debt recovery policy (rates & charges) · payment within 14 days from the posting date of the...

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Debt Recovery Policy

(Rates & Charges)

Date policy was adopted by Council: 22 May 2013 Resolution number: 99/13 Previous Policy review date: May 2013 Next Policy review date: May 2016 Reference number: C1347936

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Policy Debt Recovery Policy - Rates and Charges

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1. OUTCOMES:

To ensure the efficient and effective recovery of outstanding rates and charges. Sundry debtors are subject to a separate Sundry Debtors (Accounts Receivable) Debt Recovery Policy.

2. OBJECTIVES:

This policy has been formulated with the following objectives:

To ensure consistency, fairness, integrity and confidentiality of all proceedings for both the Council and the debtor.

To fulfil the statutory requirements of the Local Government Act, 1993 with respect of the recovery of rates and charges.

To maximise collections of outstanding debts and to optimise Council’s cash flow. Also, to prevent repeat offenders from delaying the recovery process.

To be sympathetic and helpful to ratepayers and other debtors suffering genuine financial hardship.

3. POLICY:

To establish and maintain a debt recovery process for rates and charges that is consistent across all Council functions and within Council’s hardship policy

4. DEFINITIONS:

Bulk Actions/Process: Recovery action taken on multiple accounts. Costs: Amounts incurred by Council in recovering overdue debts

(e.g. Court, professional costs) which can be legally recovered from the debtor.

Date of debt: The amount due to Council on the day an application is made including arrears and current instalments in any given year

Garnishee: Legal document issued by the court ordering third parties who hold funds on behalf of the defendant to pay such funds to Council. Garnishees will be issued against the defendant’s wages, bank accounts or any third party holding funds on behalf of the defendant.

Judgment: In cases where the debtor does not respond to a Summons issued to them, the Court may make a default judgment whereby it will award a decision without having the matter heard

Notice of Demand: Demand letter from Council’s legal recovery firm issued in accordance with the ACCC guidelines as set out in ACCC v Sampson.

Penalty interest: Interest raised in accordance with the Local Government Act 1993 and as adopted by Council in its revenue policy


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Rateable valuation: Land value used for rating purposes ie net of allowances allowed by the Valuation of Land Act 1916 and the Local Government Act 1993 Section 585.

Rate reference group: This is a group consisting of the Mayor or representative, General Manager or representative, Manager Finance or representative

Rent for Rates: Section 569 of the Local Government Act allows Council to order tenants of properties with overdue rates to pay rent to Council in lieu of unpaid rates, under specific circumstances.

Sale of Land: In accordance with section 713 of the Local Government Act, Council has the authority to sell land which has any unpaid rates or charges for more than 5 years. Please refer to Council’s separate policy on Sale of Land for Unpaid Rates.

Statement of Liquidated Claim/Statement of Claim: a legal document which outlines to the debtor:

o That a claim has been made to the Court for the recovery of monies;

o Who has initiated the claim and whom the claim is against; o The monetary value of the claim; and o Time period available to relinquish the debt.

Summons: The Summons, identified as a “Statement of Liquidated

Claim”, is a legal document which outlines to the debtor:

o that a claim has been made to the Court for the recovery of monies;

o who has initiated the claim; o who the claim is against; o the monetary value of the claim; and o time period available to relinquish the debt.

Writ of Execution: Documentation served by a Sheriff on a debtor. This document allows a court to seize goods and sell the goods. The proceeds are then distributed to the defendants less part or full payment of the debt to Council. It should be noted that a defendant can stop these proceedings at any stage by either making an acceptable arrangement with Council or by paying the judgment debt in full.

5. LEGISLATIVE OBLIGATIONS AND/OR RELEVANT STANDARDS Local Government Act 1993 (NSW) Sections, 564, 565, 566, 567 & 582 and Division 5, Part 2 of Chapter 17 Local Government (General) Regulation 2005 – Clause 128 Social Security Act 1991 (Commonwealth).


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6. CONTENT:

Procedures Rates and Annual Charges Rates Notices are issued prior to 31st July each year in accordance with Section 562 of the Local government Act 1993. Instalment notices will be issued one month prior to the instalment due date in accordance with Section 562 (5) of the Local Government Act, 1993. Instalments are due on the following dates each year:

31 August 30 November 28 February 31 May Water Consumption Charges

Water consumption notices are issued on completion of the quarterly water meter reading cycle and are billed to coincide with the ordinary rates instalment due dates.

Billing based on consumption charges for water usage on all metered properties, sewer discharge and liquid trade waste discharge on non-residential properties in accordance with Best Practice Guidelines from the NSW Office of Water.

Interest on Overdue Rates and Annual Charges and Water Consumption Accounts

Interest is calculated daily on overdue rates and charges at the maximum rate announced by the Minister for Local Government each year in accordance with Section 566 (3) of the Local Government Act, 1993. Interest is not charged on legal costs.

Section 564 and 567 of the Local Government Act allows Council to provide assistance to ratepayers by writing off accrued interest charges. All applications for assistance must be made to Council in accordance with Council’s Hardship Policy.

Rates Reminder Notice (Final Demand) A rates reminder letter will be issued, where applicable within 14 days after the due date of an instalment to those ratepayers who have an outstanding instalment balance greater than $50.00 and have not made previous satisfactory payment arrangements with Council. This reminder gives the ratepayer the balance outstanding with the option of making a mutually acceptable payment arrangement. The reminder letter may be issued by Council as a pro forma notice or on Council’s letter head by Council’s recovery agent. The letter will request payment within 14 days from the posting date of the letter. If a reminder letter does not result in payment in full or a suitable payment arrangement being made, a notice of intent to commence legal action will be issued by Council’s legal recovery firm for all accounts that are over $500.00.


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All accounts that are under $500.00 will also be sent a further letter by Council’s legal recovery firm on their letterhead advising payment has still not be made and requesting that the account be brought up to date forthwith. This letter will not threaten further legal action if the ratepayer does not comply. Water Reminder Notice A water reminder notice will not be issued as a separate notice. The water consumption component will be included in the recoverable assessment instalment balance. Payment Arrangements Arrangements may be entered into with all ratepayers in accordance with Section 564 of the Local Government Act, 1993. At all times, the debtor will be offered the alternative of paying the outstanding amount in instalments. If any collection costs have been incurred, these will have to be accounted for in any arrangement, as well as interest and future instalments and accounts. Arrangements are to be negotiated with the aim of recovering all arrears and the current year’s rates and charges within the current rating year, where possible. It is Council’s intention to have outstanding balances paid within 3 months of an arrangement being made. However, Council is sympathetic to ratepayers with special circumstances and payment of outstanding amounts should be settled within twelve months from the date the arrangement is made. Current and future instalments should be paid as they fall due. Payments can be made weekly, fortnightly or monthly or as recommended by Council’s General Manager and staff. Where the ratepayer fails to adhere to an agreement: 1) Where recovery action has not commenced and the agreement is with

Council, Council will refer the case to a legal recovery firm for recovery as outlined in the arrangement Confirmation letter sent to the debtor.

2) Where recovery action has been suspended due to the ratepayer entering into a payment arrangement and the agreement has not been met by the ratepayer within

i) 3 months of the arrangement being made, the legal action will be reactivated at the level when the suspension took place,

ii) Otherwise a new demand/prejudgement letter may be sent prior to any further legal fees being imposed.

In relation to accounts that are being dealt with by our legal recovery firm ratepayers will be given 2 defaults if they have entered into weekly or fortnightly arrangements and 1 for monthly or lump sum arrangements. This is to ensure payment of the account is made in a timely manner given future instalments will fall due.


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Pensioners

Where the ratepayer is an eligible pensioner, every attempt is to be made to assist the pensioner in paying rates and charges as they fall due within the current year. However, where circumstances exist, Council may accept an arrangement from a ratepayer who is a pensioner and requests a period of no more than 2 years to clear the outstanding debt. If a period of time greater than two instalments has elapsed and no payment has been received nor a suitable arrangement made to clear the debt, legal action will commence.

Recovery Action

If no payment is received or no arrangement made following the issue of the notice of intent, a statement of claim will be prepared, issued and served by Council or its recovery agent.

Following the expiration of 28 days from the service of the claim if the ratepayer has failed to make an acceptable arrangement or file a defence then a pre judgment letter will be issued to the ratepayer.

Following the expiration of 7 days from the date of the pre judgment letter if the ratepayer has failed to make an acceptable arrangement or file a defence then to establish a charge in accordance with section 550 of the Local Government Act 1993 a Notice of Motion for Default Judgement will be filed. This has the effect of deeming the costs incurred as being “awarded” by the court, the key requirement of section 550 of the Local Government Act.

Recovery action by Council or its legal recovery firm to recover outstanding debts that will be considered may include, but not be limited to:

A garnishee of wages, bank accounts or third party order i.e real estate agents where property is tenanted;

Writ of execution on goods and chattels; Examinations summons; Service of a section 569 rent order where the property is tenanted; Sale of land for unpaid rates in accordance with Section 713 of the Local

Government Act 1993. Winding up proceedings where the judgment debtor is a company and

the judgment debt exceeds $2,000.00 A Writ of Sale where the judgment debtor is an individual and the

judgment debt exceeds $10,000.00

Arrangements for payment may be accepted after recovery action has commenced, only by Councils legal recovery firm. Should the ratepayer not adhere to the approved arrangement.

Ratepayers will be given 2 defaults if they have entered into weekly or fortnightly arrangements and 1 for monthly or lump sum arrangements.

Ratepayers that fail to adhere to at least three payment arrangements may at the discretion of Council not be given any further arrangements.

Section 712 (1) of the Local Government Act 1993 provides that proceedings for the recovery of a rate or charge may be commenced at any time within 20 years from the date when the rate or charge became due and payable.


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All legal costs and expenses incurred in recovering outstanding rates and charges shall be charged against the property in accordance with Section 550 of the Local Government Act, 1993.

In accordance with Section 459 of the Corporations Act 2001, where the ratepayer is a company and has been served with a creditors statutory demand (Section 459E of the Corporations Act 2001) and the ratepayer has not complied within the 21 day period, Council has the right to commence proceedings to have the debtor company wound up and a liquidator appointed. All debts regarding the issue of a creditors’ statutory demand must exceed the sum of $2,000.00.

Third Party Reporting

Council will not supply private credit agencies with information regarding legal action it has taken in the recovery of overdue rates. However, Council recognises that judgment details are supplied to credit agencies by NSW courts.

If a ratepayer requests proof that the debt owed to Council has been paid, and following the payment of the resolved fee, a letter will be issued by Council confirming payment has been made. Such letter will only be issued if all overdue debts have been paid.

Further, if a ratepayer requests a notice of discontinuance to finalise the judgment at the courts, Council will require all overdue debts to be paid in full. If this criterion is met, Council's legal recovery firm will carry out the process for a notice of discontinuance. If the overdue debts are not paid in full and the ratepayer requires a notice of discontinuance urgently, the ratepayer can apply for the notice of discontinuance themselves through the courts. Council will not commence the process if rates and charges are still outstanding.

Sale of Land for Unpaid Rates and Charges

Where any rate or charge is overdue and has remained unpaid for more than five (5) years from the date on which it became payable, Council may proceed to sell the land in accordance with Division 5, Part 2, Chapter 17 of the Local Government Act, 1993.

Where any rate or charge is overdue in respect of vacant land and the amount exceeds the Valuer General’s current valuation of the property, Council may proceed to sell the land in accordance with Division 5, Part 2, Chapter 17 of the Local Government Act, 1993. On an annual basis, a report shall be referred to Council for consideration listing all ratepayers who fall into the above category. The report will provide a detailed history of the circumstances of each case together with a recommendation in relation to the possible sale of the land to recover the overdue rates and charges. See Council’s Policy on Sale of Land for Unpaid Rates.

Minimum amount for legal action

Legal collection action will not commence unless the debt is in excess of $500.00


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Interest

Interest accrues on a daily basis in accordance with Section 566 of the Local Government Act 1993 on rates and charges that remain unpaid after they become due and payable at the rate adopted in Council’s revenue policy in the current fees and charges schedule available on the internet.

Hardship

Section 567 of the Local Government Act 1993 empowers Council to write off accrued interest on rates or charges payable by a person if, in Council’s opinion, the person is unable to pay the accrued interest “for reasons beyond the person’s control”, or payment of the accrued interest would cause the person “hardship”.

Section 582 of the Local Government Act 1993 allows Council to waive or reduce rates, charges and interest by any person prescribed by the regulations who is in receipt of a pension, benefit or allowance under the Commonwealth Social Security Act 1991.

In cases of genuine hardship each case may be referred to Council or the Rate Reference Group with a report for consideration in closed session.

Council’s hardship policy is available on the internet.

Sale of land for arrears of rates

Where any rate or charge is overdue and has remained so for more than five (5) years from the date on which it became payable, Council may proceed to sell the land in accordance with Division 5 of Part 2 of Chapter 17 of the Local Government Act 1993.

On an annual basis, a report shall be referred to Council for consideration listing all ratepayers with rates and charges unpaid for more than five (5) years. The report will provide a detailed history of the circumstances of each case, together with a recommendation in relation to the possible sale of the land to recover the rates and charges.

Write off of debts

Council has delegated the General Manager authority (TRIM C0923475) to:-

1) Write-off accrued interest on rates or charges payable by a rateable owner if in the General Manager's opinion: i) the rateable owner is unable to pay the accrued interest for reasons

beyond the rateable owner's control; or ii) payment of the accrued interest would cause the rateable owner

hardship.

2) To waive disputed water accounts up to the value of $1,000 subject to there being justification based on Council equipment failure or the loss of water caused by an action of Council staff. Further, all disputes over $1,000 be referred to Council for determination subject to their being justification in the form of Council equipment failure or the loss of water being attributable to an action by Council staff and all disputes not falling within the above categories be dealt with on the basis that all water registered as passing through the meter is subject to charge in accordance with current fees and charges.


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7. PERFORMANCE INDICATOR

That outstanding rates and charges not exceed 4%.


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POLICY:- Policy No: Policy Title: Debt Recovery Policy Date Policy was adopted by Council: 22 May 2013 Resolution Number: 99/13 Previous Policy Review Date: May 2013 Next Policy Review Date: May 2016 PROCEDURES/GUIDELINES:- Date Procedure/Guideline (if any) was developed:

RECORDS:- Container Reference in TRIM: Policy Container Reference in TRIM: Procedure Other locations of Policy: Intranet (linked to TRIM Container) Other locations of Procedures/Guidelines:

Intranet (linked to TRIM Container)

DELEGATION (if any):- RESPONSIBILITY:- Draft Policy developed by: Revenue Accountant Committees (if any) consulted in the development of the Draft Policy:

Responsibility for Implementation: Finance Manager Responsibility for Review of Policy: Revenue Accountant INTEGRATED PLANNING FRAMEWORK: Community Strategic Plan: Strategic Priority No. 6 Delivery Program Title: Revenue Accounting Operational Plan: Program No. 805 Senior Authorizing Officer

Position General Manager

Signature/Date

22 May 2013


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ACTION COUNCIL

MEETING DATE RESOLUTION

NUMBER REPORT ITEM

NUMBER NEW/RECONFIRMED/

AMENDED

New 21 May 2003 348 Item 4 AGM - Corporate

Amended 16 June 2006 386 Closed Session Amended 17 December 2009 625/08 Item 9 Amended 27 October 2010 270/10 3 Amended 22 May 2013 99/13 Item 13 DATE REVIEWED REVIEWER POSITION REVIEWER NAME

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