Patmalniece v Secretary of State for Work and Pensions

For article 3(1) of Council Regulation (EC) No 1408/71, cumulative benefit conditions must be considered as a whole. A composite habitual-residence and right-to-reside requirement constitutes indirect, rather than direct, nationality discrimination where it applies to all claimants but is more easily satisfied by host-state nationals.

Indirect discrimination is lawful where it rests on objective considerations independent of nationality and is proportionate to a legitimate aim. Restricting a tax-funded special non-contributory cash benefit to persons with sufficient economic or social integration may satisfy that test. The benefit’s inclusion within EU social security coordination does not remove its social-assistance characteristics. The Common Travel Area Protocol may preserve favourable arrangements for Irish nationals where sufficient reciprocity and a genuine connection with free movement exist.

Patmalniece v Secretary of State for Work and Pensions concerned a Latvian pensioner who had lived in the United Kingdom since 2000 but had never worked there and lacked a right to reside. Her claim for state pension credit was refused under regulation 2 of the State Pension Credit Regulations 2002.

An appeal tribunal allowed her appeal on the basis of direct nationality discrimination. The Social Security Commissioner reversed that decision, holding that the discrimination was indirect and objectively justified. The Court of Appeal dismissed her further appeal: [2009] EWCA Civ 621.

The Supreme Court considered whether the conditions were directly or indirectly discriminatory under article 3(1) of Council Regulation (EC) No 1408/71; whether any indirect discrimination was objectively justified; and whether the favourable treatment of Irish nationals undermined that justification.

1. Appeal dismissed by a majority of four to one. Lord Hope, with whom Lord Rodger agreed, delivered the leading judgment. Lord Brown agreed with Lord Hope and Lady Hale. Lord Walker dissented on justification.

2. The entitlement conditions had to be examined cumulatively. Section 1(2)(a) of the State Pension Credit Act 2002 required the claimant to be in Great Britain. Regulation 2 of the State Pension Credit Regulations 2002 treated that requirement as involving both habitual residence and a right to reside. British nationality automatically satisfied the latter limb but did not automatically establish habitual residence. Applying Bressol v Gouvernement de la Communauté Française Case C-73/08; [2010] 3 CMLR 559, the composite test was indirectly discriminatory because nationals of other Member States were placed at a particular disadvantage. It was not directly discriminatory.

3. Indirect discrimination could be justified only by objective considerations independent of nationality and proportionate to a legitimate aim. Proportionality was not in issue. The purpose of protecting public resources against claims by persons lacking economic or sufficient social integration was legitimate. State pension credit remained in the nature of social assistance even though article 4(2a) of Council Regulation (EC) No 1408/71 classified it as a special non-contributory cash benefit. The residence rules recognised in Trojani v Centre Public d’Aide Sociale de Bruxelles Case C-456/02; [2004] 3 CMLR 820 supported making access to such assistance dependent on a sufficient connection with the host state.

   The justification had to be assessed on its own merits, without treating the provision’s indirectly discriminatory consequences as conclusive. The right-to-reside requirement applied irrespective of nationality, and the underlying integration principle was itself nationality-neutral. The indirect discrimination was therefore lawful.

4. Article 2 of the Protocol on the Common Travel Area protected United Kingdom and Irish arrangements relating to movement between their territories. Exact reciprocity was unnecessary. The arrangements had sufficient reciprocity and a sufficient connection with free movement to attract the Protocol’s protection. The appellant was not entitled to the treatment accorded to Irish nationals.

5. Lady Hale additionally reasoned that EU law logically permits responsibility for special non-contributory cash benefits to depend on a right to reside. Mere presence is insufficient, although a person possessing a residence right under national law may invoke equal treatment. Lord Walker accepted that Bressol required the case to be classified as indirect discrimination, but dissented because every British national satisfied the right-to-reside limb automatically. In his view, nationality was intrinsic to the difference and the proposed justification therefore failed.

• United Kingdom Supreme Court: By a majority of four to one, dismissed the appellant’s appeal and upheld the Court of Appeal’s decision: [2011] UKSC 11 .
• Court of Appeal: Dismissed the appellant’s appeal, holding that the conditions were indirectly discriminatory but objectively justified: [2009] EWCA Civ 621 .
• Social Security Commissioner: On 11 June 2008, allowed the Secretary of State’s appeal. The right-to-reside test was indirectly discriminatory but justified as a proportionate means of protecting public finances.
• Appeal tribunal: On 12 December 2005, allowed the claimant’s appeal on the basis that the refusal constituted direct nationality discrimination.