UK Social Security and Child Support Commissioners' Decisions

[1996] UKSSCSC CIS_5353_1995 (21 February 1996)


 


RAS/4PRIVATE 

Commissioner's File: CIS/5353/1995

SOCIAL SECURITY ACT 1986

SOCIAL SECURITY ADMINISTRATION ACT 1992

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. This is an appeal by the adjudication officer against the decision of the Middlesbrough social security appeal tribunal, given on 24 April 1995, whereby the tribunal decided that the claimant was entitled to housing costs in respect of her mortgage taken out on 14 November 1994.
2. The claimant and her husband separated in about September 1991 though for some time they both continued to live in the matrimonial home. She made a claim for income support in November 1991. In that claim she confirmed that she and her husband lived at the same address though separately. She said that she was seeking a divorce, that she had no savings and that her husband refused to maintain her. She answered "Yes" to the question asking whether she or her partner had a mortgage or loan on the house but left blank the spaces in which to provide particulars of the mortgage. In a statement made to the Department on 9 December 1991 in connection with her claim she said that her husband, who was I think in full-time employment, was paying the mortgage. Income support was apparently awarded. The applicable amount did not including anything for housing costs I think because the view was taken that there was no entitlement as the claimant was not making the payments on the mortgage.
3. The matrimonial home was sold in 1994 and with the proceeds, or her share of them, the claimant, still on income support, was, with the assistance of a mortgage for £10,500.00, able to buy another house. The purchase price was £40,000.00. That all took place in November 1994. The previous September the claimant had asked the Benefits Agency for advice as to whether she could get housing costs in respect of her proposed new mortgage. I do not know precisely what was asked or what advice was actually given. It is said that the claimant was sent a standard letter about eligible interest. The claimant apparently understood that she was told that the interest on a new mortgage would be eligible and she proceeded with the transaction to which I have referred. What actually passed between her and the Benefits Agency was at some time under investigation by the Parliamentary Commissioner for Administration. I do not know and indeed it is not relevant to this decision whether that investigation was completed or what result it has had.
4. On 15 December 1994 an adjudication officer decided that the claimant was not entitled to housing costs in respect of the mortgage of £10,500.00. The reason, by reference to paragraph 5A of Schedule 3 to the Income Support (General) Regulations 1987, was that the mortgage was taken out after 2 May 1994 and the claimant's applicable amount of income support had not previously included housing costs. The claimant appealed. Her grounds were -

"I am writing on behalf of the person named about who wishes to appeal against you decision not to include housing costs in her applicable amount.

Her grounds for appeal are that housing costs were applicable to her at the time she became entitled to income support. She was a joint owner of the property in which she resided at the time of her claim to income support, and was responsible for the expenditure relating to the costs of occupying her home. She was therefore liable to pay housing costs for 90 Glendale Road, Acklam. Regulation 5A(3) does not state that housing costs must be included in the applicable amount, only that housing costs were applicable.

I shall be representing Mrs Robson at the appeal."

That argument was accepted by the tribunal who allowed the appeal.

5. Regulation 17 of the 1987 Regulations provides, so far as relevant to this case, that -

"17. ... a claimant's weekly applicable amount shall be the aggregate of such of the following amounts as may apply in his case:

(e) any amounts determined in accordance with Schedule 3 (housing costs) which may be applicable to him in respect of mortgage interest payments or such other housing costs as are prescribed in that Schedule."

Paragraph 1 of Schedule 3 contains a list of various kinds of payments which are categorised as eligible housing costs. The first item is mortgage interest payments. Paragraph 2 enunciates what is proclaimed as the basic condition of entitlement to housing costs as follows -

"2. Subject to the following provisions of the Schedule, the housing costs referred to in paragraph 1 shall be met where the claimant, or if he is one of a family, he or any member of his family is treated as responsible for the expenditure to which that cost relates in respect of the dwelling occupied as the home which he or any member of his family is treated as occupying."

I pause here to refer to CIS/636/1992 and CIS/743/1993 which make clear that, in relation to mortgage payments, there is no entitlement to housing costs unless there is a liability to make the payments and the payments are actually made.

6. So far it might be said that the rules are relatively straightforward. However, in 1994 paragraph 5A was inserted. It contains 12 sub-paragraphs and might be thought to be a masterpiece of obscurity. I think I need only refer to sub-paragraphs (1) to (3) which read -

"5A.-(1) Subject to the following provisions of this paragraph, the housing costs referred to in paragraph 1(a), (aa) and (b) shall not be met during the relevant period where those costs were incurred -

(a) after 2nd May 1994; and

(b) during that same relevant period.

(2) The "relevant period" is any period during which the person who incurred the cost is either -

(a) entitled to income support; or

(b) living as a member of a family one of whom is entitled to income support,

together with any linked period that is to say a period falling between two such periods of entitlement to income support separated by not more than 26 weeks; and for the purposes of this paragraph two or more periods of entitlement and nay intervening linked periods form a single relevant period.

(3) Where in the relevant period, before the housing costs referred to in sub-paragraph (1) were incurred ("the new liability"), housing costs of a kind referred to in paragraph 1(a), (aa) or (b) were applicable in the case of the claimant or a member of his family ("the former liability") then, in sub-paragraph (1), the housing costs which are not to be met are such costs, except those costs mentioned in sub-paragraphs (4) and (5) -

(a) except in a case to which head (b) applies, as are equal to an amount (if any) by which the new liability exceeds the former liability; and

(b) where -

(i) the former liability has remained and the new liability was incurred in addition to the former liability; and

(ii) paragraph 4(6) (payments in respect of two dwellings) does not apply in respect of the former liability and the new liability,

as are equal to the amount of the new liability."

The adjudication officer's view was that paragraph 5A(1) was fatal to the claimant's case because the £10,500.00 mortgage was taken out after 2 May 1994 (and during a period when the claimant was entitled to income support) and that the claimant was not assisted by sub-paragraph (3) because, as she was not herself making the payments under the former mortgage, no housing costs in respect of that mortgage were applicable to her.

7. The tribunal's reasons for rejecting the adjudication officer's argument were -

"The Tribunal had found this a most difficult case and, as accepted by the parties, it turned on a statutory interpretation of the Regulations involved. The Tribunal, after long deliberation, had finally come to the conclusion that they should accept the argument put forward on behalf of the appellant, so ably, by Mrs Hudson of Cleveland Welfare Rights that as a joint owner of the former matrimonial home the appellant was liable for the mortgage instalments on it both jointly and separately with her husband. They had therefore concluded that she came within paragraph 5A(3) of Schedule 3 to the General Regulations as, in the view of the Tribunal, the housing costs - the mortgage and mortgage interest payments "were applicable" prior to 2 May 1994. In their view the appellant's appeal had therefore to be allowed."

I fully understand the tribunal's difficulty. The complexity of the legislation is quite stunning. I have to say that I have come to the view that the tribunal reached the wrong conclusion but I certainly do not blame them for doing so.

8. Since the adjudication officer's appeal further points have been taken. They are perhaps best shown by the claimant's representative's observations on the adjudication officer's submissions as follows -

"9 At the original hearing, it was my contention that I was liable for paying the mortgage, notwithstanding my husband's payments, since we had joint and several liability under the mortgage deed and indeed Schedule 3 (3) specifically states "a person is to be treated as responsible for the expenditure which relates to housing costs where he or his partner is liable to meet these costs". I note this contention is, now, accepted as correct by the Adjudication Officer and I would therefore not propose to rehearse those particular arguments further.

10. I understand that it is now contended that whilst I do indeed have a liability I am not able to recover any sums owing by way of assistance since I was not directly paying towards the mortgage.

11 I would respectfully suggest that this is a subtle but quite distinct argument and that the appropriate forum for considering this point was before the Local Appeals Tribunal initially and that it is quite incorrect for the Adjudication Officer to raise the point at this late stage.

12 I would also contend that such argument is, in any event, a simplistic one which completely fails to give credit to the fact that my eventual settlement within matrimonial proceedings was reduced to take into account my then husband paying the monthly mortgage and that I was, therefore, albeit indirectly, paying.

13 I would also suggest that this argument does not amount to a correct interpretation of Regulation 5A (3) which simply states that housing costs must be applicable to an individual. The Regulation does not state that the housing costs need actually be claimed."

Thus the argument now is that in effect the claimant was actually making payments under the former mortgage because of the adjustment to her maintenance and therefore housing costs in respect of such payments "were applicable" (to use the words of paragraph 5A(3)) in her case.

9. Mesher and Wood in Income Related Benefits: The Legislation, (1995 ed.), after pointing to the many difficulties arising from the drafting of paragraph 5A state, in relation to sub-paragraph (3), that -

"the intention is if interest on a loan for house purchase ... was already being met (note the linking rule in sub-paragraph (2)), the interest payments are restricted to the amount previously payable."

I think that must be right in principle and, as it seems to me, the words of the provision can be read as producing that result. Sub-paragraph (3) in effect compares the housing costs in relation to the previous mortgage with those in relation to the new mortgage and, I think, stipulates that any excess of the latter over the former is not to be met. It is true that the provision refers to "liability" in relation to the two mortgages; that is confusing but I do not take that reference to mean that one has to compare hypothetical amounts as opposed to actual payments. That, view, I think, is indicated by the words " ... were applicable in the case of a claimant ... ".  I do not see how it can be said that housing costs were applicable in circumstances where they were neither sought nor paid. There might have been a hypothetical entitlement - though probably not, in light of CIS/743/1993 - but in my view, if no housing costs were met in respect of the earlier mortgage no housing costs were applicable in respect of that mortgage. I accept that the word used is "applicable" rather than "met" but it seems to me that "applicable" must, in the circumstances, have the meaning to which I have referred as otherwise the comparison could be between one hypothetical amount and another to see whether there was any excess; it would be necessary to determine what entitlement there might have been in respect of the old mortgage compared with what entitlement there could be, but for sub-paragraph (1), under the new mortgage. That seems to me not to make sense, given the presumed intention of the provision.

10. In my view, because the mortgage in question was taken out after 2 May 1994 there is, by virtue of paragraph 5A(1) of the Schedule, no entitlement to housing costs in respect of that mortgage and sub-paragraph (3) does not procure a different outcome in the circumstances of this case. I allow the adjudication officer's appeal and set aside the tribunal's decision. My decision in substitution for that of the tribunal is to the effect just mentioned.

(Signed) R.A. Sanders

Commissioner

(Date) 21 February 1996