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

The request was partially successful.

Dear Charnwood Borough Council,

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

"In terms of Council Tax payments, any payment made will be matched to any outstanding instalment due, and allocated accordingly. If the payment does not match an instalment amount, then the payment will be allocated to the oldest debt associated with the account."

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

foi@charnwood.gov.uk, Charnwood Borough Council

Thank you for your information request which is acknowledged.
Your request is being considered and you should receive the information within 20 working days. This is subject to it not being covered by an exemption or requiring the payment of a fee.

I have set out below further information regarding the Freedom of Information Act for your information.

If you have any questions or concerns please contact me.

Yours sincerely
Megan Bilton
Data Protection and Information Security Officer
Charnwood Borough Council
e-mail [Charnwood Borough Council request email]
Tel 01509 634711

The Council will provide the information requested wherever possible, however the Act does set out a number of exemptions that may prevent release of the information to you. If any of the exemptions do apply to the information that you have requested we will not be able to supply it. You will be notified if this is the case with the reasons why we are claiming an exemption and your rights to complain and appeal the decision.

If a fee is payable we will inform you of this and you must pay the fee before the information request can be processed further – the 20 working day timetable is suspended until receipt of the fee. The Act also sets out the amount of work that the Council can be required to undertake. If this limit is estimated to be exceeded by your request we can refuse to process the request. If your request exceeds this limit, we will let you know.

If any of the information requested concerns a third party they may be consulted prior to taking a decision whether to release the information to you or not.

We will aim to provide the information to you in the format that you have specified. If you require an alternative format please let me know. Where the format has not been specified the information will be provided by e-mail, or as a paper copy.

show quoted sections

foi@charnwood.gov.uk, Charnwood Borough Council

Dear S Staffordson,

Following the above information request I am able to provide the following information:
The Freedom of Information Act only covers information held in recorded form. Local Authorities are not required to create new information or find the answer to a question from staff who may happen to know it.

The Council do not hold any information in relation to your request.

If you have any questions or concerns please contact me. I have outlined our Freedom of Information Complaints Procedure below should you need to make use of it.

Yours sincerely,

Megan Bilton
Data Protection and Information Security Officer
Charnwood Borough Council
[Charnwood Borough Council request email]
01509 634711

Charnwood Borough Council Freedom of Information and Environmental Information complaints procedure

Informal Complaints Procedure
If you are dissatisfied with the way in which your request has been handled please contact me, and I will try to resolve your complaint on an informal basis within 15 working days.
If you are then still dissatisfied with the response, please follow the formal complaints procedure below.
Formal Complaints Procedure
Put your formal complaint in writing, providing any supporting evidence, to the Customer Experience Manager at the address noted below, who will then investigate and respond to your complaint within 20 working days.
If the Customer Experience Manager dealt with your initial request for information your complaint will automatically be referred to the Head of Service and / or one of our Strategic Directors for independent consideration.

Write to: Customer Experience Manager
Charnwood Borough Council
Southfield Road
Loughborough
Leicestershire
LE11 2TU
Telephone: 01509 634596
E-mail: [Charnwood Borough Council request email]

If you remain dissatisfied with the handling of your request or complaint, you have a right to appeal to the Information Commissioner at:
The Information Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF. Telephone: 0303 123 1113. Website: www.ico.gov.uk
There is no charge for making an appeal.

show quoted sections

Dear [email address],

Thank you. Your response implies that the council took no steps to ensure its actions (to set its system to allocate unmatched payments to the oldest debt) complied with the law. Can you please confirm whether I have understood correctly?

Yours sincerely,

S Staffordson

foi@charnwood.gov.uk, Charnwood Borough Council

Dear Mr Staffordson,

In relation to your follow up query, I can confirm the Council does not hold any information. Please note - the Freedom of Information Act only covers information held in recorded form. Local Authorities are not required to create new information or find the answer to a question from staff who may happen to know it.

If you would like to re-use the information provided, please see the re-use page on our website
If you have any questions or concerns please contact me. I have outlined our Freedom of Information Complaints Procedure below should you need to make use of it.
Yours sincerely,

Megan Bilton
Data Protection and Information Security Officer
Charnwood Borough Council
[Charnwood Borough Council request email]
01509 634711

Charnwood Borough Council Freedom of Information and Environmental Information complaints procedure

Informal Complaints Procedure
If you are dissatisfied with the way in which your request has been handled please contact me, and I will try to resolve your complaint on an informal basis within 15 working days.
If you are then still dissatisfied with the response, please follow the formal complaints procedure below.
Formal Complaints Procedure
Put your formal complaint in writing, providing any supporting evidence, to the Customer Experience Manager at the address noted below, who will then investigate and respond to your complaint within 20 working days.
If the Customer Experience Manager dealt with your initial request for information your complaint will automatically be referred to the Head of Service and / or one of our Strategic Directors for independent consideration.

Write to: Customer Experience Manager
Charnwood Borough Council
Southfield Road
Loughborough
Leicestershire
LE11 2TU
Telephone: 01509 634596
E-mail: [Charnwood Borough Council request email]

If you remain dissatisfied with the handling of your request or complaint, you have a right to appeal to the Information Commissioner at:
The Information Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF. Telephone: 0303 123 1113. Website: www.ico.gov.uk
There is no charge for making an appeal.

show quoted sections

Dear Charnwood Borough Council,

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

I am writing to request an internal review of Charnwood 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@charnwood.gov.uk, Charnwood Borough Council

Thank you for your message.

 

Please note the Council is closed from Wednesday 25 December and will
reopen on Thursday 2 January.

 

Kind regards

 

FOI team

Charnwood Borough Council

Data Protection For information about how and why we may process your
personal data, your data protection rights or how to contact our Data
Protection Officer, please view our Privacy Notice.

foi@charnwood.gov.uk, Charnwood Borough Council

Dear S Staffordson,

 

Further to your request asking the Council to undertake a review of the
response provided to your recent FOI request (our ref 47) -

 

We have reviewed your original request (received by the Council on 17
September).  This request asked, '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]?'

This was considered by the Council and found to be a question and not a
request for recorded information; the Council does not hold any record
information which answers the question posed, and therefore the Council
responded to say that no information was held in relation to your request.

 

You then sent a follow up email (received on 26 September), in which you
stated ‘Your response implies that the council took no steps to ensure its
actions (to set its system to allocate unmatched payments to the oldest
debt) complied with the law. Can you please confirm whether I have
understood correctly?’

Following the Council’s consideration of your email, we found that you
were asking a question in which you also sought an opinion.  Again, the
Council did not hold any recorded information which answered the question
posed, and we therefore responded to say that no information was held.

 

In both the Council’s responses, we have set out that ‘The Freedom of
Information Act only covers information held in recorded form. Local
Authorities are not required to create new information or find the answer
to a question from staff who may happen to know it. 

As both of your requests to the Council have asked specific questions,
answers to which the Council does not hold recorded responses to, our
review has found that the Council’s response of No information held, to be
accurate and appropriate.

 

The Council cannot provide information which it does not hold, and we
therefore do not have information which can be provided in response to
your request.

 

The Council has now finished consideration of your review request.

 

If you remain dissatisfied with the Council’s handling of your Freedom of
Information Act request, you have a right to appeal to the Information
Commissioner at: The Information Commissioner's Office, Wycliffe House,
Water Lane, Wilmslow, Cheshire, SK9 5AF.  Telephone: 0303 123 1113. 
Website: [1]www.ico.gov.uk.

There is no charge for making an appeal.

 

Regards

 

M Bilton

Data Protection and Information Security Officer

Charnwood Borough Council

Email: [2][Charnwood Borough Council request email]

Tel: 01509 634711

 

 

show quoted sections

Dear [email address],

Thank you for your response, but further to my email of 1 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, so by allocating unspecified payments to the current year's charge is the approach which stands the best chance of achieving that aim.

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

foi@charnwood.gov.uk, Charnwood Borough Council

Dear Mr Staffordson,

As requested, your email below has been passed to the Council's Monitoring Officer for their consideration.

Kind regards

Megan

Megan Bilton
Data Protection and Information Security Officer
Charnwood Borough Council
Email: [Charnwood Borough Council request email]
Tel: 01509 634711

show quoted sections

Ward Adrian, Charnwood Borough Council

Dear Mr Staffordson,

The case law relating to the application of payments to debtor accounts suggests that various approaches can be taken, and in the absence of any specific guidance in the Council Tax Regulations our policy is to apply payments to the oldest debt, unless the person making the payment requests otherwise. However, we can make amendments to the allocation of payments on an individual basis if requested to do so by the person who made the payments.

If there is a particular issue in relation to any payments made to your own account, please let us know and we will assist you if at all possible.

Regards,

Adrian Ward
Monitoring Officer
Charnwood Borough Council
(01509) 634573
www.charnwood.gov.uk

show quoted sections

Dear Ward Adrian,

Thank you for your response. I don't see any point in pursuing this but further to my email of 9 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 in that email should have been followed in arriving at the decision.

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 the payment does not match an instalment amount...", 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)

"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.

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.

Yours sincerely,

S Staffordson

Dear Ward Adrian,

Apologies, I omitted the fact that my response was from the council's Monitoring Officer.

Yours sincerely,

S Staffordson

Dear Mr Ward,

In light of your comments you might wish to look at this from the following perspective:

Let's say a Customer has an outstanding balance of £75.00 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 £74.50 so the total amount owing the council for that year's charge has increased to £149.50. 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 (£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 £74.50 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 £74.50 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 £149.50 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 £27.50). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £74.50 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,276.45 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 £74.50 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