mr shailesh vara mp: resolution letter › documents › pcfs › written... · 1 complaints not...

1 Complaints not upheld 2009-10

Mr Shailesh Vara MP: Resolution Letter

Letter to Mrs K Carter from the Commissioner, 5 October 2009

I have now completed my enquiries into the complaint you sent me on 26 June and 6 July about Mr Vara’s claims against parliamentary allowances for a property in London owned by his wife.

In essence, your complaint was that Mr Vara had breached the rules of the House in making claims against the Additional Costs Allowance for interest on an mortgage which he did not hold.

I have consulted Mr Vara and the House authorities about this matter.

Mr Vara has told me that his property in London was bought in 2003, before he was elected to parliament. Since it was initially their matrimonial home, he and his wife intended that the property should be in their joint names. Their solicitor, however, drew up the deeds in Mr Vara’s wife’s name, and, to avoid losing the house through delay, Mr Vara and [his wife] accepted that arrangement. Mr Vara has told me that he was mindful that, had a dispute arisen about the ownership of the property, it was likely that the house would have been held to have been in their joint ownership anyway, notwithstanding the name on the title deeds. On becoming a Member of Parliament, Mr Vara made claims on this London property since his main home was in his constituency. The property was sold in February 2007, when Mr Vara and [his wife] moved to a property in another part of London. The mortgage on that second London home was in their joint names.

I have considered whether it was within the rules of the House at the time for Mr Vara to have made claims on the London home he shared with his wife from 2005 until they moved in February 2007, despite the fact that the mortgage and title deeds were in her sole name. I have concluded that it was a reasonable exercise of discretion under the rules at the time and fair that Mr Vara should have been able to do so. This was the home in which he lived with his wife in order to fulfil his Parliamentary duties. He has shown me evidence which makes it clear that Mr Vara intended that the property should be held jointly and he considers that he had beneficial ownership in the property. There is no suggestion that Mr Vara did not live in the property and incur expenses by so doing in the performance of his parliamentary duties, or that [his wife] received any additional financial benefit from the mortgage arrangement. Mr Vara ensured that the arrangement did not continue once he bought and moved into his new London home.

It would have been a more straightforward arrangement if the house had been held in Mr Vara’s name as well as that of his wife. But Mr Vara properly consulted the House authorities at the time to explain his particular circumstances and they exercised their discretion in advising that, in these exceptional circumstances, including the fact that Mr Vara intended to move to another home in London which he intended would be jointly held, it would be right to meet Mr Vara’s claims on the London property. In these circumstances, I conclude that Mr Vara acted in accordance with the rules of the House when he made his claims in respect of this property. I do not, therefore, uphold the complaint.

I will inform the Committee on Standards and Privileges of the outcome of this complaint at its next meeting.

I am copying this letter to Mr Shailesh Vara MP.

5 October 2009


Mr Shailesh Vara MP: Written evidence

1. Letter to the Commissioner from Mrs K Carter, 26 June 2009

I wish to register a formal complaint against Shailesh Vara.

Mr Vara claimed expenses on a house on which documentation was only in the name of his wife.

He is a solicitor and I cannot believe that he would have allowed “due to a misunderstanding on the part of our solicitor, he drafted the contract and other documentation only in his wife’s name.”

His view is that as it was a matrimonial home meant it was joint even though the deeds and bills did not convey that, would not be accepted in a court of law.

This appears to be an attempt to claim expenses to which he was not entitled and could be regarded as fraud in any other sphere.

26 June 2009

2. Letter to the Commissioner from Mrs K Carter, 6 July 2009

Further to my letter of the 26th June, I enclose a newspaper cutting regarding Shailesh Vara.1

I consider that his action in claiming expenses on a house belonging to his wife is a breach of the Code of Conduct for Members of Parliament and amount to fraud. [See EV 1, Daily Telegraph article]

6 July 2009

3. Extract from article in the Daily Telegraph, 2 June 2009

[Mr Vara’s] file shows that concern was also raised about the fact that only the MP’s wife, [name], was named on the mortgage statements for the Lewisham home. Rules would have prevented Mr Vara claiming mortgage interest payments on a property that he did not own.

He wrote back to the fees office: “Due to a misunderstanding on the part of our solicitor, he drafted the contract and other documentation only in my wife’s name.”

Mr Vara was allowed to carry on claiming on the Lewisham property as he said he and his wife were about to buy a new flat nearer to Parliament.

...

In February 2007, he and his wife sold the house, which they had bought in July 2003 for £320,000, for £470,000.

They went on to buy a four‐storey town house in central London for £1.2 million and, after naming it as his second home he claimed £6,264 on the new mortgage.

Since then he has only claimed for mortgage interest payments, totalling £22,839.

Earlier this month, Mr Vara told his local paper that he had nothing to hide. In a statement last night, he said: “The house was our matrimonial home and the name on the deeds and bills does not alter the reality that the ownership, responsibility and payments were joint.”

...

1 WE 3


4. Mr Shailesh Vara MP’s statement published in the Peterborough Evening Telegraph, 2 June 2009

The simple truth is that the allegations made by the Daily Telegraph are false.

The newspaper is putting two and two together and making five, if not six.

...

The Telegraph criticises the fact that our house was registered in my wife’s name. The house was our matrimonial home and the name of my wife on the deeds and bills does not alter the common sense reality that the ownership, responsibility and payments were joint. Millions of couples operate on a joint responsibility basis on their homes and we are no different in that respect. The Daily Telegraph knows this as they have copies of the documentation in which the Fees Office acknowledged this point.

...

I have argued on many occasions, long before the present crisis, that a much more open, transparent and cost effective system of allowances for MPs needs to be in place. As your readers will know, I was contacted by The ET on May 15, and asked if I would give details of my expenses. I was happy to do so and gave details of my claims and explained that I had never claimed for food, furniture or any other such items. I would add that nor have I ever “flipped” the designation of my home. Your headline at the time read “MP Vara has nothing to hide as expenses revealed”. That remains the case. I still have nothing to hide.

2 June 2009

5. Letter to Mr Shailesh Vara MP from the Commissioner, 13 July 2009

I would welcome your comments on a complaint I have received from Mrs K Carter about your claims for expenses relating to your Lewisham residence.

I attach a copy of the complainant’s letters of 26 June and 6 July, of the Daily Telegraph article of 2 June 2009 to which she refers, and of your own statement as reported by the Peterborough Evening Telegraph of the same date.2 In essence, the complaint is that you breached the rules of the House in making claims against the Additional Costs Allowance for interest on a mortgage which you did not hold. I have informed the complainant that I do not undertake criminal investigations and if she believes that the Daily Telegraph report suggests criminal behaviour, it is open to her to refer the matter to the police.

The Code of Conduct for Members of Parliament provides in paragraph 14 as follows:

“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”

Section 3 of the Green Book on Parliamentary Salaries, Allowances and Pensions sets out the rules for the operation of the Additional Costs Allowance. The relevant editions seem to be those of April 2005 and July 2006. The Speaker's Introduction to both editions says:

“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”

Section 3.1.1 of both editions sets out the scope of the allowance as follows:

2 WE 1 to WE 4


“The Additional Costs Allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”

Paragraph Section 3.2.1 sets out the eligibility requirements as follows:

“You can claim ACA if:

a) You have stayed overnight in the UK away from your only or main home, and

b) This was for the purpose of performing your Parliamentary duties, and

c) You have necessarily incurred additional costs in so doing, and

d) You represent a constituency in outer London or outside London.”

The principles of the allowance are set out in paragraphs 3.3.1. to 3.3.3 of the July 2006 edition as follows:

“You must ensure that arrangements for your ACA claims are above reproach and that there can be no grounds for a suggestion of misuse of public money. Members should bear in mind the need to obtain value for money from accommodation, goods or services funded from the allowances.

“You must avoid any arrangement which may give rise to an accusation that you are, or someone close to you is, obtaining an immediate benefit or subsidy from public .funds or that public money is being diverted for the benefit of a political organisation.

“ACA must not be used to meet the costs of a mortgage or for leasing accommodation, from:

• yourself;

• a close business associate or any organisation or company in which you—or a partner or family member—have an interest; or

• a partner or family member.”

Paragraph 3.6.1 (3.8.1 in the July 2006 edition) says

“Documentation needed

Please supply the following:

If you have a mortgage, a copy of your last statement of interest—and future statements at annual intervals. If this does not give enough information about the mortgage, further evidence may be required...”

Paragraph 3.11.1 (3.13.1 in the July 2006 edition) gives examples of expenditure allowable under the additional costs allowance. These include

“Mortgage costs—for one additional home in either London or the constituency. This is limited to the interest paid on repayment or endowment mortgages, legal and other costs associated with obtaining (and selling) that home (eg stamp duty, valuation fees, conveyance, land searches, removal expenses)

...

• Maintenance & service agreements

necessary repairs to make good dilapidation

decoration”


I would welcome your response to the complaint, taking account of the rules which I have summarised above. In particular, it would be helpful if you would explain:

1. the background to the purchase of the Lewisham property, including the date of the purchase and details of the mortgage; the date when the property was sold and how the proceeds of the sale were deployed;

2. where you had your main home from May 2005 to the time when the Lewisham property was sold;

3. the ACA claims you made for your Lewisham property from July 2005 to February 2007 and the reason for each of those claims;

4. why you made claims for mortgage interest and maintenance for a property that was apparently held in the name of your wife; and if this was the result of a misunderstanding, how it came about, when you noticed it and what action you took to rectify it;

5. your statement reported in the Peterborough Evening Telegraph that “the ownership, responsibility and payments were joint”—could you give fuller details of these joint arrangements?; whether in fact your wife joined you in staying in the home; and how far you contributed to the mortgage interest and maintenance costs in respect of your Lewisham home;

6. whether, and if so, when you lodged the mortgage interest statement with the then Department of Finance and Administration and what advice you took from the Department about these arrangements.

Any other points you may wish to make would, of course, be very welcome.

I attach a note which sets out the procedures I follow. I am letting the complainant know that I have accepted this complaint and am writing to you about it. It would be most helpful to have a response to this letter within the next three weeks. If there is any difficulty about that or you would like a word about any matter, do please get in touch with me at the House.

I would be very grateful for your help on this matter.

13 July 2009

6. Letter to the Commissioner from Mr Shailesh Vara MP, 21 July 2009

Thank you for your letter dated 13th July 2009.

I am very pleased to have the opportunity to address the complaint made by Mrs Carter, which I consider to be wholly misplaced. In short, I have always acted both within the letter and the spirit of the rules and have sought advice from the Fees Office before submitting claims made under the Additional Costs Allowance. In particular, I have followed the advice given in the Speaker’s Introduction to the relevant editions of the Green Book, where Members are advised “In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration”. This is evidenced in writing as set out below.

In answer to your specific questions, I comment as follows:

1

i. My wife and I bought the property in Lewisham as our matrimonial home prior to my election to Parliament in May 2005. We bought it in 2003 for £320,000. I attach a copy of the letter of acceptance of offer from the Estate Agents (attachment 1).3 You will note it is addressed to both me and my wife. The manuscript notes at the bottom detailing the surveyor we used and a note of a conversation I had with the Estate Agents are mine and are in my handwriting.4

ii. At the time of purchase, the property market in the country generally and in London in particular was rising and buoyant. Gazumping was common. Speed was of the essence in the transaction. This property

3 WE 7 4 These were manuscript notes dated 27 March 2003 and 2 April.


in particular was one we were keen not to lose and was one which, so we understood from the estate agents, had attracted significant interest. The house appeared cheap for what it was, undoubtedly because it needed substantial and significant refurbishment works undertaken on it. In short, we were competing with developers for the purchase and couldn't afford any delays.

iii. In light of (ii) above, you will appreciate that it was with some concern that my wife and I found we were experiencing difficulties with our solicitor. I attach a copy of my wife’s letter to him dated 15th April 2003 (attachment 2) which contains a number of relevant points.5

iv. In particular I draw your attention to the following matters from the letter of 15th April:

a. the final paragraph on the first page shows that the house being in my wife’s sole name was contrary to our intention that it should be in our joint names. My wife had the lead income in the household at the time and the mortgage funds were acquired relying on her income alone. However, we had intended that there be a simple arrangement whereby my rights over the property were stated to be secondary to those of the bank but for the house to be in joint names. As the letter shows, the solicitor was unwilling or unable to accommodate this and in light of the concern over gazumping we went ahead in my wife’s sole name. I should say that as lawyers we had in mind that even though the legal title would be in my wife’s name, nevertheless the equitable or beneficial ownership would be in joint names. Whilst we did not have a formal trust document drawn up between us, that was the arrangement, and it is evidenced by how the funds were used on the sale of the property (see below). In short, Mrs Carter appears concerned that I said the ownership was joint notwithstanding the name on the title deeds. That comment was made reflecting my legal knowledge of the distinction between legal and beneficial ownership and that what is important is the beneficial ownership. By way of example, it would make no difference if a completely different third party had owned the house legally: provided the beneficial interest rested with my wife and me, the house would still have been ours. We also had in mind that if I were to be fortunate enough to become a Member of Parliament, it would be more convenient to live in the constituency with a London home closer to Parliament, and that accordingly the house would probably not be a long term home, but rather a home for a relatively short period.

b. The final paragraph of the letter illustrates both why the letter was written by my wife rather than me and also that I was routinely the point of contact for the sale.

v. The property was sold on 23 February 2007 for £470,000 after we had owned and lived in it for 4 years during a rising market and spent c.£70,000 of our own money on refurbishment (spent within the first few months of ownership, i.e. before I became an MP).

vi. The proceeds of sale from the Lewisham property were used to part repay the mortgage on the property in Cambridgeshire, a house in our joint names (legally as well as beneficially). As regards any suggestion that the funds should have been used to lessen our mortgage on our new property in London, in Pimlico, I would point out that the annual mortgage interest payments on the Pimlico property far exceeded the full amount of the ACA entitlement and the difference was met from our family income. Moreover, we subsequently changed the mortgage provider on the Pimlico home, at which stage we also reduced the sum borrowed by use of savings from our earnings. This mortgage reduction was substantially bigger than the entire profit made on the sale of the Lewisham property. You will also note that for some 50% of the time we owned the Lewisham property, I was not yet elected to Parliament and the significant refurbishment works which account for the majority of the increase in value of the property took place prior to my election to Parliament.

2. My main home since May 2005 to the time when the Lewisham property was sold was in my constituency.

3. (i) My ACA claims between May 2005 and February 2007 are as follows:

May 2005‐March 2006: Mortgage interest £15,423.03, Utilities (TV Licence) £126.50, Council Tax £939, cleaning £2174, household insurance £596, minor repairs and other works £1460, burglar alarm premium £350. The claim for these items was submitted on 30th May 2006. Prior to that date I had explained to the Fees Office that the Lewisham property was in my wife’s name and I also explained the circumstances

5 WE 8


already set out above. They advised me to write a letter to them explaining briefly the circumstances and this I did on 23rd February 2006.6 On receipt of that letter they confirmed to me that it was fine for me to make the claim. In May I made a claim with a member of the Fees Office sitting with me and assisting me in filling out the form. A copy of my letter is attached (attachment 3) as is an internal email chain in the Fees Office (attachment 4) which confirms the conversations they had with me (although I was not privy to the email chain and did not see it until this year before the publication of Members’ expenses).7 Our offer on the Pimlico property (which we use as our second home) was accepted shortly after the ACA form was submitted and solicitors were negotiating the purchase by June 2006 (attachment 5).8 We exchanged in August with completion set at the vendor's insistence for February 2007 (attachment 6). 9 The Pimlico property is in our joint names.

April 2006‐February 2007: mortgage interest of £14173.47 for the period up to sale of the Lewisham property. A note on the claim form made by a member of the Fees Office says “this payment/arrangement has been approved by [two names]” and is signed by a third officer considering the claim. Supporting statements were provided. I also claimed for Council Tax, burglar alarm and gas for which I received £1672. After that the claims transferred to my new property for the rest of the year, which, as I understand it, do not form part of the complaint against me.

(ii) The reason for each of these claims was the same.

They were expenses incurred by me in maintaining a second home in London (at that time in Lewisham) in addition to my main home (in my constituency in Cambridgeshire) for the purpose of performing my Parliamentary duties. They therefore comply with s 3.2.1 of the Green Book.

The claims were made following conversations with, and advice from, the Fees Office in accordance with the Speaker’s Introduction to the Green Book.

The forms were almost always completed with assistance from a member of the Fees Office at their premises at ... I usually dealt with the same person, who would additionally check with a senior officer whilst I was with him if it was felt necessary to do so;

The Fees Office expressly approved the claims, and there is written confirmation of this approval on their own file.

Almost all of the claims, and certainly all of the mortgage interest claims, were supported by documentation verifying the amounts.

4. See answer under 1 above. In particular, I made the claims because the house was beneficially owned by both of us even though the legal ownership was in my wife’s name. As explained above, the legal ownership was in my wife’s name because of difficulties experienced with our solicitor at the time. Perhaps difficulties is a better way of describing it rather than a misunderstanding, but the point is we thought he could and would produce legal documentation to fit the circumstances. However, he was either not willing or not able to do so. We did not have enough time to instruct a different solicitor for fear of losing the sale. I knew from the beginning the legal interest in the property was in my wife’s name, nevertheless, the beneficial interest was in our joint names. Accordingly, no rectification of the problem was necessary. In fact there was no problem. Mrs Carter did not appreciate the beneficial ownership of the property was different from the legal ownership when making her complaint, but you now have the full facts.

5.

i. The ownership of the beneficial interest was joint. Put simply that means during ownership the right to occupy the property was joint and the proceeds of sale were joint too.

6 WE 8 7 WE 9, WE10 8 WE 11 9 WE 12


ii. It is perfectly usual and normal to have different legal and beneficial ownerships. See also answer to 1 above.

iii. The responsibility was joint because had we defaulted both of us would have been liable to the bank, me indirectly. I illustrate this as follows: (a) Had we defaulted on the loan, the bank could have called in the mortgage and sold the property over our heads. That would have been true regardless of whose name the property was in provided the bank had ensured the correct documents were signed before the loan was entered into (which banks are always keen to ensure for obvious reasons). (b) Had the bank sold at a loss in those circumstances it would have had a cause of action against my wife solely for the shortfall. However, she would have had a cause of action against me for my share of the debt reflecting the trust arrangement between us. It therefore amounts to the same thing in practical terms. (c ) Since the legal sanction for non‐payment of the mortgage loan bit on both of us, the responsibility to ensure it was paid fell on both of us too. So it was a joint responsibility.

iv. The payments were joint because we each contributed about 50% of the payments of the interest averaged over our ownership of the property. Utility and other household bills were treated jointly and were paid by either of us, irrespective of whose name they were in (some bills were in one name, some in the other and some were in joint names). Time‐wise, before becoming an MP I probably invested more time in the running and management of the house, particularly during the refurbishment work which I supervised, but again the venture was a joint one.

v. I confirm that my wife stayed with me in the same home. We try to ensure that so far as is possible, we live as a family, which means that when I am in the constituency home, my wife is with me there and when I am in London, then she is with me in London.

6. Yes. See answer to 3 above.

I very much hope that this addresses any concerns both you and indeed Mrs Carter may have. If you require any further information, please do not hesitate to contact me.

21 July 2009

7. Letter to Mr Shailesh Vara and his wife from estate agents, 22 March 2003

We are writing to confirm our clients’ acceptance of your offer of the sum of £320,000, for the purchase of the above property, subject to contract.

We also wish to confirm that the solicitor who will be acting on your behalf is [name] and we have written to him setting out the relevant information.

Please feel free to contact us if you have any questions. In the meantime, we will keep you fully informed as to the progress of the sale of this property.

22 March 2003

8. Extract from letter to solicitors from Mr Shailesh Vara’s wife, 15 April 2003

Thank you for your letter of 11th April.

May I say at the outset that I very much hope that the disagreement that we have had to date will come to a halt with this letter.

[material not relevant to this complaint]

...

With reference to your letter of 11th April, I feel it requires some clarification. I did not suggest that the signature on the consent form by Shailesh was sufficient for the purchase to be in joint names. Rather, we had a long


discussion about a separate deed in which he would subordinate his rights to those of the building society, and we discussed drafting the same. That said, Shailesh does not want to create further tension in the matter, nor do we wish to risk losing the purchase because of further delays, and we have therefore decided to proceed with the purchase in my sole name.

[further points not relevant to this complaint]

15 April 2003

9. Letter from Mr Shailesh Vara to the Director of Finance and Administration, 23 February 2006

With reference to my claim for the Parliamentary Housing Allowance for a second home, I am writing to explain why the matrimonial home is in my wife’s name alone, even though I too live there.

When my wife and I bought the house approximately 2 years ago, it had been our intention to buy it in our joint names. However, due to a misunderstanding on the part of our solicitor, he drafted the contract and other documentation only in my wife’s name. When we realised that he had omitted my name, we wished to rectify the position. However, it was important that we progressed with the purchase quickly, as there was another potential purchaser who had also bid for the property and it was feared that he might outbid us. Consequently, we decided to proceed with the purchase in my wife’s name alone in order not to jeopardise the purchase.

I am pleased to say that this irregularity is now being rectified as, since my election, we have found a flat in Westminster and we are in the process of buying it as it is much closer to the House. The flat is being purchased in our joint names.

I trust that this helps to clarify the position and am happy to provide you with any further information that you may require.

25 February 2006

10. Exchange of e-mails between officials in the Department of Resources

E-mail of 14 March 2006 from official 1 to officials 2 and 3

[name of official ], this was the decision we made. He needs to get the deeds updated then he can clarify from that date. However, I think we had a query as to whether this actually was a claim for his second home? Can you check?

E-mail of 15 March 2006 from official 3 to official 1

As I am sure you are aware, Mr Vara did seek advice from us earlier in the year and was told that a letter of explanation was sufficient, as the arrangement would soon be coming to an end. Bearing in mind our previous advice, do you think that this should affect our current decision in any way? If not, I wonder if it would be too late to ask him to make the necessary changes.


I’d forgotten the arrangement was ending soon. I am happy to stick with the letter of explanation and to leave things as they are if you’re happy with that?


We’ll speak to the MP and tell him that our original decision stands. I have asked [official 2] to contact the Member with our decision.

We will add the standard ruling on such cases to our ACA compliance listing, so that we give a consistent answer to this matter in the future.



Fine, thanks.

11. Letter to Mr Shailesh Vara and his wife from solicitors, 14 June 2006

Your purchase of [London property]

I have finally received draft papers. I therefore report as follows ...

[material not relevant to complaint accepted]

14 June 2006

12. Letter to Mr Shailesh Vara and his wife from solicitors, 30 August 2006

Your purchase of [London property]

Further to our various recent conversations, contracts in relation to your purchase of the above have been exchanged with completion agreed for February 14th next year.

I attach information sheet which I hope will assist with your arrangements.

I have submitted the report on title requesting funds from the mortgage company in time for that date, but of course the mortgage offer would expire in the meantime; should you change your lender, please advise me at the earliest opportunity to ensure that we do not incur any delays in obtaining funds at the appropriate time.

30 August 2006

13. Letter to Mr Shailesh Vara MP from the Commissioner, 22 July 2009

Thank you for your letter of 21 July about this complaint in respect of your expenses claims relating to your former Lewisham residence.

I was most grateful to have this full and clear explanation of the position. Before taking this further, I would be very grateful if you could clarify the following points:

1. Is your case that the fact that the mortgage was in your wife’s sole name was not relevant for the purpose of the Green Book rules because you held beneficial ownership of the property, or is it, as suggested by your reference to an irregularity in your letter to the Department of 23 February 2006, enclosed as attachment 3 to your letter, and as implied by the Departmental mails enclosed with attachment 4 to your letter, that this was strictly outwith the rules, but was intended to be rectified by your move to a new property in the summer of 2006? In any event, it would be helpful to know why this purchase did not proceed

2. Related to that, your letter of 23 February 2006 to the Department of Finance and Administration, submitted as attachment 3 to your letter10, states that: ‘When we realised that he had omitted my name, we wished to rectify the position.’ Could you confirm whether that was your intention at the time, which could not in the event be realised in advance of the purchase of the Lewisham property, or whether it was your intention to rectify the position after the purchase (for example, by a change to the mortgage)? In any event, could you let me know whether you considered at any time rectifying the position during the time that your wife held the mortgage on that property and what were your reasons for not doing so?

If you could let me have a response to these questions, ideally within the next two weeks, then would expect to consult the Department of Resources for their comments on this matter.

10 WE 9


Thank you again for such a prompt response and I look forward to hearing from you.

22 July 2009

14. Letter to the Commissioner from Mr Shailesh Vara MP, 7 August 2009

Thank you for your letter dated 22nd July 2009.

In answer to your numbered points, I respond as follows:

1.

i. In a sense both. I think that the Rules do allow for beneficial ownership only rather than just for legal and beneficial ownership combined, but that in my case, it is not actually necessary to determine this finally. This is because I asked the Department if it was acceptable to claim in the circumstances in which I found myself and they said it was, provided I wrote a letter explaining why the house was in my wife’s name. A full description of my conversation with them on the subject prior to my writing to them is set out in Appendix A to this letter. With my last letter I enclosed (at attachment 4) the internal chain of emails confirming their original decision. You will recall that I did not have sight of the emails at the time, so to the extent they say the arrangement was outwith the rules, I was not aware of this.

ii. I deduce from your question that you may be concerned that the Department may not have been content for the arrangement to continue as long as it did. In fact they were well aware of the situation, and I enclose with this letter a copy of my last claim in respect of the Lewisham property (Appendix B) where you will see the Department have marked on the claim form that the arrangement is approved not only by the person processing the claim, but also by two very senior members of the Department with whom the officer dealing with the case had double checked.11

Unfortunately I only have a redacted copy, but the confirmation is still fairly easily visible under the shading. You will note further, from page 2 of the claim form, that I set out the address of the Lewisham property expressly and the address was ticked by a member of the Department.

iii. The story behind the delay in our move is typical of people moving in the London property market at that time. We found a flat which we wanted to buy and had an offer accepted. Our solicitor then investigated title and found an unacceptable flaw in the terms of the lease. We invited the vendor to have this rectified with the landlord. Initially she agreed, but whilst the process was going on a new purchaser offered her £50,000 more for the property. We were given the option to take the lease “as was”, pay £50,000 extra and exchange by the end of the week. We declined to do so. ...

iv. That was in May 2006 and in the same month we found a different property and had an offer accepted on it. The vendor then appeared to be getting cold feet and the negotiations dragged on. This was far from ideal, not least as by that time .... and we were very keen to move quickly so as to be in our new home .... Eventually the vendor said she would exchange but only if we delayed completion until February of the next year. It was a vendor’s market and we reluctantly agreed. I enclose a copy of our solicitor’s letter dated 15th May 2006 (Appendix C) which from its content (which sets out when the flat deal collapsed) and the manuscript note on its face (which shows us sending £400 in respect of the Pimlico property 11 days after the letter was written) illustrates the initial timeline.12

3. The former. There seemed no point in rectifying the position after the event, particularly as we were

11 WE 15. The note, signed by official 3, said “This arrangement has been approved by [Official 1]/[another senior official] 17.05.07”

12 WE 16. The note said “+£400 for searches on [address] re tele call 26/5”


planning to move house in the event that I was elected to Parliament. As explained previously, we both understood the ownership structure and the situation.

I reiterate that I sought advice at the outset from the Department, which Members are recommended to do in the Speaker’s Introduction to the relevant editions of the Green Book—

“In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration.”

Moreover, the same Speaker’s Introduction goes on to say:

“The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules”.

You will note that my last claim was signed off by two of the most senior people in the Department.

I was entitled to rely on the “authority [of the Department] to interpret... these Rules”.

At all times I have acted both within the letter and the spirit of the Rules of the Green Book.

I hope that this is helpful.

7 August 2009

Appendix A

When I first sought advice from the Department, I explained to them that the Lewisham property was owned jointly (by my wife and me) and that we undertook joint financial and other responsibilities, although, for reasons I explained to them, the deeds were in her sole name.

I was then asked to explain briefly, in writing, why the house was in my wife’s sole name. I was only asked to explain the reason for her sole name on the deeds, nothing else. I did as I was asked, and a copy of the letter has previously been supplied as Attachment 3.


15. Mr Vara’s claim of 17 May 2007


16. Letter to Mr Shailesh Vara and his wife from solicitors, 15 May 2006

Thank you for your email of the 5th May, 2006. I have not yet had a request to return papers, other than the deadline that was issued(!)

In the meantime, I enclose my account for work to date, having made the greatest reduction possible. Most importantly, I wish you every success in finding a more suitable property to purchase.

15 May 2006

17. Letter to the Director of Operations, Department of Resources, from the Commissioner, 11 August 2009

I should be grateful for your advice on a complaint which I have received against Mr Shailesh Vara MP about his claims for mortgage interest in respect of a mortgage held in his wife's name.

The essence of the complaint is that Mr Vara breached the rules of the House in making claims against the Additional Costs Allowance for interest on a mortgage which he did not hold. [list of enclosures]

I would welcome your comments on the complaint. In particular it would be helpful if you could let me know

1 When the Department was first approached by Mr Vara over this matter, and what advice was given. It would be helpful to have copies of any record of this advice;

2 What discussions took place with Mr Vara both before and after receipt of Mr Vara’s letter to [Director of Resources] of 23 February 2006; whether any reply was sent to Mr Vara in response to this letter, and why there was the apparent change of mind in this specific case as detailed in the email exchanges of 14‐16 March 2006, of which clean copies would be helpful;

3 What view the Department takes of the continued payments for the period from May 2005 to February 2007 in the light of Mr Vara’s expectation of an earlier move and the comments made by the Department about an early ending of the arrangement;

4 The general view taken by the Department of ACA claims for mortgage interest payments where the Member is not the mortgagee, and the Department’s view of Mr Vara’s reliance on the principle and practice of beneficial ownership, and how this relates to Green Book rules.

I should also be grateful if you could let me have copies of Mr Vara’s two claims in respect of his Lewisham property, plus the supporting documentation, including the mortgage interest statements, along with any other documents or comments which you consider would assist my inquiry.

I should be grateful for a response by 18 September.

11 August 2009

18. Letter to the Commissioner from the Director of Strategic Projects, Department of Resources, 8 September 2009

Thank you for your letter of 11 August 2009 concerning a complaint against Mr Vara. You have asked for the Department’s advice on this complaint and, in particular, our answers to four questions.

First you ask when Mr Vara first approached the Department on this matter and what advice was given. The only records held by the Department are:

a. Mr Vara’s letter to [Director of Resources] of 23 Feb 2006 (there is no record of a reply to this)

b. the e‐mail exchange, of which there is an earlier page

c. a record on our Enquiries and Advice Team log of 5 January 2006 that Mr Vara had sought guidance about ACA Mortgage issues and that he intended to claim the following month


d. a further log record of 14 March 2006 which was a request for the official to whom he usually spoke to telephone him about his ACA claim

We surmise that, following the first contact, we suggested he write in with his explanation, which he did with his letter of 23 February. There were certainly discussions with Mr Vara following this letter (this is alluded to in the e‐mail exchange and officials can recall the discussions taking place, though not the detail of the advice). Records show that Mr Vara only made the one claim for 05/06. This was submitted in May 2006. His first ACA1 nomination form was dated 10 November 2005, but the date of receipt is not recorded.

Mr Vara says in his letter to you of 21st July that he usually dealt with the same member of the Department’s staff. I can confirm that this was indeed the case; Mr Vara would visit the Department where a member of the Enquiry and Advice Team would advise Mr Vara on completing his claim.

Secondly, you ask what discussions with Mr Vara took place before and after his letter to [Director of Resources] of 23 February 2006; whether any reply was sent to that letter; what the reason was for an apparent change of mind in the Department; and for copies of relevant documents.

For the answer to the first two limbs of this question, please see my reply to your first question. On the reasons for the apparent change of mind, please see the reply to your fourth question. On documents, please see the penultimate paragraph of this letter.

Thirdly, you ask for the Department’s view of the continued payments from May 2005 until February 2007. For the answer to this question, please see the answer to the following question.

Fourthly, you ask for a general opinion on ACA claims for the payment of mortgage interest when the Member is not the mortgagee; and specifically ask for comment on Mr Vara’s reliance on his beneficial ownership of the property, and how this relates to Green Book rules.

It is quite customary for a Member and his or her spouse to be joint mortgagees and for mortgage interest to be paid in respect of the whole mortgage. The Green Book which was in force in May 2005 is clear about the legitimacy of such claims. However, it is also implicit in that Green Book that, if mortgage interest is being paid under the ACA, there is an expectation that the Member ought to be a mortgagee (“if you have a mortgage...” —my emphasis).

For this reason, it seems to me entirely right that when officials of the Department became aware of the legal title of the Lewisham property, they questioned Mr Vara’s entitlement to reimbursement of mortgage interest.

However, the Department has always had the task of exercising judgement in difficult cases. The Speaker’s Introduction to the Green Book made it clear that cases of difficulty arise, and that the Department had the authority to interpret the rules. Mr Vara’s case was one such difficult issue. Although the Department’s initial reaction was that mortgage interest should not be paid in the circumstances, our more considered judgement was that the exceptional circumstances of the case meant that Mr Vara’s claim could be regarded as being in respect of costs he had wholly, exclusively and necessarily incurred when staying overnight away from his main residence. By “the exceptional circumstances of the case”, I mean the following:

a. Mr Vara’s explanation of the circumstances in which the house came to be in his wife’s sole name

b. The normality of financial transfers between husband and wife

c. The reasonableness of the designation of the Lewisham residence as Mr Vara’s second home

d. Mr Vara’s intention to regularise the position when he moved

It is certainly the case that the Department has always wanted mortgage arrangements to be as straightforward as possible, and that it would have been more comfortable if Mr Vara had been the mortgagee. We could have insisted that the property was remortgaged in joint names, but it seemed more reasonable to continue paying while Mr Vara found another property. That Mr Vara did not complete the purchase until February 2007 (that is, about a year or so after the matter was first raised with the Department) does not seem exceptionable, especially as Mr Vara had entered a contractual obligation to purchase the new property by August 2006.

I have taken advice on the issue of beneficial ownership from [...]. They confirm that the legal interest in property (which would be shown by the name on the Title Deeds) can be separate and different from the beneficial interest.


Beneficial interests can be created expressly—for example, by drafting a Trust Deed, stating that the Trustees hold the property on behalf of others. Alternatively, they can be created by the operation of the law —for example to carry out what was originally agreed by the parties despite what the Title Deeds may say.

Mr Vara tells you that:

a. He and his wife originally intended to purchase the property in joint names. He has provided you with a letter from the estate agents in March 2003 which confirms that the offer to purchase was made in both names.

b. [Mr Vara’s wife] funded the purchase completely, using a mortgage. [Mr Vara and his wife] therefore asked their solicitor to draft what we assume would have been a Declaration of Trust, which would have confirmed that Mr Vara’s interest in the property would rank behind that of the mortgage lender. However, this was not done—it is not clear whether this was because the solicitor was unwilling to do so, or if the mortgagor refused to accept anything other than a simple transaction. In order to avoid losing the purchase, [Mr Vara and his wife] decided to proceed in [Mr Vara’s wife’s] sole name. Mr Vara has provided you with a letter from his wife to their solicitor, dated 15 April 2003, in which she complains that their instructions have not been carried out and asked him to go ahead with the purchase in her name only to avoid any further delay.

c. Bills and mortgage payments were shared equally from the purchase of the property in 2003 until its sale in February 2007.

d. When the property was sold, [Mr Vara and his wife] used the proceeds to pay off part of the mortgage on their home in Cambridgeshire. This was owned in their joint names. In addition, their subsequent second home in Pimlico is also in joint names.

In cases like this, where no Trust Deed was ever drafted, I am advised that it can still be possible to establish that property was held in trust. The estate agent’s letter and letter of complaint from [Mr Vara’s wife] to their solicitor are clear evidence that [Mr Vara and his wife] originally intended to purchase in joint names but that their plans had to change. In addition, it would also be relevant that they both lived at the property, that bills and expenses were shared and that the sale proceeds were used to fund other jointly owned property. It is therefore perfectly possible that, had a dispute arisen between them while they still owned the property, the Court would have decided that [Mr Vara’s wife] owned the property on trust for them both.

Moreover, had the bank repossessed the property, [Mr Vara’s wife] could potentially have claimed against Mr Vara for a contribution towards any remaining mortgage debt, by proving that they had always intended to share the beneficial interest.

This advice on beneficial ownership seems to me to corroborate the Department’s judgement that it was right to pay Mr Vara’s mortgage interest on the second home which he occupied with his wife from 2005 to 2007, and in which he had a distinct interest—albeit that the formal title happened to be in his wife’s sole name.

Finally, you ask for copies of Mr Vara’s two claims in respect of his Lewisham property, plus the supporting documentation, including mortgage interest statements. I am enclosing a copy of the e‐mail exchange and a copy of the claim Mr Vara has already provided you with;13 we would be happy to provide additional documentation concerning Mr Vara's mortgage interest statements should Mr Vara give us permission to do so.

I hope this covers all your questions. As ever, we will be happy to provide any additional information you need.

8 September 2009

19. Exchange of e-mails between officials in the Department of Resources


Hi [...] do you have a note of the decisions we made re: ACA payments?

13 The claim is at WE 15, and the e-mail exchange at WE 10 and 19.



Not sure which specific decisions you are referring to.


I meant the ones relating to the specific Members cases—I don’t seem to have anything on Shailesh Vara’s case (the one where he was not on the mortgage) and the decision we took about him...


Sorry for being so vague.

My recollection is that we agreed that in order to claims ACA for a second home the Member must be able to prove title to a first property, therefore deeds of an existing property would have to be updated before this could be classed as the main home or the ACA home.

The remainder of this exchange is at WE 10

20. Letter to Mr Shailesh Vara MP from the Commissioner, 9 September 2009

I have now heard back from the Department of Resources about this complaint against you in respect of your claims for your London property from 2005 to 2007 which was held in your wife’s name.

I attach a copy of my letter of 11 September to the Department and a copy of their response of 8 September, together with its enclosures. As you will see, the Department concludes that, in the exceptional circumstances of the case, your claim could be regarded as being in respect of costs you would wholly exclusively and necessarily incur when staying overnight away from your main residence. They have also advised on the points you have made on the effect of beneficial ownership.

I need now to consider how best to resolve this complaint. Having carefully considered the evidence you have given me, and the advice from the House authorities, I am minded not to uphold the complaint. I attach an extract from the draft of a letter which I would propose to send to the complainant.

I would welcome any comments you may wish to make on the letter from the Department of Resources and my proposal for resolving this matter. I would welcome also any comments you may have on the factual accuracy of the draft letter to the complainant.

If you could let me have a response to this by 22 September, subject to your comments, I will aim to conclude the matter shortly thereafter.

9 September 2009

21. Letter to the Commissioner from Mr Shailesh Vara MP, 2 October 2009

Thank you for your letter of 9 September together with enclosures.

I have no further comments to make on the issue and would like to thank you for not upholding the complaint, a decision which I believe to be the correct one.

May I also take this opportunity to thank all your staff and colleagues who throughout this investigation have been very courteous and helpful whenever I have needed to deal with them.

2 October 2009

mr shailesh vara mp: resolution letter › documents › pcfs › written... · 1 complaints not...

Documents