18 June 2018

Background

Two claims were heard together because they challenged aspects of the regulations creating and implementing the system of universal credit. The claimants, under the previous system governing welfare benefits, had been in receipt of an income related employment and support allowance (the basic allowance). As they met additional criteria, they had been in receipt of severely disability premium (SDP) and enhanced disability premium (EDP).

On moving to a new local housing authority area, the claimants applied for universal credit, which replaced both housing benefit and the former income related benefits, including the basic allowance, SDP and EDP. The claimants received over £170 a month less as a result of the transfer to universal credit.

The claimants issued judicial review proceedings, contending that the way in which the system of universal credit was constructed and the implementation arrangements constituted unlawful discrimination, contrary to art 14 of, read with art 1 of the First Protocol (A1P1) to, the European Convention on Human Rights.

Issues and decisions

(1) Whether the Universal Credit Regulations 2013, SI 2013/376 (the 2013 Regulations), constituted unlawful discrimination, contrary to art 14 of, read with A1P1 to, of the Convention, absent any additional payment as part of the universal credit for those who previously had been eligible to claim SDP and EDP. In particular, whether there was differential treatment between: (i) severely disabled persons with carers and those without carers; and (ii) those with additional needs and those without such need. There was also an issue as between the defendant Secretary of State and the claimants as to the appropriate approach to be taken by the courts to the question of whether differential treatment was objectively justifiable.

The differential treatment would be reviewed by reference to both approaches, namely, first, the defendant’s approach that all the court need ask in the context of a policy dealing with the allocation of cash payments as part of a welfare system was whether the measure giving rise to the differential treatment was manifestly without reasonable foundation. Second, the claimants’ approach that the court should adopt a more structured approach to objective justification and ask: (i) did the measure pursue a legitimate aim; (ii) was the measure rationally connected to that aim; (iii) could a less intrusive measure have been adopted to achieve that aim; and (iv) bearing in mind the consequences of the measure, the importance of the measure and the extent to which the measure would achieve those aims, had a fair balance been struck between the rights of the individuals affected and the interests of the community (see [61] of the judgment).

With respect to differential treatment between severely disabled persons with carers and those without carers, a conscious and considered decision had been taken by the decision-maker that resources should be allocated to particular groups, but that additional premiums, akin to the SDP and EDP paid as part of the former system of welfare benefits, should not be included as part of the system of universal credit. That issue had been debated. The issue had again been raised when the draft regulations had been laid before the House of Lords for approval under the affirmative resolution procedure. The question of whether an equivalent to additional disability premiums should be included within universal credit had been raised in debate. However, the House of Lords had approved the draft regulations without the addition of any element equivalent to SDP or EDP as part of universal credit. The House of Commons had also approved the draft regulations (see [63] of the judgment).

In those circumstances, the 2013 Regulations pursued a legitimate aim, namely the proper allocation of resources and the appropriate method of structuring a welfare benefits system to provide, among other things, assistance to those with disabilities. The conclusion reached on how to achieve those aims had not been manifestly without reasonable foundation. It was correct that, where disabled persons had carers, those carers would receive a cash payment in respect of the care provided to the disabled person. That reflected the decision-maker’s view that it was desirable to encourage people to act as carers and to provide them with a financial incentive to do so. Those without carers would not receive, as they formerly had, additional disability premiums in the form of SDP or EDP which they could have used, if they had wished, to purchase care. However, that reflected the view that such disability premiums had not been an appropriate mechanism for targeting support to those with such disabilities (see [64] of the judgment).

It was not unreasonable to take the view that the previous system should be simplified and that disability premiums had not represented the best allocation of resources or to take the view that individuals seeking assistance in the area of social care should have resort to local authorities which were obliged to assess their needs and provide assistance in respect of those needs (see [65] of the judgment).  

In all the circumstances, it could not be said that the decision to structure universal credit in the way that had been done had been manifestly without reasonable foundation.  Consequently, applying that approach, it could not be said that the differential treatment between those persons with disabilities who had carers, and those who did not, was not objectively justified (see [66] of the judgment).  

Applying the approach favoured by the claimants, the Secretary of State had demonstrated that the differential treatment, resulting from the 2013 Regulations, was objectively justified. The aim was a legitimate one, to provide for the proper allocation of resources and an appropriate structure of welfare benefits. The measures adopted were rationally connected with that aim. In truth, the different method advocated by the claimants, namely the inclusion of a component within universal credit which was similar to the SDP and EDP, was not a less intrusive means of achieving that aim; it involved achieving a different aim (see [67] of the judgment).  

In all those circumstances, the 2013 Regulations did strike a fair balance in the way that they dealt with needs arising out of disability and the community interest (see [68] of the judgment).  

With respect to those with additional needs and those without such needs, first, the present case was not one where people in different positions were treated differently under the relevant legislation. The fact was that universal credit provided for certain levels of cash benefits to certain persons who met certain criteria. The claimants, however, sought to rely upon previous decisions of the legislature and the executive as to the amounts of, and the circumstances in which, cash payments were to be payable under the former legislative regime providing for welfare benefits. It was not appropriate to say that any replacement benefit system had to replicate features and definitions used in the former system and, if it did not do so, then to seek to argue that the new system included differential treatment, within the meaning of art 14 of the Convention, as the new system treated people in the same way when, under a different and replaced system, they would have been treated in a different way (see [71] of the judgment).  

Second, in any event, the decision to pay a higher allowance to all persons with a particular level of disability, and not to pay additional disability premiums (such as the SDP and EDP payable under the former welfare system), was objectively justifiable. It was a conscious and considered decision by the legislature and the executive in the context of the allocation of resources in the context of social and welfare policy. Any differential treatment arising out of the fact that claimants now received the same level of benefits for disability, whereas formerly different groups received different benefits, was objectively justifiable. Such a policy was not manifestly without reasonable foundation. Applying the claimants’ preferred approach, the measure pursued a rational aim, was connected to that aim and that aim could not be achieved by a less intrusive measure. The measure struck a fair balance (see [72] of the judgment).

The challenge to the 2013 Regulations failed (see [74] of the judgment).

R (on the application of Carmichael and Rourke) (formerly known as MA) v Secretary of State for Work and Pensions; R (on the application of Daly) v Secretary of State for Work and Pensions; R (on the application of A) v Secretary of State for Work and Pensions [2017] 1 All ER 869 applied; R (on the application of Tigere) v Secretary of State for Business, Innovation and Skills (Just for Kids Law intervening) [2016] 1 All ER 191 considered; Recovery of Medical Costs for Asbestos Diseases (Wales) Bill: Reference by the Counsel General for Wales [2015] 2 All ER 899 considered; Thlimmenos v Greece (Application 34369/97) (2000) 9 BHRC 12 considered.

(2) Whether the absence of any element of transitional protection as part of the implementation arrangements constituted unlawful discrimination, contrary to art 14 of, read with A1P1 to, of the Convention. In particular, whether there was: (i) differential treatment between those who moved from one local housing authority area to another who had to apply for universal and those who moved within a local housing authority who continued to receive the existing benefits, including SDP and EDP; (ii) differential treatment between those who moved from one local housing authority area to another and lost SDP and EDP, and those who would transfer or undergo managed migration to universal credit automatically; or (iii) a failure to treat two different groups differently, namely those who transferred to universal credit and who had severe disabilities and those who transferred and did not have such needs.

The aim of achieving a gradual, or phased, introduction of universal credit was a legitimate aim. Further, it was legitimate to identify the fact that one aspect of the assistance needed, such as assistance with housing costs, was an appropriate trigger to move a person from the existing benefit system to universal credit (see [81] of the judgment).  

With respect to differential treatment between those who moved from one local housing authority area to another and those who moved within a local housing authority, the difficulty that arose in the present case was the way in which the Universal Credit (Transitional Provisions) Regulations 2014, SI 2014/1230 (the 2014 Regulations), achieved that aim for the claimants. The trigger was moving local housing authority area. There was nothing to indicate that the decision-maker had addressed the consequences of that method of implementation or whether and, if so, what element of protection might be appropriate (see [82] of the judgment).

The government had considered that the issue needed, at least, to be addressed and an element of protection might be need to be provided at least in some circumstances to some groups. Despite that, there was nothing to indicate that the issue had been considered before the making of the 2014 Regulations either by the government or by Parliament when the draft regulations had been laid before it. There was no material indicating why the 2014 Regulations did not include any element of protection and why it was considered that the financial burden arising out of the differences between amounts received in respect of income related benefits for those with severe disabilities under the former system and payable universal credit should fall on those who had moved from one local housing authority area to another. A change in housing circumstances might provide an explanation as to why it had been appropriate to require them at that point to switch to universal credit. It did not explain why they should do so without any apparent consideration of whether any element of transitional protection should be provided in those circumstances in relation to the income related element of universal credit (see [83], [85] of the judgment).  

Applying the approach to justification favoured by the defendant, the decision to move a group of persons previously eligible for SDP and EDP onto universal credit because they moved to another local housing authority area, without considering the need for any element of transitional protection was manifestly without reasonable foundation (see [86] of the judgment).  

Applying the approach to justification favoured by the claimants, the 2014 Regulations sought to pursue a legitimate aim, the phased transition to universal credit, and were rationally connected to that aim. In the absence of any evidence about the connection between that aim and the absence of any element of transitional protection, it was not easy to determine whether or not any less intrusive measure could have been adopted. In any event, the material did not establish that the 2014 Regulations struck a fair balance between the interests of the individual and the interests of the community in bringing about a phased transition to universal credit. In all the circumstances of the case, the operation of the implementation arrangements in the way they did was manifestly without reasonable foundation and failed to strike a fair balance (see [87], [88] of the judgment).

It followed that the claimants had established a case of differential treatment on grounds of status in respect of the implementation arrangements for introducing universal credit and the Secretary of State had failed to establish that the differential treatment was objectively justified. An appropriate declaration in those terms would be made (see [92] of the judgment).  

With respect to differential treatment between those who moved from one local housing authority area to another and those who would be transferred to universal credit in due course, the difficulty was that no regulations had been made relating to the transfer, or managed migration, of persons to universal credit. It was not known what the terms of the regulations would be. It was not known whether there would be any differential treatment and, if so, what the differential treatment would consist of. Further, in the absence of knowledge of what the differential treatment might be, it was not feasible to consider if any differential treatment would be capable of objective justification (see [95] of the judgment).  

With respect to a failure to treat differently two different groups, the claimants did not identify the persons who had transferred to universal credit but had suffered no loss. They appeared to assume that there had to be such persons. In the absence of such information, it was difficult to assess if there was any differential treatment and, if so, whether it was on grounds of other status. In any event, the issue of objective justification appeared to add little, if anything, to the issues in connection with the group of persons eligible for SDP and EDP who were transferred to universal credit on moving local housing authority area and those who moved houses within an area (see [99] of the judgment).

Mathieson v Secretary of State for Work and Pensions [2016] 1 All ER 779 applied.

Zoe Leventhal and Yaaser Vanderman (instructed by Leigh Day) for the claimants.

Edward Brown and Nicholas Flanagan (instructed by the Government Legal Department) for the Secretary of State.

Chris Buttler (instructed by Equality and Human Rights Commission) for the Equality and Human Rights Commission, as intervener.

Karina Weller - Solicitor (NSW) (non-practising).

The universal credit implementing arrangements gave rise to unlawful discrimination, contrary to art 14 of, read with art 1 of the First Protocol to, the European Convention on Human Rights, between those who moved from one local housing authority area to another and those who moved within a local housing authority. However, the Administrative Court, held that the Universal Credit Regulations 2013, SI 2013/376, did not involve discrimination, contrary to art 14, absent any element corresponding to disability premiums payable under the previous regime and any differential treatment was objectively justifiable.

Background

The claimant’s mother died, aged 91, in an Accident and Emergency  department. The defendant coroner conducted an inquest into the death. He concluded, among other things,  that the death was due to natural causes and that any additional treatment that could have been provided to her in the short time she was at the hospital would have been ineffective. The claimant sought judicial review.

Application dismissed.

Issues and decisions

(1) Whether the coroner’s finding, that the enhanced investigative duty under art 2 of the European Convention on Human Rights had not arisen, could only have been based upon a misinterpretation of the applicable law and in breach of the claimant’s Convention rights.

The relevant principles that applied to medical cases were that art 2  imposed both substantive positive obligations on the state and procedural obligations. The primary substantive positive obligation was to have in place a regulatory framework compelling hospitals, whether private or public, to adopt appropriate measures for the protection of patients’ lives. The primary procedural obligation was to have a system of law in place, whether criminal or civil, by which individual failures could be the subject of an appropriate remedy. In the law of England and Wales, that was achieved by having a criminal justice system, which could, in principle, hold to account a healthcare professional who caused a patient’s death by gross negligence and a civil justice system, which made available a possible civil claim for negligence (see [82]-[85] of the judgment).

The enhanced duty of investigation, which fell upon the state itself to initiate an effective and independent investigation, would only arise in medical cases in limited circumstances, where there was an arguable breach of the state’s own substantive obligations under art 2. Where the state had made adequate provision for securing high professional standards among health professionals and the protection of the lives of patients, matters such as an error of judgment on the part of a health professional or negligent co-ordination among health professionals in the treatment of a particular patient were not sufficient, of themselves, to call the state to account under art 2 (see [86], [87] of the judgment).

However, there might be exceptional cases which went beyond mere error or medical negligence, in which medical staff, in breach of their professional obligations, failed to provide emergency medical treatment despite being fully aware that a person’s life would be put at risk if that treatment was not given. In such a case, the failure would result from a dysfunction in the hospital’s services and that would be a structural issue linked to the deficiencies in the regulatory framework. The crucial distinction was between a case where there was reason to believe that there might have been a breach which was a systemic failure, in contrast to an ordinary case of medical negligence. Care should be taken to ensure that allegations of what were, in truth, allegations of individual negligence were not dressed up as systemic failures. Furthermore, the person best placed to decide whether art 2 was engaged was the coroner who conducted the inquest (see [88], [89], [91] of the judgment).

 In all the circumstances of the case, the coroner had been perfectly entitled to reach the view that there had been no systemic issue which had arisen. Therefore, there had been no arguable breach of the substantive obligations in art 2. It followed that there had been no enhanced duty of investigation under art 2 either (see [120] of the judgment).

Savage v South Essex Partnership NHS Foundation Trust [2009] 1 All ER 1053 applied; R (on the application of Humberstone) v Legal Services Commission (The Lord Chancellor intervening) [2010] All ER (D) 255 (Dec) applied; Rabone v Pennine Care NHS Foundation Trust [2012] 2 All ER 381 applied; Lopes De Sousa Fernandes v Portugal (Application 56080/13) (2017) 66 EHRR 1011 considered.

(2) Whether the coroner’s failure to make a prevention of future death report could only have arisen from a misunderstanding of the nature of his duty to do so under the Coroners and Justice Act 2009 (the CJA 2009).

It was clear from the terms of the CJA 2009 Sch 5 para 7 that the duty to do a prevention of future death report only arose where a coroner had a relevant concern and formed the relevant opinion. On the facts of the present case, the coroner had not had such a concern or formed such an opinion. That had been a conclusion which had been reasonably open to him on the evidence before him, in substance, for the same reasons that he had been entitled to conclude that there had been no systemic issues which had required investigation under art 2 (see [122], [123] of the judgment).

(3) Whether the coroner’s finding, regarding the medical cause of death, namely, bronchopneumonia combined possibly with right lung pulmonary thrombi, had been irrational, and whether his use of a short form conclusion to find that the deceased had died from natural causes had constituted a sufficient discharge of his duties under the CJA 2009, under subordinate legislation and at common law and/or had been irrational. The claimant contended that the deceased had died from a shower of pulmonary emboli which would, had there been a timeous administration of thrombolytic therapy, have been prevented.

The record should show the probable cause, but it had shown such cause. The additional reference, namely to the possible cause, could simply be seen as surplusage that could be ignored or as something which, in the coroner’s judgment, ought to be included to reflect fully the view of the medical evidence he had accepted. Provided the probable cause was clear, there was nothing objectionable in the manner in which the record had been formulated by the coroner. In any event, the claimant’s argument did not go to the substance of his complaint that it had been irrational for the coroner to have reached the conclusion that bronchopneumonia had been the probable cause of death (see [153] of the judgment).

 While it might have been desirable for the coroner to spell out that emboli or thrombi had been insufficient to constitute the probable cause of death in somewhat greater detail in his conclusion, there were no grounds for saying that his acceptance of a professor’s view had been irrational. He had obviously felt that she had had greater experience and expertise than a doctor and, accordingly, had been entitled to prefer her view which, in any event, had had a logical basis to it. There were some criticisms of the sampling undertaken by the doctor that the coroner had also been entitled to take into account in expressing that preference (see [157] of the judgment).

(4) Whether the coroner’s finding, that the claimant’s conduct had obstructed the care which would otherwise have been provided by the doctor to the deceased, had been irrational.

Although it had been open to the coroner to have come to a different view on the evidence, and others might not have come to the view that the coroner had, it could not be said that the conclusion the coroner had reached on the evidence had not been one that he had been entitled to make, nor had it been irrational. The coroner had made an assessment on the evidence before him that could not be described as perverse (see [177] of the judgment).

Michael Rawlinson QC and Edward Ramsay (instructed by Pennington Manches LLP) for the claimant.

 Samantha Leek QC (instructed by Bircham Dyson Bell LLP) for the coroner.

 Stephen Brassington (instructed by Clyde & Co LLP) for the first interested party.

 Andrew Hurst (instructed by RadcliffesLeBrasseur) for the second interested party.

 Karina Weller - Solicitor (NSW) (non-practising).

The defendant coroner had been entitled to find that there had been no enhanced duty of investigation under art 2 of the European Convention on Human Rights into the death of the claimant’s mother in an Accident and Emergency department or a duty to do a prevention of future death report. The Divisional Court, in dismissing the claimant’s application for judicial review of the coroner’s decision, further gave guidance on the procedural obligations in art 2 in medical cases and rejected the claim that the coroner’s finding on the medical cause of death had not been irrational.

Background

The first applicant, Liberty Mutual Insurance Europe plc (Liberty), was a public limited company registered in England and Wales. Liberty underwrote insurance and re-insurance business from its registered office in London and its branches across Europe, and was currently planning for the consequences of the UK leaving the EU on 29 March 2019. In that regard, it sought to become a ‘Societas Europaea’ (SE), namely a European company, in accordance with Council Regulation (EC) No 2157/2001 (the Regulation). To give effect to that intention, the second applicant company (LSM Lux) was incorporated in Luxembourg with the intention that it would merge with Liberty. LSM Lux did not trade and had limited assets and liabilities. The terms of the merger between LSM Lux and Liberty (together, the companies) provided for the latter to acquire all of the assets and liabilities of LSM Lux, and for Liberty to become an SE with the name ‘Liberty Mutual Insurance Europe SE’ (LMIE SE). LSM Lux would then cease to exist by operation of law in accordance with the Regulation.

Under art 26(2) of the Regulation, each merging company had to submit to the competent authority, a certificate referred to in art 25(2) within six months of its issue, together with a copy of the draft terms of merger approved by that company. In April 2018, a notary public in Luxembourg issued a certificate under art 25(2) in relation to the pre-merger acts and formalities concerning LSM Lux, and on 4 May, the Chief Registrar issued a certificate in relation to Liberty.

Article 26 of the Regulation provided, so far as material, that ‘(1) The legality of a merger shall be scrutinised, as regards the part of the procedure concerning the completion of the merger and the formation of the SE, by the court, notary or other authority competent in the member state of the proposed registered office of the SE to scrutinise that aspect of the legality of mergers of public limited-liability companies’. The companies applied to the court, under art 26, effectively seeking a declaration and confirmation that they could bring the proposed merger into effect.

Application allowed.

Whether the requirements of art 26 of the Regulation had been satisfied. The court considered some of the features of art 26 of the Regulation and the form of order that it was appropriate to make where it was satisfied of the matters required by that article.

The function of the court under art 26 was to scrutinise the legality of the merger ‘as regards the part of the procedure concerning the completion of the merger and the formation of the SE’; the court was not asked to scrutinise the legality of the merger as regards the part of the procedure involving the pre- merger acts and formalities, because those matters were not within the phrase quoted above, and because they had been conclusively attested by the certificates under art 25(2) (see [7] of the judgment).

Article 26(4) could possibly be read in two ways; one way was to read it as referring to the original formation of the company and that way presented no problem. The other way was to read it as referring to the formation of the SE, but the SE would only be formed following the completion of the formalities under art 26 (see art 27). If art 26(4) was to be read as referring to the formation of the SE, then it would have to be read as meaning that the SE ‘will be’ formed in accordance with the law of the present jurisdiction (see [8] of the judgment).

In the present case, all of the requirements of art 26 had been satisfied. In accordance with art 26(2), the companies had provided the two certificates under art 25(2) within the relevant six-month period and they had also provided the draft terms of merger approved by both companies. The certificates meant that it had been conclusively attested that the pre-merger acts and formalities had been completed (see [6]-[8] of the judgment).

As regards art 26(3), the court was satisfied that the companies had approved draft terms of merger in the same terms. Further, as regards art 26(3), on the evidence, there were no arrangements for employee involvement, because neither company had any employees and art 26(3) did not require there to be arrangements for employee involvement where there were no employees (see [7] of the judgment).

As regards art 26(4), the court was satisfied that Liberty had been originally formed in accordance with the law of the jurisdiction of England and Wales and that the SE would be formed in accordance with the law of the jurisdiction of England and Wales (see [7] of the judgment).

Having been satisfied as to the requirements of art 26(2), (3) and (4), consideration was given to whether there was any other issue as to ‘the legality of [the] merger’, for the purposes of art 26(1), in the context of the fact that it appeared that LSM Lux had been specifically formed in order to allow Liberty to use the merger provisions in the Regulation and become an SE. Following the reasoning in authority, even if the involvement of LSM Lux was merely a means to enable the company to produce the intended result under the Regulation, the steps which had been taken, and which would be taken, came within the ambit and terms of the Regulation and did not infringe the principle of abuse of rights in accordance with the European jurisprudence (see [7] of the judgment).

Accordingly, the companies were free to take steps to bring the proposed merger between them and the formation of LMIE SE into effect, the consequences of which would take effect on the registration and formation of LMIE SE by the Registrar of Companies of England and Wales (see [8] of the judgment).

Easynet Global Services Ltd v Secretary of State for Business, Energy & Industrial Strategy [2018] All ER (D) 167 (Jan) followed.

Order accordingly.

Andrew Thornton (instructed by DLA Piper LLP) for the companies.

Carla Dougan-Bacchus Barrister.

The Companies Court allowed an application by Liberty Mutual Insurance Europe plc (Liberty) and LSM Luxembourg plc SA, pursuant to art 26 of Council Regulation (EC) No 2157/2001, concerning a proposed merger between the two companies to allow Liberty to become a ‘Societas Europaea’ (SE), namely a European company, in preparation for the consequences of the UK leaving the EU on 29 March 2019. The court held that all the requirements of art 26 had been satisfied and it ordered that the companies were free to take steps to bring the proposed merger between them, and the formation of Liberty Mutual Insurance Europe SE, into effect.