Council tax payment allocation in accordance with R. v Miskin Lower Justices [1953]

The request was partially successful.

Dear Wigan Metropolitan Borough Council,

The Council makes the statement quoted below from the link:
https://www.whatdotheyknow.com/request/e...

"R v Miskin Lower Justices (1953) held that where an amount so obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere. This case establishes that if the amount of the payment identifies the debt, then it must be allocated to that debt......

Where the person making the payment states explicitly that the payment should be allocated to a specific debt, then the council must and will abide by that statement. Where the debtor does not make any reference as to where the payment should be allocated and the amount gives no clue, then it is up to the council as the creditor to make the choice. "

The final sentence in the above does not agree with the judgment in the case of R. v Miskin Lower Justices (see below link to the judgment):

http://s000.tinyupload.com/index.php?fil...

The judgment clarifies the position in cases where a creditor has to make a decision as to which account payment should be allocated when a debtor has one account more burdensome for him than another and his payment is unspecified.

Clearly the final sentence if it were to agree with the judgment would be.....

Where the debtor does not make any reference as to where the payment should be allocated then the creditor must allocate the payment to the account which it is most beneficial to the debtor to reduce.

Q. Where did the council obtain the information regarding the appropriation of payments case law which conflicts with the judgment in R. v Miskin Lower Justices [1953]?

Yours faithfully,

S Staffordson

FoI Request, Wigan Metropolitan Borough Council

Please quote ID FOI 9276 on all correspondence

Dear Mr/Ms Staffordson,

I am emailing to confirm the receipt of your recent request for information to Wigan Council. This has been logged and will be forwarded to the relevant department for action.

We will respond as soon as possible and in most cases no later than 20 working days after the receipt of your request ie 10th October 2019.

If you have any comments or questions in the meantime, please direct them to [Wigan Council request email], or in writing to the address below.

The Council does not charge for most FOI requests, but charges may be made for actual disbursements incurred such as photocopying, printing, postage and packaging, and only if these charges amount to more than £20.00. If a charge is to be made, confirmation of the payment due will be given before the information is provided and payment may be requested prior to the provision of the information.

Your contact is Graham Donelan.

Regards
Information Governance
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline

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FoI Request, Wigan Metropolitan Borough Council

1 Attachment

Dear Mr/Ms Staffordson,

I am writing to respond to your recent request for information. This request has been handled under the Freedom of Information Act 2000.

The response to your request is attached.

If you are unhappy with any aspect of this response, an independent senior officer will review this decision. If you are not satisfied with our response you must put your complaint in writing within 40 working days of receipt of this response giving the reasons for your complaint.  You can either email [Wigan Council request email] or write to Freedom of Information at the address below.

You can also complain to the Information Commissioner, who is the regulator for Freedom of Information. Her website is https://ico.org.uk/ and her helpline number is 0303 1231113.
Her staff may ask you to exhaust our internal complaints procedure if you choose to complain to her office now.

Kind regards

Graham Donelan
Information Governance Officer
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline 

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Dear FoI Request,

Thank you for your response. Can you confirm that the information was obtained from the Institute of Revenues Rating and Valuation (IRRV), i.e the Insight magazine (10 October 2002)?

http://s000.tinyupload.com/index.php?fil...

Yours sincerely,

S Staffordson

Dear FoI Request,

Did you receive my 13 October email?

Yours sincerely,

S Staffordson

FoI Request, Wigan Metropolitan Borough Council

Dear Mr/Ms Staffordson,

We asked the relevant department to provide a response to your follow up query. I have now chased them for a response.

Kind regards

Graham Donelan
Information Governance Officer
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline

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FoI Request, Wigan Metropolitan Borough Council

Dear Mr/Ms Staffordson,

Our original response was provided by a member of staff whom is no longer an employee of Wigan Council, following your latest request the original response has been reviewed and found to be true and factual and not in contradiction of the judgement made in R V Miskin Lower Justices (1953) as previously advised. Our further response of 3rd October 2019 was formed by a Collections Team manager who reviewed the original response along with the judgement in question and associated caselaw, and has since confirmed had not had previous sight of The IRRV Insight Magazine from October 2002 nor was this publication used when reviewing the original, or formulating the latest response.

Kind regards

Graham Donelan
Information Governance Officer
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline

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Dear Wigan Metropolitan Borough Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Wigan Metropolitan Borough Council's handling of my FOI request 'Council tax payment allocation in accordance with R. v Miskin Lower Justices [1953]'.

When a decision is made with potentially legal implications the council is required to consult the Monitoring Officer and such procedures should be formally recorded. A decision that requires setting the parameters of a council tax payment processing system to automatically allocate non-specific payments to the oldest account rather than to the in-year account is one such decision.

If the proper legal process was followed when the decision was made then there will be a record of it comprising a background outlining the relevant legal requirements and risk assessment highlighting the degree to which the council would be exposed to legal challenge if not complied with. The following is an example of the kind of assessment that should have been documented.

https://democracy.npt.gov.uk/documents/s...

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/c...

Yours faithfully,

S Staffordson

FoI Request, Wigan Metropolitan Borough Council

Dear Mr/Ms Staffordson,

I have passed your request for an internal review of FOI 9276 to a senior officer. We will aim to respond within 20 working days, i.e. no later than Thursday 30th January 2020.

Kind regards

Graham Donelan
Information Governance Officer
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline

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FoI Request, Wigan Metropolitan Borough Council

1 Attachment

Dear Mr/Ms Staffordson,

Please see attached the outcome of the Senior Officer Review of the response to your request FOI 9276.

Kind regards

Graham Donelan
Information Governance Officer
Wigan Council
Legal Services – Resources Directorate
Town Hall,
Library Street,
Wigan,
WN1 1YN
01942 827639 (internal ext 2639)
[mobile number]
www.wigan.gov.uk
www.twitter.com/wigancouncil
www.facebook.com/WiganCouncilOnline

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Dear FoI Request,

Thank you for your response, but further to my email of 2 January 2020 my thoughts are that this issue should be put before the council's Monitoring Officer as it is his duty to ensure all decision making is lawful and the legal process described should have been followed in arriving at the decision.

I understand that a billing authority's duty, as a priority, is to maintain a customer's in-year account with payments received in respect of his liability, so logically the frequency with which payment would be correctly applied would be maximised (under automated conditions) if the parameters in the Council Tax processing system were set so that any unspecified payments were applied to the current year's charge. A customer who made payment in an amount sufficient to prevent his in-year liability falling in arrears would have good cause to bring legal proceedings against the council if it were to allocate his payment to a previous year's charge (thus unnecessarily burdening him further) merely because it did not match the instalment amount.

In respect of the council's statement specifically regarding R v Miskin; "Thus, if the amount of the payment identifies the debt, then it must be allocated to that debt.", there was no precedent set in the Miskin case based on payments matching the instalment amount of a particular year.

https://tinyurl.com/vk2pwhn (R v Miskin)

It is clear from the first paragraph of the judgment that the debtor (husband) did not once in any of the payments he made, make a payment matching an amount that he was required to under the terms of the maintenance/committal orders. The judge held that an appropriation was inferred from the circumstances to be the debt which it was most beneficial for the debtor to reduce (see quoted from the judgment).

"...the question whether the payments made by the husband should be appropriated to the original debt depended on the particular facts of the case. The husband would be likely to wish the payments to be utilized in discharge of the original debt..." (so that he would secure his release from the committal order).

More appropriately then (to the case authority) is the council's agreement that the inference from the circumstances of a transaction can be just as valid as an election by the debtor to pay specifically on one of several accounts as if his election were expressed, i.e,:

"Where the debtor states or implies that the payment should be allocated to a specific debt, then the creditor must abide by that statement" (3 October 2019 attachment)

In furtherance to this, the council's processing system applies payments in respect of the customer's implied intention on a severely restricted basis (solely if the sum paid corresponds with an instalment amount). A payment matching a specific liability is only one of a number of ways that the taxpayer's election may be implied. For example, case authority has consistently found that a debtor's intention may be indicated from the circumstances of the transaction (see Khandanpour v Chambers [2019] EWCA Civ 570 "Appropriation" from para 25). https://www.bailii.org/ew/cases/EWCA/Civ...

A debtor's payment pattern could indicate a debtor's intention to appropriate payment to a particular debt, so if a pattern had emerged of a customer's payment being made and accepted as credited to a particular debt then it would be inferred from the nature of the transaction, even if not expressed at the time by the customer, that he intended to ascribe it to that account.

A customer having one liability more onerous for him than another must have his payment if it were unspecified carried to that account which it is most beneficial for him to reduce. A customer who would be caused the additional burden from recovery action being taken in respect of his in-year liability as a consequence of payment being applied to his arrears, would clearly have intended his payment to be appropriated to his in-year liability to avoid unnecessary additional costs etc. Evidence of an intent to appropriate would be provided in those particular circumstances to be an election to pay specifically on the current year's liability.

Yours sincerely,

S Staffordson

Dear FoI Request,

In anticipation of you not responding, I have decided against pursuing this, but further to my email of 2 January 2020 I maintain that this issue should be put before the council's Monitoring Officer as it is his duty to ensure all decision making is lawful and the legal process described should have been followed in arriving at the decision.

I understand that the software supplied to local authorities for the purpose of payment allocation has a parameter which can typically be set so that when a payment fails to match one of the rules it will, option 1, be applied to the in-year account, or option 2, be applied to the oldest years account. Therefore, it is within the council's control to maximise the frequency with which non-specific payments would be correctly applied i.e. to maintain the in-year account as a priority.

Regarding the Miskin case law, despite being decided in 1953, it is obviously relevant to Council Tax or there would unlikely be guidance tailored specifically for the benefit of Local Authorities. For example, Ipswich Council demonstrates its awareness of the case and other case law relevant to Council Tax liability in the following page exhibited presumably from a book entitled "Local Authority Revenues" https://www.whatdotheyknow.com/request/4...

The relevant passage summarises a billing authority's obligations regarding the allocation of payments where a customer has several accounts payable to the council in the context of R v Miskin Lower Justices and associated case law. The Institute of the Revenues Rating and Valuation (IRRV) has published similar in its 10 October 2002 Insight magazine https://tinyurl.com/y3hoyx9v

As for the Council defending the practice of applying non-specified payment to the oldest year where a debt remains outstanding, the overwhelming evidence is that this does not accord with established case law.

Possibly the council has been influenced by the ruling in Devaynes v Noble 1816 merivale 529 (Clayton's Case). Clayton's Case is confined to cases where there is an unbroken account between the parties, or “one blended fund,” as in the case of a current account at a bank or between traders; it does not apply where there is no such account or fund, but merely distinct and separate debts. Snells Principles Of Equity's gives a definition in the document here: https://tinyurl.com/y3uzpd5n

A number of billing authorities wrongly rely on the Clayton Case ruling to justify allocating non-specific payment to the arrears because the effect of the rule is that in the absence of any express appropriation, each payment is impliedly appropriated to the earliest debt that is not statute-barred (payments are presumed to be appropriated to debts in the order in which the debts are incurred). They are of course misinformed because the rule does not apply to Council Tax as it consists of distinct insulated debts, between which a plain line of separation can be drawn (a bill is issued each year relating specifically to that year's liability).

Conveniently in the Clayton Case judgment the rules by which the application of indefinite payments are governed have been discussed. Clearly before any consideration is given as to the order in which the debts have arisen it must be asked, to which of the debts would the allocation be most beneficial to the debtor? (where the purpose for which a payment is made is unspecified it must be carried to that account which it is most beneficial to the debtor to reduce). Only if it was of no more benefit to the debtor which of the accounts payment was applied to could it be said that allocating non-matching payments to any arrears would be in accordance with established case law.

https://en.wikipedia.org/wiki/Devaynes_v... (Clayton's Case)

It is noteworthy that the Sri Lankan case, Ephraims v. Jansz (1895) 3 N.L.R. 142, similarly discussed the rules relating to the appropriation of payments in the context of the onerous nature of debt due on several accounts. The condition in the below quoted from the judgment could not be more relevant to the circumstances that are in issue with Council Tax liability:

https://www.lawnet.gov.lk/wp-content/upl... (Ephraims v. Jansz)

"If no such appropriation is made at the time of payment, the creditor must apply it to some claims which could be enforced at the time of payment and which at the moment is not in controversy."

Council Tax may be enforced (subject to payments being met) so a customer's in-year liability is not in controversy, providing his instalments are paid when due. An unspecified payment then, applying this principle, would have clearly been misappropriated if the council applied it to arrears so causing his in-year liability instalment to have not been met.

But regardless of whether the principle in the Sri Lankan case can be relied on, a customer having one liability more onerous for him than another must have his payment if it were unspecified carried to that account which it is most beneficial for him to reduce in line with other case authority mentioned.

A customer who would be caused the additional burden from recovery action being taken in respect of his in-year liability as a consequence of payment being applied to his arrears, would clearly have intended his payment to be appropriated to his in-year liability to avoid unnecessary additional costs etc. Evidence of an intent to appropriate, although falling short of being express, would be provided in those particular circumstances to be an election to pay specifically on the current year's liability (the inference from the circumstances of a transaction is just as valid an election to pay specifically on one of several accounts as if his election were expressed).

A customer who made payment in an amount sufficient to prevent his in-year liability falling in arrears would have good cause to bring legal proceedings against the council if it were to allocate his payment to a previous year's charge (thus unnecessarily burdening him further) merely because it did not match the instalment amount. In any event, I understand that a billing authority's duty, as a priority, is to maintain a customer's in-year account with payments received in respect of his liability, so logically the frequency with which payment would be correctly applied would be maximised (under automated conditions) if the parameters in the Council Tax processing system were set so that any unspecified payments were applied to the current year's charge.

P.S. Your Monitoring Officer might wish to look at this from the following perspective:

Let's say a Customer has an outstanding balance of £87.50 secured by a Magistrates' court Liability Order from a previous year's charge. This gives councils the power to use various enforcement methods to collect the debt and adds costs to the arrears. The standard costs rubber stamped by the court are in the sum of £62.50 so the total amount owing the council for that year's charge has increased to £150.00. The customer now has his in-year Council Tax obligation to meet as well as the amount secured by a court order from the previous year's charge.

The customer's in-year payments are set at £121.95 for the first instalment and £120.00 for the remaining nine (£1,201.95 in total). The customer makes his first payment of £122.00 but because the council's system applies payments that do not exactly match to the oldest debt, his in-year Council Tax obligations have been detected by the computer system to have not been met even though the payment was made in sufficient an amount to prevent his in-year liability falling in arrears. Although Council Tax liability consists of distinct insulated debts, between which a plain line of separation can be drawn, the benefit to the council is the same (£122.00) whether payment is applied to the in-year account or arrears so there is no legitimate advantage for the council nor justification in engineering a further burden for the customer in respect of his in-year liability. The previous year's debt has already been secured with a court order which has no time limit restricting its use.

It is therefore reasonable to suspect that the council allocates non-matching payments to the arrears thus imposing an additional £62.50 standard costs in respect of the in-year engineered non-payment for a non-legitimate reason. But there is no theoretical advantage to the council in respect of the costs it claims because the law only entitles it to claim the actual expenditure it incurs. It would therefore be self defeating if the council were to go about obtaining court orders merely to benefit from the application if its costs claim was genuine and not inflated. Another possible motive would be to punish the customer, but this is troublesome for the council because it is making use of the Magistrates' court unnecessarily and in so doing burdening the customer with a further £62.50 debt. This by definition is penalising the customer with imposed costs which is impermissible according to established case authority. It was held on judicial review of a licensing case R v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406 that costs should not exceed the proper costs incurred and should not be a penalty.

In the more recent case it was held that the Magistrates were bound to decide the matter of costs in accordance with the Council Tax (Administration and Enforcement) Regulations 1992 (the court needs to be satisfied that it was reasonable for the council to incur them) i.e. they would not reasonably have been incurred if it was not reasonable for the council to take steps to enforce payment (see paras 34 and 51 of R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252) http://www.bailii.org/ew/cases/EWHC/Admi...

In the aforementioned scenario the council would have impermissibly obtained a court order to enforce the misappropriated £122.00 element of the liability TWICE. This is because the payment which was intended to be applied to the in-year liability was misapplied to the arrears.

Each year's liability is a distinct debt so if the council has a secured debt in respect of one year's charge it cannot use the same court order to enforce payment if a customer defaults in a subsequent year (another order must be obtained from the court). However, the court order securing £150.00 debt from a previous year was effectively used to collect the sum of £122.00 which was actually paid in respect of the in-year liability (the amount secured by the previous court order reduced to £28.00). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £62.50 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,264.45 which was secured by a fresh court order).

The upshot of all this is that the customer has outstanding liability relating to two separate debts, each independently subject to enforcement by the various oppressive methods enabled by the court order. The customer's overall indebtedness arising from the misappropriated payment has immediately increased by £62.50 because of unnecessary court costs. In engineering the default, the council has clearly been shown to have unlawfully used an order securing a previous year's debt to enforce payment from the in-year liability which was perversely the cause of the Council Tax processing system triggering recovery in respect of the in-year liability (the same £122.00 amount has been subject to enforcement by two separate court orders).

Yours sincerely,

S Staffordson