THIRD SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 37526/97

by Carol Elizabeth PEARSON

against the United Kingdom

The European Court of Human Rights ( Third Section) sitting on 11 May 1999 as a Chamber composed of

Mr J-P. Costa, President ,

Sir Nicolas Bratza ,

Mr L. Loucaides ,

Mr P. KÅ«ris ,

Mr W. Fuhrmann ,

Mrs H.S. Greve ,

Mr K. Traja , Judges ,

with Mrs S. Dollé, Section Registrar ;

Having regard to Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 22 April 1997 by Carol Elizabeth PEARSON against the United Kingdom and registered on 8 August 1997 under file no. 37526/97;

Having regard to the reports provided for in Rule 49 of the Rules of Court;

Having regard to the observations submitted by the respondent Government on 17 August 1998 and the observations in reply submitted by the applicant on 10 February 1999;

Having deliberated;

Decides as follows:

THE FACTS

The applicant is a British citizen, born in 1948 and living in Sheppey (Kent). She is represented before the Court by Mr T. J. Bancroft , a solicitor practising in Sheerness. The facts of the case, as submitted by the parties, may be summarised as follows.

A. Particular circumstances of the case

On 6 June 1989 the applicant, an auxiliary nurse employed by Kent County Council, sustained back injuries when lifting a patient. The accident aggravated a pre-existing back injury with the result that she was likely permanently to suffer from lower back pain, preventing her ever from returning to work.

After the accident, the applicant applied to the Department of Health and Social Security for reduced earnings allowance for the period from 14 June 1989 to 21 September 1993 to supplement statutory sick pay paid by her employers between 7 June 1989 and 27 December 1989. She also applied for and received invalidity benefit for the period from 28 December 1989 to 1 June 1994 and disability living allowance for the period from 3 November 1993 to 25 May 1994. The subsequent certificate of total benefit specified that the benefits received by her between June 1989 and June 1994 amounted to GBP 27,117.95.

On 2 June 1992 the applicant issued a writ for damages for personal injury and loss occasioned by negligence against her former employers. She claimed special damages, to compensate her for loss of earnings and other quantifiable loss occasioned by the accident, of GBP 38,228.87 and general damages, to compensate for pain and suffering, loss of amenity and loss of earning capacity, of GBP 8,500. The total claim for damages therefore amounted to GBP 46,728.87.

On 2 December 1996 the defendant made a payment into court in full settlement of the claims for special and general damages, of GBP 40,000, which the applicant decided to accept. In accordance with section 93(2)(a)( i ) of the Social Security Administration Act 1992 (see below), the defendant withheld GBP 27,117.95 from the payment into court, in respect of benefits received by the applicant from the date of her accident, and paid this sum directly to the Compensation Recovery Unit. The applicant received the remaining amount, GBP 12,882.05.

B. Relevant domestic law and practice

1. National Insurance and Social Security Benefits

The United Kingdom National Insurance Scheme is financed from contributions from employers’ and employees’ contributions, and from general taxation. Rates and levels of contributions are set annually to ensure each year that sufficient income is received to pay for social security benefits due and other services, such as the National Health Service.

A person injured or incapacitated by accident or illness may be entitled to receive certain social security benefits. The relevant benefits, as they applied during the period 1989-1996, are described below. “Contributory benefits” are paid only where the claimant has made sufficient National Insurance contributions, whereas “non-contributory benefits” are paid regardless of National Insurance contributions.

During the relevant period, statutory sick pay and invalidity benefit were contributory benefits intended to provide a measure of earnings replacement while an incapacitated person was unable to work. Statutory sick pay was an income-replacement benefit paid at a single rate by employers to employees. The employer was able to recover a percentage of the sums paid from the State. After receiving statutory sick pay for 28 weeks, an incapacitated person was entitled, indefinitely, to invalidity benefit, another earnings-replacement benefit which was paid at a basic personal rate.

Entitlement to reduced earnings allowance, a non-contributory benefit, depended on a level of disablement of at least 1% and was intended primarily to compensate for loss of earnings due to the disablement. Disability living allowance, another non-contributory benefit, was paid to people disabled before the age of 65 who needed help in looking after themselves.

2. Compensation Recovery Scheme

The Compensation Recovery Scheme (“the Scheme”), applicable at the time of the facts in question, was introduced on 21 July 1989 by the Social Security Act 1989 and subsequently consolidated in the Social Security Administration Act 1992 (“the 1992 Act”). It was based on the principles that (1) tortfeasors should not have any of their liabilities met through the social security scheme and (2) accident victims should not be compensated twice. Under the Scheme a tortfeasor , or “ compensator ”, who made a payment of compensation to an injured person, was required to repay to the Compensation Recovery Unit (“CRU”) an amount equivalent to any sums already paid in social security benefits in consequence of the injury in question. This amount was notified to the compensator by a certificate issued by the CRU (1992 Act, section 82(1)).

Certain payments were exempted from the application of the Scheme, for example, small payments up to and including GBP 2,500 and payments made under a contract of insurance between a victim and an insurance company (1992 Act, section 81(3)(a) to (j)). Sums paid to the injured person up the date of the award or settlement or in the preceding five years were subject to recoupment ; no future entitlement to benefits was taken into account.

The Scheme included an appeals mechanism, under which an individual might challenge the amount, rate, period or benefits specified in the certificate issued by the CRU, within three months of the date of the payment of compensation.

The Scheme has since been amended by the Social Security (Recovery of Benefits) Act 1997, which, inter alia , abolishes the small payments limit and prevents the recoupment of benefits from damages for pain and suffering.

COMPLAINTS

The applicant complains, under Article 1 of Protocol No. 1, that she has been disproportionately deprived of her possessions, namely the sum of money recouped by the CRU. In addition, she invokes Article 14 of the Convention, taken together with Article 1 of Protocol No. 1, claiming discrimination between herself, on the one hand, and other accident victims who received awards of less than GBP 2,500. Under Article 6 § 1 of the Convention, read alone or in conjunction with Article 14 of the Convention, the applicant argues that the Scheme interfered with her ability to pursue her action for damages for personal injury.

PROCEDURE

The application was introduced on 22 April 1997 and registered on 8 August 1997.

On 16 April 1998, the Commission decided to communicate the application to the respondent Government.

The Government’s written observations were submitted on 17 August 1998, after an extension of the time-limit fixed for that purpose. The applicant replied on 10 February 1999, also after an extension of the time-limit.

On 1 November 1998, by operation of Article 5 § 2 of Protocol No. 11 to the Convention, the case fell to be examined by the Court in accordance with the provisions of that Protocol.

On 23 November 1998 the Court granted the applicant legal aid.

THE LAW

1. The applicant complains that the Scheme operated disproportionately to deprive her of her “possessions”, namely her accident compensation and/or her social security benefits, contrary to Article 1 of Protocol No. 1 to the Convention, which provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The Government contend, first, that since the applicant did not avail herself of the appeal mechanism provided for in the 1992 Act, she has not exhausted domestic remedies as required by Article 35 § 1 of the Convention.

In the alternative, the Government submit that only the proceeds of the settlement, but not the social security benefits, constituted “possessions” for the purposes of Article 1. Referring to the Stran Greek Refineries and Stratis Adreadis v. Greece judgment of 9 December 1994 (Series A no. 301-B, pp. 84-85, §§ 60-61), they recall that a claim will only be a possession once it has “given rise to a debt ... that was sufficiently established to be enforceable”. The applicant’s argument that the benefits she received represented the fruits of her contributions to the National Insurance scheme is based on a fundamental misunderstanding of that scheme, which is not designed to offer a guaranteed return on the payment of contributions, nor to cover all unexpected requirements such as the inability to work due to accident, injury or disease, but is instead based upon an arrangement whereby those who are working pay for the social security benefits of those who are, for example, retired, sick or unemployed. Social security benefits are not capable of constituting “possessions”, since they form part of a general insurance scheme based on the principle of social solidarity.

The Government further submit that, to the extent that the proceeds of the settlement can be described as “possessions”, the recoupment should properly be characterised as a control of the use of property which strikes a fair balance between the general interest of the community and the requirements of the protection of the individual’s fundamental rights. The principal aims behind the introduction of the Scheme in 1989 were the avoidance of double recovery by claimants, and the shifting of the burden from the taxpayer to the compensating tortfeasor . The Scheme operated fairly and in a proportionate manner in the present case, particularly in view of the facts that the applicant received approximately GBP 4,000 more than her claim for general damages and that the recoupment took no account of future entitlement to benefits, which the applicant continues to receive.

The applicant strongly rejects the Government’s claim that she has not exhausted domestic remedies. She submits that the appeal procedure under the 1992 Act provided a means to challenge, on grounds of fact, the amount of benefit recouped, but did not furnish a right of appeal against the recoupment itself.

Referring to the above-mentioned Stran Greek Refineries and Stratis Andreadis judgment, the applicant contends that her claim for damages in tort for personal injury was sufficiently established to constitute “possessions” within the meaning of Article 1 of Protocol No. 1. Moreover, she reasons that the eligibility criteria for invalidity benefit were virtually identical to the criteria for emergency assistance in Austria, in respect of which the Court held in its Gaygusuz v. Austria judgment of 16 September 1996 ( Reports of Judgments and Decisions 1996-IV, p. 1141, § 41), that “the right to emergency assistance – in so far as it is provided for in the applicable legislation – is a pecuniary right for the purposes of Article 1 of Protocol No. 1”. She submits that this principle should apply a fortiori in her own case, where half the benefits in question were contributory benefits.

The applicant points out that, through the operation of the Scheme, she was deprived either of the totality of the benefits to which she was entitled, or a substantial portion of her special damages, namely GBP 27,117.95. Prior to her accident in June 1989, when the Scheme had not yet been introduced, there was nothing to suggest to her that, in the event of incapacity, she would not have absolute entitlement to social security benefits or that there was any need to take out independent insurance cover. The Scheme came into operation on 21 July 1989, and provided for the retrospective recoupment of benefits. As a result, the applicant was left to carry an individual and excessive burden. As a result of the recoupment , it is necessary for her still to rely on State benefits.

With regard to the issue of exhaustion of domestic remedies, the Court observes that there was no mechanism under English law which would have permitted the applicant to challenge generally the application to her of the Scheme provided for by the 1992 Act, which forms the subject matter of her complaint to the Court, rather than the detail of the amount recouped. It follows that the appeal procedure under the 1992 Act did not constitute an effective remedy for her Convention complaint and that she cannot be required, under Article 35 § 1 of the Convention, to have made use of it.

Turning to the substance of the applicant’s complaint, the Court notes, at the outset, that the Commission considered a number of similar complaints about the operation of the Scheme and found them manifestly ill-founded (nos. 28778/95, Kightley v. the United Kingdom; 29576/95, Irvine v. the United Kingdom; 28918/95, Stevens and Knight v. the United Kingdom; 30135/96, Bass v. the United Kingdom; and 30291/96, Godney , Wright and Edwards v. the United Kingdom).

The Court observes that on 2 December 1996 the applicant’s former employer made a payment into court, which the applicant accepted, of GBP 40,000 in full settlement of her claims for special and general damages resulting from her accident at work. Of this sum, GBP 27,117.95 was recouped by the Compensation Recovery Unit (“CRU”) pursuant to the 1992 Act. The Court considers that the portion of the settlement recouped by the CRU constituted a “possession” within the meaning of Article 1 of Protocol No. 1 (see, mutatis mutandis , the above-mentioned Stran Greek Refineries and Stratis Andreadis judgment, p. 85, §§ 61-62).

The Court recalls that the interference of which the applicant complains was the CRU’s recoupment from the payment into court of GBP 27,117.95, which corresponded to the amount of benefits she had received from the date of her accident. This recoupment was carried out in accordance with the principles underlying the 1992 Act, namely that the victim of an accident should not be compensated twice for the same loss and that the taxpayer should not bear the burden of losses caused by a compensating tortfeasor .

Against this background, the Court considers that the applicant’s complaints fall to be examined under the head of “securing the payment of other contributions”, within the rule in the second paragraph of Article 1 of Protocol No. 1 to the Convention. That paragraph explicitly reserves the right of Contracting States to pass such laws as they deem necessary to secure the payment of other contributions (see, mutatis mutandis , the Gasus Dosier - und Fördertechnik GmbH v. the Netherlands judgment of 23 February 1995, Series A no. 306-B, p. 48, § 59). However, according to the Court’s well-established case-law, the second paragraph of Article 1 of Protocol No. 1 must be construed in the light of the principle set out in the Article’s first sentence. Consequently, an interference must achieve a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. There must, therefore, be a reasonable relationship of proportionality between the means employed and the aim pursued (ibid., p. 49, § 62). The requisite proportionality will not be found if the person concerned has had to bear an individual and excessive burden (see, for example, the Lithgow and Others v. the United Kingdom judgment of 8 July 1986, Series A no. 102, p. 50, § 120).

In this connection, the Court observes that the principle that social welfare benefits are provided on the basis of immediate need, and may therefore be recovered by the State from a subsequent award of damages, cannot be said to be incompatible with Article 1 of Protocol No. 1. It is not unreasonable to regard the social security benefits the applicant received before and pending resolution of her claim for damages as being in the nature of payments on account of those damages. This is particularly clear in view of the fact that the benefits received, namely reduced earnings allowance, statutory sick pay, invalidity benefit and disability living allowance, were designed to replace lost earnings or additional expenses incurred as a result of the injury, and the special damages paid by the applicant’s former employers were intended to cover the same loss of earnings and other quantifiable consequential losses.

Moreover, the Court recalls that the applicant’s claim against her former employers was divided between special damages of GBP 38,228.87 and general damages of GBP 8,500. She decided to accept the defendant’s payment into court of GBP 40,000, from which GBP 27,117.95 was deducted pursuant to the Scheme. In the event, however, the applicant retained GBP 12,882.05, a sum considerably higher than the amount claimed by her in respect of general damages.

In the Court’s view, measures to prevent the applicant being compensated twice for the same losses caused by her injury, the cost of which would otherwise be borne by the taxpayer, cannot be said to strike an unfair balance between the general interest and the rights of the individual.

In these circumstances, the Court does not find that the operation of the Scheme was disproportionate. It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4.

2. The applicant also claims to have suffered unjustifiable discrimination, in breach of Article 1 of the First Protocol in conjunction with Article 14 of the Convention, which states:

“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

She points to the fact that, due to the small payments exemption under the 1992 Act, an individual who received the same amount of benefits as herself, but who only received up to GBP 2,500 in damages for tort, would have been entitled to the peaceful enjoyment of some GBP 29,617.95 without suffering any recoupment .

The Government submit, first, that the difference between those who, like the applicant, claim damages in excess of GBP 2,500, and those who claim less than GBP 2,500 is not a difference in status falling within the criteria envisaged by Article 14. In the alternative, if there were any discrimination between these two classes of claimant, it is objectively justified, since the small payments limit was introduced in order to avoid disproportionate cost and complexity in recovery in small cases.

The Court recalls that a difference in treatment is discriminatory for the purposes of Article 14 if it has no objective and reasonable justification, that is, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment (see the above-mentioned Gaygusuz judgment, p. 1142, § 42).

The Court notes that the exemption from recoupment of damages up to GBP 2,500 pursued the aim of saving unwarranted administrative costs under the Scheme. This aim can be regarded as legitimate under Article 14. It considers that the decision where to strike the balance between administrative costs and benefit to the taxpayer in principle falls within the State’s margin of appreciation. Moreover, the difference in treatment did not affect the present applicant disproportionately.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4.

3. Finally, the applicant submits that the combined effect of the Scheme, including the GBP 2,500 exemption, and the national Rules of Court and legal aid legislation, was such that she was in fact, if not in law, prevented from pursuing her claim for damages in tort before the Courts, in breach of Article 6 § 1, taken alone or together with Article 14. Article 6 § 1 states (as relevant):

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... .”

The Government submitted that this complaint was manifestly ill-founded.

The Court notes that the applicant brought her case before the domestic courts. She was represented throughout the proceedings, and was freely able to choose whether to pursue her claim to judgment or accept a payment in settlement at an earlier stage. In the event, she chose to accept the payment, knowing of the existence and effect of the Scheme. The fact that the particular sum was recouped from the total settlement by the CRU cannot render the proceedings unfair or otherwise in contradiction with Article 6 of the Convention, taken alone or together with Article 14.

It follows that this part of the application also is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected in accordance with Article 35 § 4.

For these reasons, the Court, unanimously,

DECLARES THE APPLICATION INADMISSIBLE .

S. Dollé J-P. Costa

Registrar President