Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007:

The decision of the First-tier Tribunal at Bolton under reference 122/09/00927, held on 7 August 2009, did not involve the making of an error on a point of law.

Reasons for Decision

A.          History and background

1.           The claimant in this case is Mr C. The case concerns his housing costs. His wife was formerly Mrs R; it is easier to explain the history if I continue to refer to her as Mrs R. The property in respect of which the issue arises was formerly the matrimonial home of Mr and Mrs R. They were buying it with the aid of a mortgage. When they divorced, Mr R was ordered to transfer his interest to Mrs R. This was subject to his entitlement to one third of the net proceeds of sale on her remarriage or their daughter attaining 18. This was protected by a charge on the property. Mrs R received legal aid in connection with the divorce, which was the subject of a charge.

2.           Mr C and Mrs R married. On 24 May 2007, the following transactions took place. I have taken the figures from the completion statement.

·       Mrs R (now Mrs C) transferred the property into the joint names of herself and Mr C;

·       a new mortgage was obtained for £46,955;

·       £16,079.85 was paid to discharge the original mortgage;

·       £13,000 was paid to Mr R;

·       £11,672.97 was paid to the Legal Services Commission;

·       leaving the couple with a balance, after costs and disbursements, of £5,577.18, which was used in part to settle a judgment debt.

B.          The legislation

3.           The issue in this case is governed by paragraph 15(1) of Schedule 3 to the Income Support (General) Regulations 1987:

‘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) above had the loan not been paid off.’

C.          The decisions below

4.           On 1 September 2008, Mr C claimed income support. The decision-maker allowed as housing costs the amount paid to discharge the original mortgage under paragraph 15(b), but not the moneys paid to Mr R and to the Legal Services Commission. The tribunal decided that those moneys were not eligible as housing costs, since they were ‘simply incumbrances on the title to the property’.

D.          The arguments on the appeal

5.           On appeal, Mr C’s representative has argued that the £13,000 paid to Mr R was eligible, since it was ‘not a encumbrance to the title but a deferred payment for Mr R’s share of the property’. In support, he cited the decision of Mr Commissioner Henty in CIS/762/1994.

6.           The Secretary of State’s representative has argued that the tribunal was correct. His argument is in three stages. Only the second stage is in dispute:

·             The first stage is that Mrs R acquired absolute title to the property in 1995. Mr C’s representative has not argued otherwise.

·             The second stage is that she did not acquire an interest in the property by paying the amount charged on the property.

·             The third stage is that the transfer of interest between Mrs R and Mr C was of no significance for income support. In support, the Secretary of State’s representative relied on the decision of Mr Commissioner Rice in R(IS) 1/95. Mr C’s representative has not argued otherwise.

E.          Analysis

7.           I accept the Secretary of State’s argument.

8.           The analysis cannot be affected by the inclusion of Mr C on the title to the property. The assets of each member of a couple are treated as available to other. As Mr Rice reasoned in R(IS) 1/95 at [10]: ‘Any transfer between themselves took the matter no further for the purposes of claiming eligible interest.’

9.           It is unarguably correct that Mrs C acquired the absolute title to the property in 1995.

10.        Once that occurred, Mr R was left with a right to a sum of money. The amount was quantified by reference to the value of the property, but that is not the same thing as having an interest in the property. The money to which he was entitled was secured by a charge on the property, but that is not the same thing as having an interest in the property.

11.        The 2007 loan was not taken out to defray monies applied for acquiring Mr R’s interest in the home. Mrs R acquired that interest in 1995 and did so by virtue of the court order in the ancillary relief proceedings. The money was used to pay Mr R his entitlement. Having done so, the charge in his favour ceased to apply. But that did not give Mrs R any additional interest in the property.

12.        Mr C’s representative has relied on the decision of Mr Commissioner Henty in CIS/762/1994. It seems that the claimant and her husband divorced. The court ordered the transfer of his interest in the former matrimonial home to the claimant, subject to a charge in his favour for £5,000, which she was to pay to him at the rate of £25 a week. The Commissioner analysed this as a transfer in consideration of a payment of £5,000 in instalments. The claimant acquired the absolute title to the property and remortgaged. It seems that she used part of the money raised to pay the £5,000. The Commissioner decided that the amount of the remortgage was eligible as a housing costs. I keep saying ‘it seems’, because some of the facts have to be inferred from the Commissioner’s analysis; I suspect that this was not a decision intended to be read by anyone other than the parties. I have some doubts about the Commissioner’s reasoning. The case concerned a divorce settlement by court order. I would have analysed it as a distribution of the couple’s assets between them rather than a transfer by one to the other in consideration of a payment by instalments. However, accepting it as it stands, the facts are different from this case. Here there was a gap of over a decade before any payment was made to Mr R and there was no provision for regular payments. The usual and natural interpretation of the court order here is that the court distributed the couple’s capital between Mr and Mrs R with a delay in payment to Mr R so that their daughter could continue to reside in her home while she finished her education. On that basis, if CIS/762/1994 is correct, I distinguish it.

13.        Mr C’s representative has also relied on the decision of Mr Commissioner Mitchell in R(IS) 6/94. The claimant’s husband in that case went bankrupt. His interest in their home vested in his trustee in bankruptcy. The claimant raised money to purchase that interest from the trustee. The Commissioner held that this was an eligible housing cost. That case is distinguishable from this. The claimant did acquire an interest that she had not previously had: the interest of the trustee in bankruptcy. There is nothing equivalent here, as I have explained.

F.           Disposal

14.        I dismiss the appeal.