THE parents of two men withDown's Syndrome, who look after them at home, have lost thousands of pounds on claims for arrears of severe disability payments.

The payments would have been worth about #3000 to Mrs Isabella Laing, whose 33-year-old son Neill is also diabetic and severely mentally disabled, and Mr John McFaul whose son Michael, 31, is severely mentally disabled. Both were claiming for arrears of a payment which is now worth #37 a week.

Yesterday's decision at the Court of Session, to dismiss their actions, was greeted with disappointment by The Action Group (Learning Disabilities).

Spokesman Mr Mark Brough described the system as ''a lottery'', pointing out that payments of #10,000 had been made in some cases, but thousands of others in Scotland had lost out.

The Action Group backed the actions by Mrs Laing, of Deanpark Avenue, Balerno, Edinburgh, and Mr McFaul, of Forthview Crescent, Danderhall, Midlothian, who were contesting a ruling by the Social Security Appeals Tribunal that they had made their claims too late.

Mr Brough explained: ''People who applied for late appeals up to a certain point were allowed to pursue them. It's a highly confusing and complex issue which people couldn't work out for themselves.

''It seems to have become a bit of a lottery depending on where you lived and what advice you had access to.''

In a written decision at the Court of Session yesterday, Lord Nimmo Smith explained that the severe disability premium (SDP) became payable with effect from April 1988.

Mrs Laing said that at that time her claim for SDP as an element of income support was refused by a DSS adjudication officer on the basis that her son was living in the same house. Mr McFaul said his claim on his son's behalf was refused on the same grounds.

The judge said the assumption was made under the social security regulations that people in the situation of Mrs Laing and Mr McFaul were likely to be able to help cope with the disability and that the SDP was not needed.

In November 1994, however, the Court of Appeal in England decided that a severely disabled person who lived with her parents in their house was entitled to the premium.

Both appeals in this case had been lodged in the context of that case with the assistance of The Action Group (Learning Disabilities), but Lord Nimmo Smith pointed out that the Court of Appeal ruling was later overturned by the House of Lords.

There was no suggestion that any distinction could be made between the facts in that case and the cases presently in the Court of Session.

Normally, an appeal against the decision of an adjudication officer had to be lodged within three months, although the time limit could be extended for special reasons. Mrs Laing had not written to the Benefits Agency until August 1994 appealing the decision made in 1988 not to allow her son SDP.

She accepted she should have applied within three months but explained she had only recently realised her son should have qualified for the premium. When he first got income support the system was new and complicated and the DSS leaflets had been misleading, she said.

The letter added: ''We just had to trust that Neil was getting the right amount from the information we had given the DSS at the time. I hope you will agree it is not fair for disabled people to miss out on money . . . just because the appeal was not made at the right time.''

Mr McFaul wrote a letter in similar terms in January 1995.

Each application for an extension of time was refused by a Social Security Appeal Tribunal and Lord Nimmo Smith said both Mrs Laing and Mr McFaul were now seeking a judicial review of these decisions on the grounds that they were unreasonable.

The judge pointed out that both applications for extensions had been prompted by the Court of Appeal case in England and had been decided by the tribunal before the House of Lords' decision was known.

In the light of the Lords decision, which had overruled the appeal court, the original decisions of the adjudication officers could now been seen to have been correct.

Lord Nimmo Smith said he could see no basis for deciding that the decision to refuse an extension of time for an appeal was unreasonable, and dismissed both cases.