introduced a subjective element’ into the assessment, supported neither by the words of the regulation nor the intention of the legislation (paragraphs 39–40).

Summary

The claimant was treated as having notional income from money available for withdrawal in a personal pension fund, but that he had not withdrawn. He had not withdrawn the money because the value of the plan fund was less than his contributions, and following a complaint he had been advised by the Financial Services Compensation Scheme not to withdraw available income from the fund. In the Upper Tribunal, it had been held that where the pension funds were less than the claimant’s contributions, the notional income rule at regulation 18 of the State Pension Credit Regulations 2002, No.1792 should not be applied, as any available money should in fact be treated as capital.

The Court of Appeal ruled that the Upper Tribunal judge had failed to apply the correct legal principles to the construction of regulation 18 and that the Secretary of State’s appeal should be allowed. The claimant’s original appeal against the notional income decision was dismissed (paragraph 36). The wording in regulation 18, including references to pension schemes and income withdrawal, have a clear and technical statutory meaning relating to pensions and tax legislation. In that context, ‘income’ was unconnected with the financial performance of a pension fund. To find, as the Upper Tribunal did, that it was so connected would require continuing examination of the financial performance of personal pension schemes, and it was unlikely that such a complex and unpredictable approach was intended (paragraphs 24–34).

Summary

The claimant telephoned the tribunal clerk to request a postponement of her appeal because of a conflicting appointment, and then wrote to ‘confirm the conversation’. The request was passed to an HMCTS tribunal caseworker, who refused the postponement request, saying that no explanation had been given regarding the conflicting appointment and that the claimant’s medical records were now available to the tribunal. The tribunal proceeded in the claimant’s absence (and refused the appeal), explaining that it had ‘sufficient evidence’ to enable it to make a decision and that it was in accordance with the overriding objective to proceed in the claimant’s absence.

Judge Poynter allowed the claimant’s further appeal and remitted the case to a new tribunal, with directions that an oral hearing should be held on a day on which the claimant was able to attend. The facts (not before the tribunal) were that the claimant had been unable to attend the hearing because she had an urgent medical appointment for cancer treatment. The clerk had made a procedural error in not recording this detail which was very probably included in the telephone conversation with the claimant. But (more importantly) the tribunal caseworker was exercising the judicial power of the tribunal, and should have directed that the missing information about the conflicting appointment be requested from the claimant before deciding the postponement request (paragraphs 16–19). Further, the tribunal’s decision to proceed in the claimant’s absence also involved an error of law. The tribunal had proceeded on the basis that it had ‘sufficient evidence’; but the test under rule 31 of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Procedure) Rules 2008, No.2685, was whether it is in ‘the interests of justice’ to proceed. At the very least, the tribunal had failed to explain how it was fair (and in accordance with the overriding objective) to proceed (paragraphs 27–32).

The judge suspected that some may think that the claimant, who was unrepresented, should have known that she needed to provide an explanation about the conflicting appointment. But he pointed out that, on the facts, it would have been ‘astonishing’ had she not in fact done that in the context of her telephone conversation with the clerk (paragraph 42). Furthermore, the claimant – ‘in common with many other appellants in the Social Entitlement Chamber’– was ill. A person suffering pain and fatigue ‘cannot necessarily be expected to draft applications to the tribunal with the same thoroughness that she would bring to the task if she were well’ (paragraph 44). Finally, the judge cited his own experience as a district judge of the First-tier Tribunal in observing that many unrepresented claimants (and some represented ones) simply did not understand that a social security appeal is a judicial hearing, and believed that requesting a postponement is just giving notice to cancel an appointment. ‘Such an approach,’ said the judge, ‘should not be held against unrepresented claimants, at least when there is no reason to believe they have been told what is actually required.’ The tribunal had an enabling role and, ‘particularly as many people are better at expressing themselves by word of mouth than they are in writing, allowing claimants to attend hearings and explain their situation in person’ was important (paragraphs 47–49).

Comment from CPAG

This decision shows how inattention to the need for fairness (and concentration on merely progressing business), including by tribunal caseworkers, can lead tribunals astray. The judge’s observations on the realities and perspectives of many social security appellants are a timely and important reminder of the importance of oral hearings.

Summary

The claimants were all women on universal credit (UC), employed and paid monthly. Because they were paid on or around the last working day or last banking day of the month, there were times when earnings payable in respect of two different months were paid during one UC assessment period. For example, one claimant had an assessment period running from 30 November to 29 December, and received the November earnings on 30 November and the December earnings on 29 December. As a result, she (and the other claimants) were treated as having two lots of wages paid in the same assessment period. As they were entitled only to one work allowance in that month, their UC entitlement was severely reduced when they were paid the UC, leading to serious financial difficulty. The claimants’ challenge was based on arguments that the assessment of their earnings in this way led to effects that contravened the Welfare Reform Act 2012 so as to be ultra vires, or that it led to unlawful discrimination contrary to Article 14 of the European Convention on Human Rights (ECHR) read with Article 1 of protocol 1 of the ECHR. One claimant also argued that the Secretary of State had failed to comply with the public sector equality duty under section 149 of the Equality Act 2010.

In the High Court, Lord Justice Singh and Mr Justice Lewis held that the decisions counting payments of both sets of monthly earnings in the same assessment period were indeed wrong, although as that was because of an erroneous interpretation of the relevant regulation, did not go on to consider the claimant’s arguments about ultra vires or the ECHR. On the facts (which included equality impact statements regarding the impact of UC on groups with protected characteristics, including women), the court held that the Secretary of State had satisfied the public sector equality duty (paragraphs 64–67).

The court concentrated on regulation 54 of the Universal Credit Regulations 2013, SI No.376. That provides that the calculation of earned income ‘in respect of’ an assessment period is ‘to be based on the actual amounts received in that period’. The court noted that the regulation ‘does not provide that the amount of earned income “is to be the actual amounts” received “in” the assessment period. Rather, the amount of earned income is to be “based on” the actual amounts received’ (paragraph 50). Although earned income was indeed ‘based on’ earnings received in the assessment period, there might need to be ‘an adjustment’ where it was ‘clear that the amounts received in an assessment period do not, in fact, reflect the amounts of earned income received in respect of the period of time included within that assessment period’ (paragraphs 52 and 56). In the circumstances of these cases, therefore, the Secretary of State had wrongly interpreted regulation 54 and ‘wrongly assumed that where salaries for two different months were received during the same assessment period, the combined salaries from the two months were to be treated as earned income in respect of that assessment period’ (paragraph 62).

Comment from CPAG

The court directed further submissions on identifying the appropriate remedy.

Summary

This decision of the Northern Ireland Court of Appeal concerns the context in which the various descriptors in the WCA should be applied. The claimant had been refused employment and support allowance (ESA). The issue was whether, in the WCA, she should have been awarded points under Activity 14 (coping with change).

In the decision now under appeal, the Northern Ireland Commissioner (applying in particular the Upper Tribunal decision in AS v SSWP [2013] UKUT 587) had held that the descriptors must be applied on their own terms, but be understood against the backdrop of the modern workplace. But that did not mean that context applied to each and every descriptor: although some descriptors applied only to the workplace, others clearly did not (paragraph 20).

The Northern Ireland Court of Appeal rejected the claimant’s argument that the commissioner had, in the context of Activity 14, wrongly failed to apply the ‘work context’ as described in AS (and as endorsed in JC v SSWP [2014] UKUT 352 (AAC)). It was clear that the commissioner had been fully sighted of the decision in AS and recognised it represented an ‘authoritative statement of the law’ (paragraph 36). The commissioner’s finding that some descriptors were not limited to the workplace, including those in Activity 14 which was about to ability to cope with change and manage ‘day to day life’ was ‘entirely consistent’ with the decision in AS (paragraph 38). On the evidence, both the tribunal and the commissioner had been entitled to refuse the claimant points under Activity 14 (paragraphs 39–55).

Summary

The claimants were Swedish nationals (mother and children) living in Germany. The mother and one of her daughters worked in temporary jobs lasting less than a year, then received Arbeitslosengeld II, a benefit (referred to by the Court as a ‘subsistence allowance’) for the long-term unemployed. But that was terminated on the basis that they had been unemployed for more than six months.

The precise legal basis for the termination was that the benefit was social assistance, the claimants’ only right to reside was now only as jobseekers, and that under Article 24(2) of EC Directive 2004/38/EC (‘the residence Directive’) there was no obligation to provide such assistance to nationals of other European Union (EU) member states, other than to workers and their family members. The claimants challenged that, arguing that the termination was in breach of Article 4 of EC Regulation 883/2004 on equality of treatment for nationals of member states, read in conjunction with Article 70 on provision of ‘special non-contributory cash benefits’.

The European Court of Justice held the termination of the benefit to be lawful. The benefit concerned was correctly classified as ‘social assistance’ within the meaning of Article 24(2) of the residence Directive. The Court considered that ‘the predominant function of the benefits at issue in the main proceedings is in fact to cover the minimum subsistence costs necessary to lead a life in keeping with human dignity’. It followed that they were not ‘benefits of a financial nature which are intended to facilitate access to the labour market’ – ie, so Article 24(2) could be applied (paragraphs 45– 46). Regarding equal treatment, the Court referred to its decision in Vatsouras and Koupatantze (EUECJ C-22/08 and C-23/08), in which it held that EU citizens with a right to reside on the basis of retained worker status under Article 7(3)(b) of the residence Directive (ie, as former workers now seeking employment) have the right to social assistance for ‘at least six months’ (paragraph 54). However, in the present case, the Court held that it was not disputed that the claimants no longer enjoyed retained worker status at the point the benefit was terminated (ie, their only right to reside now was as jobseekers with a genuine change of being engaged in employment – ie, under Article 14(4)(b) of the residence Directive) (paragraph 55). It followed that although the claimants may still have a right to reside, that was not as workers, and so ‘social assistance’ could be refused under Article 24(2) of the Directive (paragraphs 57–58).

Comment from CPAG

The Court’s classification of the German benefit concerned as a ‘social assistance’ benefit is crucial to the reasoning of the decision. Disappointingly, the Court’s explanation for not regarding the benefit as one to facilitate access to the labour market is not very clear, and neither does it explain why it considered that the claimants no had longer retained worker status after six months (given that Vatsouras merely said that such status applied for ‘at least’ that period).

Summary

The claimant was paid industrial injuries disablement benefit from July 2010 until March 2018, on the basis of spinal and associated injury caused by an accident at work in March 2010. However, in February 2018 a DWP doctor had, in effect, changed her mind in relation to previous assessments, and found that (although the claimant undoubtedly had ongoing loss of faculty) any continuing disablement was unlikely to have been caused by the accident at work. The doctor had learned from the claimant that he had an old fracture in his spine, dating from before the accident. Therefore, a decision was made terminating his entitlement from March 2018. The First-tier Tribunal refused the claimant’s appeal, concluding that ‘the appellant’s impairment arose from a constitutional condition which existed prior to the incident even though giving rise to few symptoms at that time’. The claimant appealed, arguing that the tribunal had given inadequate reasons for its decision, in particular in allegedly not explaining why it had rejected previous decisions awarding him entitlement.

Deputy Judge Rowland dismissed the claimant’s appeal. The tribunal had explained its decision adequately. The tribunal had been entitled to consider the issue of causation afresh. And not relying on the earlier decisions had been explained: ‘The reasons given for not placing weight on the decisions were essentially that causation had not explicitly been considered in them – because it was not considered a live issue at the time – and that the medical advisors had not had the medical evidence that was before the First-tier Tribunal and caused the First-tier Tribunal to consider that the assessment decisions had been based on mistakes of material fact (see paragraphs 71 and 72 of the statement of reasons). That is perfectly proper reasoning.’ The tribunal had then gone on to set out its reasons for concluding that ongoing disability was not caused by the accident in 2010.

The deputy judge also rejected arguments (made by the Secretary of State) that the tribunal had erred in not explaining its findings that the injury had caused only soft-tissue damage and that the degenerative disc disease showing in a December 2010 MRI scan was unlikely to have been caused by that. The deputy judge pointed to the presence on the tribunal of a medically qualified member: ‘Where a tribunal includes a registered medical practitioner as a member and so has its own expertise, it is required to give reasons for its conclusion but is generally entitled to rely on its own expertise. I do not accept that the First-tier Tribunal is obliged to give reasons for its reasons in the absence of reasoned evidence that contradicts its opinion. It may be that, on an appeal to the Upper Tribunal, a party is entitled to adduce evidence for the purpose of showing that there is a contradictory body of medical opinion and that, in the circumstances of a particular case, the First-tier Tribunal’s reliance on its unexplained opinion is inadequate, but that has not been done here…’ (paragraph 17).

Comment from CPAG

The involvement of the issue of causality and that that had not been the subject of enquiry in previous decisions were important factors in this case. However, the emphasis on the ability of a tribunal to rely on its own expertise in the absence of evidence to the contrary is of wider relevance.

Summary

The claimant had third-party deductions (‘TPDs’) made from her income-related employment and support allowance (ESA) in respect of fuel and water debts. On application for judicial review, she challenged the lawfulness of the Secretary of State’s written guidance in the Decision Maker’s Guide and in a related overview document about such deductions, which she claimed led to decisions to make the deductions in an unlawful way. The statutory rules on the deductions (which were not the subject of the claimant’s challenge) were in regulation 37 and Schedule 9 of the Social Security (Claims and Payments) Regulations 1987, SI No.1968. This is a distinct scheme from that that applies to universal credit. 

The guidance was challenged on the grounds that it unlawfully failed to advise seeking consent or representations from the claimant before the deductions were made. Specifically, it (i) failed to include that whether the claimant consented to the deductions was a relevant consideration; (ii) implied that it was not under an obligation to seek representations and information from the claimant; and (iii) omitted to say that in many cases it would need to seek those views in order to act fairly. Additionally, the decision maker was in effect precluded from considering any of the claimant’s circumstances. The claimant also argued that these failures amounted to a breach of her human rights, under her rights to property under Article 1 of Protocol 1 or as discrimination in breach of Article 14. 

In the High Court, the judge allowed the claimant’s application but only on the ground that the guidance led to the decision maker not seeking representations and information from the claimant. He said: ‘…the claim for judicial review succeeds on one aspect only. This is that the defendant’s written guidance to decision makers in relation to TPDs is unlawful because, by implication and omission, it has the effect that, read as a whole, the guidance presents a misleading picture of the true legal position to decision makers, in that it does not make clear that claimants should be offered the opportunity to make representations and/or provide relevant information to the decision maker before the TPD decision is taken’ (paragraph 292). The other arguments made were rejected. The judge did not go further than declaring that the guidance was unlawful in the single respect he identified: ‘This is because TPDs are imposed upon over a hundred thousand claimants each year and so any breaches of common law duties affect a very large number of people. Also, the deficiency in the written guidance that I have held to exist can relatively simply and easily be remedied, by adding a direction to the effect that claimants should be offered the opportunity to make representations and/or provide relevant information to the decision maker before the TPD decision is taken’ (paragraph 291).

Comment from CPAG

The decision is not simple authority that the deductions are unlawful or that claimant consent is required. But it does establish that views and/or information should be sought from the claimant before these deductions are made. Arguably, it should apply to universal credit as well as to legacy benefits (like income-related ESA) – but that may require additional authority.