[2024] UKUT 405 (AAC)

Art 29 can only be understood alongside Arts 24 and 25, since it relies upon them to locate the state that is responsible for the costs of benefits in kind.

Arts 24 and 25, taken together, however, plainly do not operate as a rule of priority in relation to benefits in kind. They expressly avoid this.

Art 24 deals only with the situation where a person is not otherwise entitled to benefits in kind from the state of residence – in other words, to cases where the equivalent to NHS provision is only available on condition of having paid insurance contributions or some other stipulation beyond lawful residence. By definition, therefore, it cannot affect the entitlement to benefits in kind to which a person is otherwise entitled.

Art 25, by contrast, deals with the situation where a person is entitled to benefits in kind by reason of residence alone, or without paying insurance contributions. However, it expressly avoids the removal of that entitlement. What it does instead is permit (though not require) the state of residence to recoup the costs of providing benefits in kind to the pension-paying state, withoutpreventing the provision those benefits in kind in the meantime. It therefore does not affect the right of the pensioner and his or her family to benefits in kind from the state of residence, nor directly confer on them any rights to such benefits from the pension paying state.

Further, whether or not the state of residence chooses to take up this right of recoupment, or the pension paying state disputes it, has no effect on the pensioner or his family’s rights to receive the benefits.

The fact that Arts 24 and 25 do not operate as a rule of priority so as to exclude entitlement in the state of residence does not, logically mean that Art 29 does not do this, if that is the clear effect of its language. But it is a striking context in which to consider Art 29, given the reliance of that article on the earlier provisions.

Art 29(1) says that cash benefits “shall be paid to [the pensioner] by” the competent institution responsible for benefits in kind, and Art 29(2) says that this shall also apply to members of the pensioner’s family. Applying Art 24 or 25, that will generally be the state that pays the pension. In this case, it means that cash benefits “shall be paid” to SE by Switzerland.

Art 29 does not, however, say, at least in express terms, that cash benefits “shall not” be paid by the state of residence. As a matter of language, it is therefore possible to read it as saying no more than that, as with Art 21 considered in Harrington, the pensioner and his family have an entitlement to cash benefits from the pension paying state in the alternative to any entitlement to that in the state of residence, so that, per Lewis LJ at ¶44, they are not “denied cash benefits because they are resident in a state “other than the competent state”.

I accept that this is not clear one way or another from the language of Art 29 taken alone, but I certainly do not accept that the language of Art 29 is clear cut in favour of the Respondent’s position.

Leaving aside wider points about history and purpose that I will turn to below, it must be considered alongside the provisions of Title II, and Art 11 in particular. In that regard, the starting point is that Art 11 expressly confirms the general rule about how to determine the legislation applicable to an individual, and the entitlements that they have flowing from that legislation. It is therefore necessary, to achieve the outcome contended for by the Respondent, to construe Art 29 as deliberately displacing that general rule, so as to remove those entitlements. I do not think that the language of Art 29 takes away the rights that are expressly confirmed by Title II.

That is further reinforced by the final words of Art 11(3)(e), which provide that the legislation applicable to a person by reason of residence shall be “without prejudice to other provisions of this Regulation guaranteeing him benefits under the legislation of [other] Member States”. To my mind that reinforces the conclusion that Art 29 would have been understood by the EU legislature as adding to rather than taking away from rights available under the applicable legislation. The general rule is that an economically inactive insured person is subject to the legislation of the state of residence, and therefore entitled to such benefits as it may provide, but that is subject to a right to such alternative provision as may arise under Title III, where the application of the rules of the state of residence would mean that the person is deprived of benefits. That general rule would then explain why it was not felt necessary, in Arts 21 and 29, to expressly state that the entitlements that they grant only arise where there is no right to benefits in the state of residence. I note that Lewis LJ made a similar point at ¶54 of Harrington.

I accept that the wording of Art 29 is different from Art 21, and that it does not use the word “entitled”, but this does not in itself lead to a different conclusion if, as I would hold, the wording of Art 29 does not create a clear rule of priority. It may be said that, if the intention was to achieve the same outcome as in Art 21, the same language would have been used. But it can equally be said that, if the intention was to create a rule of priority, the language of Art 32 would have been used. The language used in different parts of Title III shows no consistency, even where the same result is intended. So there is no substitute for considering the meaning of the particular words used in Art 29, regardless of what language is used elsewhere in Title III.

Finally, Art 29(1) cross-refers to Art 21, which is to apply “mutatis mutandis”. I confess that I do not find this easy to understand but it tends to reinforce the idea that Art 29 should be read so as to align with Art 21, given that both concern the payment of cash benefits to persons for whom the competent state is not the state of residence. It is not easy to see why, as a matter of policy, they should have different effects. I do not need to rely on this for my overall conclusion but it tends to reinforce it.