Appeal No.	 EAT/445/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 2 February 2001

Before
THE HONOURABLE MR JUSTICE LINDSAY (PRESIDENT) 
MRS A GALLICO
MRS M T PROSSER

MR MICHAEL JOHN SIBBICK	APPELLANT

SOUTHAMPTON CITY COUNCIL	RESPONDENTS

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING – EX PARTE

Revised

	APPEARANCES

For the Appellant	THE APPELLANT IN PERSON	

	MR JUSTICE LINDSAY (PRESIDENT):		We have before us the adjourned hearing of a preliminary hearing of the appeal of Mr Michael John Sibbick in the matter Sibbick v Southampton City Council. Mr Sibbick has been in person in front of us today. 

1.	On 10th September 1999 Mr Sibbick lodged an IT1 for a contractual payment of a relatively unusual kind, in the sense that it does not very often come up for study at the EAT. It is worth setting out his expanded IT1 as he set it out. He said:

“My concerns relate to the Southampton City Council’s “Mortgage Subsidy Scheme” and the amount I have been awarded under this scheme.
On application to my present post I was given information about the above scheme whereby new appointments are given financial assistance in moving to Southampton from a less expensive area. This information included a table indicating the difference in house prices from the area I moved was calculated at £25,000 and the intention of the scheme was to “assist in purchasing a comparable house”.
Given the difficulty in finding a “comparable” property we purchased a small house in very poor condition for £6,000 above my selling price in the knowledge that some essential building work would need to be carried out in order to bring the house to anything like a comparable standard. Adding this to the difference between the buying and selling prices brought by total claim to £17,450 which represents a small amount of the cost incurred in bringing the house to a “living standard” and remained well below the calculated £25,000.
I have been offered the subsidy payment on the £6,000 with Southampton claiming they can only consider the difference between the buying and selling prices. However, the policy is, in my opinion, not made clear. Consequently I took my complaint to a first stage grievance which supported the view that the wording was “unclear and contradictory”.
Given that I purchased my property on the understanding that I would receive financial support and that my claim is significantly below the city’s own figures of comparable costs between the two areas I believe that my claim should be honoured which outlines the reason for this application.”

2.	On 13th October 1999 the City Council put in its IT3 and they said, inter alia, that:

“9.	The Applicant sold his former property for £125,000 and purchased a property in Brockenhurst, New Forest, (within the geographical limit of the Schemes), at a price of £131,000. By application of the formula set out within the scheme the Applicant is entitled to mortgage assistance in respect of the interest payments on the additional £6000 capital cost in purchasing the property. The interest rate being set at 9.27%.
10.	The Applicant and Respondent agreed by way of a written agreement dated 16th March 1998 that the Applicant was eligible under the MAS. At Clause 3(a) the Applicant undertakes that he has properly read and understood the MAS. The sum of £6000 was set out in the document as the amount upon which the Applicant would receive assistance on mortgage interest on the decreasing rate over 5 years.
11.	… The Applicant sought an additional £11450 under the MAS which is a sum incurred by the Applicant to improve the property. The Applicant claims that the real cost of purchasing a comparable property would have been £25,000 and the level of assistance offered by the Respondent did not equate to the true cost.”

	Southampton concluded, in effect, by saying:

“The Respondent will contend that the contractual conditions are clear and that if he was in any doubt he should have sought clarification prior to purchasing his property in Brockenhurst.”

3.	That led to a hearing at the Employment Tribunal on 14th January 2000 under the chairmanship of Mr S G Vowles. On 27th January 2000 the decision, which was unanimous, together with summary reasons were given; the decision was:

“There has been no unauthorised deduction from, or underpayment of, the Applicant’s wages. The application is dismissed.”

4.	Mr Sibbick on 11th February 2000 asked for a review and also for extended reasons. On 3rd March 2000 extended reasons were given. On 3rd March 2000 also the application for a review was refused as being out of time. 

5.	On 18th April 2000 Mr Sibbick lodged a Notice of Appeal as against both decisions, namely the substantive decision and also the decision to refuse a review.

6.	This is not a case in which the refusal to review adds considerations not arising on the substantive appeal and for practical purposes we only need to consider the appeal against the substantive decision.

7.	The matter first came before the EAT as a preliminary hearing on 14th July 2000 when it was adjourned because the documents that formed part of the mortgage assistance scheme were not in front of the EAT and really for an informed consideration of the appeal one needed to see the documents. The documents, or some of them at any rate, have since been added.

8.	The Notice of Appeal is succinct and limited to only a confined area. In paragraph 6, which is headed “The grounds upon which this appeal is brought are that the employment tribunal erred in law in that”, Mr Sibbick has completed it as follows:

“The point in law relates to the wording of Southampton City Council’s mortgage assistance scheme: which states:-
-	Subject to the detailed provision outlined [below], assistance will be given towards the mortgage interest on the difference in “price” [Mr Sibbick’s emphasis] between the employee’s former property and the “cost” [Mr Sibbick’s emphasis] of a comparable house in the Southampton area.
On my application for this subsidy Southampton City Council stated that the difference could only be calculated on the difference between the purchase price and selling price of the two properties which the employment tribunal said was clear in the above wording of the scheme.
In an attempt to attain a comparable property, which is said to be the purpose of the scheme, I purchased a “run down” property and included “some” essential building works in my application which was for £17,450, still well below the maximum figure allowable of £25,000.
The definition of the word “cost” states (Shorter Oxford English Dictionary):-
1.	“That which must be given to acquire, produce or effect something.”
2.	“The price paid for a thing”.
3.	“To be the price of, be brought or maintained for or necessitate the expenditure of”.
On this basis the word “cost” does not mean simply “the price paid for”. Therefore I believe Southampton City Council’s position and the decision of the tribunal to be wrong in law, which outlines the reason for my appeal.”

9.	Well, with that we go to the extended reasons. The position as described in the facts found by the tribunal is that Mr Sibbick, on joining Southampton, had initially been sent two mortgage assistance or subsidy scheme documents from 2 different authorities, but only one of them came to be his prospective employer, Southampton, and only one of them, that with Southampton, was taken further. Mr Sibbick did not raise with his employer by way of initial advice or internal advice any confusion as to which scheme was relevant. It seems to us the other scheme, the Hampshire scheme, is not relevant to his present complaint. Looking at the Southampton scheme the tribunal said:

“6.	The Respondent conceded that the payments were wages and that the complaint was within the time limit. …”

	So that point was in Mr Sibbick’s favour. They went on to find as a conclusion of fact:

“9.	That the mortgage assistance payments did qualify as wages under s.13 and the definition of wages in s.27. The payments were subject to income tax and National Insurance deductions and were emoluments referable to the applicant’s employment. They were not payments in respect of expenses incurred in carrying out the employment. This issue was conceded by the Respondent.”

	So, so far, Mr Sibbick is succeeding. But then they went on in their paragraph 11:

“… The assistance under that scheme [the Southampton scheme] was limited to the mortgage interest on the difference in price between the employee’s former property and the cost of a comparable house in the Southampton area. In the Applicant’s case the price differential was £6,000, based on the sale of a property for £125,000 and the purchase of a new property for £131,000. The level of assistance was to be calculated from the in price between the old home and the new home, and was payable of a reducing scale over 5 years from 90% in the first year to 10% in the fifth year.”

	Mr Sibbick, they held, had bought a house for £131,000; he had taken the view that the house in its purchased state was not comparable with his previous one and that he had therefore embarked on improvement works costing £11,450. They said:

“12. … He interpreted the phrase “cost of a comparable house” to include the cost of bringing his newly purchased house up to what he considered to be a comparable house by means of house improvement building works. …”

	The tribunal held that he had not sought clarification beyond what they described; they said:

“12 … he only sought informal clarification from a Personnel Assistant who told him she was not very familiar with the scheme. If the Applicant was in any way unsure about the amount properly payable to him under the scheme it was reasonable to expect him to have sought an authoritative decision from his employer before committing himself to expenditure on house improvement building works amounting to £11,450. …”

	They went on as to his allegations as to the meaning of the scheme:

“12. …That was not an interpretation supported by the terms of either scheme.”

	Accordingly, they concluded:

“13.	That the amount properly payable under the terms of the Respondent’s mortgage assistance scheme was in respect of interest on the sum of £6,000. Payment based on that sum had already been offered to the Applicant in March 1998. There was, therefore, no unauthorised deduction from, or underpayment of, the Applicant’s wages.
14.	It follows that the Originating Application is dismissed.”

10.	We now have the Southampton scheme document in front of us and 4.2 is headed “Benefits”. It says:

“4.2.1	Subject to the detailed provisions outlined below, assistance will be given towards the mortgage interest on the difference in price between the employee’s former property and the cost of the a comparable house in the Southampton area.
4.2.2	The level of assistance will normally be calculated from the interest on the difference in price between the employee’s old home and new home except for first time buyers where it will be calculated on a capital sum of £10,000 …”

	There is then the reducing scale from 90% to 10% which the tribunal mentioned. 

11.	It is not a sophisticated provision. But it seems to us that Mr Sibbick’s contention is without foundation. The house he bought at Brockenhurst was - and this is his own case - not comparable at the time of its purchase with the former property which he had sold for £125,000. There appears to have been no investigation of what a truly comparable house would have cost to satisfy the terms of 4.2.1. That was not proved by expert or any other evidence, nor could it be assumed for the purposes of 4.2.1 that the cost of a truly comparable house could be ascertained by reference simply to the aggregate of the cost of what was an incomparable house plus the cost of converting it to make it more comparable. Few concepts would be more familiar to valuers than that improvement -works do not necessarily (and, indeed, perhaps, only rarely) add the whole of their cost to the value of the premises upon which the work is done. Mr Sibbick would have needed to call expert evidence if a true 4.2.1 figure for the cost of a truly comparable house was to be substantiated, but that was not done. Therefore, no figure satisfying 4.2.1 is to be found in the case. But 4.2.1 is subject, as it says, to the detailed provisions “outlined below” and that draws one on to 4.2.2 and 4.2.2 comes to the rescue because there it is said, and one has to underline the word “normally”, that:

“The level of assistance will normally be calculated from the interest on the difference in price between the employee’s old home and new home …”

	in order to determine the level of assistance which is calculated by reference to rates of interest on that capital difference. That normal approach does throw up a capital figure, £6,000, and in turn throws up the income figures which are calculated by reference to it. Mr Sibbick can have no complaint about mortgage assistance related to and calculated duly by reference to the £6,000 capital difference because, as the tribunal found, that had been offered to him as long ago as March 1998. 

12.	Mr Sibbick before us has referred to the Hampshire scheme and he says that he was poorly advised. But we do not see that as taking him any useful distance. He must have known that it was Southampton that was to be his employer; it must have been plain enough that it was the Southampton scheme that was relevant. If he was in any state of confusion about the matter, it really did behove him to take advice or clarification and we have already cited the limited extent to which he did that, so far as the Employment Tribunal held was the case. The tribunal also held that it was unfortunate that details of the Hampshire County Council mortgage subsidy scheme had been included in error in the papers sent to him, but they went on:

“11. … it was obvious that it contained different terms and was a separate scheme. …”

	So it is difficult, in the face of that finding, for us to pay attention to the Hampshire scheme and what the Hampshire scheme might have provided. 

13.	We are, of course, only concerned with errors of law and we have been unable to detect an error of law in the tribunal’s conclusion that it was interest related to £6,000 that was the level of assistance that was due to Mr Sibbick under the Southampton scheme. Seeing no arguable error of law, we must dismiss the appeal.