URGENT qualifying loans for mortgage payments

Has anybody any simlar experience of this:

Claimant on IS. Ct has leashold mortgage of 15,000 with Natwest while self employed in 1994. Ct was renovating property as it was not suitable to live in and was borrowing form brother a bit a time in order to renovate approx amount cost for renovation £31,000. However ct unable to meet mortage repayments in 1999 when he became ill so brother lent him the 15000 loan in order to prevent repossession. Ct became sick and claimed IS in 1998. In 1999 Ct registered loan from Brother to make it official. He did this on the advice of JCP. Ct made a claim for housing costs but this was refused on the grounds that the loan was taken out while on IS. The loan form brother is treated as a new loan. The JCP are using evidence that the original loan was used for business and was not for the same purpose as the brothers loan. 

We would be trying to argue that the loan form brother of £46,000 (£15000 mortgage + £31000 renovation costs) was taken out to repay original loan, which was for purchasing home and renovating prior to Ct being on IS. Therefore loan qualifies.

I was also wondering if anybody new of any relevant caselaw regarding loans from family members.