THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

DECISION OF THE UPPER TRIBUNAL JUDGE

The appeal against the decision of the First-tier Tribunal given at Aldershot on 02/10/2009 is refused. It is dismissed.

REASONS FOR DECISION

Decision

1.               I have refused the appeal, because I consider that the Ft-T came to the right decision, but for the wrong reasons. I consider that the claimant falls under paragraph 2(1)(b) of Schedule 3 of the Income Support (General) Regulations 1987 as a person meeting the housing costs because her ex-husband was not meeting them and it was reasonable to meet those costs in order to continue to live in the house. If I am wrong on that analysis, I would hold that the liability for meeting those costs fell on the claimant from 15 September 2008 in circumstances where the loan was “incurred” prior to the relevant period.

Background

2.               The factual background is set out in the Statement of Reasons. The house in which the claimant resides was bought in 1986, in the claimant’s husband’s name, and was mortgaged and remortgaged in 2001 for £110,000. The claimant divorced from her husband in 2007 and under a court order the property was transferred into her name. The bank refused to transfer the mortgage into the claimant’s name, but under the court order she undertook to relieve her husband of the obligation to make mortgage payments.

3.               The Ft-T held that the claimant was responsible for payment of the loan to keep a roof over her head from September 2008 and that on the date of the transfer of the property to the claimant she had become legally responsible for the payment of the mortgage monies. The tribunal held that under paragraph 15 of Schedule 3 of the Income Support (General) Regulations 1987 the claimant acquired an interest in the property. Therefore that “the interest on that loan should be treated as eligible housing costs, pursuant to the Regulations.”

Secretary of State’s appeal

4.               The Secretary of State appealed on the ground that:

“Any liability from this transaction was incurred during the relevant period as defined at paragraph 4(4) of Schedule 3 to the Income Support Regulations. The claimant has been receiving Income Support since 2003. Where a liability for a loan is incurred during the relevant period the loan is not eligible for Income Support in accordance with paragraph 4(2).”

5.               The ground of appeal was amplified in submissions to which reference should be made. In particular the Secretary of State submitted that the loan was incurred by the claimant when she took over legal liability for the loan when the house was transferred to her on 15^th September 2008.

6.               The claimant make submissions in response, which are referred to for their term.

Schedule 3 to the Income Support (General) Regulations

7.               The following paragraphs are relevant to this decision:

1.—(1) Subject to the following provisions of this Schedule, the housing costs applicable to a claimant are those costs–

(a) which he or, where he is a member of a family, he or any member of that family is, in accordance with paragraph 2, liable to meet in respect of the dwelling occupied as the home which he or any other member of his family is treated as occupying, and

(b) which qualify under paragraphs 15 to 17.

…

2.—(1) A person is liable to meet housing costs where–

(a) the liability falls upon him or his partner but not where the liability is to a member of the same household as the person on whom the liability falls;

(b) because the person liable to meet the housing costs is not meeting them, the claimant has to meet those costs in order to continue to live in the dwelling occupied as the home and it is reasonable in all the circumstances to treat the claimant as liable to meet those costs;

(c) …

…

4. —(2) Subject to the following provisions of this paragraph, loans which, apart from this paragraph, qualify under paragraph 15 shall not so qualify where the loan was incurred during the relevant period …

…

(4) The “relevant period” for the purposes of this paragraph is any period during which the person to whom the loan was made–

(a) is entitled to income support

…

15.—(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 …

Discussion

8.               Where I consider that the Ft-T went wrong is in their legal analysis that on the transfer of the property on 15 September 2008 the claimant “became legally responsible for the payment of the mortgage monies on the property. Her liability for this loan to Barclays Bank PLC [sic] is caused by her acquiring an interest in the property as a result of the court order. From this date, [the claimant] had to assume responsibility for the loan in order to acquire an interest in the property and secure a home for herself and her son.”

9.               The facts found by the Ft-T was that although title to the property was transferred to the claimant that the bank refused to let her take on the mortgage in her own name. It was further found, in accord with the Court Order [page 71] that the claimant agreed to indemnify her husband against any liabilities in respect of the debt to the Woolwich and to pay all outgoings on the property. In my opinion, on those facts, it is the claimant’s husband who is liable to make payment of the sums due on the mortgage, because the bank refused to transfer the mortgage into the claimant’s name. It was the husband’s mortgage and so he is the persona primarily liable to the bank – the bank would have no claim against the claimant under the mortgage documentation. The claimant is liable to indemnify her husband for any of the payment that might be due and one way to meet this obligation is to make the payments herself. Accordingly, it is my opinion that the claimant comes under paragraph 2(1)(b) of Schedule 3. The “person liable to meet the housing costs is not meeting them” – her husband is not meeting them, admittedly in terms of the claimant’s undertaking to the court, but paragraph (b) is only concerned with the factual situation and the person actually liable to make the payments is not making them. The claimant “has to meet those costs in order to continue to live in the dwellinghouse as a home” – if she does not meet the mortgage payments then the bank will foreclose and it has been found that “There are now mortgage arrears and possession proceedings have been issued by the bank”. Although there is no finding by the FtF to the effect that “it is reasonable in all the circumstances to treat the claimant as liable to meet those costs”, I make that additional finding on the material set out in the Statement of Reasons and in the papers. This is the claimant’s home for herself and her disabled child for whom it has been specially adapted [page 120] and it is therefore reasonable that she should meet these payments where title to the property has been transferred to her name and she is living in it. It was clearly reasonable for the claimant to take on this commitment in the divorce proceedings, in order to secure the matrimonial home for herself and her child and for title to be transferred to her. I note from the papers that her brother helped her pay them initially so she took on this commitment at a time she appears to have had the resources from her family to meet these obligations.

10.            If I am wrong and paragraph 2(1)(b) does not apply then I would hold that the claimant is the person liable to meet the housing costs under paragraph 2(1)(a). She assumed liability, probably on 8 March 2007, when the divorce order was pronounced although it might be argued that she only assumed liability when the house was transferred on 15 September 2008. Clearly this was during the relevant period [paragraph 4(4)] as she has been receiving income support since 2003. The question therefore is the meaning of paragraph 4(2) – was this “loan incurred during the relevant period”. In my opinion the loan was incurred, at least by 2001 over the house. I consider that paragraph 2(2) is concerned with when the loan was incurred over the property, rather than with when the individual became liable for that loan. Paragraph 1(1) defines housing costs applicable to a claimant as those cost “which he or, where he is a member of a family, he or any member of that family is, in accordance with paragraph 2, liable to meet in respect of the dwelling occupied as the home which he or any other member of his family is treated as occupying”. I note the reference to costs to be met by the claimant or any member of that family and that it is in respect of dwelling occupied as a home, thus making clear that the Schedule is not concerned with who is actually paying at the time. Paragraph 2(2)(a) refers where “the liability falls upon him or his partner” and allowing liability in the alternative. Under paragraph 15(1) the loan has to be taken out for the purposes of “acquiring an interest in the dwellinghouse occupied as a home” – there is no requirement that it should have been taken out by the claimant. It is only the purpose for which it was taken out that is relevant. Going back to paragraph 2(2) the question is when was the loan “incurred” with no reference to the requirement that it should have been incurred by the claimant. Under paragraph 2(1) the liability continues where the liability falls on the claimant or the claimant’s partner and I see no reason why liability should not shift from one to the other over time in respect of a loan “incurred” at an earlier date. I therefore reject the Secretary of State’s argument that this loan was incurred during the relevant period.

(Signed)

Sir Crispin Agnew of Lochnaw Bt QC

Judge of the Upper Tribunal

Date: 7 September 2010