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[1993] UKSSCSC CIS_760_1992 (12 May 1993)

R(IS) 12/94

Mr. J. Mitchell CIS/760/1993

Housing costs - claimant's daughter's estate liable for mortgage payments - whether estate "a person liable to meet those costs [but] not doing so"

On 19 May 1989 the claimant's daughter acquired an interest in the home now occupied by the claimant and her grandson. The claimant's daughter acquired her interest in the home by way of a deposit of £24,000 and a mortgage of £34,250. Both the mortgage and the home are in the sole name of the daughter. The claimant, her daughter and grandson moved into the home together from their previous home which they had also shared. On 16 May 1991 the claimant's daughter died. The claimant remained in the home and on 30 May 1991 made a claim for income support for herself and her grandson. On the claim for income support she stated that the home had been left to her grandson. The award of income support did not include housing costs. Correspondence followed between the Department, the mortgagor and the claimant's solicitor. An impasse was reached when the mortgagor required as a condition of transferring the mortgage into the claimant's name an undertaking from the Department that all the interest due on the loan would be paid as an eligible housing cost. On 7 January 1992 the adjudication officer issued a decision that no housing costs would be paid. The claimant appealed to a social security appeal tribunal who upheld the adjudication officer's decision. The claimant appealed to a social security Commissioner.

Held that:

the term partner in paragraph 3(1)(b) of Schedule 3 to the Income Support (General) Regulations 1987 has the same meaning as in regulation 2(1) (para. 10);

paragraph 3(1) of Schedule 3 is a deeming regulation and lays down the circumstances under which a person who is not legally liable for repayment of a loan can be treated as responsible for payment of those costs with regard to income support (para. 11);

there is no doubt that the claimant's daughter's estate was liable for the repayments on the loan. An incorporeal person, or the estate of a deceased person can be liable for debts just as a corporeal person may be. The claimant can therefore be treated as responsible for the housing costs under paragraph 3(1)(b) of Schedule 3 (para. 13).

DECISION OF THE SOCIAL SECURITY COMMISSIONER

This is a claimant's appeal, brought by leave of a Commissioner, against a majority decision of a social security appeal tribunal dated 20 July 1992 which confirmed a decision issued by the adjudication officer on 7 January 1992. My own decision is as follows:

(1) The aforesaid decision of the appeal tribunal is erroneous in point of law and is set aside;

(2) Without making fresh or further findings of fact, I can give the decision which I consider that the appeal tribunal should have given;

(3) The claimant is and has been entitled to have carried into the assessment of her income support, by way of housing costs, the interest falling due under a mortgage, by way of a legal charge upon a property (to which I shall refer as "No. 91") in Taunton, Somerset, which mortgage was dated 19 May 1989, was made between the claimant's daughter (to whom I shall refer as "Janet" and who is now deceased) and the Halifax Building Society, and by which was secured repayment of the sum of £34,250 together with interest thereon;

(4) In the circumstances indicated in paragraph 2 below, either party shall be at liberty to restore this appeal before me for final determination of the precise dates and the precise sums involved in the implementation of sub-paragraph (3) above.

This appeal is attended by substantial urgency. Possession proceedings by the Halifax are afoot in the Taunton County Court. (That is why I have resorted to the very exceptional course of promulgating the first two paras. of this decision by way of a direction.) The detailed implementation of paragraph 1(3) above however, I leave at this stage to the adjudication officer. I know that the claimant signed the claim form for income support on 30 May 1991, but I am not certain of the date from which that benefit was awarded. (In form, of course, the proceedings before me may well be by way of the review of the decision which originally awarded income support to the claimant.) It will be from the starting date of the claimant's income support as awarded pursuant to that claim that my own decision will take effect. The adjudication officer will bear in mind paragraph 7(1) of Schedule 3 to the Income Support (General) Regulations 1987, although, since the claimant was at all material times aged over 60, it seems unlikely that any reduction of the eligible interest will be called for in respect of any period. The adjudication officer must also, of course, project my decision into precise sums of housing costs in respect of specific weeks. I do not anticipate that any difficulties will arise from the adjudication officer's performance of those functions. In the event, however, that:

(a) he shall entertain any doubt as to the effect of my decision as set out in paragraph 1(3) above; or

(b) he and the claimant do not agree the detailed implementation of that sub-paragraph,

either party shall be at liberty to restore this appeal before me.

I held an oral hearing of this appeal on 1 April 1993. The claimant attended but had no representative. She was courteous but, since her home and the home of her grandson ("Robert") was at stake, she was, quite understandably somewhat agitated. She need not have been agitated. The adjudication officer was represented by Mr. L. Scoon of the Office of the Solicitor to the Departments of Health and of Social Security. Mr. Scoon's ability, objectivity and, indeed, geniality are well known to me. There was a fruitful discussion of various issues of law. I am happy to say that by the end of that discussion Mr. Scoon expressed his assent to the manner in which I have determined this appeal.

The claimant was born on 1 August 1929. She is a widow. At the time when the local adjudication officer completed form AT2 the claimant had no savings and no capital. Her income consisted of retirement pension in the sum of £54.77 a week and income support. Sadly, her daughter, Janet, died of cancer on 16 May 1991 when she was aged only 35. Janet had a son (to whom I refer as "Robert") who was born on 4 May 1984. It is clear that those three formed a very close trio. The claimant told me that she and Janet lived together for the whole of Janet's life apart from the periods when Janet was attending Exeter University. They were all living in Scarborough when, on 9 January 1989, Janet executed a will. A copy of that will is in the papers. I summarise its contents so far as relevant to this appeal:

(a) The claimant was appointed sole executor of the will.

(b) The claimant was appointed the guardian of Robert.

(c) Clause 3 of the will appointed as trustees "the person or persons who shall take out the first and any subsequent grants of probate to be made in respect of this my will".

(d) All Janet's real and personal estate, not otherwise specifically disposed of, was devised and bequeathed to the trustees with certain general and conventional powers.

(e) The primary specific trust was set out in clause 7(a): "as to my residuary estate for my said son [Robert] upon attaining the age of twenty one years or if he shall die in my lifetime . . etc.".

That will has not yet been admitted to probate, but before me the claimant was emphatic in disclaiming any intention of renouncing probate.

Later in 1989 the claimant sold her house in Scarborough. She and Janet had their eyes on a newly built house in Taunton (No. 91). The purchase price of that house was £58,250. Janet herself had no money, but the proceeds of the sale of the Scarborough house enabled the claimant to put down £24,000 by way of deposit on No. 91. The balance of £34,250 was obtained from the Halifax, subject to the mortgage which lies at the centre of this case. The mortgage was executed on 19 May 1989 and on the same day Beazer Homes (West) Limited transferred No. 91 to Janet. A copy of the transfer is in the papers. Only Janet is named therein as the transferee. Only Janet was named as the mortgagor in the legal charge by way of mortgage. Before me the claimant explained, in the presence, of course, of Mr. Scoon, why her name had not featured in the relevant documentation. I need not here set out that reason. It had nothing to do with social security. There was certainly not, from the standpoint of the income support fund, any sinister or improper motivation.

I add this in respect of the transactions of 19 May 1989:

(a) The claimant herself paid the legal and other costs involved in the purchase of No. 91.

(b) The claimant told me that the father of Robert was a guarantor of Janet's obligations under the mortgage (although there is no reference to that in the papers before me).

(c) The claimant told me that for about ten months Robert's father contributed towards the repayments under the mortgage.

It was on 16 May 1991 that Janet died. On 30 May 1991 the claimant signed a claim form in respect of income support. In the space near the end of that form which is headed "Other information" she wrote:

"My daughter died on 16 May 1991 and I am now looking after my grandson. The house does have a mortgage, but has been left to him. I need to clarify this with you when I visit."

The claimant was awarded income support. Unsurprisingly, however, the assessment of her entitlement contained no element by way of housing costs. Enquiries were set afoot and correspondence ensued. The papers contain letters written by the claimant's then solicitors, by the Halifax and by the Department of Social Security. Matters reached an impasse. The Halifax stated that a transfer of the mortgage into the claimant's name would be considered if:

(a) the executors of the estate were prepared to sign a transfer of the equity into the claimant's sole name;

(b) unconditional confirmation was obtained from the Department to the effect that the relevant interest payments would be met by the Department in full; and

(c) the relevant sums would be paid by the Department directly to the Halifax.

For its part, the Department required written confirmation from the Halifax to the effect that the mortgage was now in the claimant's name as a precondition to the payment to the claimant of any sums by way of housing costs. That was the situation which had been reached before the Department was informed of the tenor of Janet's will. That, of course, further complicated matters. I need not go into any further details of the correspondence.

By the decision issued on 7 January 1992 the adjudication officer decided that no sum was allowable to the claimant in respect of housing costs. The claimant's then solicitors sent to the Department a letter by way of appeal to the appeal tribunal. I quote one paragraph therefrom:

"Since our letter of 18 December (copy enclosed), our client has applied for legal aid in order to recover the sum of £24,000 invested in the property, [No. 91]. Our client is currently awaiting the result of her legal aid application to take proceedings against the estate. It will therefore be the case that our client will be purchasing an interest in the property and we understand that this is the main stumbling block in our client's claim."

How much of that the claimant herself understood I cannot confidently say. It seems to me that the contemplated action would have had as plaintiff the claimant in her personal capacity and as defendant the claimant in her capacity as Janet's executor. Be that as it may, those proceedings were never initiated.

I need not here attempt to summarise the whole of the income support legislation relevant to the meeting of mortgage interest. I can take most of it as read. Schedule 3 to the General Regulations is entitled "Housing Costs". I content myself with two quotations from that Schedule. Paragraph 3 is entitled "Circumstances in which a person is to be treated as responsible for housing costs" and only sub-paragraph (1) is material to this appeal:

"3.–(1) A person is to be treated as responsible for the expenditure which relates to housing costs where–

(a) he or his partner is liable to meet those costs other than to a member of the same household;

(b) because the person liable to meet those costs is not doing so, he has to meet those costs in order to continue to live in the dwelling occupied as the home and either he was formerly the partner of the person liable, or he is some other person whom it is reasonable to treat as liable to meet the cost;

(c) he in practice shares those costs with other members of his household, other than close relatives of his or his partner, at least one of whom either is responsible under the preceding provisions of this paragraph or has an equivalent responsibility for housing benefit expenditure and for which it is reasonable in the circumstances to treat him as sharing responsibility."

And I set out sub-paragraph (3) of paragraph 7:

"(3) Subject to sub-paragraphs (3A) to (6) [which have no bearing upon this case], in this paragraph 'eligible interest' means the amount of interest on a loan, whether or not secured by way of a mortgage or, in Scotland, under a heritable security, taken out to defray money applied for the purpose of–

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

(b) paying off another loan but only to the extent that interest on that other loan would have been eligible interest had the loan not been paid off."

I turn now to issues of law which arise out of the passages which I have quoted in the preceding paragraph and which have been canvassed in these proceedings. With the first of those issues I can deal very briefly. It has been urged on behalf of and by the claimant that she falls to be treated as having been the "partner" of Janet. That submission was made in the context of the words "he was formerly the partner of the person liable" where they appear in paragraph 3(1)(b) of Schedule 3. The contention is that "partner" can be construed against the background of a business partnership. That is entirely unsustainable. In regulation 2(1) of the General Regulations appears the following definition:

"'partner' means where a claimant–

(a) is a member of a married or an unmarried couple, the other member of that couple;

(b) is married polygamously to two or more members of his household, any such member;"

The definitions in regulation 2(1) are prefixed by the customary legislative words "unless the context otherwise requires". I am quite satisfied that in paragraph 3 of Schedule 3 the context does not otherwise require and that "partner" falls to be construed in the light of the definition in regulation 2(1).

Paragraph 3(1) of Schedule 3 is quite clearly a "deeming" provision. It sets out circumstances in which a claimant may, for the purposes of income support, be regarded as responsible for expenditure which relates to housing costs (in this case, mortgage interest payments) although he is not so responsible under the general civil law of the land.

In his submission (undated, but received by the Office of the Social Security Commissioners on 15 January 1993) the adjudication officer now concerned sets out very frankly and clearly his attitude to the application to this case of paragraph 3(1)(b) of Schedule 3. He accepts that the claimant has to meet the interest payments "in order to continue to live in the dwelling occupied as the home". He states that he would "probably" decide that the claimant is a person "whom it is reasonable to treat as liable to meet the cost". But he finds, I think with reluctance, that the opening words of sub-paragraph (b) constitute a fatal stumbling block. Those words are, of course "because the person liable to meet those costs [i.e. the interest payments] is not doing so". I quote from paragraph 8 of his submission:

"In my submission this is not the case. The reason she has to meet those costs is not because there is a person liable to meet the costs who is not doing so. There is no one who is liable to meet those costs. Rather, the reason [the claimant] has to meet the housing costs is because the person who was liable to meet them has died. This is not a contingency which is envisaged by this regulation."

Before me, Mr. Scoon was initially inclined to adhere to the passage which I have just quoted. I pointed out to him, however, that the law recognises incorporeal persons as well as corporeal persons. The estate of a deceased person has an incorporeal personality of its own. As such, it can possess assets and be the subject of liabilities. Indeed, it can acquire rights and incur obligations which were not enjoyed by the deceased and for which the deceased was not liable at the time of his death. There is not the slightest doubt but that Janet's estate was liable in respect of all interest payments falling due under the mortgage, whether so falling before or after Janet's death, until such time as alternative arrangements were made which were acceptable to the Halifax. Mr. Scoon is a sound lawyer. I am happy to recount that, as soon as I had reminded him of those consequences in law (i.e. the general law of the land) he readily agreed that:

(a) the claimant could bring herself within paragraph 3(1)(b); and

(b) the outcome was fair and in the public interest.

Robert is currently in the care of Somerset County Council. It is in everybody's interest that he should be restored to the home in which and to the grandmother (now his guardian) with whom he lived from May 1989 until the death of his mother. This is not a case involving a house in "millionaires' row". I cannot see that there would be any overall gain to public funds if Robert had to be kept permanently in the care of the Council and the claimant had to be rehoused at public expense.

It was clearly considerations such as those which influenced the dissenting member of the appeal tribunal. I suspect that that member was the legally qualified chairman, for he emphasises the fact that Janet's estate was still responsible for payment of the mortgage interest. The majority of the tribunal felt inhibited by what the adjudication officer now concerned considered to be a fatal stumbling block. I quote one sentence from the recorded reasons of the majority:

"There was in fact no person responsible for payment of the mortgage after [Janet's] death."

There was not, of course, any stumbling block at all.

Both the Interpretation Act 1889 and its 1978 successor tersely provided and provide that:

"'Person' includes a body of persons corporate or unincorporate."

There is the customary "unless the contrary intention appears" saving. I do not, for my part, see that that makes any material contribution to the issue which I have discussed in paragraph 12 to 14 above. Nor have I derived any assistance from the 68 items set out under "Person" in the 5th Edition of "Stroud's Judicial Dictionary". I content myself with the reflections that my construction of "person" (as used in the opening words of paragraph 3(1)(b) of Schedule 3 to the General Regulations) is:

(a) in no way an affront to the general law of this land; and

(b) seems to accord fully with the intention of the legislature, to the extent that such intention can be ascertained from the wording of the relevant legislation.

It may well be, of course, that at all times since the purchase the claimant herself had an equitable interest in No. 91 arising by way of resulting trust. If that were indeed so, the sum advanced by way of mortgage would have gone, in part at least to the acquiring by the claimant of an interest in No. 91. The claimant might, accordingly, be able to mount a claim in respect of "eligible interest" without having to resort to any deeming provision. I make no attempt to go into those (potentially interesting) issues here. In view of the manner in which I have decided this appeal, they are not for me to determine.

For the avoidance of any doubt, I make it quite clear that I have awarded housing costs to the claimant in her private, personal capacity and not in her capacity as executor or trustee.

The claimant's appeal is allowed.

Date: 12 May 1993 (signed) Mr. J. Mitchell

Commissioner