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

The request was partially successful.

Dear Dover District Council,

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

"I can confirm that if a payment does not match exactly either the debt outstanding or an instalment due, the payment is allocated to the oldest debt outstanding. "

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 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

DDC FreedomOfInformation, Dover District Council

2 Attachments

Dear Sir/Madam

 

Thank you for your request for information about Council Tax payment
allocation.   Your request was received on 16 October 2019 and we are
dealing with it under the terms of the Freedom of Information Act 2000 or
Environmental Information Regulations 2004, as appropriate. We will
endeavour to respond within 20 working days and if we think the request
requires extra time then we will contact you and let you know.

 

In some circumstances a fee may be chargeable and if that is the case, I
will let you know the likely charges before proceeding.

 

If you have any queries regarding this email, please contact me.

 

Regards

 

Kerry

 

 

Kerry Scott
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs
Business Park, Whitfield, Dover
[1]cid:image001.jpg@01D18E99.2FB77DF0     CT16 3PJ
Tel: 01304 872312
Fax: 01304 872300
Email:
[2][email address]
Web:  [3]http://dover.gov.uk
 
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DDC FreedomOfInformation, Dover District Council

2 Attachments

Dear Sir/Madam

 

I am writing in respect of your enquiry for information held by this
Authority received on 15 September 2019 and to confirm that we have
completed the search for the information that you requested.  The
information you have sought is set out below.

 

Council Tax accounts have unique account reference numbers and payments
will be allocated to the account reference that the customer quotes when
making payment.   Where a payment does not match exactly either the debt
outstanding or an instalment due on that account, the payment is allocated
to the oldest debt outstanding. The oldest debt is considered the most
beneficial debt to clear for our customers.  There is no manual
intervention in this process unless a customer contacts us to advise
payment was intended for an alternative year's charge and then the payment
can be moved upon request.    Therefore, should a customer contact us and
request that the payment they have made be reallocated to the debt that is
the most beneficial for them, we would reallocate the payment as
instructed.

 

If you have any queries about this email, please contact me.

 

I hope you find the information useful but if, for whatever reason, you
are unhappy with the service you have received in relation to your request
and wish to make a complaint or request a review of our decision, you are
entitled to pursue any dissatisfaction through the Council’s Complaints
Procedure.

 

If you are not content with the outcome of your complaint, you may apply
directly to the Information Commissioner for a decision. Generally, the
ICO cannot make a decision unless you have exhausted the complaints
procedure provided by the Council.   The Information Commissioner can be
contacted at: The Information Commissioner’s Office, Wycliffe House, Water
Lane, Wilmslow, Cheshire SK9 5AF.

 

Regards

 

Kerry

 

 

Kerry Scott
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16
    3PJ
 Tel: 01304 872312
Fax: 01304 872300
Email: [1][email address]
Web:  [2]http://dover.gov.uk
 
P Please consider the environment before printing this email

 

  [3][IMG]

Dover District Council is a data controller under GDPR, your attention is
drawn to our [4]Corporate Privacy Notice. This explains how we will use
and share your personal information and protect your privacy and rights.

 

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Dear DDC FreedomOfInformation,

Thank you for your reply. However, I don't agree that the oldest debt would be considered the most beneficial debt to clear for council tax payers (the debt would not necessarily be cleared as a consequence of the allocation). This would almost certainly result in the Council's automated recovery procedure being triggered to the detriment of the taxpayer by way of unnecessary additional costs relating to the enforcement of the in-year account which would have fallen in arrears not as a result of the taxpayer failing to maintain his account but as a consequence of the billing authority misappropriating payment.

The council is most likely to have already obtained a liability order adding costs in respect of any older debts that the taxpayer might have and the council cannot repeat this procedure adding more costs again for the same year's liability.

Yours sincerely,

S Staffordson

Dear DDC FreedomOfInformation,

Is there a review response to this please.

Yours sincerely,

S Staffordson

DDC FreedomOfInformation, Dover District Council

2 Attachments

Dear Sir/Madam

 

I have checked the Council’s records and although you did reply to the
Council’s response to your FOI request, you did not ask any further
questions and did not request a review of the Council’s response.  Can you
please confirm if you are now seeking a review of the response provided to
you?

 

Regards

 

Kerry

 

 

 

Kerry Scott
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16
    3PJ
 Tel: 01304 872312
Fax: 01304 872300
Email: [1][email address]
Web:  [2]http://dover.gov.uk
 
P Please consider the environment before printing this email

 

  [3][IMG]

 

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Dear DDC FreedomOfInformation,

I would like my query addressing re, 13 October, and would also like to bring it to your attention that my request asked "where did the council obtain the information regarding the appropriation of payments case law" (the response never dealt with this).

Yours sincerely,

S Staffordson

DDC FreedomOfInformation, Dover District Council

Dear Sir/Madam

I am writing in respect of your request for a review of the response you received to your recent Freedom of Information request. I can confirm this has been passed to me to look in to and I will respond to you within the specified timeframe.

Regards

Mandy

Mandy Weir
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16 3PJ

Tel: 01304 872318
Fax: 01304 872300
Email: [email address]
Web: http://dover.gov.uk

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DDC FreedomOfInformation, Dover District Council

Dear Sir/Madam

I am writing in respect of your email dated 6 December 2019 regarding a review of the response you had received to your recent Freedom of Information request. Please see below a detailed explanation regarding the allocation of council tax payments, setting out the current position, the relevant caselaw and what operational changes and improvements have been considered.

The issue
Flowing from an FOI enquiry, current cash allocation practices have been questioned. Specifically, the practice of allocating ‘random’ payments to the oldest council tax debt.
Where a payment for council tax is received, and the payment neither:
•Matches a regular agreed instalment amount, nor
•Has a specific instruction from the debtor as to where to allocate the payment to

then caselaw shows that the creditor can allocate the payment as it sees fit. The complainant is suggesting that in fact the payment should be allocated to the debt that is most beneficial to the debtor.

What is the current operational practice in place?
Locally, in East Kent (Canterbury City Council, Dover District Council, Thanet District Council) the operational practice is:
If a payment amount is received from a debtor that does not match a current instalment amount , or does not match an amount of an ‘old’ debt, in other words the payment received is a completely random amount, then it gets allocated to the oldest debt (I expand on what part of the oldest debt further down in this document, in the section headed ‘What can our computer system do?’
The principle behind this practice is that it is generally the oldest debt which will be furthest down the enforcement route, and therefore allocating the payment towards that debt should be, in most cases, the most beneficial to the debtor.
Whenever a debtor makes an express election for a payment to be allocated towards a specific debt, we will accord with their wishes.

What does the caselaw say?
PAYMENTS–APPROPRIATION
Where several accounts are payable to the local authority by one debtor, the debtor may, when making a payment which is insufficient to discharge all the debts, appropriate the money paid to a particular debt or debts and if the payment is accepted as so appropriated it must be applied in the manner directed by the debtor. It may be, as frequently happens, that payments are received without any indication of appropriations by the debtor and in these cases the creditor may apply the payments as he best thinks fit (Peter v Anderson (1814) 5 TAUNT 596). The allocation will eventually have to be communicated to the debtor but this is frequently done at the time of payment in the form of the receipt. The debtor has first choice but his right to appropriate must take the form of a communication of his intention. This communication may be express or implied but should be clear enough for the creditor to know that his own right of appropriation cannot arise (Stepney Corporation v Osofsky (1937) 3 All ER 289). It follows that it is not essential for there to be a specific expression by the debtor as to which account is to be credited. The intention may be gathered from other circumstances or implied by the debtor's conduct. The amount paid may so obviously relate to a specific liability that it would be an unwarranted assumption to allocate it elsewhere (R v Miskin Lower Justices (1953) 1 QB 533). Once an election is made by the creditor and communicated to the debtor, it is irrevocable (Albermarle Supply Co Ltd v Hind and Co (1928) KB 307)." Peter v Anderson (1814) held that where there is no indication from the debtor, the creditor may apply payments as they think fit. Stepney Corporation v Osofsky (1937) held that the debtor has first choice over allocation of payments; that the choice may be express or implied, and that the creditor cannot exercise discretion unless there is no indication by the debtor. Albermarle Supply Co Ltd v Hind & Co (1928) held that, once an election as to where a payment should be allocated was made by a creditor, and communicated to the debtor, that allocation of payment was irrecoverable by the debtor In summary the principles established by the Courts are:

- if the amount of the payment identifies the debt, a specific instalment etc., then it must be allocated accordingly
- where the debtor states or implies that the payment should be allocated to a specific debt, then the creditor must abide by that statement
- where the debtor does not make any reference as to where the payment should be allocated then it is up to the creditor to make the choice.

Payments received that do not identify the debt and where the debtor does not make reference as to where the payment should be allocated are put towards the oldest debt.
In the case of R v Miskin Lower Justices (1953), I have reviewed this case and it simply bears out the reasoning that, if a payment so obviously relates to a specific debt, then it would be an unwarranted assumption (on the part of the creditor) to allocate that payment elsewhere. The Miskin case does not say that allocating a totally ‘random’ payment to the oldest debt is an illegal practice.

What can our computer system do?
The cash allocation rules within the OpenRevenues system have 4 options;
•Current: this will allocate payments to the current debt costs
•Current – charge: this will allocate payments to the current charge
•Oldest: this will allocate payments to the oldest costs
•Oldest – charge: this will allocate payments to the oldest charge

The system is currently set to ‘Oldest’. We believe this is firmly in the majority of customers best interests. The system setting is one that must apply to all cases, it cannot be selected for each individual case. Where a customer wants us to amend where the payment is allocated to we will do so.

Further caselaw considered
•Thomas v Ken Thomas Ltd
•Khandanpour v Chambers

Both the above cases are around appropriation of funds, and confirm that if a debtor expresses a wish to allocate a payment to a specific debt, the creditor should adhere to the debtor’s wishes. Also that a debtor’s intention to appropriate funds to a certain debt can be inferred from circumstances known to both parties.
Additionally:
Leeson v Leeson 1936 K.B156 (NELC13) confirms that an appropriation of a payment cannot be inferred from an intention in the mind of the debtor uncommunicated to the creditor. It can only be inferred from circumstances known to both parties.

Conclusion
Taking into account all the caselaw listed above, and our current procedures, I am satisfied that our existing operational practice complies with the relevant law.

I hope you find the information above helpful but should you remain unhappy with our response, you may apply directly to the Information Commissioner for a decision. Generally, the ICO cannot make a decision unless you have exhausted the complaints procedure provided by the Council. The Information Commissioner can be contacted at: The Information Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

Yours faithfully

Mandy Weir
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16 3PJ

Tel: 01304 872318
Fax: 01304 872300
Email: [email address]
Web: http://dover.gov.uk

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Dear DDC FreedomOfInformation,

I have a query regarding the following:

"Additionally:
Leeson v Leeson 1936 K.B156 (NELC13) confirms that an appropriation of a payment cannot be inferred from an intention in the mind of the debtor uncommunicated to the creditor. It can only be inferred from circumstances known to both parties."

Where have you obtained the information regarding "Leeson v Leeson 1936 K.B156 (NELC13)" ?

Yours sincerely,

S Staffordson

DDC FreedomOfInformation, Dover District Council

Dear Sir/Madam

Thank you for your email. The officer who provided the information is currently away so I will respond as soon as I can upon their return to work.

Yours faithfully

Mandy Weir
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16 3PJ

Tel: 01304 872318
Fax: 01304 872300
Email: [email address]
Web: http://dover.gov.uk

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Dear DDC FreedomOfInformation,

Are you in a position yet be able to confirm where the information regarding "Leeson v Leeson 1936 K.B156 (NELC13)" was obtained?

Yours sincerely,

S Staffordson

DDC FreedomOfInformation, Dover District Council

Dear Sir/Madam

Thank you for your email. I believe the officer returned to work yesterday so I will contact him today.

Yours faithfully

Mandy Weir
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16 3PJ

Tel: 01304 872318
Fax: 01304 872300
Email: [email address]
Web: http://dover.gov.uk

 Please consider the Environment before printing this email

Dover District Council is a data controller under GDPR, your attention is drawn to our Corporate Privacy Notice. This explains how we will use and share your personal information and protect your privacy and rights.

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Mandy Weir, Dover District Council

Dear Sir/Madam

I am writing further to your email dated 17 December 2019 in which you ask where the Council obtained information regarding " Leeson v Leeson 1936 K.B156 (NELC13)". I can advise this information was obtained via various Google searches, including scribd.com and legalbeagles.info.

If a requestor is directly affected by our payment allocation procedure then they can ask us to review what we have done on their individual case. As already indicated in our previous response, we believe our existing process complies with the law. As we have also already indicated, any debtor who wants their payment allocated to a specific debt can ask us to do so. The FOI process is not the correct channel for challenging allocation of payments, as indicated, this would need to be done on a case-by-case basis.

I hope you find the information above helpful but should you remain unhappy with our response, you may apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted at: The Information Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

Yours faithfully

Mandy Weir
Corporate Services Officer
Dover District Council
Council Offices, White Cliffs Business Park, Whitfield, Dover CT16 3PJ

Tel: 01304 872318
Fax: 01304 872300
Email: [email address]
Web: http://dover.gov.uk

 Please consider the Environment before printing this email

Dover District Council is a data controller under GDPR, your attention is drawn to our Corporate Privacy Notice. This explains how we will use and share your personal information and protect your privacy and rights.

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Dear Mandy Weir,

I have also done internet searches on the cited authority and it is evident that the reference (NELC13) does not form part of the case. NELC is in fact North East Lincolnshire Council and 13 denotes Exhibit 13. Paragraph 40 in the representations below pretty much confirms this:

https://tinyurl.com/y5aeomuc (Perjury to Commit Fraud - 2 Dec 15)

" 40. Exhibit ‘NELC13’ which is referred to in para 72 of NELC’s Witness Statement relies on the case; ‘Leeson v. Leeson (1936) 2 K.B. 156’. The context of that case is not clear from what is detailed in its statement which is limited to the following: ‘an appropriation of a payment cannot be inferred from an intention in the mind of the debtor un-communicated to the creditor. It can only be inferred from circumstances known to both parties’. "

The above is written evidence supporting allegations made against NE Lincs Council for engineering a shortfall in payment of an in-year account by allocating payment against the customer's wishes to a disputed sum from a previous year's liability. Ironically Dover District Council has, in support of its response, quoted from a witness statement alleged to have been perjured for obtaining additional costs from an unnecessary court application.

Yours sincerely,

S Staffordson

Dear Mandy Weir,

In anticipation of you not responding, I have decided against pursuing this. However, 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...

So 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 above 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

In respect of the council's statement; "if a payment does not match exactly either the debt outstanding or an instalment due...", 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).

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.

The council's processing system applies payments in respect of the customer's implied intention but on a severely restricted basis (solely on the sum paid corresponding with an instalment amount). A payment matching a specific liability covers only one of several 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, 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 £50.00 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 £110.00 so the total amount owing the council for that year's charge has increased to £160.00. 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 £110.00 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 £110.00 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 £160.00 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 £38.00). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £110.00 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,311.95 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 £110.00 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