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

The request was partially successful.

Dear Bromley Borough Council,

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

"where sums received do not correspond with those contained in the instalment plan and no direction is given as to the debt against which it should be applied, the Authority applies the amount against the oldest debt. Whilst I am unable to cite the legislation to support this course of action, I would like to draw your attention to the following case law:"

The council's statement 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 council's statement, if it where to agree with the judgment, would be.....

[[ Where the debtor does not make any reference as to were 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

Dear Bromley Borough Council,

Response to this request is delayed. By law, Bromley Borough Council should normally have responded promptly and by 11 October 2019.

Yours faithfully,

S Staffordson

Morbin, Jane,

3 Attachments

 

Second attempt at delivering email.

 

From: Morbin, Jane
Sent: 17 October 2019 08:48
To: '[email address]'
Subject: FOI request

 

Dear Sir/madam

 

Firstly I apologise for the delay in replying to your request.

 

Request under the Freedom of Information Act 2000(the Act)

 

I have investigated your statement concerning case law R. v Miskin Lower
Justices. This case law that you refer to does not cover statutory debts
such as council tax. This law covers debts where you might have debts with
credits cards, mortgages etc. and you only want to make payments to one of
these and not the other creditors.

 

The following is included in a decision made by the local government
ombudsman in relation to another case concerning allocation of payments.

8.       Payments are usually allocated by a computer system. Payments
that exactly match the instalments or exact multiples of instalments will
be allocated to the current instalment debt. Once a summons has been
issued the computer system may then allocate instalment payments to any
arrears because the right to pay by instalments will be lost once a final
notice has been issued. The law requires taxpayers to pay as billed. But
if the taxpayer has specified where they want the payments to go, and the
Council has agreed, it should have in place a mechanism to ensure the
payments follow the agreement.

9.       The regulations show before applying for a liability order the
Council should issue at least one reminder.

10.   Disputes over how much Council tax should be paid may be decided by
appeal to the Valuation Tribunal. The law does not prevent councils from
continuing with recovery action while the Tribunal considers an appeal.
The duty on the Council to collect the tax and the taxpayer to pay it
remains in place.

11.   Once a liability order has been granted the Council may take
enforcement action if the taxpayer does not clear the arrears. The
taxpayer can enter an arrangement with the Council to clear arrears. The
Council has discretion what sort of arrangement it will accept. Usually
councils look to have the debt cleared by the end of the financial year
and where the debt is for a previous year, it will also want to see
payment for the current year maintained.

12.   The regulations and accounting practice allow councils to pay any
payments that do not exactly match the agreed instalments or are not paid
on the exact agreed date to be put toward arrears and costs.

13.   The Council says it accepts payment for Council Tax by direct debit,
standing order, cash or by card over the telephone. Where an account is in
arrears the Council will review the type of payment it may accept. It will
allocate payments based on the instructions by the taxpayer against a
specific year, or without such instructions, it will assign the payment to
the oldest outstanding balance. Payments received by direct debit are
automatically credited to the current year because this amount is specific
to the schedule set out in the annual bill.

14.   The Council says any deviation from the date or amount stated on the
bill will result in the payment being offset to any arrears. This is
standard accountancy practice.

15.   When recovering several years arrears, the Council may manually
allocate funds where:

I hope this answers your request and clarifies the position concerning the
allocation of payments.

Yours faithfully

Jane Morbin

Collections Team Leader & High End Recovery Manager

Tel 0208 603 3444

Fax 02084648016 

Bromley Civic Centre

Stockwell Close

Bromley BR1 3UH

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Dear Morbin, Jane,

Thank you for your response. I would like a review and suggest that before any response is provided the council's Monitoring Officer makes a formal declaration that the authority in R v Miskin Lower Justices does not apply to debts such as council tax.

You should also note that the Local Government Ombudsman's (LGO) decision you refer to (see below link) was based on a combination of information Bromley Borough Council provided and the LGO's own incorrect guidance it expects investigators to follow when dealing with complaints about the allocation of Council Tax payments.

London Borough of Bromley (18 000 514)
https://www.lgo.org.uk/decisions/benefit...

Please note that paragraph 17 (para 14 in your response) is a claim made by Bromley Borough Council:

"...any deviation from the date or amount stated on the bill will result in the payment being offset to any arrears. This is standard accountancy practice."

The Council was asked in a Freedom of Information request dated 7 January 2019 (FOI #542358) if it would 'disclose the authority on which the Council based its assertions that it is standard accountancy practice to offset any arrears if a debtor deviates from paying the exact instalment amount'. The Council managed to delay a response until 22 May 2019 where it simply exploited the LGO's decision, i.e. "the LGO found no fault with the Council’s practice and we consider the matter closed". Bromley Borough Council did not (and could not) support the claim made to the Ombudsman about the allocation being 'standard accountancy practice'.

Please be advised that the LGO does not make decisions based on proper legal advice and routinely finds in favour of the Local Authority because this is the way government intended the organisation to function. To put it another way, the LGO's decisions are not worth the paper they are written on.

Yours sincerely,

S Staffordson

Loughlin, Jonathan, Bromley Borough Council

1 Attachment

Dear S. Staffordson,

 

Internal Review of 18597 - STAFFORDSON

 

Thank you for your request for an Internal Review which was received on
18/10/2019. This request and now receiving attention and you should hear
from the outcome of the Internal Review within 20 working days.

 

Kind Regards

 

Jonathan Loughlin

Information Coordinator

 

 

Please note:

Section 1 of the Freedom of Information Act 2000 (FOIA) places two duties
on public authorities.  Unless exemptions apply, the first duty at Sec
(1)(a) is to confirm or deny whether the information specified in a
request is held.  The second duty at Sec (1)(b) is to disclose information
which is permitted to the public domain and that has been confirmed as
being held.  Where exemptions are relied upon s17 of FOIA requires that we
provide the requester with a notice which: a) states fact b) specifies
exemption(s) in question and c) states (if that would not otherwise be
apparent) why exemption applies.

 

Section 12 (1) of the Freedom of the Freedom of Information Act states
that a public authority is not obliged to:…. “comply with a request for
information if the authority estimates that the cost of complying with the
request would exceed the appropriate time limit of 18 hours of an officers
time to manually review records, retrieve and collate the data which we
are not obliged to do under the act if to do so would exceed the 18 hour
time limit.

 

If you are dissatisfied with the handling of your FOI request, you have
the right to ask for us to conduct an internal review.

 

If you are not content with the outcome of our internal review, you have
the right to apply directly to the Information Commissioner for a
decision.  The Information Commissioner can be contacted on 0303 123 1113
or 01625 545 745.

 

Loughlin, Jonathan, Bromley Borough Council

1 Attachment

Dear S Staffordson,

Internal Review of 18597 - STAFFORDSON

The Internal Review panel have convened and concluded this request does
not constitute a valid FOI request under Section 8(1)(c) of the Freedom of
Information Act because it is not a request for recorded information held
by the Council. The Freedom of Information Act only covers information
held in recorded form, therefore local authorities are not required to
create new information or find the answer to a question from staff who may
happen to know it.

However in the spirit of the Act and with an effort to be helpful I can
supply the information below.

 

If a payment is received which does not exactly match a payment due or a
debt outstanding our system will automatically apply it to the oldest debt
outstanding. If a payment received exactly matches that of a payment due
or a debt outstanding the payment will be credited to the relevant
account. If a customer advises us a payment was credited to the wrong
account we can move it on their instruction.

 

Kind Regards

 

Jonathan Loughlin

Information Coordinator

 

 

Please note:

Section 1 of the Freedom of Information Act 2000 (FOIA) places two duties
on public authorities.  Unless exemptions apply, the first duty at Sec
(1)(a) is to confirm or deny whether the information specified in a
request is held.  The second duty at Sec (1)(b) is to disclose information
which is permitted to the public domain and that has been confirmed as
being held.  Where exemptions are relied upon s17 of FOIA requires that we
provide the requester with a notice which: a) states fact b) specifies
exemption(s) in question and c) states (if that would not otherwise be
apparent) why exemption applies.

 

Section 12 (1) of the Freedom of the Freedom of Information Act states
that a public authority is not obliged to:…. “comply with a request for
information if the authority estimates that the cost of complying with the
request would exceed the appropriate time limit of 18 hours of an officers
time to manually review records, retrieve and collate the data which we
are not obliged to do under the act if to do so would exceed the 18 hour
time limit.

 

If you are dissatisfied with the handling of your FOI request, you have
the right to ask for us to conduct an internal review.

 

If you are not content with the outcome of our internal review, you have
the right to apply directly to the Information Commissioner for a
decision.  The Information Commissioner can be contacted on 0303 123 1113
or 01625 545 745.

 

Dear Loughlin, Jonathan,

In my 18 October correspondence I asked if the council's Monitoring Officer would make a formal declaration that the authority in R v Miskin Lower Justices does not apply to debts such as council tax because this is what the council initially stated.

Yours sincerely,

S Staffordson

Dear Bromley Borough Council,

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

I am writing to request an internal review of Bromley 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...

P.S. In my 18 October correspondence I asked if the council's Monitoring Officer would make a formal declaration that the authority in R v Miskin Lower Justices does not apply to debts such as council tax because this is what the council initially stated.

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

Loughlin, Jonathan, Bromley Borough Council

1 Attachment

Dear S Staffordson,

Internal Review of 18597 - STAFFORDSON

An Internal Review has already been conducted in relation to this request. This response was sent to you on 18/11/2019.

We are therefore taking no further action with your request for an additional Internal Review.

The attached Appeals Procedure outlines the steps you can take if you are dissatisfied with this response.

Kind Regards

Jonathan Loughlin
Information Coordinator

Please note:
Section 1 of the Freedom of Information Act 2000 (FOIA) places two duties on public authorities. Unless exemptions apply, the first duty at Sec (1)(a) is to confirm or deny whether the information specified in a request is held. The second duty at Sec (1)(b) is to disclose information which is permitted to the public domain and that has been confirmed as being held. Where exemptions are relied upon s17 of FOIA requires that we provide the requester with a notice which: a) states fact b) specifies exemption(s) in question and c) states (if that would not otherwise be apparent) why exemption applies.

Section 12 (1) of the Freedom of the Freedom of Information Act states that a public authority is not obliged to:…. “comply with a request for information if the authority estimates that the cost of complying with the request would exceed the appropriate time limit of 18 hours of an officers time to manually review records, retrieve and collate the data which we are not obliged to do under the act if to do so would exceed the 18 hour time limit.

If you are dissatisfied with the handling of your FOI request, you have the right to ask for us to conduct an internal review.

If you are not content with the outcome of our internal review, you have the right to apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted on 0303 123 1113 or 01625 545 745.

Dear Loughlin, Jonathan,

Thank you but you have apparently not taken into account that the original response did not actually address the request so a review of a response to that has never been asked for.

Additionally I did indicate that I would ask for a review but first wanted a formal declaration from the council's Monitoring Officer that the authority in R v Miskin did not apply to debts such as council tax.

Yours sincerely,

S Staffordson

Loughlin, Jonathan, Bromley Borough Council

1 Attachment

Dear S Staffordson,

Internal Review of 18597 - STAFFORDSON

As stated in previous correspondence an Internal Review has been conducted with a response sent to you on 18/11/2019.

If you are still not satisfied by the response provided you have the right to apply directly to the Information Commissioner's Office. Advice and their contact details are within the attached Appeals Procedure and below.

Kind Regards

Jonathan Loughlin
Information Coordinator

Please note:
Section 1 of the Freedom of Information Act 2000 (FOIA) places two duties on public authorities. Unless exemptions apply, the first duty at Sec (1)(a) is to confirm or deny whether the information specified in a request is held. The second duty at Sec (1)(b) is to disclose information which is permitted to the public domain and that has been confirmed as being held. Where exemptions are relied upon s17 of FOIA requires that we provide the requester with a notice which: a) states fact b) specifies exemption(s) in question and c) states (if that would not otherwise be apparent) why exemption applies.

Section 12 (1) of the Freedom of the Freedom of Information Act states that a public authority is not obliged to:…. “comply with a request for information if the authority estimates that the cost of complying with the request would exceed the appropriate time limit of 18 hours of an officers time to manually review records, retrieve and collate the data which we are not obliged to do under the act if to do so would exceed the 18 hour time limit.

If you are dissatisfied with the handling of your FOI request, you have the right to ask for us to conduct an internal review.

If you are not content with the outcome of our internal review, you have the right to apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted on 0303 123 1113 or 01625 545 745.

Dear Loughlin, Jonathan,

Thank you for your response.

I will consider whether or not there is any value in appealing this to the Commissioner, but further to my email of 3 January 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, and the best chance of achieving that would be if the parameters in the Council Tax processing system were set so that any unspecified payments were allocated to the current year's charge.

For example, a customer who made payment in an amount sufficient to prevent his in-year liability falling in arrears would have good cause to bring a legal case against the council if it were to allocate his payment to a previous year's charge (thus unnecessarily burdening him further) merely because it not match the instalment amount.

Yours sincerely,

S Staffordson

Loughlin, Jonathan, Bromley Borough Council

1 Attachment

Dear S Staffordson,

Internal Review of 18597 - STAFFORDSON

The Council's Monitoring Officer has reviewed your case and concluded that they can see nothing inherently unlawful.

If you are still not satisfied by the response provided you have the right to apply directly to the Information Commissioner's Office. Advice and their contact details are within the attached Appeals Procedure and below.

Kind Regards

Jonathan Loughlin
Information Coordinator

Please note:
Section 1 of the Freedom of Information Act 2000 (FOIA) places two duties on public authorities. Unless exemptions apply, the first duty at Sec (1)(a) is to confirm or deny whether the information specified in a request is held. The second duty at Sec (1)(b) is to disclose information which is permitted to the public domain and that has been confirmed as being held. Where exemptions are relied upon s17 of FOIA requires that we provide the requester with a notice which: a) states fact b) specifies exemption(s) in question and c) states (if that would not otherwise be apparent) why exemption applies.

Section 12 (1) of the Freedom of the Freedom of Information Act states that a public authority is not obliged to:…. “comply with a request for information if the authority estimates that the cost of complying with the request would exceed the appropriate time limit of 18 hours of an officers time to manually review records, retrieve and collate the data which we are not obliged to do under the act if to do so would exceed the 18 hour time limit.

If you are dissatisfied with the handling of your FOI request, you have the right to ask for us to conduct an internal review.

If you are not content with the outcome of our internal review, you have the right to apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted on 0303 123 1113 or 01625 545 745.

Dear Loughlin, Jonathan,

Your Monitoring Officer might wish to review his comments once looking at this again from a different perspective.

Let's say a Customer has an outstanding balance of £25.00 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 £126.50 so the total amount owing the council for that year's charge has increased to £151.50. 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. 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 £126.50 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 £126.50 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 £151.50 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 £29.50). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £126.50 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,328.45 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 £126.50 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 for the in-year liability (the same £122.00 amount has been subject to enforcement by two separate court orders).

Notwithstanding all the above, 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.

Contrary to the council's statement that R v Miskin Lower Justices case law does not cover statutory debts such as council tax but rather credits cards, mortgages etc., this is almost certainly misconceived. Presumably the council is mixing up R v Miskin with 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). Of course, they are 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).

Returning again to the R v Miskin case law. If this was not applicable to statutory debts such as Council Tax there would unlikely be guidance tailored specifically for the benefit of Local Authorities. However, 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's assertion that it is standard accountancy practice to apply non-matching payments to any arrears, the overwhelming evidence is that this is incorrect. 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 to be standard accountancy practice to apply non-matching payments to any arrears.

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

"In the absence, therefore, of any express declaration by either, the inquiry was, what application would be most beneficial to the debtor. The payment was, consequently, applied to the most burthensome debt...and, if the debts were equal, then to that which had been first contracted."

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).

Yours sincerely,

S Staffordson