IN THE UPPER TRIBUNAL Case No. CJSA/403/2010
ADMINISTRATIVE APPEALS CHAMBER
DECISION
1. This is an appeal by the Claimant, brought with my permission, against a decision of a First-tier Tribunal sitting at Coventry on 28 September 2009. For the reasons set out below that decision was in my judgment wrong in law. I allow the appeal, set aside the First-tier Tribunal’s decision and remit the matter for redetermination by a differently constituted First-tier Tribunal in accordance with the law as set out in this decision. Although I have dealt with it last, it is likely to be sensible for the new tribunal first to consider the point dealt with in paras. 60 to 65 below, because it could render it unnecessary to consider which of the works fell within the definition of “repairs and improvements”. The Claimant is to provide to the new First-tier Tribunal, within one month from the date of issue of this decision, such further (if any) documentary evidence as he intends to rely upon at the re-hearing.
Introduction and adjudication history
2. The Claimant purchased the 3 bedroom semi-detached house in which he and his family currently live in November 1999, with the aid of a mortgage in the sum of £79,650. According to the Claimant the property was built in 1949 (p.5). The valuation survey report mentioned significant cracking to a number of external elevations, and corresponding cracks internally, suggestive of structural movement. Structural engineers recommended certain remedial works (pp. 69 to 71).
3. The Claimant considered that various works needed to be carried out before the property was suitable to be lived in at all. In his words (p.17):
“We had bought it in a condition that required a considerable amount of repair/improvement/alteration. Therefore, initially, that [i.e. £79,650] was the maximum, mortgage to value, that we could raise at the time. Amongst other things, the house had no central heating and no gas supply. The water supply was still through lead piping. The electric wiring needed updating for safety reasons. We carried out the most basic of the work first to get the house habitable at basic level. We then moved in and continued to carry out alterations and improvements at a measured pace. We cashed in investments and used the access we had to other funds/savings to pay for this work to be carried out.
It was always the intention to recoup this expenditure back out of the property, as its true value rose as the direct result of the alterations/improvements carried out by us. The intention was that this “equity release” would replenish the personal funds we had used and we would do this over several years. Had this work been carried out “by others” prior to us purchasing the property this would have been reflected in the upgraded purchase price and mortgage required.
We remortaged in 2002 for £105,132.43, which enabled us to release part of the funds. …….”
4. Prior to moving in the following works were carried out: gas mains installation, various ground works, rewiring, relaying of water mains and works in respect of central heating and boiler (see p.73).
5. The Claimant and his family moved in to the property in April 2000 (p.109). In early 2001 the Claimant obtained a quotation from a firm called National Contracts for substantial building works (£8900 plus VAT – p.81 – I think that these may have been the works listed on the Schedule at pp.85 to 87 which had not yet been carried out). These works appear to have been completed by early April 2001 – see the invoice at p.82.
6. A quotation was also obtained from National Contracts in respect of substantial works in respect of the kitchen (part of these works are listed in the quotation beginning on p.66, although the second page of that quotation is missing). The kitchen works appear to have been completed by mid February 2001, as there is an invoice for them totalling £7206.28 dated 19 February 2001 (p.67). In addition, as regards the kitchen, kitchen units were purchased from MFI in January 2001 at a total cost of £2418.10. They are itemised at pp. 102-3. The Claimant has summarised the works in respect of the kitchen as follows (p.19):
“Following flood from burst pipes 2000/2001, former scullery kitchen, outside toilet, utility room and coal store was converted into one new room to create new kitchen with breakfast area, walls replastered, roof strengthened, ceiling reboarded, new windows fitted, new rear door fitted, existing window to front removed and opening formed for and fitted with new French doors, concrete floor screeded to receive tiles, Purchased fitted kitchen consisting of 7 base units, 1 larder unit, 1 double full height cupboard/boiler housing, 9 wall units, 9 metres of work surface, inset stainless steel sink, cooker hood/extract canopy. Including cornices and pelmets, and delivery.”
As I understand it the reason for the references to the roof, in relation to the kitchen works, is that what is now the kitchen area is contained in a single-storey wing attached to the left hand side of the house (as viewed from the front) (p.69). A new gas cooker had, it seems (p.106) been purchased and fitted in the old “scullery” kitchen in May 2000, and was presumably reused in the new kitchen.
7. By about the middle of 2001 most of the work in respect of which housing costs are now claimed had been carried out and paid for (pp. 73-4).
8. In 2002 the Claimant and his wife remortgaged the property for £105,132. - i.e. an increase in the mortgage of £25,482. (p.17).
9. In 2003 £1760 was expended in respect of the drains, and £605 in respect of moving a staywire (p.74, 49).
10. In 2004 the property was remortgaged again, for £135,000, “which allowed us to release the remaining funds and cover the associated legal and arrangement fees etc.” (p.17).
11. In 2005 a sum of £1,146 was paid in respect of further subsidence repairs not covered by insurance (p.74).
12. In 2006 the property was remortgaged again, in the sum of £203,925 “to consolidate personal borrowing. This included an amount of £25,000 to remove a second charge/debenture against the house, held against us by HSBC”. (p.18). At the time of this remortgage the amount owed to the previous lender, Halifax, was about £127,000. However, in order to redeem that mortgage the Claimant and his wife were required to pay, in addition, a “repayment administration fee” of £175, and an “early repayment charge” of £5,400 (p.50).
13. The Claimant claimed JSA from 4 August 2008, having been made redundant. The question arose as to how much of the loan secured on the house qualified for housing costs under Schedule 2 to the JSA Regulations 1996 (the relevant parts of which are in the same terms as Schedule 3 to the Income Support (General) Regulations 1987). The Claimant has never contended that the entirety of the current loan qualifies, as he accepts that the only part which qualifies is the part which has been used to pay off loans which were used either to purchase the house or to pay for qualifying repairs and improvements. In his initial response to the DWP he contended that the cost of these repairs and improvements was £44,552.24. (p.19).
14. However, on 16 March 2009 a decision was made that a total of only £4576.57 was in respect of qualifying repairs and improvements. The decision maker accepted, however, that “he used the money from the 1st and 2nd remortgages to pay for repairs and improvements” . (By that was clearly meant that the excess over the amount needed to repay the previous loan was used to pay for repairs and improvements, or at least to repay loans which had been taken out in order to pay for repairs and improvements).
15. Following an appeal by the Claimant and a more detailed explanation from him of the nature of the works (pp. 4-10), on 12 May 2009 a revised decision was made accepting that the sum of £2259.76 spent repairing the central heating system also qualified (p.24).
16. The Claimant’s appeal then proceeded, and prior to the hearing the Claimant produced a substantial amount of documentation verifying the amounts expended, and what the expenditure was for (see especially pp.46-107). In a “calculation sheet, showing a complete breakdown of the costs” (p.43; 73-4) certain items were shown as “removed”, on the ground that either there was insufficient evidence available, or they were accepted as not qualifying. The “removed” items totalled £7,320.36, leaving the total of the repairs and improvements which were claimed to qualify as £37,654.08.
17. The hearing before the First-tier Tribunal, at which the Claimant appeared and gave evidence, took place on 28 September 2009. The Tribunal had the benefit of a written submission on the Claimant’s behalf prepared by Warwickshire Welfare Rights (pp. 114 onwards).
18. The Tribunal allowed the appeal to the extent of finding that an additional £12,234 of the works constituted qualifying “repairs and improvements.” That meant that the total of qualifying works allowed by the decision maker and the Tribunal was £19,070.33.
The procedural history of this appeal
19. The Claimant’s UT1 Form, seeking permission to appeal to the Upper Tribunal, contained in the comments in Section E (Reasons for appealing) a reference to the detailed grounds which had been set out in a letter from the Claimant to the Tribunals Service dated 27 November 2009. That letter did not find its way into the numbered papers in file CJSA/403/2010, but I have located it in the First-tier Tribunal file and of course considered it. That may be what the Claimant is referring to when he says, in his submission in reply in this appeal, that certain of the correspondence which he provided to the First-tier Tribunal has not been passed on to the Upper Tribunal. (If there are any other documents in that category, then they are no longer in the First-tier Tribunal file, which I have before me. The Claimant should therefore provide them again to the First-tier Tribunal, before the case is reheard at that level. I am assuming for this purpose that the documents at pages 46 to 107 of CJSA/403/2010 are a printout of all the documents on the disk which the Claimant provided to the First-tier Tribunal. That disk is retained in the First-tier Tribunal file, but I have not attempted to examine it).
20. The detailed grounds of appeal in the letter of 27 November 2009 contended that the First-tier Tribunal had erred in law in two respects – i.e. in relation to the kitchen works (see para. 6 above) and the additional sums which were paid in order to redeem the Halifax mortgage (para. 12 above).
21. I gave permission to appeal on 26 April 2010, and made directions for submissions to be made in the appeal. The Secretary of State’s submission was that the First-tier Tribunal had erred in law, but only in relation to the repayment administration fee and early repayment charge (para. 12 above). The Claimant, on the form relating to his submission in reply, ticked the box stating that he did not want an oral hearing of the appeal, but qualified that with the final paragraph of his submission:
“However if the judge does not support my appeal (or is unlikely to) either in full or in part and the reasons given remain inconclusive and/or purely subjective, I would request that I am given the further opportunity to take this still further up the appeals process or via an additional oral hearing.”
22. On 2 September 2010 my Direction dated 13 August 2010 and draft decision of the appeal were issued. The Direction explained that the decision was in draft because (i) I had raised a new point (i.e. that now in paras. 57 to 62 below, which I shall refer to as “the use of the 2002 remortgage monies issue”) and (ii) I was unclear whether the Claimant did in the circumstances want an oral hearing. The draft decision would have set aside the First-tier Tribunal’s decision and remitted the matter to be redetermined by a fresh First-tier Tribunal in accordance with the principles set out in the decision. The Direction gave the parties the opportunity to make further submissions in the light of it.
23. The Secretary of State made a very short submission essentially agreeing with my draft decision. The Claimant responded at considerable length, but among the points which he made was that he did require an oral hearing of the appeal. He requested “a decision with full and proper reasons … as soon as possible” (p.192)
24. Accordingly, by a Direction made on 19 October 2010 I directed an oral hearing of the appeal. My Direction went on to make clear that, as there was now to be an oral hearing before me, I would if possible, instead of remitting the matter to a new First-tier Tribunal, re-make the First-tier Tribunal’s decision by making all necessary factual findings. I pointed out that the burden lay on the Claimant to establish (i) the factual matters referred to in paras. 46 to 48 of the draft decision (relating to the use of the 2002 remortgage monies issue) and (ii) that the disputed works were of a nature which qualified, as referred to in paras. 25 to 45 of my draft decision. I invited the Claimant to consider what further information he might need to provide, and directed that he should in any event bring to the hearing certain photographs which had been before the First-tier Tribunal. That Direction was issued to the parties on 5 November 2010.
25. On 5 November 2010 the Claimant sent an e-mail to the Upper Tribunal saying that, in view of their not having obtained the correct amount of housing costs, he and his wife were now “highly likely to lose [their] home”. He said that he hoped that the tribunal/judge would fully acknowledge the additional stress which they being put under because of [the] lack of a decision.
26. On 8 November I instructed that the hearing before me should be fixed for a date as soon as reasonably practicable, a full day to be allowed. On 25 November 2010 the parties were notified that the hearing had been fixed for 22 December, in London.
27. On Sunday 19 December the Claimant e-mailed the Upper Tribunal to say that he would now be unable to attend on 22 December because (i) he had now found employment and would be unable to take time off and (ii) such time as he was able to take off needed to be spent at home, his wife having had a major operation at the beginning of December. The Claimant also said:
“I have not had any time to put any further information to the tribunal. However, what I will say is that the tribunal already have all the evidence they need from me; this was provided from the beginning and throughout this absurdly protracted process.”
28. It seemed to me that the hearing would probably serve little useful purpose in the absence of the Claimant, and on 20 December I therefore directed that the date be vacated and the Secretary of State’s representative be informed as soon as possible, in order to avoid any further wasted preparation time.
29. The options now open to me are: (i) to fix another date for a hearing of the appeal before me; (ii) to decide the appeal in broadly the terms of my draft decision – i.e. to set aside the First-tier Tribunal’s decision and remit the matter for redetermination of the factual issues; (iii) to set aside the First-tier Tribunal’s decision and redetermine the factual issues on the basis of the material now before me.
30. I have decided that I should adopt option (ii). The Claimant’s reasons for not being able to attend on 22 December appear substantial ones, and I am therefore reluctant to substitute my own decision on the factual matters without him having had the further opportunity of a hearing. On the other hand, part of the reason why I indicated that I would try to resolve the factual issues myself, rather than remitting the matter to a new First-tier Tribunal in the normal way, was because there was to be a hearing before me in any event, and in order to minimise any further delay. The Claimant has to a certain extent now brought any further delay on himself. Further, I note that he has known since the beginning of September that I consider that further evidence is likely to be necessary to resolve, in particular, the use of the 2002 remortgage monies issue, but appears to have decided not to produce anything, although he may think better of that. I now think that the matter should be remitted to a new First-tier Tribunal for redetermination in the normal way.
31. I turn therefore to the substantive issues in the appeal.
The additional sums payable on early redemption of the Halifax loan
32. The Secretary of State accepts, in my judgment rightly, that the First-tier Tribunal went wrong in law in relation to the “repayment administration fee” of £175 and the “early repayment charge” of £5400 which it was necessary to pay to the Halifax in 2006 in order to redeem that mortgage.
33. Under para. 14 of Schedule 2
“(1) A loan qualifies ……. 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.
(2) ……………………………………………….
(3) Where a loan is applied only in part for the purposes specified in heads (a) and (b) of sub-paragraph (1), only that portion of the loan which is applied for that purpose shall qualify under this paragraph.”
34. As it was necessary to pay the sums of £175 and £5400 in order to redeem the Halifax charge, the part of the new loan taken out in 2006 which was used to pay those sums in my judgment fell within the words “the loan was taken out to defray monies applied ….. paying off another loan ….” CIS/5110/1999, referred to by the Secretary of State, is not directly in point, because it concerned a case not of sums required by the old mortgagee in order to redeem, but of an “acceptance fee” required by the new mortgagee. However, the broad principle is the same, namely that additional sums which a mortgagee requires to be paid, whether as a price of permitting redemption, or for making a loan, can fall within the wording of para. 14.
35. However, in the present case this is in my judgment subject to the qualification that if (as is the case) only part of the Halifax loan qualified under para.14, any parts of the sums of £175 and £5400 attributable to the non-qualifying part will not qualify. I doubt whether this causes any problem in relation to the £175, which I imagine was a fixed sum, whatever the amount of the loan. However, I would assume that the £5400 was calculated as a percentage of the loan outstanding. If that is so, then only so much of the £5400 as would have been payable in respect of the qualifying part of the Halifax loan can qualify. The Claimant will need to produce evidence to the new tribunal, if he can, as to the manner in which the £5400 was calculated. If he cannot, the new tribunal should in my judgment assume that it was calculated as a percentage of the £127,000 owing to Halifax at redemption (p.50), and the £5400 should therefore be reduced pro rata in relation to the non-qualifying part of the Halifax loan.
The sums paid in respect of the kitchen works
36. It will be recalled (see para. 6 above) that these comprised (i) a sum of £7206.28 paid to National Contracts in respect of the substantial renovation and reconstruction works to what is now the kitchen and (ii) the sums totalling £2418.10 paid to MFI for kitchen units etc.
37. The Tribunal found that none of (i) qualified, and that of the items in (ii), the cost of items which had been described in the Claimant’s representative’s submission (p.116) as “worktop, worktop joiner, sink, plumbing kit for sink, taps and extractor fan/filter”, totalling £926, did qualify. So the amounts held not to qualify were £7206.28 paid to builders in respect of reconstruction/renovation works, and £1456.10 in respect of kitchen units etc purchased from MFI.
38. The Tribunal’s reasoning in relation to the kitchen reconstruction works was as follows:
“The appellant and [his representative] also argued that the cost of his kitchen refurbishment in the sum of £7206.28 should be allowed as coming within para 15(2)(f) of the Regulations. The appellant said that his original scullery kitchen was too small to be fit for purpose and he produced photographs of the same at the hearing. It is not the place of the tribunal to comment on the decisions which the appellant made as to the works which he thought essential in modernising and refurbishing his house, it is simply a matter of whether the tribunal considers the expenditure is allowable for the purpose of Schedule 2 to the Regulations. Bearing in mind the case quoted by the Decision Maker in the Submission, namely R(IS) 16/98, the tribunal concluded that the expenditure did not come within the Regulations.”
39. The relevant statutory provision is para. 15 of Schedule 2 to the 1996 Regulations which is as follows:
“(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) ………………………………………………..
(c) paying off another loan to the extent that the other loan would have qualified under head (a) or (b) of this sub-paragraph 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 ……. …… –
(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 systems;
(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 for 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;
(l) provision of separate sleeping accommodation for children of different sexes aged 10 or over who are part of the same family as the claimant.
(3) Where a loan is applied only in part for the purposes specified in sub- paragraph (1), only that portion of the loan which is applied for that purpose shall qualify under this paragraph.”
40. In my judgment the Tribunal’s reasoning (see para. 38 above) was wholly inadequate as an explanation of why the Tribunal considered that the bulk of the sums spent in connection with what is now the kitchen did not qualify under para. 15 of Schedule 2. The First-tier Tribunal’s decision was therefore wrong in law in relation to that. Although the final decision will have to be made by a new tribunal, after finding the further necessary facts, it should proceed in accordance with the following guidance as to the law, which is by no means straightforward.
41. The sub-paragraph of para. 15(2) of most relevance to the kitchen works is plainly (f): “provision of facilities for preparing and cooking food.”
42. There are a number of conditions which must be fulfilled if repairs or improvements are to qualify under para. 15(2)(f). They must (i) be undertaken with a view to maintaining the fitness of the dwelling for human habitation (ii) amount to the “provision” of (iii) “facilities” (iv) for “preparing or cooking food”. I think that it is helpful to consider the potential significance of each of those conditions in relation to the present case.
43. As has been pointed out in the submissions, it is important to bear in mind, when construing the wording of para. 15, that it was substantially modified with effect from 1995, in general so as substantially to restrict the works which could qualify. It may therefore be relevant, as was held by Mr Commissioner Rice on the facts in R(IS) 16/98, to look at the previous wording.
44. According to the Claimant’s description (para. 6 above) the works were undertaken because the previous kitchen was very small and in a very bad state of repair, partly owing to damage which had been caused by burst pipes. The works were a kitchen extension and modernisation, involving substantial reconstruction in order to incorporate space which had previously been a utility room, an outside toilet and coal store, so as to create what is commonly known as a kitchen/breakfast room. I imagine that the house in its previous state might well have been advertised as requiring or as being a property which would benefit from “modernisation”. The Tribunal was shown photographs of the original state of the house, which I have not seen.
45. As regards the requirement that the works must have been undertaken “with a view to maintaining the fitness of the dwelling for human habitation”, the pre-1995 equivalent wording was “with a view to maintaining its fitness for occupation.” There is probably little, if any, difference between those two expressions, but it is significant that the pre-1995 wording contained a residual sub-paragraph (k) in broad terms: “other improvements which are reasonable in the circumstances”, which has no equivalent in the current legislation.
46. It is in my judgment plain that if an existing kitchen is a perfectly serviceable one, a reconstruction or refitting which was undertaken to (in the view of the owner) improve it, by enlarging it or altering the layout, or providing better quality units, will not qualify. In my judgment the words “with a view to maintaining the fitness of the dwelling for human habitation” impose an objective element in that the existing dwelling must be objectively capable of being regarded as in some respect, relevant to the kitchen works, unfit for habitation. I do not think, however, that too strict a test is appropriate here, and that something which is by modern standards clearly outdated would probably qualify. This will be a matter of fact for the new tribunal to determine.
47. Then there are the requirements that the sums must have been expended for the “provision of facilities for the preparing and cooking of food”. The equivalent pre-1995 wording was “improvements to the facilities for storing, preparing and cooking food”.
48. It is submitted by the Secretary of State as follows. First, that “an enhancement of an existing facility or the replacement of a facility by something better does not amount to “provision” in this context.” He relies on R(IS) 2/07, in which Mr Commissioner Angus, said as follows in para. 40:
“The repeated use of the word “provision” in the list of specified repairs and improvements in para. 16(2) is significant. It seems to me to imply that what will be a loan eligible under paragraph 16(1) or a charge deductible under para. 17(2)(c) is a loan or a charge in respect of the cost of the provision of something not already in existence or the replacement of something which no longer functions.”
49. Secondly, it is submitted:
“…… that the property already had a kitchen and while there may have been some flood damage affecting the original food preparation facilities the work extending the kitchen into adjoining areas and improving the general structure was an enhancement to rather than the provision of such facilities. Flood damage does not necessitate the extensive alterations that were carried out here. In any event I submit that paragraph 15(2)(f) is specifically restricted to the facilities for preparing and cooking food and does not extend to the general environment in which the food is prepared or to incidental items that may have some connection with cooking such as storage cupboards (see para. 6 of R(IS) 16/98).
50. It was held by Mr Commissioner Rice in R(IS) 16/98 that, in view of the fact that the reference to “storing” had been removed in 1995, provision of items such as built in storage cupboards or a built in refrigerator could not qualify. The Claimant argues that storage areas are just as necessary in relation to the preparation and cooking of food as, for example, work surfaces are, and therefore should be included. If the present wording had been the original wording, I would have agreed with him. However, one cannot ignore the legislative history, and in my judgment the Commissioner was right in R(IS) 16/98 to conclude that the removal of the word “storing” indicated that provision of storage facilities was no longer intended to be included.
51. The Claimant has strongly contested the correctness of R(IS) 16/98. He submits as follows:
“Mr Rice has based his interpretation purely on the basis that a word had been “deliberately removed”. My argument is that if that word had been “deliberately removed” then there must be some legislative record of that “deliberate removal” together with the reason or policy intention why it was removed. Unless the tribunal can provide/produce evidence of the existence of that note, record or memorandum of change, that undeniably proves that the word “storage” has been “deliberately removed”, then the simple phrase of facilities for the preparation and cooking of food is still wide open to interpretation. This interpretation should be both logically and factually based and should also take into account the general policy intention applying it to real world situations.”
52. However, courts and tribunals frequently have to decide on the effect of an amendment to legislation without the aid of any material, other than the legislation itself, showing why the amendment was in fact made. (Indeed, there are strict limits on the nature of the material which it is permissible to take into account as an aid to determining the meaning of legislation). I am not aware that there is any material showing why this particular amendment was made. In those circumstances the probable intention has to be deduced from the nature of the amendment itself. In this case it is highly unlikely that the word “storing” was omitted by accident – i.e. owing to some sort of clerical error. The presumption must be that it was deliberate. Further, as I have said, in my judgment Mr Commissioner Rice was right in concluding that the reason for the removal was probably that provision of storage facilities was no longer intended to be included. The only other possible reason for that particular change of wording could have been that “storing” was omitted because it was considered unnecessary – i.e. because it was considered to be comprised in the remainder of the wording. However, that seems to me to be a much less likely reason for the removal of “storing”. If the draftsman had intended that the provision of facilities for storage should continue to be included, it is unlikely that he would simply have removed the word “storing”. He would have been aware that, if he did that, it would be thought that the intention must have been to exclude the provision of facilities for storage.
53. The new tribunal should therefore follow R(IS) 16/98, in this respect.
54. However, I do not think that the words “provision of facilities for ….” are necessarily limited to the provision of items such as cookers and worktops, as opposed to the construction or adaptation of the part of the building containing them. I note that in paragraph 23592 of the Decision Makers Guide the example is given of a claimant obtaining a loan to buy a cottage “lacking basic modern amenities”, and to pay the cost of building an extension to house a new kitchen and bathroom, there being no other way of providing those facilities in the existing structure. The opinion is expressed that “interest on a loan for the extension can be considered ……..as the allowable expenditure is for providing or adapting a room to house ….the facilities for cooking and preparing food.” I would agree with that view, which seems to me to conflict with the Secretary of State’s submission in the present case that the wording does not extend to works to “the general environment in which the food is prepared”.
55. It is, however, notable that the wording is “provision of facilities”, as opposed the previous wording “improvement of facilities …..”. The present wording would clearly comprise provision, by way of replacement, of a built in cooker or worktops, provided at any rate that the previous ones had ceased to be acceptable by modern standards. But it is much more doubtful whether it could include simple repair and redecoration of the kitchen space. That would not seem to be “provision” of the facilities, but repair of the space housing them.
56. In the present case, however, if the Claimant is correct in asserting that the previous kitchen was too small and poorly located to be acceptable to the present day owner, so that some reconstruction was reasonably necessary to render the house habitable, those works in my judgment amounted to the “provision” of facilities for cooking, notwithstanding that there had previously been a kitchen. I do not see that such a conclusion would conflict with anything which was said by Mr Commissioner Angus in R(IS) 2/07.
57. The works are, however, limited to those necessary to provide facilities for preparing and cooking food. As noted above, that excludes storage. It also excludes facilities for eating. That is significant in that what was created appears to have been what is commonly known as a kitchen/breakfast room. It appears to have been substantially larger than would have been necessary for a kitchen alone. The works also included provision of items such as a loft hatch and roof space (p.66). Those may well also not have been sufficiently directly related to the cooking and preparation of food. Also excluded would be facilities, including the necessary space, for washing clothes. It is relevant here that the knew kitchen incorporated the previous utility room.
58. In my judgment the Tribunal was therefore right not to allow the cost of the items purchased from MFI in so far as they were for storage, or for purposes other than the direct cooking and preparation of food. As regards the National Contracts costs, in my judgment the new tribunal (if it accepts that a reconstructed kitchen was reasonably necessary to render the house habitable in the 21st century) should in relation to para. 15(2)(f) apply a broad judgment as to the proportion which related to providing space for cooking and preparation of food, as opposed to other purposes.
59. Some of the kitchen works might, however, be capable of qualifying under other heads, and in particular para. 15(2)(d), (h), (i), (j). Again, the new tribunal may have to apply a reasonably broad brush approach in relation to these. It will be hampered in that, as noted above, the second page of the National Contracts estimate (i.e. that which followed after p.66) is missing, and there is of course no apportionment of the overall cost to the different items. It will have to do the best it can, bearing in mind always that the burden is on the Claimant to show what part of the works qualify.
Were the loans used to pay for the works, or to repay a previous qualifying loan?
60. This is a point which was not taken by the Secretary of State before the First-tier Tribunal, but which the new tribunal must nevertheless consider. The First-tier Tribunal has an inquisitorial function, and is “part of the adjudication system which is designed to secure that claimants receive neither more nor less than the amount of social security benefit to which they are properly entitled (as opposed to the benefits to which the parties may be contending that they are entitled).” R(IB) 2/04, para. 32. The First-tier Tribunal in my judgment therefore further erred in law in not considering it.
61. The effect of para. 15(1) of Schedule 2 is that a loan only qualifies if it was taken out and used for the purpose of (a) carrying out qualifying repairs and improvements or (b) paying off a loan which had itself been taken out and used for those purposes. The Claimant’s statement set out in para. 3 above suggests that the works may have been paid for by means of other monies which were available to the Claimant and his wife, rather than by means of loans, and that when the property was remortgaged in 2002 the excess of the proceeds over and above what was needed to redeem the existing mortgage may have been used for purposes other than repayment of loans. The process seems to have been one not of borrowing money (e.g. on credit card or overdraft) in order to pay for the works, and then repaying those debts by means of the remortgage, but rather of paying for the works out of surplus assets, and then remortgaging in order to replenish the funds. I note, however, that the documents in pp. 46 to 107, which were produced by the Claimant to evidence payment for the works, include both bank statements and credit card statements.
62. There are two points here. First, and most obviously, when the remortgage was taken out in 2002, it can only have been a qualifying loan at that stage to the extent that it was taken out for the purpose of (i) redeeming the previous mortgage (there is of course no problem as to this) or (ii) repaying debts/loans which had been incurred for the purpose of carrying out qualifying works. Even if all the works which had been done by 2002 were qualifying works (i.e. fell within the definition of “repairs and improvements”), none of the additional loan taken out in 2002 will have qualified unless it was taken out for the purpose of repaying a loan or loan which had itself been used for the purpose of carrying out those works. The maximum amount of the 2002 remortgage, over and above the amount necessary to redeem the existing remortgage, which could have qualified was therefore the amount of the total other indebtedness of the Claimant and his wife immediately before the remortgage. If, immediately before the remortgage, the Claimant and his wife had no other indebtedness, because the works had been paid for by means of cash realised from other assets, or had been paid for by means of loans which had been repaid by the time of the remortgage, then it seems to me that it must follow that none of the additional sum borrowed at the time of that remortgage can qualify. It will have been used not to repay qualifying loans, but for other purposes. Secondly, it seems to me that if at any stage prior to the 2002 remortgage, but after works had been carried out, the Claimant and his wife had no indebtedness, it follows that the additional sum borrowed in 2002 cannot have been used to repay loans/debts which had been incurred in order to enable those works to be carried out.
63. The Claimant sought to grapple with these points to some extent on p.3 of his submission dated 1 October 2010 (p.188). He stated:
“…we did have savings that we had to raid but these were for the purpose of everyday living expenses such as food, household bills, council tax and paying the mortgage interest instalments etc. Other money, borrowed through overdrafts and credit cards, personal loans etc, addressed the work we had done to the house. We remained indebted after the works were carried out and definitely still in that indebted position to the point where the 2002 remortgage was taken out.
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I have provided all this information in the form of bank and credit card statements more than 12 months ago. I should not, especially at this very late stage in this increasingly protracted process, have to re-prove to such an infinite detail which sub-element of that pool any particular payment came from, other than an amount was borrowed from various sources of which an equal amount was spent. What more am I expected to do?”
64. I would point out, however, that the bank and credit card statements of which there are copies among the evidence provided at pages 46-107 have all the details blanked out, other than the particular item(s) of expenditure which are referred to. It is impossible to attempt to work out the Claimant’s financial position at any particular time, or at the date of the 2002 re-mortgage. (Indeed, I am not sure that the precise date of the remortgage emerges from the present evidence). It does not seem to me that he has demonstrated that, at the time of the 2002 remortgage, he was indebted to any extent (let alone to the extent of the sums spent on works). The fact remains that the indication from what the Claimant said on p.17 seems to be that the works were paid for from cashing in investments and “access we had to other funds/savings”. I accept, however, that the expression “other funds/savings” is wide enough to cover monies borrowed on a credit card.
65. These points raise issues of fact on which the Claimant will have to reconsider whether he should provide any further evidence to the new First-tier Tribunal. The burden of establishing entitlement to benefit is on the Claimant, although in determining what is necessary to satisfy that burden the Tribunal can of course take into account what is reasonably practicable in the light of the time which has elapsed. The Claimant clearly still has at least some credit card and bank account statements going back to that time, but has so far provided only some of them, and those that are provided are almost entirely blanked out.
Generally
66. The Claimant has rightly pointed out that if the works had all been carried out by the previous owner, and had been reflected in a higher purchase price paid by him and his wife, and therefore a higher mortgage initially taken out, the entirety of the increased sum borrowed would have been a qualifying loan. That does not, however, avoid the need to apply the legislation to the facts as they actually were.
Judge of the Upper Tribunal