Northern Ireland - Social Security and Child Support Commissioners' Decisions

FMcC-v-Department for Communities (PC) [2016] NICom 70

 

Appeal No: C2/15-16(PC)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

PENSION CREDIT

 

 

Appeal to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 2 December 2013

 

 

DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

Background circumstances

 

1. In 1988 the appellant took out a mortgage in order to purchase her current home, with a loan of £32,000. She took out a second mortgage in 1997 with a loan of £40,000 and redeemed the previous mortgage. She took out a third mortgage in 2000 with a loan of £90,000 and redeemed the previous mortgage. She took out a fourth mortgage in 2003 with a loan of £93,295 and redeemed the previous mortgage. She took out a fifth mortgage in 2010 with a loan of £173,495, and again redeemed the previous mortgage.

 

2. In January 2010 the appellant claimed state pension credit (PC) from the Department for Social Development (the Department). The Department awarded PC, including an element of housing costs, from 25 January 2010, based on the mortgage loan figure of £93,295. However, following the receipt of further information, the Department decided that the appellant's housing costs element had been incorrectly assessed. Following reassessment, the Department restricted the appellant's housing costs to the amount of the first loan, taken out for the purchase of the appellant's house in 1988, plus increases for certain repairs and improvements. It rejected certain other claimed repairs and improvements on the specific basis that the appellant was not a "disabled person" at a material time.

 

3. The appellant appealed from this decision, but a tribunal disallowed her appeal. She appealed to the Social Security Commissioner. In an interim decision issued on 9 December 2015, I found that on a correct interpretation of the law the appellant fell within the definition of "disabled person" from 1 April 1996 to 7 April 2002, therefore potentially qualifying for the cost of certain repairs and improvements to be added to her housing costs. I allowed her appeal and set aside the decision of the appeal tribunal for the reasons given in my interim decision.

 

4. Having set aside the decision of the tribunal, rather than remit the appeal to a newly constituted tribunal, I directed further evidence with a view to making a decision on the appellant's entitlement to housing costs under Article 15(8)(a)(ii) of the Social Security (NI) Order 1998. The appellant submitted evidence on 7 January 2016. I gave the Department an opportunity to comment on the evidence and Mr Crilly duly responded on 9 February 2016. The appellant made further submissions in response on 26 April 2016.

 

5. Arising from Mr Crilly's submissions, I appreciated that there remained a further issue of disputed law within the proceedings in addition to the factual questions. This concerned the application of paragraph 12(1) of Schedule 2 to the State Pension Credit Regulations (NI) 2003 (the PC Regulations) to the appellant's circumstances. It had not seemed necessary to decide this issue in my interim decision, although it was a factor in the tribunal's decision. I now recognise that it would have been better to have resolved this issue in my interim decision, and I apologise to the appellant for the undue delay which this omission has contributed to the proceedings.

 

6. On 10 June 2016, I issued a direction to the Department to make written observations under regulation 20(4) of the Social Security Commissioners (Procedure) Regulations (NI) 1999. In the light of the submissions received on 19 July 2016, I held an oral hearing on 27 September 2016.

 

Relevant legislation

 

7. The issue in dispute concerns the interpretation of paragraph 12 of Schedule 2 to the PC Regulations. This provides that:

 

12.—(1) A loan qualifies under this paragraph where the loan was taken out, with or without security, for the purpose of—

 

(a) carrying out repairs and improvements to the dwelling occupied as the home;

 

(b) paying any service charge imposed to meet the cost of repairs and improvements to the dwelling occupied as the home;

 

(c) paying off another loan to the extent that the other loan would have qualified under head (a) or (b) had the loan not been paid off,

 

and the loan was used for that purpose, or is used for that purpose within 6 months of the date of receipt or such further period as may be reasonable in the particular circumstances of the case.

 

Hearing

 

8. I held an oral hearing on this further issue. The appellant, who stated that she was unwell, was not expected to attend and did not attend. Mr Crilly of Decision Making Services appeared for the Department.

 

9. I invited Mr Crilly to make submissions on the meaning of paragraph 12. He outlined that the Department's position was that the words above permit housing costs to be met where a loan was used for a prescribed purpose in sub-paragraphs (a)-(c) or is prospectively to be used for such a purpose at the date of a claim. However, it was the Department's interpretation that each of those limbs was subject to the time requirement that the loan was used for the purpose within six months of the date of receipt or such further period as may be reasonable in the particular circumstances of the case. Although the submissions and discussion which follow equally apply to each of the three limbs from (a) to (c), in the particular case I am concerned with sub-paragraph (a) which deals with repairs and improvements. As some of the work of repair and improvement had not been carried out by the appellant for a long time after the loans had been taken out, the Department's submission was that she could not satisfy the requirements of the paragraph.

 

10. While accepting that there was an element of ambiguity in the words in paragraph 12, Mr Crilly submitted that the use of the terms "was" and "is" indicated a distinction between the loan having been used or being prospectively used for the statutory purpose. Mr Crilly submitted that paragraph 12 of Schedule 2 to the PC Regulations is the equivalent of paragraph 16 of Schedule 3 to the Income Support (General) Regulations (Northern Ireland) 1987 (the IS Regulations). The current form of Schedule 3 to the IS Regulations came into force on 02 October 1995. Prior to this date, loans for repairs and improvements were provided for in paragraph 8 of the previous Schedule 3.

 

11. Paragraph 8(1) of the former Schedule 3 was drafted in the following terms:

 

8.—(1) Subject to paragraph 7A, there shall be met under this paragraph interest payable on any loan which is taken out, with or without security, for the purpose of—

 

(a) repairs and improvements to which paragraph 1(b) refers; or

 

(b) paying off another loan but only to the extent that interest on that other loan would have been met under this paragraph had the loan not been paid off,

 

and which is used for that purpose or is to be so used within 6 months of the date of receipt or such further period as may be reasonable, and the amount to be met under this paragraph shall be calculated as if the loan were a loan to which paragraph 7 applied.

 

12. Mr Crilly submitted that the wording in the old paragraph 8(1) allowed for the carrying out of repairs and improvements to be anticipated. This is made clear by the use of the words "or is to be so used". Therefore, a loan could have qualified as an eligible housing cost under paragraph 8(1) before it was actually used for the purpose of carrying out repairs and improvements.

 

13. Mr Crilly further observed that the prospective element that had been apparent in the former paragraph 8(1) appears to have been removed when the current equivalent IS provision came into effect from 2 October 1995. This was because the two words "to be" have been omitted. However, Mr Crilly submitted that the second limb must contain a prospective element. Otherwise there would be no need for it as the condition in the first limb would always be satisfied once the loan has been used for the relevant purpose.

 

14. Taking this into account, he submitted that, whilst a literal interpretation of the second limb of paragraph 12(1) would preclude consideration of any element of anticipation that the loan is to be used for a relevant purpose, a purposive approach should be adopted to allow for such a consideration. This would involve reading "... or is to be so used for that purpose ..." into the legislation, with the effect of preserving a construction with which to permit a prospective element that had clearly been present in its predecessor.

 

15. Turning to the question of the period within which the statutory purpose had to be achieved, Mr Crilly submitted that the former paragraph 8(1) meant that, in order to qualify as an eligible housing cost, a loan taken out for the purpose of repairs and improvements had to be so used within 6 months of the date of receipt or longer if reasonable. He submitted that the 6 month limit in the former paragraph 8(1) applied to all loans, including those taken out previously and already used for the stated purpose. He further submitted that this was confirmed by GB Commissioner's decision CIS/257/1994.

 

16. CIS/257/1994 was concerned with the application of paragraph 8(1) of the former Schedule 3 to the IS Regulations. In that case, the claimant had taken out a loan with the intention of carrying out repairs and improvements to her home. However, the loan was not used for that purpose. The money had been transferred in to a business account owned by the claimant's son and spent. GB Commissioner Rowland held that the loan did not fall to be included as a housing cost for income support purposes. He gave his reasons for this conclusion in paragraph 7 of the decision:

 

"I agree with the adjudication officer now concerned with the case that the dissenting member of the tribunal took the right approach and that the majority erred in their construction of paragraph 8(1). The opening words of paragraph 8(1) require that the loan have been taken out "for the purpose of" carrying out repairs or improvements. That condition is satisfied in this case. However, the concluding words require that the loan be "used for that purpose" within 6 months or an extended period. The words "or is to be so used" are included only because the determination may be made before the end of the relevant period so that the adjudication officer or tribunal is obliged to anticipate what will happen. Where, as here, a tribunal is able to make use of hindsight, they should base their decision on what has actually happened. Therefore, if it was reasonable to extend the 6 months' period only to 12 months, the claimant was still not entitled to have interest on the loan met - even during those 12 months - because she had not used the loan for the relevant purpose within the 12 month period."

 

17. Mr Crilly submitted that the Commissioner in CIS/257/1994 held that the 6 month or relevant extended period rule applied to all instances; both to those circumstances where the purpose had already been met, as well as those where the purpose was still a prospective one.

 

18. He further submitted that this view was supported by the commentary accompanying paragraph 16(1) to Schedule 3 in page 679 of Social Security Legislation 2014/15: Volume II - Income Support, Jobseeker's Allowance, State Pension Credit and the Social Fund edited by Sweet & Maxwell. This states:

 

"The loan has to be used for the repairs, etc. within six months or some further period. If the loan is not so used, the claimant is not entitled to interest on it even during the six months or any extended period (CIS 257/1994)".

 

19. Turning to the present form of the rule in paragraph 12 of the PC Regulations, Mr Crilly submitted that the six month rule equally applied to the past and the prospective limbs. In the present case, even if the appellant could show that she had used a relevant loan for repairs and improvements, it would not be enough to establish entitlement. She would have to show that she had used the loan for the purpose within six months of its receipt, or such longer period as might be reasonable in the circumstances.

 

Assessment

 

20. I accept the submission of Mr Crilly that paragraph 12 of Schedule 2 to the PC Regulations is a direct equivalent of paragraph 16 of Schedule 3 to the IS Regulations and is therefore linked in its origin to paragraph 8 of the former Schedule 3. However, it seems to me that the words of paragraph 12 are less clear than the provisions which preceded them.

 

21. The Department has not been able to point to any change in policy or rationale for changing the words from those appearing in the pre-2 October 1995 IS Regulations. The changes were put into effect by the Social Security (Income Support and Claims and Payments) Regulations (NI) 1995 (SR 1995, No.301). Those regulations principally introduced a distinction in treatment between entitlement to the housing costs element of IS incurred before and after 2 October 1995. Entitlement was restricted in certain respects after that date. However, it does not appear from the particulars of those changes, that this should necessarily alter the correct interpretation of the provisions which I have to consider.

 

22. The main change in the relevant paragraph is that the tense of each limb is altered by the amendment so that the original pairing of "is used" with "is to be so used" is replaced by a pairing of "was used" and "is used". It may be that the change was considered necessary in the light of the more general changes to the provisions dealing with housing costs. Nevertheless, it seems to me that, whatever the purpose, the amended legislation was intended to preserve a distinction between entitlement in respect of periods where a loan has already been used for the purpose of repairs and improvements and entitlement in respect of periods where those repairs and improvements had not yet been carried out.

 

23. Mr Crilly submits that the words at the end of paragraph 12 require a purposive construction to achieve this effect, due to the omission of the words "to be" from the version of the legislation which is before me. Otherwise, if I understand his submission correctly, there is no effective difference between the terms "was used" and "is used". As I noted above, the original version of this legislation employed the term "is used" for expressing the past tense in the sense of covering the situation where the repairs and improvements had already been carried out under the loan.

 

24. However, the key issue in the appeal is whether the Department is correct in its further submission that the relevant words have the effect that both of these limbs are subject to the condition that the loan was used for the statutory purpose within six months of the date of its receipt or such further period as may be reasonable in the particular circumstances. The Department submits that, as the appellant did not use her loan within six months of receipt, paragraph 12 prevents payment of housing costs for otherwise eligible repairs and improvements.

 

25. It does not appear to me, from a basic construction of the words in issue, that the Department's submission is correct. The previous version of the legislation read

 

"and which is used for that purpose or is to be so used within 6 months of the date of receipt or such further period as may be reasonable".

 

26. The current version reads:

 

"and the loan was used for that purpose, or is used for that purpose within 6 months of the date of receipt or such further period as may be reasonable in the particular circumstances of the case".

 

27. It appears to me that, had the legislator intended to make both limbs subject to the time qualification, the insertion of commas after "purpose" and "used" would have clarified that intention in the old version of the legislation and the insertion of a single comma after the second "purpose" would have clarified that in the present version. Commas would have the effect of connecting both limbs to the time requirement. In their absence, there is an element of ambiguity.

 

28. As I understand the old version of the legislation, it provided for meeting the housing costs of a claimant who had taken out a loan and had used it to effect qualifying repairs and improvements. It also provided for meeting the housing costs of a claimant who had taken out a loan, but who had not yet used it to effect qualifying repairs and improvements, yet would prospectively use it to do so within six months or further reasonable period of receiving the loan. Significantly, it permitted entitlement to housing costs prior to completion of the repairs and improvements. Presumably there would have been cases where entitlement was accepted on a prospective basis, but the statutory purpose was later frustrated by non-completion of the work.

 

29. The current version of the legislation similarly provides for paying the housing costs of a claimant who has taken out a loan and has used it to effect qualifying repairs and improvements. However, a small difference appears evident to me. It appears that the new formulation does not permit payment pending the completion of prospective repairs and improvements. Instead, it seems to me, it permits payment retrospectively for a past period where such work was anticipated and has now been completed. The important qualification is that the repairs and improvements must have been completed within the relevant time requirement.

 

30. In the present case, the Department submits that the time requirement attaches to both the first and second limbs of the provision. However, it is not clear to me why the time requirement should extend to both limbs. If the time requirement was intended to apply to both limbs, only one limb would have been necessary. I consider that, from a plain reading of the legislation, the time qualification only extends to the prospective limb. It appears to me that the first purpose of the legislation is to meet a claimant's housing costs in the situation where a loan has been taken out in order to carry out repairs and improvements regardless of when the repairs and improvements have been done. The second purpose is to meet the interest on a loan for a period where repairs and improvements have not yet been done, but where they are subsequently done within the relevant time period.

 

31. Mr Crilly argued for a purposive construction, and submitted that the current version of the legislation required the notional insertion of the words "to be" after "is", in order to achieve a prospective effect. However, it appears to me that the change in tense in both limbs and the omission of the words "to be" is not accidental. Rather it is a subtle amendment. I consider that the two limbs each have a separate purpose. Rather than reading in the words "to be" when they are not there, as suggested by Mr Crilly, I consider that it is the very reference to the relevant time period which achieves the prospective effect intended by the legislature. The loan qualifies if it "is used for that purpose within 6 months of the date of receipt or such further period as may be reasonable in the particular circumstances of the case".

 

32. Mr Crilly submits that the time period qualification would extend to both limbs of the provision. By this interpretation, if repairs and improvements were delayed beyond six months or further reasonable period, they could never qualify as housing costs even when belatedly completed. However, it is difficult to see why this should be the case on policy terms. There is no undue advantage to such a claimant. Even without such a time restriction, the claimant who unreasonably delayed repairs and improvements would not qualify for increased housing costs until the work was done. Yet the obvious aim of the legislation is to meet such housing costs when repairs and improvements are done. A rationale for penalising delay by an absolute disentitlement from housing costs is not obvious.

 

33. Yet, where a loan is obtained, but then not used for relevant housing costs, it is easier to see why public policy would prevent payment pending completion of such work, or restrict it to a retrospective payment where the work was done within a particular timeframe. Such a measure would prevent a claimant who intended using a loan for a different purpose to those prescribed in the legislation from receiving interest on the loan by way of PC.

 

34. Mr Crilly relied on CIS/257/1994 and the authors of Social Security Legislation 2014/15: Volume II - Income Support, Jobseeker's Allowance, State Pension Credit and the Social Fund. However, it seems to me that CIS/257/1994 must be distinguished from the present case. It concerned a claimant who took out a loan for repairs and improvements. However, the money was channelled into her son's business and lost. The Commissioner was considering whether it could still be said that the money was to be used to the statutory purpose with, if not six months, at least a further reasonable period. The claimant had no realistic expectation that the money would ever be repaid. The question before the Commissioner was whether, in a case where the purpose of the loan was not achieved, the claimant was entitled to housing costs on the premise that it was nevertheless her intention to have the repairs done.

 

35. In an era before Article 13(8)(b) of the Social Security (NI) Order 1998, which precludes this approach, he considered that the tribunal was entitled to use hindsight and to consider post-decision events. The Commissioner held that, even if it was reasonable to extend the statutory period to 12 months, the claimant was still not entitled to have interest on the loan met - even during those 12 months - because she had not used the loan for the relevant purpose within the 12 month period. In the contemporary adjudication system, a tribunal is not entitled to have regard to circumstances which were not obtaining at the date the decision under appeal was made. However, the change in the legislative provisions which I referred to above makes it unnecessary for me to explore the implications of that further.

 

36. More generally, it appears to me that there is not authority for the proposition submitted by Mr Crilly, relying on CIS/257/1994 and Social Security Legislation 2014/15: Volume II, that the loan has to be used for the repairs and improvements within six months or such further reasonable period .

 

37. CIS/257/1994 was concerned with the pre-2 October 1995 version of the equivalent IS legislation and with a factual situation where the repairs and improvements were not done. I do not understand it as extending to a principle that, where repairs and improvements are affected beyond the statutory time period extending to prospective loans, the interest on the relevant loan can never be met. If my understanding is wrong, I consider any proposition to that effect in CIS/257/1994 to be obiter. In any event, I consider that I should distinguish it from the present case on both fact and law, as it dealt with an earlier version of the law.

 

38. I conclude that the words qualifying entitlement in terms of the time in which the loan must be used for the statutory purpose apply to periods when the work of repairs and improvement has remained in prospect, but not to the period when the work of repairs and improvement has been done. Accordingly, there should be no restriction on entitlement to the appellant in the present case during any period when she had completed work of repairs and improvements, solely on the basis that she did not complete such work within six months of receiving a loan or such further period as might be reasonable in the circumstances.

 

39. The Department and the tribunal each interpreted the time qualification as precluding an award of an element of housing costs where repairs and improvements were carried out beyond a period of six months or further reasonable period from the receipt of the loan. I am satisfied that this interpretation involved the making of an error of law.

 

40. I allow the appeal. I make the findings of fact which appear in the Appendix to this decision and I direct accordingly.

 

 

(signed)

O Stockman

Commissioner

 

26 October 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX

 

My findings and decision on entitlement

 

Loan 1: I find that the appellant borrowed £32,300 from Cheltenham & Gloucester Building Society in 1988 to purchase her present home.

 

I find that £32,300 of that sum is an allowable housing cost under paragraph 11(1)(a) of Schedule 2 to the PC Regulations from 1988.

 

Loan 2: I find that the appellant borrowed £40,000 from the Mortgage Trust in 1997 to redeem her original mortgage to the extent of £32,300.

 

The appellant submits that the balance of the loan was employed to repair the roof of her house at a cost of £1,000, and to replace windows at a cost of £5,000.

 

The appellant submits that the roof repairs were necessary due to storm damage and that there were two sets of roof repairs in 1997 and then in 1998/99. The appellant states that the window repairs were necessary due to the age of the house.

 

The appellant has provided evidence in the form of a letter from Belfast City Council dated January 2016 which establishes that environmental health abatement notices were issued by the council in 1997 in respect of a defective bay window and in April 1999 in respect of a defective rear entrance door and kitchen window, with work completed on each in October 1997 and July 1999 respectively.

 

The appellant has further produced copy invoices for £350, dated 1 December 1999, and £650, dated 30 November 2000 for flashing and slates replacement. These do not appear to me to be original documents. Nevertheless, I am satisfied that the work was done as claimed.

 

The period in issue is now some considerable time in the past. However, the onus must be on the appellant to make out the case that she spent the further loan as claimed. Judge Lane in the Upper Tribunal in KWA v Secretary of State for Work and Pensions [2011] UKUT 10 (AAC) has referred to the difficulty in assessing figures in cases where documentary proofs are not available. She has commented that tribunals cannot pluck figures out of the air, but are entitled to use experience and judgement in order to obtain them.

 

The Department has previously disallowed the sums claimed in the period of Loan 2 due to the fact that the claimed work was not done within 6 months or a reasonable period after obtaining the loan. Contrary to the Department's approach and for the reasons given above, I consider that this is not a lawful basis for refusing this element of the relevant loan.

 

I find that £32,300 of the sum of £40,000 is an allowable housing cost under paragraph 11(b) of Schedule 2 to the PC Regulations from 1997.

 

I find that the appellant is entitled to be assessed on the basis that interest on a further £350 for roof repairs should be allowable under paragraph 12(1)(a) and 12(2)(j) from 1 December 1999.

 

I find that the reasonable costs of replacement of a bay window must be permitted from 17 October 1997 and the reasonable cost of a rear entrance door and kitchen window should be permitted from 8 July 1999, again under 12(2)(j).

 

I do not have the expertise to make an assessment of the cost of these items myself. I direct the Department to make a reasonable assessment of the cost of the required work for bay window replacement and rear entrance door and kitchen window replacement and to allow these further sums to be added to the eligible housing costs from the respective dates. I grant the appellant liberty to apply to me for assessment, in the event that she disputes the amount permitted by the Department. Any such application must be made by the appellant within three weeks of the Department notifying her of its assessment.

 

Loan 3: I find that the appellant borrowed £90,000 from the Woolwich Building Society on 4 October 2000 to redeem her mortgage. She claims that she paid off the previous mortgage of £40,000 and used the balance to extend her property by reason of her disability needs.

 

The appellant is entitled to a housing costs element of £32,300 under paragraph 11(1)(b) plus a sum for the repairs and improvements element of Loan 2 above under paragraph 12(1)(c) from 4 October 2000.

 

The appellant is entitled to be assessed on the basis that interest on a further £650 for roof repairs should be allowable under paragraph 12(1)(a) and 12(2)(j) from 30 November 2000.

The Department previously disallowed the sums claimed under Loan 3 on the basis that the appellant did not fall within the definition of "disabled person" at the material time. I have found in my interim decision that the appellant was in receipt of IVB from 1 April 1996 to 7 April 2002 and therefore was a "disabled person" on 4 October 2000.

 

The appellant provides evidence in the form of a letter from an occupational therapist prepared in support of a disability living allowance claim and dated 12 September 2001. This refers to an earlier occupational therapy assessment which recommended a ground floor toilet and shower facility and referred to the appellant sleeping downstairs.

 

It appears that the appellant applied for a renovation grant and a disabled facilities grant from the NI Housing Executive around July 2000. On 29 March 2003 a senior grants officer in the NI Housing Executive certified that costs amounting to £13,502.14 associated with a renovation grant application were reasonable and should be given technical approval as the reasonable eligible cost of proposed work.

 

The applicant further provided evidence to me in the form of a Housing Executive grant costing summary in the sum of £20,316.55. This appears to consist of an element of £8065.30 for disabled facilities and £10,068.41 for renovation, totalling £20,316.55 with the addition of VAT. The appellant has stated that the grant was never awarded. I do not know whether that is an accurate statement or not, but in any event it does not matter to the issue which I have to decide, namely whether the loan was taken out for the purpose of carrying out repairs and improvements to the dwelling occupied as the home. In the light of the evidence concerning the appellant's health at the material time, I accept that it was.

 

In a document dated 9 November 2009, the appellant has claimed that she used £26,000 of the £50,000 to adapt the house for her needs as a disabled person in 2005/06 by installing a downstairs bedroom and bathroom extension. She states that she installed new windows in 2003 at an approximate cost of £5,000. She states that she refurbished the kitchen in 2004 at an approximate cost of £3,000. She states that she installed a patio and ramps at a cost of £3,500. She has also stated that she advanced £17,000 to her son in 2000.

 

I do not fully accept the accuracy of the applicant's statements in the absence of relevant proofs. Nevertheless, there was evidence that work of extension to the appellant's house to accommodate a bedroom and bathroom would have cost around £20,316.55.

 

The appellant submits an undated builder's letter, which could be an estimate or an invoice, in the sum of £23,605, of which some £7,000 appears itemised, with £15,720 labelled non-specifically as "original costs". The appellant has endorsed a VAT figure to this by hand, but the document does not appear to be a VAT invoice, lacking as it does any VAT registration number. Its relationship to the work which is the subject of the NI Housing Executive grant application is also unclear.

 

I find that the appellant is entitled to the further sum of £20,316.55 to be assessed as a qualifying loan for repairs and improvements under the heading of adapting the dwelling for the special needs of a disabled person (paragraph 12(1)(a) and 12(2)(k)) from an approximate completion date of 2005.

The appellant does not provide evidence which would tend to establish that the remaining balance of the £50,000 further loan was used for the particular purposes claimed. She stated herself that £17,000 was advanced to her son, which is clearly not an allowable element. Moreover, I do not accept that the costs outlined for window repairs, kitchen renovation and the installation of ramps and a patio can be separated from the general work referred to in the NIHE application or builder's estimate.

 

At this point in time, long after the claimed work, I appreciate that the appellant has a very great difficulty in proving what was done and at what cost. However, as stated by Judge Lane in KWA v Secretary of State for Work and Pensions, where an issue cannot be resolved due to lack of evidence, it must be decided against the party who had the burden of proving it. In this case, that party is the appellant.

 

I find that there appears to be a certain amount of duplication in the work 2010. I do not consider that it is likely that the applicant's kitchen would have required replacement in terms of maintaining its fitness for human habitation in such a short space of time as 6 years. It appears to me that there was work claimed for wheelchair access ramps in the period from 2000-05 but also in 2010. It also appears to me that the appellant had claimed for replacement windows in 1999 and 2003. I do not accept that the appellant proves when this work was done and at what cost to the standard necessary for me to allow it.

 

Loan 4: I find that the appellant borrowed £93,295 from UCB Home Loans on 8 October 2003 in order to redeem her existing mortgage and used to it to repay the existing loan.

 

I find that there was no additional relevant loan at this time.

 

Loan 5: I find that the appellant borrowed £173,795 from Santander Bank on 25 March 2010.

 

I accept and adopt the findings of the Department in relation to the further work of repairs and improvement done at this time.

 

Conclusion

 

In summary, I find that the appellant is entitled to certain further elements of housing costs to be awarded to her in respect of loans for repairs and improvements to the dwelling home within the terms of paragraph 12(2). To the extent that they have not been previously allowed by the Department, these are:

 

(i) the sum of £350 for roof repairs as part of loan 2;

 

(ii) the reasonable cost of replacement of a bay window and the reasonable cost of a rear entrance door and kitchen window as part of loan 2:

 

(iii) the sum of £650 for roof repairs as part of loan 3;

 

(iv) the sum of £20,316.55 for adapting the dwelling for the special needs of a disabled person as part of loan 3.

 

FMcC-v-Department for Social Development (PC) [2015] NI Com 70

Decision No: C1/15-16(PC)

 

 

 

 

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

 

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

 

 

PENSION CREDIT

 

 

Application by the claimant for leave to appeal

and appeal to a Social Security Commissioner

on a question of law from a Tribunal's decision

dated 2 December 2013

 

 

INTERIM DECISION OF THE SOCIAL SECURITY COMMISSIONER

 

 

1. This is a claimant's application for leave to appeal from the decision of an appeal tribunal sitting at Belfast.

 

2. For the reasons I give below, I grant leave to appeal. I allow the appeal. I have decided that I should determine the appeal myself, under Article 15(8)(a)(ii) of the Social Security (NI) Order 1998, subject to making findings of fact. I give directions below as to the evidence which must be provided to me before I can make relevant findings of fact.

 

REASONS

 

Background

 

3. The applicant claimed pension credit (PC) from the Department for Social Development (the Department) from 21 January 2010. This included a claim for her housing costs. The Department awarded PC including housing costs, based on mortgage figure of £93,520, effective from 25 January 2010. On 28 June 2010 the Department was informed that the applicant had re-mortgaged her house, with a loan of £173,495. She advised the Department that she had redeemed her earlier loan on 29 March 2010. The Department sought further information from the applicant, asking how the balance of the money had been used. The applicant stated that improvements had been carried out due to her disability, or were planned. The Department considered the figures which were submitted. On 10 December 2010 the Department awarded an element of PC for housing costs at the level of £118.92 per week.

 

4. Following a change in her interest rate, the applicant sought a review of her housing costs on 3 April 2012. Following some correspondence the applicant was asked for more information. The applicant advised that she had initially moved to her present address in 1988, buying the house with a mortgage of £32,300. She had re-mortgaged the house for £40,000 in 1997. She had then re-mortgaged in October 2000 for £90,000. She had then re-mortgaged for £93,295 in October 2003. She explained that she had carried out various elements of repair and improvements to the house in 1997, 2000 and 2010, giving details and figures for the work done. Following its enquiries, the Department decided that the applicant's housing costs had been incorrectly assessed. It made a decision on 31 July 2012 reducing the element of PC for housing costs to £29.07 from 25 June 2012. On 3 August 2012 the Department issued a further decision. This made changes to the awards made to the applicant for housing costs for six separate periods from 25 January 2010 to 24 June 2012. The applicant appealed.

 

5. The appeal was considered by a tribunal consisting of a legally qualified member (LQM) sitting alone on 2 December 2013. The tribunal disallowed the appeal. The applicant then requested a statement of reasons for the tribunal's decision and this was issued on 8 March 2014. The applicant applied to the LQM for leave to appeal from the decision of the appeal tribunal. Leave to appeal was refused by a determination issued on 31 March 2014. On 4 April 2014 the applicant applied to a Social Security Commissioner for leave to appeal.

 

Grounds

 

6. The applicant submits that the tribunal has erred in law on the basis that:

 

(i)         it had misinterpreted the Pension Credit Regulations;

 

(ii)        the Department had been biased;

 

(iii)       the LQM "did not give enough weight in determining housing costs";

 

(iv)       it erred by refusing to adjourn the hearing.

 

7. The Department was invited to make observations on the appellant's grounds. Mr Crilly of Decision Making Services (DMS) responded on behalf of the Department. In the course of detailed observations, he submitted that the tribunal had not erred in law as alleged and indicated that the Department did not support the application.

 

8. The applicant responded to Mr Crilly's observations. She submitted, inter alia, that the Department had not complied with the Disability Discrimination Act in failing to provide her with an explanation of the submission in a form which she could understand. She submitted that the Department had not adequately investigated her housing costs. She took issue with multiple matters of fact. She submitted that the tribunal had erred by not awaiting the outcome of her incapacity benefit appeal relevant to the question of whether she was a disabled person in 2000.

 

9. Further correspondence was received from the applicant, reiterating her point that the tribunal did not make reasonable adjustments to enable her to participate in her hearing. She submitted that another case concerning entitlement to incapacity benefit which she had brought before the Commissioner should be considered prior to the present application. She alleged that the Department had "suppressed vital information" on her case.

 

10. I decided to hold an oral hearing of the application. I asked the Department for further submissions on an issue concerning the interpretation of relevant law. Mr Crilly responded. The applicant in turn responded to Mr Crilly's submissions.

 

Relevant law

 

11. The law relevant to this application can be found in Schedule 2 to the State Pension Credit Regulations (NI) 2003 (SR 2003, No.28) ("the Pension Credit Regulations"). Entitlement to receive housing costs derives from regulation 6(6)(c) of the Pension Credit Regulations. Calculation of the amount payable derives from paragraph 1 of Schedule 2. This reads:

 

1.—(1) Subject to paragraphs 2 to 15, the housing costs applicable to a claimant in accordance with regulation 6(6)(c) are those costs—

 

(a) which the claimant or, if he has a partner, his partner is, in accordance with paragraph 3, liable to meet in respect of the dwelling occupied as the home which he or his partner is treated as occupying, and

 

(b) which qualify under paragraphs 11 to 13.

 

Of further relevance in this particular case is the definition of "disabled person" which appears in paragraph 1(2) of Schedule 2. This reads:

 

"(2) In this Schedule—

 

"disabled person" means a person—

 

(aa) who, had he in fact been entitled to income support, would have satisfied the requirements of paragraph 12 of Schedule 2 to the Income Support Regulations (additional condition for the higher pensioner and disability premiums), or

 

(b) who—

 

(i) has not attained the age of 20 and for whom the claimant or his partner is responsible; and

 

(ii) is a person in respect of whom disability living allowance is payable or would be payable but for suspension or abatement because the person becomes a patient; or

 

(iii) is registered as blind in a register compiled by a Health and Social Services Board established under Article 16 of the 1972 Order; or

 

(iv) who is in receipt of an employment and support allowance which includes an amount under section 2(2) or (3) or 4(4) or (5) of the Welfare Reform Act (components);"

 

Paragraph 11(1) of Schedule 2 makes provision for qualifying loans as follows:

 

11.—(1) A loan qualifies under this paragraph where the loan was taken out to defray monies applied for any of the following purposes—

 

(a) acquiring an interest in the dwelling occupied as the home, or

 

(b) paying off another loan to the extent that the other loan would have qualified under head (a) had the loan not been paid off.

...

 

Paragraph 12 of Schedule 2 makes further provision for qualifying loans as follows:

 

12.—(1) A loan qualifies under this paragraph where the loan was taken out, with or without security, for the purpose of—

 

(a) carrying out repairs and improvements to the dwelling occupied as the home;

 

(b) paying any service charge imposed to meet the cost of repairs and improvements to the dwelling occupied as the home;

 

(c) paying off another loan to the extent that the other loan would have qualified under head (a) or (b) had the loan not been paid off,

 

and the loan was used for that purpose, or is used for that purpose within 6 months of the date of receipt or such further period as may be reasonable in the particular circumstances of the case.

 

(2) In sub-paragraph (1) "repairs and improvements" means any of the following measures undertaken with a view to maintaining the fitness of the dwelling for human habitation or, where the dwelling forms part of a building, any part of the building containing that dwelling—

 

(a) provision of a fixed bath, shower, wash basin, sink or lavatory, and necessary associated plumbing, including the provision of hot water not connected to a central heating system;

 

(b) repairs to existing heating system;

 

(c) damp proof measures;

 

(d) provision of ventilation and natural lighting;

 

(e) provision of drainage facilities;

 

(f) provision of facilities for preparing and cooking food;

 

(g) provision of insulation of the dwelling occupied as the home;

 

(h) provision of electric lighting and sockets;

 

(i) provision of storage facilities for fuel or refuse;

 

(j) repairs of unsafe structural defects;

 

(k) adapting a dwelling for the special needs of a disabled person, or

 

(l)....

 

The tribunal's decision

 

12. The applicant did not attend the hearing of her appeal. She had made a postponement application. This complained that a further submission to clarify the decision making process had not been shared with her by the Department. The applicant further submitted that the outcome of her appeal to the Social Security Commissioner on income support and incapacity benefit was material to the decision in the present appeal and that it was better to defer the present appeal until the other appeal had been decided. The Department's presenting officer satisfied the tribunal that an addendum submission made in order to clarify the appeal process had been shared with the applicant on 4 September 2013. The tribunal determined that the issue in the appeal related to the Social Security Commissioner concerned the period from 8 April 2002 to 24 October 2005 and therefore was not relevant to the present appeal.

 

13. The issue before the tribunal was whether the Department had correctly assessed the applicant's housing costs under Schedule 2 of the Pension Credit Regulations. The tribunal found that the applicant had first taken a loan on her current home in 1988, amounting to £32,000. It found that she had taken out a second loan in 1997 amounting to £40,000. It found that she had taken out a third loan in 2000 for £90,000. A particular dispute arose as to whether an element of this loan was for an extension to meet the needs of a disabled person. It found she had taken out a further loan in 2003 amounting to £93,295. It found that the applicant subsequently re-mortgaged in 2010 in the amount of £173,495.

 

14. The tribunal addressed the provisions of paragraph 1, 11 and 12 of Schedule 2 to the Pension Credit Regulations. It indicates in its statement of reasons that it accepted the Department's conclusions with regard to these loans, as follows.

 

15. The tribunal accepted that the first loan of £32,000 was used to acquire an interest in the dwelling in which the applicant resided and was a qualifying loan under Schedule 2 paragraphs 1 and 11.

 

16. The applicant claimed that £6,000 of the second loan of £40,000 had been used for repairs and improvements. However, the tribunal found that the work had not been carried out within 6 months of the loan or, in the absence of any explanation, such longer period as may be reasonable in the particular circumstances of the case. As such, it found that this work did not fall within Schedule 2 paragraph 12, and was therefore not a qualifying loan.

 

17. The applicant claimed that £50,000 of the third loan of £90,000 in 2000 had been used to extend her property to include a downstairs bedroom and bathroom to facilitate her disability. However, the applicant stated that the extension was not completed until 2005/06, pending the outcome of an appeal about an NIHE grant. The Department submitted that the applicant's evidence had been inconsistent on how the £50,000 had been spent and that she was not in receipt of a qualifying benefit in 2000 such as to make her a "disabled person" under Schedule 2, paragraph 12(2)(k). The tribunal relied on the decision in relation to appeal BE/407/06/52/P, which confirmed that the applicant "had not been entitled to Incapacity Benefit from 1/04/96-7/04/02" and accepted that her evidence was inconsistent. It found that this work did not fall within Schedule 2 paragraph 12(2)(k), and was therefore not a qualifying loan.

 

18. The tribunal found that only the original £32,000 qualified in respect of the fourth loan of £93,000 under Schedule 2 paragraphs 1 and 11.

 

19. In relation to the fifth loan of £173,495 (2010), the tribunal accepted that £9,330 was allowable under paragraph 12(2)(k) of Schedule 2 on the basis that the applicant was a "disabled person" in 2010, being then in receipt of disability living allowance.

 

20. In summary, for the purposes of her PC claim of 21 January 2010, the tribunal decided that the applicant had eligible housing costs of £32,000 from 25 January 2010 and £41,630 from 27 March 2010.

 

Hearing

 

21. I held an oral hearing of the appeal. The applicant did not attend and was not represented. Mr Crilly of DMS appeared on behalf of the Department.

 

22. Mr Crilly submitted that the tribunal had applied the legislation correctly and made reasonable findings of fact relevant to the issues before it.

 

23. I asked Mr Crilly to address me on certain matters, including whether the fact that the applicant had received IB in 2000 was sufficient to make her a "disabled person", notwithstanding the fact that entitlement for that period was superseded and removed subsequently. I am grateful to Mr Crilly for his submissions.

 

Assessment

 

24. The applicant submits that the tribunal erred in law by proceeding on the day in her absence. She has referred to the Disability Discrimination Act in her submissions.

 

25. The applicant had applied to the tribunal for a postponement of the hearing by a letter dated 20 November 2013. This was on the basis that she should have access to the submission by the Department and copies of relevant legislation. In the letter she accused the Department of "withholding vital information", relating to her other case on the issue of incapacity benefit (IB). She asked for the appeal to be deferred pending the determination of the IB case.

 

26. On the day of hearing, the tribunal noted the postponement request. It satisfied itself that the Department had provided a detailed explanation of its case to the applicant on 5 September 2010. The Department's representative had submitted that the applicant's response of 9 September 2013 to that explanation confirmed the she had received it.

 

27. The tribunal further considered whether to adjourn pending the decision in the applicant's IB appeal to the Social Security Commissioner. However, it decided that since the IB appeal concerned only the period from 8 April 2002 to 24 October 2005, it could not be relevant to the £90,000 loan taken out in 2000. Therefore, the tribunal elected to proceed with the hearing.

 

28. As indicated, the tribunal addressed the two grounds for the applicant's postponement application - the issue of the Department's submission and the issue of the IB appeal. I consider that the tribunal made relevant enquiries and was entitled to exercise its discretion as it did. In order to err in law, the applicant would need to establish an arguable case that the tribunal had acted irrationally by refusing to adjourn. I do not accept that there is an arguable case that this was so.

 

29. In her more recent submissions the applicant has referred to the Disability Discrimination Act. I accept that a discriminatory refusal to postpone, in principle, could amount to irrationality. However, in order to make such a submission, I consider that the applicant would have had to establish that she was a disabled person for the purposes of the Disability Discrimination Act and to have made an application for postponement on that basis. However, the applicant did not seek postponement of the hearing on the basis of disability. Even if it was now established that she was a disabled person for the purposes of the Disability Discrimination Act, it is not arguable that the tribunal has irrationally refused to postpone the hearing on that basis.

 

30. In a further ground of application, the applicant has submitted that the Department has shown bias against her. She does not particularise that allegation. However, I am concerned with the conduct of the tribunal - not the Department. If the Department had acted in a biased manner, the tribunal had the opportunity to correct matters. The tribunal had to apply the relevant law to the facts as it found them. I see no evidence that the tribunal has acted in a biased manner, and I refuse leave to appeal on that ground.

 

31. The applicant submitted that the tribunal had erred in law in its interpretation of paragraph 12 of Schedule 2 to the Pension Credit Regulations. I consider that it is arguable in one respect that the tribunal has erred in law and this is in relation to its approach to whether the applicant was a "disabled person" for the purposes of Schedule 2 paragraph 12(2)(k). This is relevant to the question of whether a loan was taken out for the purpose of adapting a dwelling for the special needs of a disabled person. I grant leave to appeal on that ground.

 

32. The definition of disabled person is given in paragraph 1(2)(a) of Schedule 2. One category of "disabled person" is "someone who, had he in fact been entitled to income support, would have satisfied the requirements of paragraph 12 of Schedule 2 to the Income Support Regulations". This is a reference to the Income Support (General) Regulations (NI) 1987 (SR 1987, No.459). It is common case that one category of person who comes within the definition is a claimant "in receipt of long-term incapacity benefit under Part II of the Contributions and Benefits Act".

 

33. The applicant has been exercised that the case concerning her entitlement to IB should be heard after the present case, in order that the factual situation grounding a decision in the case concerned with housing costs would be clear. I decided the application under reference A3/14-15(IB) before I considered the present case. However, that case was concerned with the decision of the Department in respect of the period from 8 April 2002 to 24 October 2005.

 

34. A tribunal's decision in respect of an earlier period from 6 April 1994 to 7 April 2002 was partially successful and was not appealed further. However, a decision was made to the effect that the applicant was not entitled to IB from 1 April 1996 to 7 April 2002.

 

35. The applicant submits that the loan in 2000 was taken out to adapt the dwelling to the needs of a disabled person. Mr Crilly submits that the applicant, having formerly been paid IB, was not entitled to IB at the material time when the loan was taken out. This was due to the supersession of the award of IB as upheld by the tribunal for the period from 1 April 1996 to 7 April 2002.

 

36. I asked Mr Crilly whether it made any difference that although the applicant was not entitled to IB she was nevertheless in receipt of IB at the relevant time. Mr Crilly submitted that entitlement and receipt meant the same thing in this context. However, I am not sure that he is correct.

 

37. By paragraph 14B of Schedule 2 to the Income Support Regulations, "For the purposes of this Part, a person shall be regarded as being in receipt of any benefit if, and only if, it is paid in respect of him and shall be so regarded only for any period in respect of which that benefit is paid". This does not progress matters very far.

 

38. There is no definition of the phrase "in receipt of", and therefore it must be given its ordinary English language meaning, albeit in the context of the regulations in which it appears. With hindsight it is established that the applicant was not entitled to IB. However, at the time when the loan was taken out she was in receipt of IB. Had a relevant claim for housing costs been made at that time, she would have been entitled to housing costs in relation to any increase in the loan to adapt a dwelling to meet the needs of a disabled person. Her entitlement to IB was later superseded on the basis that she was working more than a de minimis amount as a landlord of multiple properties.

 

39. Mr Crilly's submission is that "in receipt of" means the same as "entitled". In my judgment, the expression "entitled" imports the requirement of being properly or lawfully in receipt of something. Whether someone is entitled to a social security benefit is a question of law. Whether someone is in receipt of a social security benefit is a question of fact. It seems to me that receipt of IB was a fact precedent to being a disabled person for the purposes of paragraph 12(2)(k), and therefore that the applicant was a "disabled person" at the time the loan was taken out in 2000. It is not an entirely attractive proposition, since the applicant has subsequently been found not to have been entitled to the benefit she received. However, the legislation could easily have been drafted to make entitlement the relevant requirement, rather than receipt. I consider that on a plain reading of the legislation I must find that the tribunal has erred in law by equating the issues of entitlement to and receipt of benefit.

 

40. The question then arises as to whether that was a material error of law in the sense that it was capable of affecting the outcome of the appeal.

 

41. The applicant had submitted that the tribunal had not addressed the evidence correctly in relation to housing costs. The applicant had stated that the balance of the £90,000 loan taken out in 2000, after paying off the outstanding mortgage of £40,000, was spent on adapting her home to her needs following a stroke. The evidence in a signed response by the applicant dated 9 November 2009 was that the extension was not completed until 2005-06, with windows and doors replaced in 2003-04, a kitchen refurbishment in 2004, and paths and ramps built at an unspecified date. It was also stated that £17,000 had been given by the applicant to her son to help purchase a house.

 

42. The tribunal has not made formal findings as to what amount of housing costs the applicant is entitled to, in the context that it found that the applicant "was not in receipt of any qualifying benefits throughout 2000". I consider that this is a material error of law. I must therefore set aside the decision of the appeal tribunal. The tribunal has indicated that the account given by the applicant as to how the loan in 2000 was spent is inconsistent. It has not made formal findings on how this money was spent.

 

Disposal

 

43. This case has travelled back and forth between tribunal and Commissioner on a number of occasions. I consider that it is appropriate for me to make findings of fact and to determine the appeal myself. The applicant has previously been given an opportunity to provide relevant evidence and explanation. However, I consider that I should give the applicant a final opportunity to address the relevant issues which have not been satisfactorily addressed up to now.

 

44. I direct the applicant to answer the following questions within 28 days:

 

1)         You extended the borrowing on your mortgage to £40,000 in 1997. You stated on 1 July 2012 that you paid for roof repairs to be carried out in 1998/99 at an approximate cost of £1000.

 

a)         What was the nature of the roof repairs undertaken?

 

b)         Why was the work not undertaken until 1998/99 if funds were available in 1997?

 

2)         You stated that you paid for windows replacement at an unknown date, at an approximate cost of £5,000.

 

a)         What was the nature of the windows replacement work undertaken?

 

b)         Was it undertaken before or after the roof repair work?

 

c)          If after, why was the work not undertaken until then?

 

3)         You stated that you increased your borrowing by £50,000 on 4 October 2000. You stated that you borrowed in order to undertake an extension to your home following a stroke in 2000 at an approximate cost of £26,000. You stated that the work was not undertaken until 2005/2006. You stated that you installed new windows in 2003-04 at an approximate cost of £5,000. You stated that you refurbished the kitchen in 2004 at an approximate cost of £3,000. You stated that you installed a patio and ramps at an unknown date at a cost of £3,500.

 

a)         Please provide any available evidence of the date and cost of the extension work.

 

b)         Why was the extension work carried out with the additional borrowing not undertaken until 2005-06?

 

c)          What work was undertaken to windows in 2003-04?

 

d)         Why was the work on the windows not undertaken earlier?

 

e)         What work was undertaken to the kitchen in 2004?

 

f)           Why was the work on the kitchen not undertaken earlier?

 

g)         When was work undertaken to install ramps and a patio?

 

4)         Please provide evidence of any special needs you have arising from disability since 2000 - such as evidence in the form of occupational therapy assessments, medical reports or copies of reports carried out on behalf of the Department for the purpose of benefit claims.

 

5)         Please now supply any other evidence which you consider supports your case.

 

 

(signed) O Stockman

 

Commissioner

 

 

 

9 December 2015