CIS/257/1994

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

Social Security Appeal Tribunal: Basildon

1. The claimant's appeal is unsuccessful but I accept the counter-submission of the adjudication officer. The decision of the Basildon Social Security Appeal Tribunal dated 29 June 1992 is erroneous in point of law. I set that decision aside and substitute my own decision which is to reinstate the original decision of the adjudication officer. The claimant is not, and has not at any time been, entitled to include as a housing cost for income support purposes the interest on the loan of £17,600 taken out on 2 April 1991. Any overpayment of benefit made in consequence of the tribunal's decision is not recoverable. 

2. The claimant is severely disabled and has been in receipt of income support since April 1988. There are two mortgages on her home. One, originally for £22,400, was for the purchase of the home and interest on that mortgage is met through income support as a housing cost under paragraph 7 of Schedule 3 to the Income Support (General) Regulations 1987. The second mortgage was originally for £17,600 and was taken out on 2 April 1991 for the purpose of carrying out repairs and improvements to the home. However, it was not used for that purpose. The money was paid straight into a business account, held by the claimant's son and his partner, which was heavily overdrawn. Three days later, the account was only £324.60 in credit. The business is now in liquidation. The adjudication officer decided that interest on the second mortgage could not be met under paragraph 8(1) of Schedule 3 of the 1987 Regulations which, at the material time, provided:- 
"There shall be met under this paragraph an amount in respect of interest payable on a loan which is taken out, with or without security for the purpose of - 
(a) carrying out repairs or improvements to the dwelling occupied as the home; or
(b) ……, 
and which is used for that purpose or is to be so used within 6 months of the date of receipt or such further period as is reasonable, ……".
The ground of the adjudication officer's decision was that, whatever the original purpose of the loan, it had not been used for carrying out repairs and improvements and was not be used for that purpose within 6 months of such further period as might be reasonable. 

3. The claimant appealed on the ground that she still wished to carry out the repairs and improvements and therefore it could still be said that the money was to be used for that purpose within, if not 6 months, at least a further reasonable period or, alternatively, that the payments were an "analogous" housing cost - falling within paragraph 1(h) of Schedule 3. The tribunal, by a majority, allowed the appeal in part, expressing their decision as follows:- 
"To revise the Adjudication Officer's decision. The majority of the Tribunal find that the appellant is entitled to housing costs for interest payments for the purpose of carrying out home improvements. This, however, is not an open ended right. The time was to be within a reasonable period and the Tribunal consider this is one year, ie six months added to the six months referred to in the regulation."
The dissenting member would have dismissed the appeal on the ground that "as the work has not been done the appellant is not entitled to have the interest on the loan paid by the Department". 

4. I presume that all the additional benefit due to the claimant as a result of the tribunal's decision has since been paid to her. By a letter dated 31 March 1994, the claimant sought leave to appeal against the decision of the tribunal, on the ground that the tribunal had failed to give adequate reasons for their decision that the interest on the loan should be treated as a housing cost for only 12 months and that, in any event, on a proper construction of paragraph 8(1) of Schedule 3 to the 1987 Regulations, the tribunal ought to have treated the interest on the loan as a housing cost for an indefinite period. On 4 May 1994 a Commissioner gave the claimant leave to appeal out of time. The adjudication officer now concerned with the case agrees that the tribunal's decision is erroneous in point of law but effectively opposes the claimant's appeal. She submits that the tribunal gave no reason for extending "the time limit in which the loan is to be used for carrying out improvements" to the property and that, in any event, interest on the loan should not have been allowed as a housing cost at all. 

5. Both parties submit that there is sufficient agreement as to the facts to allow me to substitute my own decision for that of the tribunal, should I conclude that the tribunal erred in law. The papers do raise the question whether the claimant's son paid the money into his business account with the consent of the claimant. However, I am content to determine this case on the basis of the tribunal's findings that the claimant did not authorise him to use the money for the purposes of his business and that she always wished to use the money in order to carry out repairs and improvements to her home. I therefore agree that this is a case in which I can make any final determination necessary. The fact that I am able to do so makes it unnecessary for me to deal with the submission that the tribunal's reasons for decision were inadequate. The real question is whether the majority of the tribunal construed properly paragraph 8(1) of Schedule 3 to the 1987 Regulations. 
6. Before dealing with that issue, it is convenient to dispose of the argument based on paragraph 1(h) which was raised before the tribunal but not on the appeal to me. Paragraph 1(h) was repealed with effect from 2 February 1993. Before the repeal, paragraph 1 provided:- 
"Subject to the following provisions of this Schedule, the amounts which may be applicable to a person in respect of mortgage interest payments or other prescribed housing costs under regulation 17(1)(e) or 18(1)(f) (applicable amounts) are - 
(a) mortgage interest payments; 
(aa) interest payments under a hire purchase agreement to buy the dwelling occupied as a home; 
(b) interest on loans for repairs and improvements to the dwelling occupied as the home; 
………
(h) payments analogous to those mentioned in this paragraph." 
I agree with the local adjudication officer that, because on any view the interest payments in this case were actually "interest on loans for repairs and improvements to the dwelling occupied as the home" and so fell squarely within paragraph (b), they could not fall within paragraph (h) as being merely analogous payments. The word "for" in paragraph 1(b) refers to the original purpose for which the loan was taken out. As the structure of the Schedule makes it clear that payments under paragraph 1(b) are to be met only to the extent allowed by paragraph 8, I return to the main issue in the case. 

7. I agree with the adjudication officer now concerned with the case that the dissenting member of the tribunal took the right approach and that the majority erred in their construction of paragraph 8(1). The opening words of paragraph 8(1) require that the loan have been taken out "for the purpose of" carrying out repairs or improvements. That condition is satisfied in this case. However, the concluding words require that the loan be "used for that purpose" within 6 months or an extended period. The words "or is to be so used" are included only because the determination may be made before the end of the relevant period so that the adjudication officer or tribunal is obliged to anticipate what will happen. Where, as here, a tribunal is able to make use of hindsight, they should base their decision on what has actually happened. Therefore, if it was reasonable to extend the 6 months' period only to 12 months, the claimant was still not entitled to have interest on the loan met - even during those 12 months - because she had not used the loan for the relevant purpose within the 12 month period. 

8. There is no reason why the time within which the loan had to be used for that purpose should have been extended beyond 12 months. The unfortunate fact is that once the claimant's son's business went into liquidation there was no prospect whatsoever of the £17,600 being repaid to the claimant so that she could use it for carrying out repairs and improvements to her home. The contrary has never been suggested. She may earnestly have wanted the money back but I doubt that she had any hope that it would be repaid and she certainly had no realistic expectation of receiving the money within the foreseeable future. 

9. Accordingly, the majority of the tribunal erred in allowing the claimant's appeal to the extent that they did. There is no question of the consequent overpayment being due to any misrepresentation by the claimant or any failure by her to disclose a material fact and so it is not recoverable under section 71 of the Social Security Administration Act 1992. Therefore, I give the decision in paragraph 1 above. That decision may seem harsh to the claimant but she is in no worse position than she would have been in had she agreed to her son using the loan for business purposes. Many people find that interest on mortgages is not met through income support. If, as the tribunal found, her son abused her trust, the responsibility for her predicament rests squarely on him. The legislation does not enable the consequences of his behaviour to be mitigated by payments of income support. 
  
(Signed) M. Rowland
Commissioner 

(Date) 4 January 1995