HM Revenue and Customs v Ruas

The issue on this appeal is whether a person with Portuguese nationality is entitled to claim United Kingdom child benefit for his children resident in Portugal in circumstances where he has worked in the United Kingdom and currently lives here but he ceased to work on the ground of incapacity some time before he claimed the benefit. In the light of the way the appeal has been argued, the same issues of principle would arise in the case of a claim for similar benefit by the national of any other member state of the European Union (“EU”) living in the United Kingdom. The issue is, therefore, one of general significance.

It is important to emphasise at the outset that there is no question of entitlement to child benefit in both countries. The only question is whether the benefit is payable in the United Kingdom rather than Portugal or other EU member state.

The appeal is brought by the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) from the decision of Judge Mesher on 28^th January 2009, sitting in the Administrative Appeals Chamber of the Upper Tribunal. He allowed the appeal of Jose Antonio Lopes Ruas from the Boston Appeal Tribunal, which had itself disallowed Mr Ruas’ appeal from the Commissioners’ refusal in November 2006 to pay child benefit for Mr Ruas’ children in Portugal.

The Judge held that Mr Ruas was in principle entitled to United Kingdom child benefit by virtue of Article 73 of EC Council Regulation 1408/71 of 14 June 1971 (“the Regulation”), which is directly effective in the United Kingdom. The Commissioners appeal on the ground that the Judge misinterpreted the Regulation and wrongly held that it disapplied the provisions of section 146(1) of the Social Security, Contributions and Benefits Act 1992 (“the 1992 Act”), which restrict child benefit to children resident in Great Britain.

Mr Ruas has served a Respondent’s notice in which he seeks to uphold the decision of the Judge on two further grounds. They are that disentitlement to child benefit for his children living in Portugal would constitute unjustified indirect discrimination against migrant workers contrary to Article 3 of the Regulation or Article 18 of the EU Treaty (“the Treaty”) (formerly Article 12 of the EC Treaty) or Article 7 of Council Regulation (EEC) 1612/68 or would be inconsistent with the Social Security (Portugal) Order 1979 giving effect to the 1978 Convention on Social Security Between the Government of the United Kingdom and the Government of Portugal.

The factual context can be stated very briefly. Mr Ruas is a Portuguese national. He came to Britain from Portugal in 2000 with his wife and youngest daughter, Sara. His two elder daughters, Rita Raquel, born in 1988, and Micaela Sofia, born in 1992 remained in Portugal, living with his wife’s mother. Mr Ruas worked in Britain and paid national insurance contributions until he became unable to work in 2004 due to ill-health. He remained living in Britain. In 2006 Mr Ruas applied for child benefit for all three of his children. At that time he was in receipt of disability living allowance and income support and qualified for national insurance credits on the ground of incapacity for work. His application was refused in respect of his two elder daughters because they were not, and could not be treated as being, in Great Britain.

The entitlement to child benefit is laid down in Part IX of the 1992 Act. It is a universal benefit in that, subject to certain qualifications, it is paid to any person responsible for one or more children in any week, and is not dependent upon national insurance contributions or upon any assessment of means. Section 141 of the 1992 Act provides so far as relevant:

Section 146 of the 1992 Act makes it a condition of entitlement to child benefit that both the child and the claimant must be in Great Britain during the relevant period. That section is as follows so far as relevant:

No child benefit shall be payable in respect of a child … for a week unless he is in Great Britain in that week.

No person shall be entitled to child benefit for a week unless he is in Great Britain in that week.

Circumstances may be prescribed in which any person is to be treated for the purposes of subsection (1) or (2) above as being, or as not being, in Great Britain.”

Mr Ruas does not rely upon any prescribed circumstances within section 146(3) of the 1992 Act.

Mr Ruas’ entitlement to child benefit rests on the proper meaning and effect of the Regulation, and in particular Article 73, which is as follows:

Child benefit is a “family benefit” within Article 73.

Article 1 of the Regulation contains definitions of expressions used in the Regulation, including, so far as relevant, the following in relation to “employed person” and “self-employed 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 1 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 1;

The title of Annex 1 of the Regulation (“Annex 1”) is: “Persons covered by the Regulation”. Paragraph 1 of Annex 1 is headed “Employed persons and/self-employed persons (Article 1(a)(ii) and (iii) of the Regulation)”. It contains a series of definitions of persons to whom the Regulation applies, which have been inserted at the instigation of individual member states. The entry for the United Kingdom, which is at sub-paragraph Y, is as follows so far as relevant:

The expressions “employed earner” and “self-employed earner” are defined in section 2(1) of the 1992 Act as follows:

It is convenient to set out at this point the following further provisions of the Regulation.

The recitals in the Regulation include the following:

Other provisions of the Regulation relied upon by one or other of the parties include the following:

Judge Mesher accepted Mr Ruas’ case that he was entitled to child benefit, being a family benefit within Article 4(1)(h), by virtue of Article 73, read in the light of the definition of “employed person” in Article 1(a). He did not accept Mr Ruas’ argument that he fell within limb (i) of Article 1(a) (“limb (i)”). On that issue, he said:

The Judge did, however, accept that Mr Ruas fell within limb (ii) of Article 1(a) (“limb (ii)”). Having observed in paragraph 15 of his judgment that Article 2(1) provides that the Regulation applies to, among others, employed and self-employed persons “who are or have been subject to the legislation of one or more Member States” and are nationals of a Member State, he said:

The Judge considered that the present case is in terms of principle on all fours with the decisions of the ECJ in Case C-85/96Martinez Sala v Freistaat Bayern [1998] ECR I-2691 (“Sala”) and Case C-292/96Sürül v Bundesanstalt für Arbeit [1999] ECR I-2685 (“Sürül”).

The Commissioners’ case is that, at the time of Mr Ruas’ application for child benefit for his children living in Portugal, he did not fall within either limb (i) or limb (ii) of Article 1(a) of the Regulation. Although it was contended in the Respondent’s notice and the Respondent’s skeleton argument that the Judge was wrong to reject Mr Ruas’ case that he fell within limb (i), in the course of the hearing before us Mr Richard Drabble QC, for Mr Ruas, helpfully said that, in order to concentrate on his strongest points, he would not be pressing that argument in oral submissions. He also accepted that Mr Ruas did not fall within the second indent of limb (ii) (“limb (ii)(b)”). Accordingly, the critical issue is whether Mr Ruas was entitled to the benefit of Article 73 of the Regulation by virtue of the definition of “employed person” in the first indent of limb (ii) (“limb (ii)(a)”).

Mr Jason Coppel, counsel for the Commissioners, submitted that the law on that point is unclear, and, for that reason as well as the significant financial and other implications of the issue, this Court should direct a reference to the ECJ for a preliminary ruling. He submitted that such case law as exists is, on balance, in favour of the Commissioners’ denial of Mr Ruas’ entitlement to child benefit for his children resident in Portugal, but he conceded that this is open to question in view of the passage of time since some of the cases were decided, amendments to the Regulation, including (what is now) Annex 1, changes in the United Kingdom’s domestic legislation, and the development of jurisprudence in this area by the ECJ.

The Commissioners’ case is that, although they accept that Mr Ruas falls within limb (ii), he does not fall within limb (ii)(a). They accept that he falls within limb (ii) because child benefit is available under a social security scheme for all residents. The Commissioners contend, however, that he does not fall within limb (ii)(a) because the scheme for child benefit does not distinguish between employed or self-employed persons and others since entitlement to child benefit does not depend on contributions paid as an employed person. Even if the scheme in limb (ii) is to be regarded as the United Kingdom social security scheme as a whole, the Commissioners say that Mr Ruas cannot be identified under the scheme as an employed person because he is not currently (and, more to the point, was not at the time of his application for child benefit) an employed earner within Annex 1 and the 1992 Act; nor is there any connection between his previous employment, and in particular any national insurance contributions made by him while employed, and his entitlement to child benefit.

The earliest decision on which the Commissioners rely is Case 17/76 Brack v Insurance Officer[1976] ECR 1450. The facts of the case were that Mr Brack, a British national resident in Great Britain, had been insured under the British National Insurance scheme since 1948. Until 1957 he paid contributions as an employed person. He subsequently become self-employed and paid contributions as a self-employed person. In September 1974 he went on holiday to France where he fell seriously ill and had to receive immediate medical attention. He returned home to England, and claimed cash sickness benefits for and from the period of his illness in France. He was not entitled to sickness benefit for the period of his illness in France under domestic legislation. The question arose whether he was a “worker” within the Regulation and could therefore benefit under the provisions of Article 22(1). They provided at that time that: “A worker who satisfies the conditions of the legislation of the competent State for entitlement to [sickness] benefits… and : (a) whose condition necessitates immediate benefits during a stay in the territory of another Member State…shall be entitled:… (b) to cash benefits provided by the competent institution in accordance with the legislation which it administers…”. The defined expression in Article 1(a) at that time was “worker” rather than “employed person”. It did not extend at all at that time to a “self-employed person”. Further the equivalent of Annex 1 at that time was Annex V. The relevant part of the entry for the United Kingdom, which was originally inserted when the United Kingdom acceded to what was then the European Economic Community and which reflected the domestic law at that time, was:

As I said, Mr Brack had paid national insurance contributions both as an employed person and subsequently as a self-employed person. He claimed entitlement to sickness benefit calculated on the rate applicable if all those contributions were taken into account.

The ECJ observed that certain categories of persons who were not strictly employed persons under the domestic legislation were required to pay contributions as employed persons. It said that the relevant part of the United Kingdom’s entry in Annex V was thus intended to ensure that limb (ii) was applied broadly, in that Annex V made it clear that any person who was required to pay contributions as an employed person could be identified as such by virtue of the manner in which the British system was administered or financed in the sense of limb (ii).

The ECJ held in paragraph 15 of its judgment that a person in Mr Brack’s situation fulfilled the first two conditions in limb (ii) in that he was “compulsorily insured for one or more of the contingencies covered by the branches of social security dealt with in [the] Regulation… under a social security scheme … for the whole working population”.

The ECJ then said:

The ECJ expressly acknowledged that the Regulation applies to certain categories of persons who, when the contingency occur, do not have the status of “employed persons” in the meaning of employment law:

The essence of the ECJ’s reasoning and its conclusion are then to be found in the following paragraphs of its judgment.

Mr Coppel submitted that Brack is authority that the definition of “employed person” in limb (ii) (a) is only capable of embracing persons no longer in work if they are persons whose claim to a particular benefit is linked to their previous employment; for example, in the case of the United Kingdom, by establishing a relationship between the benefits claimed and the previous payment of national insurance contributions. There is no such link in the case of child benefit, which is not funded through national insurance contributions, and to which there is an entitlement irrespective of whether the person claiming the benefit has ever been employed.

Mr Coppel also relied upon Brack as authority that the United Kingdom’s entry in Annex 1 must be taken into account in identifying those entitled to be considered an “employed person” for the purposes of limb (ii)(a), even though Annex 1 is only expressly mentioned in limb (ii)(b). He contended that, accordingly, subject only to the limited extension that those currently unemployed can be regarded as within limb (ii) if there is a connection between the benefit they claim and their previous employment, both limbs (ii)(a) and (ii)(b) are to be regarded, by virtue of the United Kingdom’s entry in Annex 1, as restricted to those who are currently “an employed earner” or a “self-employed earner” within the meaning of domestic legislation.

Mr Coppel then referred to Case 84/77Caisse Primaire d’Assurance Maladie d’Eure-et-Loir v Tessier [1978] ECR7 (“Tessier”). In that case Mrs Tessier, while resident in France, claimed to be entitled to French sickness insurance benefits by virtue of the Regulation because she had previously worked as an au pair in Great Britain and during that period she had been entitled to use the National Health Service (“the NHS”). The facts before the ECJ did not establish whether or not during the period she was working in Great Britain she was obliged to pay contributions under the British social security legislation. The NHS was available to all persons ordinarily resident in the United Kingdom. The French Cour de Cassation referred the following question to the ECJ:

The analysis of the ECJ, and its response to that question, were as follows:

Mr Coppel submitted that the analysis of the ECJ in Tessier further supports the Commissioners’ argument that limb (ii) requires a “benefit by benefit approach”: the “social security scheme” in limb (ii) was the NHS and what was required was some identification of the claimant as an employed person by the manner in which the scheme was administered or financed.

In Case C-15/90Middleburgh v Chief Adjudication Officer [1992] ECR 1-1823 Mr Middleburgh, a British citizen, claimed child benefit while resident in the United Kingdom, in respect of his child in Ireland. He had worked in Ireland between 1981 and 1982, when he was made redundant. He then returned to the United Kingdom. He was initially employed, was then unemployed, and then was self-employed. Mr Middleburgh applied for child benefit for the entire period following his return to the United Kingdom, but the Social Security Commissioner ruled that he was not entitled to child benefit for the period when he was self-employed. Mr Middleburgh claimed to be entitled pursuant to Article 73 and Article 1, although at that time Article 73 had not been extended to self-employed persons. One of the questions referred to the ECJ by the Court of Appeal was as follows:

a person is self-employed, and

is entitled (under national law) to unemployment benefit upon the involuntary cessation of such self-employment, and

is so entitled by reason of contributions paid or credited as an employed person,

The ECJ’s analysis and conclusion on that question were as follows:

Mr Coppel relies particularly on paragraph 9 of the ECJ’s judgment. He submitted that this shows that the words “by virtue of the manner in which such scheme is administered or financed” within limb (ii)(a) require a connection between the child benefit claimed and the claimant’s status under the relevant scheme as an employed person. In the context of the United Kingdom, that connection is provided by the payment of contributions in the capacity of an employed person. He submitted that this is precisely the principle which applies in the present case.

Joined cases C-4/95 and C-5/95 Stöber and Piosa Pereira v Bundesanstalt für Arbeit[1997] ECR 1-1511 concerned the claims of Mr Stöber, a German national, and Mr Piosa Pereira, a Spanish national, to family allowances from the German administrative authorities in respect of children living outside Germany. Mr Stöber had worked in Ireland from 1965 to 1969, and then returned to Germany. From then until 1977 he was employed and covered by the compulsory statutory sickness and old age insurance scheme. From February 1977 he was self-employed and paid voluntary contributions to the statutory pension scheme for salaried employees and became a voluntary member of a substitute statutory sickness insurance scheme. Mr Piosa Pereira was employed in Germany until 1988 and, as such, was liable to contribute to compulsory sickness and old age insurance schemes. From 1 April 1989 he became self-employed and made voluntary contributions to a recognised independent sickness insurance scheme. By this time Article 73 of the Regulation had been amended to include reference to self-employed persons. Neither Mr Stöber nor Mr Piosa Pereira was entitled under the German legislation to dependent children’s allowances in respect of children residing abroad. Mr Stöber and Mr Pereira relied upon Article 73 and Article 1(a). The German authorities relied, however, on the fact that Mr Stöber and Mr Piosa Pereira did not fulfil the conditions in the entry in Annex 1, point 1, C, for Germany, which was as follows:

Describing the German national court’s observations, the ECJ said in paragraph 21:

The reasoning and conclusion of the ECJ on the relevance for limb (ii) of the entry for Germany in Annex 1 were as follows:

Mr Coppel submitted that the ECJ’s reasoning again supports the view that the wording of limb (ii) and limb (ii)(a) requires the identification of, and linkage between, particular risks and schemes, and also that limb (ii)(a) as well as limb (ii)(b) are to be read and applied as restricted by the country entries in Annex 1. He relied, in this context, on the fact that (as is apparent from paragraph 31 of the ECJ’s judgment) the Regulation is a co-ordinating and not a harmonising instrument. He submitted that the same paragraph in the ECJ’s judgment confirms, if confirmation were needed, that the entries in Annex 1 are as much a part of the Regulation, and to be given equal status, as its other provisions.

Mr Coppel submitted that Mr Ruas’ claim for child benefit for his children in Portugal should, on the basis of those authorities, plainly fail. His argument was as follows. Those authorities show that a person can only fall within limb (ii)(a) if the particular risk covered by the insurance falls within a particular scheme, and the manner in which such scheme is administered provides a linkage between the risk or benefit claimed and the claimant’s status as an employed person. Furthermore, the relevant country entry in Annex 1 may both explain the manner in which the scheme is administered or financed and limit what might otherwise be the wider operation of limb (ii)(a). The effect of those requirements and matters in the present case is that Mr Ruas had no entitlement to the child benefit claimed in respect of his children living in Portugal. Mr Ruas did not fall within the terms of the United Kingdom’s entry in Annex 1 since he was not employed or self-employed at the time he made his claim for child benefit; nor is there any linkage between his previous employment and child benefit, the entitlement to which does not depend upon present or past employed or self employed status. If limb (ii)(a) were to be interpreted as covering non-contributory benefits, it would lack any real meaning or force. Further, the scope of the Regulation, in terms of the matters within Article 4, is different from the range of persons who can claim under it. The Commissioners’ interpretation of Article 73 and Article 1(a) makes greater sense of the need for Article 74, which deals expressly with the right of an unemployed person who was formerly employed or self-employed, and who draws unemployment benefits, to family benefits for members of his or her family residing in another member state. A wider interpretation of limb (ii) undermines the need for Article 74. A wide interpretation of limb (ii), and in particular limb (ii)(a), would also make the country entries in Annex 1 redundant.

In his skeleton argument, Mr Coppel said that the Judge’s reasoning cuts across careful distinctions drawn by the Regulation between employed persons and unemployed persons, and, for example, pensioners. In that connection, he pointed to a number of places within the Regulation where rights are set out for each category of persons separately: for example, in the context of sickness and maternity benefits, Title III, Chapter 1, section 2 sets out rights for employed and self-employed persons, section 3 sets out rights for unemployed persons and section 4 sets out rights for pensioners. These distinctions, he said, would be undermined if the Judge was right to consider that Mr Ruas, who was unemployed at the time of his claim, was actually an employed person.

Mr Coppel submitted that Judge Mesher was wrong to place so much weight on Sala and to interpret the judgment in that case as he did. The facts of that case were that Mrs Sala, a Spanish national, had been living in Germany from a young age. She was employed for several years. She then became unemployed and was in receipt of social assistance. On the birth of her second child she applied for a child raising allowance in accordance with the relevant German legislation. That application was rejected on the ground that she was neither a German national nor in possession of a residence permit or other form of residence authorisation granted for humanitarian or political reasons. She was not at risk, however, of being deported from Germany. The German legislation provided that a non-national wishing to receive a child raising allowance must be in possession of a residence entitlement or a residence permit, and the German court had consistently held that a person was “in possession” of a residence entitlement only if he had a document from the Foreigners’ Office duly attesting his right of residence at the start of the benefit period; an entitlement to stay was not sufficient. Mrs Sala did not have a valid residence permit at the date of her application. Mrs Sala claimed to be entitled to the child raising allowance as an employed person within Article 1(a). The first question referred to the ECJ for a preliminary ruling was as follows:

The ECJ approached that question as reflecting a general issue:

In view of the importance of this case in the judgment of Judge Mesher and the argument before this court, it is appropriate to set out in full the analysis and conclusion of the ECJ on the status of employed or self-employed persons within the meaning of the Regulation:

Accordingly, Mrs Sala had the status of an employed person within the meaning of Article 1 (a) even though she was not in employment at the date of her application for child raising allowance, simply by virtue of the fact that she was covered (or rather she was assumed to be covered) by compulsory retirement pension insurance in Germany, and without any specific link between her entitlement to family benefit and her previous employment. Mr Coppel submitted that there were numerous grounds for distinguishing Sala and the apparent width of the ECJ’s judgment. His starting point was that Sala was not a United Kingdom case, and that it turned upon social security arrangements and benefits in Germany. Secondly, he said that it was significant that the ECJ’s approach was to look, first, at the entry for Germany in Annex 1, which was restricted to family benefits within Chapter 7 of the Regulation. The ECJ could obtain no assistance from that entry since Mrs Sala’s situation was not covered by any of the provisions of Chapter 7. By contrast, Mr Coppel submitted, the United Kingdom entry in Annex 1 would either be determinative of entitlement under limb (ii)(a) or, at any event, highly material in the application of limb (ii)(a). Thirdly, he said that it is not clear from the ECJ’s judgment whether the ECJ was deciding the first question under limb (i) or limb (ii). In paragraph 4 of the judgment reference is made specifically to the terms “employed person” and “self-employed person” in limb (i). He pointed out that it appeared from Stöber that Germany has schemes for employed and self-employed persons within limb (i). Fourthly, he submitted that paragraph 44 of the judgment, which is a critical paragraph, does not expressly address the separate requirements of limb (ii)(a). The Commissioners’ case is not inconsistent with a jurisprudential requirement of Community law that there must be a scheme under which the claimant is insured for a single risk. He submitted that paragraph 44 begs the question whether any such scheme existed and, in that context, it is significant that the ECJ held in paragraph 45 that it had insufficient information to determine whether Mrs Sala did indeed come within the Regulation. Fifthly, he pointed out that the ECJ did not expressly overrule or distance itself from Brack, Middleburgh and Stöber. Reference was expressly made by the ECJ to Stöber in paragraphs 40 and 41 of its judgment. Finally, Sala was not a case under Article 73 at all. Mrs Sala’s claim for child raising allowance was for her child living with her in Germany, and the case was really about equality of treatment and the principle of non-discrimination.

Despite those matters on which Mr Coppel relied for distinguishing and confining the judgment in Sala, he conceded that, in the light of that judgment, the now historic judgments of the ECJ in Brack, Middleburgh and Stöber, and changes in the Regulation over time, there remains a sufficiently large degree of uncertainty to warrant a reference to the ECJ rather than simply to allow or dismiss the appeal.

Notwithstanding the detailed and skilful submissions of Mr Coppel, I agree with Judge Mesher’s lucid judgment and his conclusion that Sala clearly confirms Mr Ruas’ entitlement to child benefit.

If the Community jurisprudence had ended with Stöber, I consider that there would have been sufficient doubt to warrant a reference to the ECJ. Brack, Tessier, Middleburgh and Stöber do not clearly support the Commissioners’ case that the effect of the United Kingdom’s entry in Annex 1 is to restrict limb (ii)(a) to persons who are currently an “employed earner” or a “self-employed earner” within the meaning of the domestic legislation or a person claiming a benefit who was previously employed and whose national insurance contributions can be linked to the benefit claimed. It is certainly possible to interpret those authorities, or alternatively passages within them, as supporting that interpretation, but it is far from clear that this is what the ECJ intended to hold in those cases.

At the time of Brack the wording of Article 1(a) and Annex 1 was different from the current version. It is clear from Brack that, notwithstanding the terms of Annex 1, Article 1(a) was not restricted to persons currently in employment. Subsequent cases clearly confirm that position. Furthermore, it is apparent that the ECJ regarded the United Kingdom’s entry in Annex 1 as clarifying, rather than restricting, limb (ii):

It is true that, in paragraph 29 of the judgment in that case, the ECJ expressly observed that Mr Brack had previously paid contributions as an employed person and his entitlement to sickness benefits at the full rate depended upon taking into account those contributions. That paragraph, however, highlights one of the difficulties of analysing the ECJ’s judgment. There were two separate issues, namely, whether Mr Brack was an employed person within limb (ii) and also whether the contributions he had made as a self-employed person were to be taken into account in the calculation of his sickness benefits. The ECJ’s judgment does not address the two issues separately, but it conflates them.

Tessier does not appear to me to assist the resolution of this appeal. The recorded facts do not indicate Mrs Tessier’s legal employment status while she was working as an au pair in the United Kingdom and, in particular, whether she ever paid or was required to pay national insurance contributions. Nor is it clear from the ECJ’s judgment whether the ECJ was treating the NHS as a separate social security scheme. In the event, it was left to the national authorities to establish whether or not the requirements of limb (ii) were satisfied. On the other hand, the ECJ certainly accepted in Tessier that a claimant for benefits need not be currently employed in order to qualify as an employed person within limb (ii).

As Mr Richard Drabble QC pointed out, Middleburgh is to be understood in the context of the confinement of Article 73 at that time to employed persons. Mr Middleburgh’s problem was that, in respect of the period in question for which he claimed child benefit, he was self-employed. His argument was that, if he had been unemployed during the period, he would have been entitled to receive unemployment benefit by virtue of the contributions he had previously made when he had been an employed person. The question was whether that was sufficient to bring him within the status of an employed person within Article 73. The Advocate General (Mischo) observed in paragraph 17 of his opinion that Mr Middleburgh could not at the same point of time be both self-employed and unemployed or employed and self-employed. That simple analysis may help to explain the very terse reasoning in paragraphs 8 and 9 of the ECJ’s judgment. It seems right to infer that paragraph 9 of the ECJ’s judgment, on which Mr Coppel heavily relies, reflects observations of the ECJ in Brack. It can be read, however, in the context I have described, as simply saying that if, as had been the case in Brack, the child benefit had been linked to contributions previously paid while Mr Middleburgh was employed, the situation would have been different. It is not at all clear, in the context of the facts and the issue in the case, that the ECJ was intending to say that in every case, in order to qualify as an employed person within limb (ii), it was necessary for the benefit claimed to be linked to contributions made as an employed person. That approach to the proper meaning of paragraph 9 is supported by the fact that, as appears from paragraph 14 of the Advocate General’s opinion, it was the applicant who was seeking to rely on Brack. The Advocate General distinguished Brack in paragraph 15 of his opinion, on the basis that the sickness benefit claimed by Mr Brack had been funded by contributions which had been made but the benefit of which he risked losing by virtue solely of the place in which the risk materialised, whereas “the family benefit at issue in the present case is not linked to such contributions”.

Mr Drabble fairly accepted that some of the comments in Stöber, particularly paragraphs 32 and 34, are expressed in wide terms suggesting that entries in Annex 1 may colour the entirety of limb (ii) and in a restrictive manner. On the other hand, it appears that the case was strictly only about limb (ii)(b) since the German legislation on dependent children’s allowances was a scheme for the “family benefits” branch, which applied to all residents and whose manner of administration did not make any distinction between employed and self-employed persons (paragraph 19). Further, the ECJ in Stöber regarded the entry for Germany in Annex 1 as restrictive rather than, as the ECJ in Brack appeared to have viewed the United Kingdom entry in Annex 1, as merely clarificatory. Indeed, Mr Coppel accepted that the United Kingdom entry does serve a clarificatory purpose. The definition of “employed earner” in the 1992 Act makes it clear, for example, that an office holder may fall within the definition. I do not, therefore, accept that the interpretation argued for limb (ii) on behalf of Mr Ruas would deprive the United Kingdom’s entry in Annex 1 of all effectiveness.

For those reasons, the position under those authorities was, at best, doubtful in relation to the issue on this appeal. These doubts were, however, removed by the ECJ’s judgment in Sala. The fact that Mrs Sala was not claiming under Article 73 and that the case concerned German family benefits are no grounds for distinguishing the ECJ’s reasoning and conclusion. The first question addressed by the ECJ was the meaning of “employed person”, which the ECJ proceeded to analyse by reference to the definition in Article 1(a) of the Regulation. That definition cannot mean different things in relation to different Articles, although the extent of its application may depend on the particular context. The German setting was irrelevant: the ECJ held that the entry for Germany in Annex 1 had no application and so the case turned on the proper application of Article 1(a) without regard to that entry. Furthermore, it is clear from paragraph 44 of the ECJ’s judgment that the ECJ was concentrating on the requirements of limb (ii). There is nothing in the reasoning in that or the immediately preceding paragraphs to indicate any intention to confine the reasoning to other parts of Article 1(a). 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. It is clear from paragraph 8 of the ECJ’s judgment that the child raising allowance in Germany was a non-contributory benefit. I do not consider that the significance of Sala is undermined by the reference in paragraph 45 of the judgment to the absence “of sufficient information to enable the Court to take account of all the circumstances which may be relevant in this case.” The analysis of the ECJ proceeded on the assumption that Mrs Sala was insured for sickness and retirement, but it was for the national court to verify the precise circumstances of the insurance scheme. On the assumption made, Mrs Sala was found to be within limb (ii). That is sufficient for the purposes of Mr Ruas’ case.

That interpretation of Sala is confirmed by Case 182/78Bestuur van het Algemeen Ziekenfonds Drenthe-Platteland v G. Pierik[1979] ECR 1977. In that case Mrs Pierik was in receipt of an invalidity pension in the Netherlands and had claimed repayment of the costs relating to medical treatment received in Germany. The first question referred by the Dutch Court to the ECJ was essentially “whether the provisions of Article 22 of [the Regulation], governing the right of a “worker” to benefits in kind, also cover a pensioner “who is not, or is no longer, at work” and who asks the competent institution for authorisation to go to a Member State other than the one where he resides to receive there the treatment appropriate to his state of health” (para. 3).

The analysis of the ECJ and its conclusion on this issue are to be found in paragraphs 4 to 8 of its judgment as follows:

As I have said, the Judge relied on Sürül as confirming his analysis and conclusion based on Sala. Reliance is placed on Sürül in the Respondent’s skeleton argument, but we were not taken to it by Mr. Drabble in the course of his oral submissions. It was concerned with the proper meaning and effect of Decision 3/80 of the Association Council of 19 September 1980 on the application of the social security schemes of the member states of the European Communities to Turkish workers and members of their families. (“Decision 3/80”). The significance of the case is that Article 1 of Decision 3/80 contains a definition of “worker” similar to that for an “employed person” in limbs (i) and (ii) of Article 1(a) of the Regulation. The ECJ referred to and followed the analysis of the Regulation in Sala, holding that “a person has the status of worker 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, irrespective of the existence of an employment relationship” (para. 86). While Sürül confirms, if confirmation were needed, that the analysis in Sala is not in any sense a jurisprudential aberration, it does not take the matter any further.

The way in which I have analysed Sala and its implication for Mr Ruas’ case is supported by the policy underlying the Regulation disclosed by its recitals. They show that, although the Regulation is an instrument for co-ordination rather than harmonisation, the policy underlying the Regulation is that, in support of the freedom of movement of workers who are nationals of member states, employed persons and self-employed persons moving within the Community should be subject to the social security scheme of only one single member state in order to avoid the overlapping of national provisions and ensuing complications, and that the exceptions to the general rule should be as limited as possible. That policy is most graphically and simply reflected in Article 13, which provides that, with certain exceptions, the persons to whom the Regulation applies shall be subject to the legislation of a single member state only. The Judge’s interpretation, far from depriving limb (ii)(a) of any force, as Mr Coppel submitted, provides it with a meaning and effect which reflect a coherent policy.

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 1, 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 to establish that “employed person” in Article 73 means something other than its defined meaning in Article 1(a).

Specifically in the context of family benefits, I do not consider that it is a necessary implication of Article 74 that the term “employed person” in Article 73 bears a different meaning to its defined meaning in Article 1. It is inconceivable that, if that had been the intention, it would not have been stated much more clearly. Unlike Article 73, which is addressing a situation in which the employed or self-employed person is in one member state and members of his family are in another member state, Article 74 provides a right to family benefits in the member state in which the claimant is claiming unemployment benefit, regardless of whether the claimant or members of his family are present in that state. It is possible, as Mr Drabble suggested, that Article 74 is therefore directed particularly to the situation where an unemployed person claiming unemployment benefit in one member state moves with his family to seek work in another member state, retaining in the meantime the right to continue to receive unemployment benefit for a limited period. There is no reason to think that it throws any light on the situation, such as the one presently under consideration, where an unemployed person, who has previously moved from the member state of which he is a national to another member state where he worked and continues to live, claims family benefits for a family member living in the member state from which he came or some other member state.

For those reasons I would dismiss this appeal.

Encouraged by the Court to concentrate on the strongest of the further grounds for upholding the Judge’s order mentioned in the Respondent’s notice, Mr Drabble confined his oral submissions, on this aspect of the appeal, to the issue of indirect discrimination contrary to Article 18 of the Treaty and Article 3 of the Regulation. Those issues are important and were well argued on both sides, but, in the event, it is not necessary to address them to dispose of the appeal.

I agree

I also agree.