CIS 3295 2003

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1	I allow the appeal.

2	The claimant and appellant is appealing with permission of a chairman against the decision of the Dorchester appeal tribunal on 4 March 2003 under reference U 03 192 2002 00414.

3	For the reasons below, the decision of the tribunal is set aside. I refer the appeal to a new tribunal to consider in accordance with the directions in this decision (Social Security Act 1998, section 14(8) and (9).  

The facts

4	The following facts were found. Mrs M, the claimant and appellant, has been receiving income support since 1997. In March 1999 Mrs M’s ex-husband (Mr M) purchased a house (Hazel Bower), as sole owner subject to a mortgage. Two months later Mr M declared by declaration of trust that he held Hazel Bower solely for Mrs M. A caution was entered at the Land Registry to protect her interest. 	Mrs M made payments for the mortgage to Mr M, and he paid them to the mortgagee. She moved to Hazel Bower on 3 April 2001. She then claimed and was paid housing benefit, alleging that she was a tenant. This was untrue, and the housing benefit was reclaimed.  On 15 May 2002 Mrs M took out a mortgage with a building society, and used this to buy Hazel Bower from Mr M. He transferred Hazel Bower to her, and paid off the mortgage with the proceeds. She claimed housing costs for the loan from the building society on 22 May 2002.

5	Mrs M is a disabled person for the purposes of paragraph 1 of Schedule 3 to the Income Support (General) Regulations 1987. 

The tribunal decision 

6	The tribunal decided that Mrs M was not entitled to housing costs under paragraph 4 of Schedule 3 to the Income Support (General) Regulations 1987. This was because both the loan to Mr M and the loan to her were taken out after she “became eligible for Income Support Housing”.  It also found that neither the loan to Mr M nor the loan to her could be said to be taken out to provide her with “suitable” accommodation for her disability because one was taken out over a year before she moved there, and the other was taken out a year after she moved there. But it made no findings of fact on the second issue. 

The law

7	The relevant rules are in paragraph 4 of Schedule 3 to the Income Support (General) Regulations 1987. Subparagraph 4(2) lays down the general rule that loans do not qualify for income support housing costs if the loan is made during the “relevant period”. This is defined by subparagraph 4(4) as including any period during which the person to whom the loan was made is entitled to income support. 

8	Subparagraph 4(7) provides exceptions to these general rules:

“Notwithstanding the preceding provisions of this paragraph, housing costs shall be met in any case where a claimant satisfies any of the conditions specified in sub-paragraphs (8) to (11) below, but –
(a) those costs shall be subject to any additional limitations imposed by the sub-paragraph; and
(b) where the claimant satisfies the conditions in more than one of these sub-paragraphs, only one sub-paragraph shall apply in his case and the one that applies is the one most favourable to him.”

 The exception in paragraph 4(9) is that:

“the loan is taken out, or an existing loan increased, to acquire alternative accommodation more suited to the special needs of a disabled person than the accommodation which was occupied before the acquisition by the claimant.”

Grounds of appeal 

9	The solicitors acting for Mrs M accepted that the tribunal’s finding that, but for the exceptions, her claim was stopped by paragraph 4(4). It was argued, however, that she was entitled by reason of paragraph 4(9). Both loans could be, and should be, regarded as taken out in circumstances that fell within paragraph 4(9). There was nothing in the rule that required any immediacy in the link between the loan, the acquisition and the move. Had Mrs M moved to Hazel Bower at the same time as she took out the loan then there would have been no problem. If regard was had to paragraph 15 of Schedule 3 (loans for acquiring houses used as dwellings), then Mrs M should qualify.

10	In response, the secretary of state's representative supported the appeal. This was because the tribunal failed to find adequate facts for the full consideration of paragraph 4(9). 
Nonetheless, the secretary of state's representative submitted that the claimant could not succeed on her application. Mrs M neither increased a loan to purchase alternative accommodation nor took out a loan to purchase alternative accommodation. With regard to the loan to Mr M, this was not a qualifying loan because at the time the loan was obtained Mr M held the sole interest in Hazel Bower, and so the loan did not qualify under paragraph 15 of Schedule 3. Mrs M was not therefore helped by paragraph 4(6). With regard to the loan to Mrs M, this was taken out within the relevant period, and so did not qualify. 

11	In reply the, solicitors argued that subparagraph 4(9) provides that “help may be given where the loan was taken out, or an exiting loan increased, to acquire alternative accommodation more suited to the special needs of a disabled person that the accommodation which was occupied before the acquisition by the claimant. In other words, the test focuses on acquisition rather than provision of accommodation.” The argument that there was no test of immediacy in subparagraph 4(9) was reinforced. 

12	In a further submission, the secretary of state's representative agreed that the focus of subparagraph 4(9) was on acquisition rather than provision. But, in the view of the secretary of state's representative, it is the point at which the loan was acquired that was the primary focus. The argument that the claimant did not take out the loan to acquire more suitable accommodation was also restated.

My decision 

13	The key to this case is subparagraph 4(9) of Schedule 3 to the Income Support (General) Regulations 1987. Unless that applies, the solicitors for the claimant rightly concede that the tribunal was correct in applying subparagraph 4(4) of Schedule 3 to the case to exclude the claim.  The submission by the Secretary of State to the tribunal did not set out subparagraph 4(9), nor did it deal with the issue arising under that sub-paragraph clearly. Nor, perhaps for this reason, did the tribunal focus on the issue. I accept the submissions of both parties that the tribunal decision should therefore be set aside. 

14	For the avoidance of doubt, given the citations in the papers of decisions of Commissioners made on earlier forms of paragraph 4, the form of wording of subparagraphs 4(7) and (9) are those applying from October 1995 without relevant amendment. However, subparagraph 4(2) and following are broadly similar to the previous paragraph 5A to that Schedule. 

15	There is no dispute that the claimant is disabled for the purposes of considering subparagraph 4(9) in the sense that she is within the definition set out in subparagraph 1(3).  That is where agreement ends. There is no finding of fact by the tribunal or by the Secretary of State that Hazel Bower was more suitable to the claimant’s own disability needs, nor any finding of what those needs were.  To the extent that this is in point, the guidance of the Commissioner in CIS 14551 1996, based on identical words in a former version of what is now subparagraph 4(9), applies. 

16	  Paragraph 4 is headed “Housing costs not met”.  It starts with two general rules about this in subparagraphs (1) and (2).  Sub-paragraphs (3) to (6) supplement subparagraph (2).  Subparagraph 4(7) applies a group of exceptions to all those subparagraphs (“Notwithstanding the previous provisions of this paragraph”). Entitlement under subparagraph 4(7) and the linked subparagraphs (8) to (11) therefore provide an alternative set of rules to those under subparagraphs 4(1) and (2). Accordingly, the Secretary of State was right in this case to decide the matter, as was done initially, under subparagraph 4(2) and then subparagraphs 4(7) and (9).  Confusion set in when on “reconsideration” the two rules were conflated, and they remained conflated in the submission and the tribunal decision. In particular, no attention was paid to subparagraph 4(7) at any of these stages.

17	Does subparagraph (7) apply? This incorporates the test of “housing costs” set out in paragraph 1 to Schedule 3, and so requires that the costs are liable to be met by the claimant in respect of the dwelling occupied as her home and within paragraphs 15 to 17. 
Paragraph 15 applies relevantly to loans taken out to defray monies applied for either acquiring an interest in the dwelling as a home or paying off another loan to the extent that that other loan would have qualified had it not been paid off.  In the submission on the appeal, the secretary of state's representative conceded that paragraph 15 applies to the loan to Mrs M. Accordingly, the alternative rule in subparagraph 4(7) can apply if any of the subparagraphs 4(8) to 4(11) also apply. In the grounds of appeal, it is conceded for Mrs M that only subparagraph 4(9) can apply. Further, there are no limitations in subparagraph 4(9) of the kind flagged up in subparagraph 4(7) and found, for example, in subparagraph 4(10). 

18	The question is therefore whether “the loan” – that is, the loan within the scope of paragraph 15 – was as a matter of fact taken out to acquire more suitable accommodation than the accommodation occupied before the acquisition. “Suitable” is to be judged by whether it is more suited to the special needs of Mrs M because of her disabilities. 

19	Mrs M took out the loan in May 2002. It was also apparently then that she acquired the ownership of Hazel Bower.  I say “apparently” because the tribunal expressly made no finding on this point.  She moved to Hazel Bower in April 2001.  Does that stop her being able to establish that the loan was taken out to acquire more suitable accommodation than that occupied before the acquisition?  The solicitors for the claimant submit that it does not. The secretary of state's representative submits that it does.  The basis for the latter submission is either because she was living at the property more than a year before the loan was taken out (the view expressed in the “reconsideration”) or alternatively that “she was already occupying the property at the time she acquired it” (the view expressed in the submission to the Commissioner). I think both the approaches of the Secretary of State are wrong in so far as they appear to set rules rather than consider the facts.   

20	There are no time limits in subparagraph (9) and in particular no requirement of immediacy linking the time of acquisition, the time the loan is taken out, and the time the claimant moves. It will depend entirely on the circumstances. What the subparagraph requires for it to apply in this case is:
	(a) that alternative accommodation is acquired,
(b) that the acquired accommodation is more suited to the special needs of a disabled person than the accommodation occupied by that person before the acquisition, and
	(c) that the loan is taken out to enable the accommodation to be acquired.

21	The tribunal found none of those facts. The matter must go back for a tribunal to determine them.  

								David Williams
				Commissioner
				05 May 2004
[Signed on the original on the date shown]