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Neutral Citation Number:	2010 UKUT 326 AAC
Reported Number:
File Number:	CIS 688 2010
Appellant:	Secretary of State for Work and Pensions v Mohammad [2011] EWCA Civ 1358
Respondent:	NM
Judge/Commissioner:	Other Judges / Other Commissioners/Deputy Commissioners
Date Of Decision:	23/11/2011
Date Added:	06/10/2010
Main Category:	Income support and state pension credit
Main Subcategory:	housing costs
Secondary Category:
Secondary Subcategory:
Notes:	Court of Appeal decision reported as [2012] AACR 29 Income support – housing costs – whether loan “taken out” to acquire an interest in the home – whether “incurred” during relevant period The claimant and her husband resided in a property owned by the husband. He had purchased the property in 1987 and it became subject to a mortgage taken out by him in 2002. The claimant and her husband divorced in 2007. In terms of a court order, the property was transferred to the claimant. The building society refused to transfer the loan to the claimant but, in terms of the order, she undertook to relieve her husband of the obligation to make mortgage repayments. The claimant had been in receipt of income support since 2003 and sought to include the mortgage interest payments as eligible housing costs. The First-tier Tribunal accepted that the claimant was legally responsible for the mortgage interest payments and that these payments were eligible housing costs in terms of paragraph 15 of Schedule 3 to the Income Support (General) Regulations 1987 (the Regulations). The Secretary of State appealed to the Upper Tribunal. The Upper Tribunal upheld the decision albeit on a different basis holding that, for the purposes of paragraph 2(1)(b) of Schedule 3 to the Regulations, the claimant was a person meeting the housing costs because her ex-husband was not meeting them and it was reasonable to meet those costs for her to continue to live in the home. The Secretary of State appealed with permission of the judge of the Upper Tribunal. Held, allowing the appeal, that: 1. Schedule 3 to the Regulations, in so far as relevant to this appeal, set out a number of requirements. The first requirement under paragraph 2 of the Schedule was that the claimant must be liable to meet the mortgage interest payments. There was no dispute that the claimant in this case was so liable (paragraph 15); 2. the second requirement was that the loan was a qualifying loan for the purposes of paragraphs 15 to 17 of Schedule 3. In essence, two questions must be answered: (i) whether the loan was taken out to acquire an interest in the home or to pay off another loan that was taken out for that purpose; and (ii) whether the loan was incurred before 2003 (paragraphs 16 to 19); 3. although the claimant had assumed responsibility for the payments, legal liability for the loan remained with her husband. The claimant had not taken out a new loan nor had she taken over an existing loan. If the claimant defaulted, her liability was to her husband and not to the building society. In the circumstances of this case, it was apparent that the loan taken out by the husband in 2002 had not been taken out to acquire an interest in the property (paragraph 30); 4. it could not be considered that, where there was one loan, it could be said to be “taken out” at a different time from when it was “incurred” for the purposes of paragraphs 15(1) and 4(2) of Schedule 3 to the Regulations. Although the draftsman had used different language in these paragraphs, the obvious interpretation was that a loan is taken out/incurred at the same time. It therefore followed that, even if the claimant had successfully established that she had taken out the loan at the time of the ancillary relief proceedings thereby satisfying the provisions of paragraph 15(1), she would necessarily have incurred it while she was on income support and thus would have been disqualified from receiving benefit by reason of paragraph 4(1) (paragraph 31).
Decision(s) to Download:	CIS 0688 2010-00.doc [2012] AACR 29bv.doc [2012] AACR 29ws.doc