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IRRV FORUM WEBINAR -‐

30TH SEPTEMBER 2015

COURT COSTS: AN UPDATE

GARY L WATSON IRRV (HONS) DEPUTY CHIEF EXECUTIVE IRRV

Institute of Revenues Rating and Valuation www.irrv.org.uk [email protected]

OUTLINE OF PRESENTATION

•  IntroducHon

•  Recovery Procedures

•  Key LegislaHon

•  Costs

•  The Reverend Nicolson Case

•  Way Forward


THE REVERAND NICOLSON

WORKSHOP


INTRODUCTION (COUNCIL TAX HANDBOOK: CHILD POVERTY ACTION GROUP)

(9TH EDITION: 1ST OCTOBER 2011) IntroducHon “Just as the last ediHon of this Handbook was going to press in 2009, the problem of corner cu]ng in liability order proceedings was highlighted in a Parliamentary statement by the then JusHce Minister, Bridget PrenHce. In a statement in October 2009, she revealed that invesHgaHons by Her Majesty’s Courts Service (HMCS) staff had idenHfied examples of a small number of Magistrates’ Courts failing to follow the correct procedures. “ “Costs added to council tax recovery at liability order proceedings and for enforcement appear to provide a source of short-‐term revenue and profit to local authoriHes, as well as to bailiffs and to a small number of other professionals, such as insolvency pracHHoners. Costs charged for enforcement also help cover up levels of default; those debtors who pay subsidise those who do not.”



(9TH EDITION: 1ST OCTOBER 2011) Chapter 11: Enforcement “It appears that many local authoriHes may use liability order costs as a form of revenue raising. This is likely to be in breach of the intenHon of the regulaHons, which allow for costs that are “reasonable”. A Parliamentary answer obtained in February 2009 from Bridget PrenHce, Minister of JusHce, indicated that the cost of issuing a liability order through the magistrates’ court system was £3.00. This represents the court’s administraHon costs and also the costs associated with the local authority’s acHon. While it is likely that local authoriHes will have discussed a level of costs with the clerk to the court, PracHce Note No. 9 (paragraph 12.1) points out that the court should be saHsfied that the amount claimed in costs is no more than that reasonably incurred by the local authority. You should therefore query other amounts included in the costs on a summons, to establish why they have been incurred.”



(9TH EDITION: 1ST OCTOBER 2011) Acknowledgements

“Thanks are due to Dave Paterson’s scruHny of legal issues, and to Carolyn George and Sarah Clarke for rewriHng and checking the council tax benefit chapter. I am also parHcularly grateful to Robert Telfer for his knowledge of and contribuHon on the law in Scotland and to Gary Watson of the InsHtute of Revenues RaHng and ValuaHon. Thanks are also due to staff and volunteers at Nucleus Legal Advice in Earl’s Court, Karen Buck MP, The Reverend Paul Nicolson, Joanna Kennedy and Henu Cummins of the Zacchaeus 2000 Trust, Peter Tuion, Debt Policy Officer of the CiHzens Advice Bureau, members of the Enforcement Law Working Group, the Walton CiHzens Advice Bureau and Councillor Ben Grower of Bournemouth BC, all of whom provided informaHon and insights on different aspects of the tax and appeals system, and the impact on vulnerable people.”


INTRODUCTION (COUNCIL TAX PRACTICE NOTE NO.9 -‐ RECOVERY AND

ENFORCEMENT: DEPARTMENT OF THE ENVIRONMENT) (1992) SecHon 12 -‐ Costs “12.1 The liability order will include the costs incurred by the authority in obtaining the order. Whilst it is likely that authoriHes will have discussed a scale of fees with the clerk to the jusHces, it should be recognised that the court may wish to be saHsfied that the amount claimed by way of costs is no more than that reasonably incurred by the authority. 12.2 As with community charge, costs must be accounted for separately.


INTRODUCTION (COUNCIL TAX PRACTICE NOTE NO.9 -‐ RECOVERY AND

ENFORCEMENT: DEPARTMENT OF THE ENVIRONMENT) (1992) SecHon 12 -‐ Costs 12.3 Unlike the community charge, it will be possible for a billing authority to put on the summons that they will accept, at the summons stage, payment of costs plus the amount outstanding. If this is received, the authority must accept the payment and not proceed any further with the applicaHon for the liability order. 12.4 If, following the applicaHon for a liability order, the amount outstanding has been paid without the costs element, then a liability order can sHll be made for the costs alone.


INTRODUCTION (GUIDANCE TO LOCAL COUNCILS ON GOOD PRACTICE IN COLLECTING COUNCIL TAX ARREARS: DCLG) (JUNE 2013)

“3.3 Charges for the court summons and for liability orders should be clear on all documentaHon, with clear informaHon on how they can be paid and how they will be collected, if not. 3.4 Local authoriHes are reminded that they are only permiied to charge reasonable costs for the court summons and liability order. In the interests of transparency, local authoriHes should be able to provide a breakdown, on request, showing how these costs are calculated. While it is likely that authoriHes will have discussed costs with the Clerk to JusHces, it should be recognised that the court may wish to be saHsfied that the amount claimed by way of costs in any individual case is no more than that reasonably incurred by the authority.”


RECOVERY PROCEDURES (FLOW CHART: RECOVERY OF COUNCIL TAX)

Demand NoHce |


Reminder / Final NoHce |

Complaint |

Summons |

Liability Order Hearing |

Request for Financial InformaHon |

_________________________________________________________________________ | | | | | | Aiachment Aiachment DeducHon Taking Control Charging Insolvency

of Earnings of Allowances from IS / JSA of Goods Order |

Means Enquiry


RECOVERY PROCEDURES (FLOW CHART -‐ JUDICIAL SYSTEM)

Court of JusHce of European CommuniHes |

Supreme Court |

Court of Appeal |

__________________________________________________________________ | | | |

Crown Court County Court High Court Upper Tribunal (Lands Chamber) | | | Magistrates Court Magistrates Court & ValuaHon Tribunal ValuaHon Tribunal


KEY LEGISLATION

•  Council Tax -‐ Local Government Finance Act 1992 * Schedule 2: Billing and collecHon * Schedule 4: Enforcement -‐ The Council Tax (AdministraHon and Enforcement) RegulaHons 1992 (S.I.1992/613) * Billing, collecHon and enforcement

•  Non-‐DomesHc Rate

-‐ Local Government Finance Act 1988 * Schedule 9: Billing, collecHon and enforcement -‐ The Non-‐DomesHc RaHng (CollecHon & Enforcement) RegulaHons 1989 (S.I.1989/1058) * Billing, collecHon and enforcement


COSTS (BACKGROUND)

SecHon 1 Distress for Rates Act 1849

(An Act to enable Overseers of the Poor and Surveyors of the Highways to recover the costs of distraining Rates)

“It shall be lawful hereater for all jusHces of the peace, if in their discre8on they shall so think fit, in any warrant of distress they shall make and issue for the levying of any sum or sums to which any person or persons is or are now or may hereater be rated or assessed in or by any rate or assessment for the relief of the poor or for the highways in England and Wales, or in or by any other rate or assessment which by law now or hereater is or shall be directed to be enforced or recovered in the same manner as a poor rate, or in any warrant for the levying of any arrears of the same, to order that a sum, such as they may deem reasonable, for the costs and expenses which such overseers or surveyors, or the persons applying for such warrant, shall have incurred in obtaining the same, shall also be levied of the goods and chaiels of the person …..”.


COSTS (BACKGROUND)

Distress for Rates Act 1960

(Extract from the journal of the RaHng & ValuaHon AssociaHon: January 1960)

“Clause 5 Distress for Rates Bill 1960 re-‐enacts in much simpler form, the provisions of SecHon 1 Distress for Rates Act 1849, empowering the Magistrates Court in its discre8on, to include in any distress warrant granted, the costs incurred in obtaining the warrant. The power is sHll permissive but the re-‐enactment affords an excellent opportunity for raHng authoriHes to reconsider their a]tude in the maier. It was understood that more and more raHng authoriHes are undertaking the service of summonses, for which no specific fee is now laid down, and many authoriHes prepare the summonses and distress warrants. Even with the present modest level of salaries, the Hme alone Involved must amount to a substanHal sum per rate.


COSTS (BACKGROUND)



Statutory summons costs are not penal in nature and the occupier who deliberately withholds payment of the rate unHl a summons is issued, is not unknown. A sliding scale based on the amount due for the rate would help to recompense raHng authoriHes, but the maier is one which, it is suggested, should form the subject of an informal approach to the Magistrates Court Commiiee before a formal applicaHon is made, in order to arrive at an understanding. It should be noted that Clause 5 authorises the granHng of the costs of obtaining a distress warrant, to be included in the warrant. The form of summons provides for similar costs, but there appears to be no similar specific authority, hence the suggesHon in the last paragraph.


COSTS (BACKGROUND)



The secHon goes on to provide that the power to award costs shall have effect, subject to the restricHon on the allowance of costs imposed by the Poor Rates Recovery Act 1862. Costs are not to be awarded if separate complaints, summons, orders and warrants are used, where one such document would be enough. A nice piece of draughtsmanship here, for the Act has not been repealed, but merely incorporated. Presumably, there remains other local rates (e.g. Water and Improvement Rates) to which the Act applies.”


COSTS (BACKGROUND)

SecHon 100 General Rate Act 1967

(Costs of obtaining Warrant of Distress)

(1) The Magistrates’ Court issuing a warrant of distress under this part of this act may, if it thinks fit, include in the warrant an order that such sum as it may deem reasonable for the costs incurred in obtaining the warrant, shall be levied under the warrant.

(2) This secHon shall have effect subject to the restricHon on the allowance of costs imposed by the Poor Rates Recovery Act 1862 (which, in a case where several rates of the same or different kinds are due from the same person, authorises their inclusion in one warrant of distress or other document and directs that no costs be allowed if several such documents are used where one would be enough).


COSTS (BACKGROUND)

RegulaHon 29 The Community Charges (Admin. & Enforce.) RegulaHons 1989 (S.I.1989/438)

(ApplicaHon for a Liability Order)

(1) If an amount which has fallen due under RegulaHon 20(2) or 21(1 and 4) is wholly or partly unpaid, or (in a case where a reminder noHce is required under RegulaHon 28) the amount stated in the reminder noHce is wholly or partly unpaid at the expiry of the 7 days beginning with the day on which the noHce was issued, the charging authority may, in accordance with paragraph 2, apply to a Magistrates’ Court for an order against the person to whom it is payable. (2) The applicaHon is to be insHtuted by making complaint to a jusHce of the peace, and requesHng the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding.


COSTS (BACKGROUND)

RegulaHon 29 The Community Charges (Admin. & Enforcement) Regs. 1989 (S.I.1989/438)

(ApplicaHon for a Liability Order)

(5)  The court shall make the order if it is saHsfied that the sum has become payable by the defendant and has not been paid.

(6)  The order shall be made in respect of an amount equal to the aggregate of:-‐ (a) The sum payable; and (b) A sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.


COSTS (CURRENT LEGISLATION)

RegulaHon 34 The Council Tax (AdministraHon and Enforcement)

RegulaHons 1992 (S.I.1992/613)

(1) If an amount which has fallen due under RegulaHon 23(3 or 4) (including those paragraphs as applied as menHoned in RegulaHon 28A(2) is wholly or partly unpaid, or (in a case where a final noHce is required under RegulaHon 33) the amount stated in the final noHce is wholly or partly unpaid at the expiry of the 7 days beginning with the day on which the noHce was issued, the billing authority may, in accordance with paragraph 2, apply to a Magistrates’ Court for an order against the person to whom it is payable.





(2)  The applicaHon is to be insHtuted by making complaint to a jusHce of the peace, and requesHng the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding.





(5)  If, ater a summons has been issued in accordance with paragraph 2 but before the applicaHon is heard, there is paid or tendered to the authority an amount equal to the aggregate of:-‐

(a) The sum specified in the summons as the sum outstanding or so much of it as remains outstanding (as the case may be); and (b) A sum of an amount equal to the costs reasonably incurred by the authority in connecHon with the applicaHon up to the Hme of the payment or tender,

the authority shall accept the amount and the applicaHon shall not be proceeded with.





(6) The court shall make the order if it is saHsfied that the sum has become payable by the defendant and has not been paid.

(7) An order made pursuant to paragraph 6 shall be made in respect of an amount equal to the aggregate of:-‐

(a) The sum payable; and (b) A sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order (which costs, including those of insHtuHng the applicaHon under paragraph 2, are not to exceed the prescribed amount of £70 -‐ Wales only).





(8) Where the sum payable is paid ater a liability order has been applied for under paragraph 2 but before it is made, the court shall nonetheless (if so requested by the billing authority) make the order in respect of a sum of an amount equal to the costs reasonably incurred by the authority in making the applicaHon (which costs, including those of insHtuHng the applicaHon under paragraph 2, are not to exceed the prescribed amount of £70 -‐ Wales only).



RegulaHon 12 The Non-‐DomesHc RaHng (CollecHon and Enforcement) (Local Lists)

RegulaHons 1989 (S.I.1989/1058)

(1) Subject to paragraph 3,if an amount which has fallen due under RegulaHon 8(2) in consequence of such a failure as is menHoned in RegulaHon 8(2)(a) is wholly or partly unpaid, or (in a case where a reminder noHce is required under RegulaHon 11) the amount stated in the reminder noHce is wholly or partly unpaid at the expiry of 7 days beginning with the day on which the noHce was served, the charging authority may, in accordance with paragraph 2, apply to a Magistrates’ Court for an order against the person to whom it is payable.




RegulaHons 1989 (S.I.1989/1058)

(2)  The applicaHon is to be insHtuted by making complaint to a jusHce of the peace, and requesHng the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding.

(5)  The court shall make the order if it is saHsfied that the sum has become payable by the defendant and has not been paid.




RegulaHons 1989 (S.I.1989/1058)

(6) An order made pursuant to paragraph 5 shall be made in respect of an amount equal to the aggregate of:-‐

(a) The sum payable; and (b) A sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order (which costs, including those of insHtuHng the applicaHon under paragraph 2, are not to exceed the prescribed amount of £70 -‐ Wales only)




RegulaHons 1989 (S.I.1989/1058)

(7) Where the sum payable is paid ater a liability order has been applied for under paragraph 2 but before it is made, the court shall nonetheless (if so requested by the billing authority) make the order in respect of a sum of an amount equal to the costs reasonably incurred by the authority in making the applicaHon (which costs, including those of insHtuHng the applicaHon under paragraph 2, are not to exceed the prescribed amount of £70 -‐ Wales only).


COSTS (PAYABLE TO THE MAGISTRATES COURT)

•  Schedule 6 Magistrates Courts Act 1980

-‐ IniHal posiHon (General Rate) * Enforcement of any rate, to include complaint and summons: 10p -‐ Amended by the Magistrates’ Courts Fees (Amendment) Order 1992 (S.I.1992/842) (Community Charge / Non-‐DomesHc Rate) * Orders: ApplicaHon for a liability order : 70p -‐ Amended by the Magistrates’ Courts Fees (Amendment) Order 1992 (S.I.1992/1889) (Community Charge / Council Tax / Non-‐DomesHc Rate) * Orders: ApplicaHon for a liability order: 70p

•  Magistrate’s Courts Fees Order 2005 (S.I.2005/3444)

-‐ Previous posiHon (Council Tax and Non-‐DomesHc Rate) * On an applicaHon for a liability order (each defendant): £3.00


COSTS (PAYABLE TO THE MAGISTRATES COURT)

•  Magistrate’s Courts Fees Order 2008 (S.I.2008/1052)

-‐ Current posiHon (Council Tax and Non-‐DomesHc Rate) * On an applicaHon for a liability order (each defendant): £3.00 -‐ Amended by the Magistrates’ Courts Fees (Amendment) Order 2009 (S.I.2009/1496) (Council Tax) * On an applicaHon for a liability order (each defendant): £3.00 -‐ Amended by the Magistrates’ Courts Fees (Amendment) Order 2010 (S.I.2010/731) (Non-‐DomesHc Rate) * On an applicaHon for a liability order (each defendant): £3.00 -‐ Amended by the Courts and Tribunal Fee Remissions Order 2013 (S.I.2013/2302) * Revised condiHons for remissions and part remissions


COSTS (CASE LAW)

Patel v

Camden LBC

19th June 2013

Queen’s Bench Division AdministraHve Court (Silber J)

Summary

This was a case stated on appeal against a refusal of a Magistrates’ Court to make an order for costs against the billing authority under SecHon 64 Magistrates Court Act 1980, when dismissing applicaHons

by the billing authority for liability orders against the appellant

for Non-‐DomesHc Rate.


COSTS (CASE LAW)

•  LegislaHon -‐ SecHon 64 Magistrates Court Act 1980 -‐ Schedule 9 Local Government Finance Act 1988 -‐ Non-‐DomesHc RaHng (CollecHon and Enforcement) (Local Lists) RegulaHons 1989 (S.I.1989/1058)

•  Key Facts -‐ The billing authority applied for a liability order against Mr Patel which was refused; they also argued that liability orders issued against other companies in respect of 159-‐161 Camden High Road, London should be set aside; again, this was refused -‐ The ratepayer applied for costs against the billing authority which was refused

•  Decision -‐ The applicaHon for costs should be refused -‐ It was held the billing authority had acted honestly and reasonably in pursuing the applicaHons for the liability order; as a consequence, costs should not be awarded


THE REVERAND NICOLSON CASE (SUMMARY)

R (On the applicaHon of the Reverend Paul Nicolson) and

Toienham Magistrates (Defendant) London Borough of Haringey (Interested Party)

6th May 2015

Queen’s Bench Division AdministraHve Court

(Mrs JusHce Andrew DBE)

Summary This was a case where permission to seek judicial review was granted by Green J following a refusal by the Magistrates Court to state a case

for the opinion of the High Court on 20th December 2013; not to mandamus it to state a case but to quash the order sought, to be appealed.


THE REVERAND NICOLSON CASE (SUMMARY)

•  LegislaHon -‐ SecHon 111 Magistrates Court Act 1980 -‐ Schedule 4 Local Government Finance Act 1992 -‐ Council Tax (AdministraHon and Enforcement) RegulaHons 1992 (S.I.1992/613)

•  Key Facts -‐ The billing authority issued a summons on the 10th July 2013 which included costs of £125.00 -‐ The Reverend Nicolson never disputed he was liable for the council tax but did not agree the costs to be reasonable and sought a breakdown on how these were arrived at -‐ A liability order was granted on 2nd August 2013 (no explanaHon on how costs calculated) and the defendant duly made applicaHon for a case stated on the 22nd August 2013, which was refused

•  Decision -‐ The liability order should be quashed (the fact costs had since been wriien off was irrelevant) as the magistrates had not saHsfied themselves the costs were reasonably incurred, had failed to make further inquiries and the claimant had been denied a fair opportunity to challenge the lawfulness of the liability order


THE REVERAND NICOLSON CASE (KEY FACTS)

•  General -‐ Magistrates did not make any submissions … just the billing authority as the interested party -‐ The High Court had more informaHon available to them then the magistrates did -‐ There was a lack of informaHon available at the liability order hearing -‐ Focus throughout on RegulaHon 34 (S.I.1992/613) -‐ Costs awarded against the billing authority; not the Magistrates Court

•  The Reverend Nicolson’s concerns

-‐ Were the costs a penalty or deterrent? -‐ Were the costs just covering general administraHve costs rather than an appraisal of costs in enforcing an obligaHon to pay ? -‐ Why was no breakdown provided?


THE REVERAND NICOLSON CASE (KEY FACTS)

•  Weaknesses for the billing authority -‐ No breakdown of costs given -‐ Relied on costs agreed with the court in an e-‐mail sent March 2010 (not shown to defendant) … but was there more?

•  Weaknesses for the Magistrates Court -‐ Magistrates simply stated he had the means to pay -‐ ExplanaHon given on how they deemed costs to have been ‘reasonably incurred’ (i.e. linked to ability to pay) -‐ Decision to award costs is not ‘discreHonary’ -‐ Argument should have been on whether costs were reasonably incurred and not whether the amount of costs claimed were a reasonable amount


THE REVERAND NICOLSON CASE (KEY ISSUES ARISING)

•  References to RegulaHon 33 (final noHce) (paragraph 13)

•  Confusion over the £3.00 ‘issue’ fee (paragraph 14)

•  Acceptance that RegulaHon 34(1) (S.I.1992/613) is key (i.e. costs at summons stage) (paragraph 38)

•  What costs are reasonable (paragraph 46)

•  Understanding of the posiHon in Wales (paragraphs 47 to 49)

•  What costs are both reasonable and unreasonable (paragraph 51)

•  Reference to the DCLG guidance on collecHng council tax arrears (paragraph 56)


WAY FORWARD

•  The case for and against a prescribed amount

•  RelaHonship with the Magistrates Court -‐ Annually (i.e. now) -‐ Before a hearing -‐ At a hearing

•  Approach

-‐ Two sets of costs (i.e. at complaint and at liability order)? -‐ Look at council tax and non-‐domesHc rate separately -‐ ‘One off’ cases? -‐ Evidence required at the Magistrates Court * CalculaHon (who signs?) * Extract of legislaHon


WAY FORWARD

•  CalculaHon -‐ Who should be involved in the decision making? -‐ Source of informaHon * RO forms (RO6) * Full cost (include all support costs) -‐ What to include -‐ What not to include -‐ What to do next year

•  IRRV role

-‐ Liaison with the DCLG and MOJ -‐ Test calculaHons -‐ Current outcomes


CONTACT DETAILS

Gary L Watson IRRV (Hons) Deputy Chief ExecuHve IRRV Telephone: 0207-‐691-‐8988 E-‐Mail: [email protected]

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