MJG/SH/1W/DC
				Commissioner’s File:	CIS/11293/1995

SOCIAL SECURITY ADMINISTRATION ACT 1992

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

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

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	I dismiss the adjudication officer’s appeal against the decision of the social security appeal tribunal dated 16 August 1995 as that decision is not erroneous in law:  Social Security Administration Act 1995, section 23.

2.	This is an appeal to the Commissioner by the adjudication officer against the unanimous decision of the social security appeal tribunal dated 16 August 1995 which allowed the claimant’s appeal from a decision of the adjudication officer issued on 27 February 1995. That officer’s decision in effect restricted the claimant’s income support housing costs (for mortgage interest) by 50% because of the earlier history of the matter (see below).  

3.	At the request of the claimant the appeal was the subject of an oral hearing before me on 15 August 1996 at which the claimant was present and was represented by Mrs J Stevens of the local Citizens Advice Bureau.  The adjudication officer was represented by Mr L Scoon of the Office of the Solicitor to the Departments of Health and Social Security.  I am indebted to all those persons for their assistance to me at the hearing.

4.	The facts of the matter were summarised for the tribunal by the adjudication officer as follows,

“[The claimant] is aged 29 and has been in receipt of Income Support for herself and her 2 sons aged 7 and 5 years since 25 February 1994.  Her only other income is Child Benefit.  At the start of her claim [the claimant] lived in her own home at 23 HHC, owned jointly with her ex‑husband.  [The claimant and her husband] were jointly liable for the mortgage of £18,000 which was secured on the property taken out with the Halifax Building Society.”  [A letter from the Halifax Building Society confirms that that the liability on the mortgage was joint and several].  “As [the husband] has liability for 50% of the mortgage payments, the Adjudication Officer allowed [the claimant] as a housing cost included in her applicable amount, interest on £9,000.  ... On 21 December 1994 it came to the benefit officer’s attention that the marital home at 23 HHC had been sold and [the claimant] had moved to a house which she had purchased, in her own name, at 33 C Street.  Further enquiries revealed that [the claimant] had moved as her ex‑husband wanted his share of the proceeds from the sale of the house ... [the claimant’s] new home at 33 C Street cost £43,800 and had been purchased with the aid of a mortgage from the Halifax Building Society of £18,000.  The new mortgage had been advanced on 20 December 1994.  ... The adjudication officer considered whether housing costs in respect of this new mortgage could be allowed, i.e. interest on the amount of £18,000 borrowed to purchase 33C Street.  The adjudication officer decided” [taking into account paragraph 5A of Schedule 3 to the Income Support (General) Regulations 1987 - see below] “that as the new loan had been taken out for the reasons specified and at a time [the claimant] was entitled to income support, then the amount of housing costs payable to her could not include interest on the difference between the old liability and the new liability, i.e. [the claimant] had been receiving interest of £9,000 (the old liability) and could only now receive interest on £9,000 of the new liability (the new liability being £18,000 in total).”

5.	The claimant appealed against the continuing restriction of the amount of mortgage interest taken into account for income support purposes to 50% of the amount of her mortgage on the new home at 33C Street.  The tribunal allowed her appeal and held that the whole of the interest should be taken into account giving as their reasons,

“The question in this case is what is the liability of [the claimant] for her mortgage at 23 HHC and her mortgage at 33C Street.  At 23 HHC, she was on a mortgage with Halifax Building Society with her husband in the sum of £18,000 and it is clear that this was a joint and several liability with the Halifax.  In other words, [the claimant] had a legal liability with the Halifax to repay £18,000.  It follows, therefore that the mortgage on 33C Street in the sum of £18,000 is not an increase on her legal liability on her previous house.  In fact the figures are exactly the same, namely the sum of £18,000.  The tribunal review [sic] therefore that [the claimant] is entitled to the payment of housing costs at 33C Street, based on a mortgage of £18,000.  Paragraph 3 of Schedule 3 of the General Regulations applied paragraph 5A(3) of Schedule 3 applied.”

6.	The adjudication officer appealed to the tribunal on the ground that, “Paragraph 5A(3) of Schedule 3 [to the Income Support (General) Regulations 1987] requires a comparison between the ‘former’ mortgage interest payments and the ‘new’ ones:  the Tribunal erred in law in comparing the amounts of capital.”  Paragraph 5A(3), (see below), does not in terms refer to “interest payments”, however (see below).

7.	The adjudication officer’s contention requires a close examination of paragraph 5A of Schedule 3 to the Income Support (General) Regulations 1987, S.I. 1987 No. 1967, added by S.I. 1994 No. 1004 as from 2 May 1994, the relevant provisions of which read as follows,

Other Housing Costs which are not met

5A.	-	(1)	Subject to the following provisions of this paragraph, the housing costs [in relation to e.g. mortgage interest] 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)	..........

		(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 [such as mortgage interest] 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 ...

				(a)	... as are equal to an amount (if any) by which the new liability exceeds the former liability; and 

				(b)	..........”

8.	The question is, in relation to the facts of this case, what is meant by the expressions in paragraph 5A(3), “the new liability”:  “the former liability”: and “applicable in the case of the claimant or a member of his family”.  As the claimant’s husband had never apparently claimed income support, the reference to “a member of [her] family” will not assist the claimant here.  The claimant’s representative urges upon me that, because of the use of the word “liability”, what is meant is legal liability and stresses that in the joint mortgage with her husband, the claimant was jointly and severally liable (i.e. individually liable) for the full amount, in the sense that the Halifax Building Society could sue her for the full amount of repayments if they were not paid.

9.	Paragraph 3 of Schedule 3 to the 1987 Regulations states that a person is to be treated as responsible for housing costs for the expenditure which relates to housing where “he or his partner is liable to meet those costs other than to a member of the same household” (paragraph 3(1)(a)).  At the time the claimant made her claim for income support the husband was no longer her “partner” as they were living separately.  But nevertheless the claimant herself was severally as well jointly liable to the Halifax Building Society for the repayments due on the mortgage of the marital home. That factor clearly influenced the tribunal as they referred to paragraph 3 of Schedule 3.

10.	However, it is stated in paragraph 5A(3) that housing costs which are “the new liability” i.e. in this case the claimant’s sole liability on the new mortgage of the new house are not to be taken into account in so far as they exceed “the former liability” i.e. the “housing costs [which] were applicable in the case of the claimant ..”.  Does this mean factually applicable at the given time, i.e. here only 50% of the housing costs on the mortgage of the former matrimonial home (as the adjudication officer contends) or does it mean costs that could have become applicable if the Halifax Building Society enforced the several (i.e. individual) liability on the mortgage?

11.	To discover what is meant by the expression “housing costs were applicable in the case of the claimant” (para 5A(3)) regard must be had (inter alia) to section 135(1) of the Social Security Contributions and Benefits Act 1992 which provides that “the applicable amount, in relation to any income-related benefit, shall be such amount or the aggregate of such amounts as may be prescribed in relation to that benefit.”  The relevant prescription here is in regulation 17 of the Income Support (General) Regulations 1987 headed “applicable amounts”.  That regulation provides that “a claimant’s weekly applicable amount shall be the aggregate of such of the following amounts as may apply in his case” and then lists a number of matters e.g. personal amounts, disablement premiums, etc. and then in this context refers in sub-paragraph (e) to, “any amounts determined in accordance with Schedule 3 (housing costs) which may be applicable to him in respect of mortgage interest payments .... as are prescribed in that Schedule.”(my underlining.)  In my view that sentence helps to support the claimant’s contention that what is involved here is not necessarily what is factually payable as income support at any given date but what is the possible future entitlement based on the potential legal liability involved.  Paragraph 5A(3) does not refer to the income support actually being paid but simply states that there should have been “housing costs of a kind .. applicable in the case of the claimant”.  In my judgment, that involves asking, under the rules as to entitlement in all of the Regulations, whether the claimant could claim that potentially there were applicable to him housing costs for the entirety of the mortgage.  The answer to that question in the case is of course in the affirmative.  Therefore in my view the tribunal’s reasoning in this case was correct and I must dismiss the adjudication officer’s appeal.

12.	At this point I should refer to the fact that another Commissioner, in a decision on file CIS/5353/1995 (not ‘starred’ or reported and apparently given without an oral hearing) made some observations in a case, with facts superficially similar to the present, on the use of the words “were applicable” in para. 5A.  However in that case the wife had made no payments at all under the joint mortgage with her husband of the former matrimonial home and no income support applicable amount had ever applied to her.  At paragraph 9 of his decision the Commissioner said,

“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 [of being actually met] 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), [of paragraph 5A] under the new mortgage.  That seems to me not to make sense, given the presumed intention of the provision.”

Although the facts of that decision were different, the reasoning of course is equally applicable to the present case.  However I must respectfully decline to apply it to the present case, I must either distinguish the decision on its facts or alternatively decline to follow it.

13.	Lastly I should emphasise that nothing in this decision affects the situation in relation to one house still owned by a husband and wife (whether together or separated) with a joint and several mortgage.  Any income support paid to either of them would undoubtedly be tied to the actual payments under the mortgage being made by the spouse in question (see, to this effect, my decision on file CIS/743/93 - to be reported as R(IS)9/95 - and cf. CIS/636/92 (no income support when mortgage initially interest-free).

					(Signed)	M. J. Goodman
							Commissioner

					(Date)		1 October 1996