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

The request was partially successful.

Dear Stockton on Tees Council,

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

"Where a payment is received that does not match an instalment profile, either the current year or previous years, the payment is allocated to the oldest year where a debt remains 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

Stockton on Tees Council

1 Attachment

Dear S Staffordson

 

Freedom of Information Act 2000 / Environmental Information Regulations
2004 – Ref: 1323/1920

 

Thank you for your correspondence received on 18 September 2019

 

Your request is being considered under the Freedom of Information Act 2000
or the Environmental Information Regulations 2004 (whichever is most
appropriate). You will receive the information requested within the
statutory timescale of 20 working days.

 

However, please note the Acts define a number of exemptions that may
prevent release of the requested information. There will therefore be an
assessment of your request to determine if any exemptions apply to the
information requested. If the information cannot be released, or only
released in part you will be informed of the reasons why, together with
any rights of appeal.

 

If the information requested refers to a third party, they may be
consulted before deciding whether it can be released.

 

Yours sincerely,

 

Stockton-on-Tees Borough Council

Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD

(01642) 527521

[1][email address]

[2]www.stockton.gov.uk

 

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Dear Stockton on Tees Council,

Response to this request is delayed. By law, Stockton on Tees Council should normally have responded promptly and by 16 October 2019.

Yours faithfully,

S Staffordson

FOI and Complaints, Stockton on Tees Council

This document was classified as: OFFICIAL

Dear S Staffordson

This 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.

Yours sincerely,

Information Governance Team
Stockton-on-Tees Borough Council
Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521

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Dear FOI and Complaints,

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.

I therefore consider my request is a valid request under freedom of information legislation.

Yours sincerely,

S Staffordson

FOI and Complaints, Stockton on Tees Council

This document was classified as: OFFICIAL

Dear S Staffordson

We stand by our decision that your request did not constitute a valid FOI request. 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.

Yours sincerely,

Information Governance Team
Stockton-on-Tees Borough Council
Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521

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Dear Stockton on Tees Council,

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

I am writing to request an internal review of Stockton on Tees 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.

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 and Complaints, Stockton on Tees Council

This document was classified as: OFFICIAL

Dear S Staffordson

I acknowledge receipt of your request and will be in touch once this has been given full consideration

Regards

Lisa Williams
Manager (Information Governance)
Information and Improvement Services
Stockton-on-Tees Borough Council
Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521
[email address]
www.stockton.gov.uk

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FOI and Complaints, Stockton on Tees Council

This document was classified as: OFFICIAL

Dear S Staffordson

 

Re: Freedom of Information Act 2000 – Internal Review Ref: 1323/1920

 

A review has been undertaken of the Council's response to your Freedom of
Information Act request, sent to you on 18 October 2019.  Please see below
the outcome of the review. 

 

In your original request you referred to a statement made by the Council:

 

"Where a payment is received that does not match an instalment profile,
either the current year or previous years, the payment is allocated to the
oldest year where a debt remains outstanding. "

 

You shared that the council's statement above does not agree with the
judgment in the case of R. v Miskin Lower Justices and provided a link to
that judgement
([1]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.  You believe that the Council’s statement (if it were to
agree with the judgment) should 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.”

 

Your request therefore asked the following:

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]?

The Council’s response advised that your request did 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.

 

On 18 October 2019 you raised an objection to the Council’s response as
you stated that “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.  The Council responded
that we maintained our position but for clarity shared that 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.

On 23 December 2019 you asked that the matter be considered within an
internal review, stating that 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.

 

In the case of R. v Miskin Lower Justices it was held that where an
amount so obviously relates to a specific liability, it would be an
unwarranted assumption to allocate the payment elsewhere.  Where several
separate debts are due from the debtor to the Council, the debtor may,
when making a payment, apply the money to a particular debt or debts, and
if the Council accepts the payment under those instructions, we must apply
it as directed by the debtor; if, however, the debtor gives no instruction
when making the payment, the Council may apply it as it wants. Section
1.8.2 of the Council's Collection Policy states that if payments are made
and it is not for an instalment, it will be allocated to the debt that is
outstanding.  The Council’s practice is that if a payee makes it clear
(either at the point of payment or afterwards) that the payments is
intended for another charge, the payment will be transferred to that
charge and any costs cancelled.

 

Officer Decisions in relation to the Collection Policy can be found by
undertaking a search of these using the following link:

 

[2]Officer Decision (in consultation)

 

I hope that this clarity explains the Council’s position on this matter.

 

If you remain dissatisfied, please contact the Information Commissioner’s
Office by using either of the details; The Information Commissioner's
Office (ICO), Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF. 
Telephone: 0303 123 1113  Website: [3]www.ico.gov.uk. The ICO does not
make a charge for an appeal.

 

Yours Sincerely

 

 

 

Lisa Williams                                                              
Manager (Information Governance)

Information and Improvement Services

Stockton-on-Tees Borough Council

Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521
[4][email address]
[5]www.stockton.gov.uk

 

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5. http://www.stockton.gov.uk/

Dear FOI and Complaints,

Can you please clarify your response.

I have used the suggested search facility and not found any cabinet papers recording the decision process regarding the policy to automatically allocate non-specific payments to the oldest account rather than to the in-year account.

However, the search has led me to a couple of decisions which confirm that the council has made amendments to a document entitled "Council Tax and Business Rates Collection Policy". I assume the reference in the response (Section 1.8.2) refers to this policy. I have satisfied myself, after making reasonable attempts to locate the document, that it is not publicly available and would consequently like a copy providing as well as any cabinet papers recording the decision process that I have failed to locate.

Also regarding the summary of the case authority provided in respect of R v Miskin Lower Justices, it is of some concern that this has been produced from selected parts of an article published in the IRRV 10 October 2002 Insight magazine and guidance from a book entitled "Local Authority Revenues".

https://www.whatdotheyknow.com/request/4... (Local Authority Revenues)

https://tinyurl.com/y3hoyx9v (IRRV Insight magazine)

The above both took into consideration a number of cases relevant to the appropriation of payments, for example Peter v Anderson (1814), R v Miskin etc. and gave a summarised account from them all. The council though, has left out from the already inadequate case summaries the fact that the debtor's right to appropriate can take the form of a communication express or implied, so the council's right to appropriate does not simply arise if the debtor gives no instruction when making the payment.

In respect of the council's statement regarding R v Miskin; "if payments are made and it is not for an instalment, it will be allocated to the debt that is outstanding", there was no precedent set in the Miskin case based on payments matching the instalment amount of a particular year.

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

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

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

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

"Where the debtor states or implies that the payment should be allocated to a specific debt, then the creditor must abide by that statement." (IRRV Insight article)

Alternatively....

"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." (Local Authority Revenues)

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.

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.

Yours sincerely,

S Staffordson

FOI and Complaints, Stockton on Tees Council

This document was classified as: OFFICIAL

Dear S Staffordson

I acknowledge receipt of your email below. A response will be issued in due course

Regards

Lisa Williams
Manager (Information Governance)
Information and Improvement Services
Stockton-on-Tees Borough Council
Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521
[email address]
www.stockton.gov.uk

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FOI and Complaints, Stockton on Tees Council

3 Attachments

This document was classified as: OFFICIAL

 

 

Dear S Staffordson,

 

Freedom of Information Act 2000 - Ref: 1323/1920

 

In response to your email received on 27 January 2020, this matter has now
been given consideration.

 

You requested a copy of the Council Tax and Business Rates Collection
Policy. A copy is now attached for your information.  

 

The Council confirms that the latest Cabinet Decision which approved the
current Council Tax and Business Rates Collection Policy is attached for
your reference.

 

The Council has nothing further to add in relation to your comments which
you have made. If you remain dissatisfied, please contact the Information
Commissioner’s Office by using either of the details;

 

The Information Commissioner's Office (ICO),

Wycliffe House,

Water Lane,

Wilmslow,

Cheshire,

SK9 5AF. 

 

Telephone: 0303 123 1113  Website: [1]www.ico.gov.uk. 

 

The ICO does not make a charge for an appeal.

 

Yours Sincerely,

 

Gemma

 

Gemma Jackson      
                                                           
Information Governance Team

Stockton-on-Tees Borough Council

Municipal Buildings, Church Road, Stockton-on-Tees, TS18 1LD
01642 52 7521
[2][email address]
[3]www.stockton.gov.uk

 

[4]CSE LOGO NEW

 

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Dear FOI and Complaints,

Thank you for your reply, though the information provided does not match up with what you stated was held in the previous response. However, you will probably be pleased to hear I have decided against pursuing this though your Monitoring Officer, if he has been referred the matter, might also wish to consider these additional comments:

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 £75.00 so the total amount owing the council for that year's charge has increased to £150.00. The customer now has his in-year Council Tax obligation to meet as well as the amount secured by a court order from the previous year's charge.

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

It is therefore reasonable to suspect that the council allocates non-matching payments to the arrears thus imposing an additional £75.00 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 £75.00 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 £150.00 debt from a previous year was effectively used to collect the sum of £122.00 which was actually paid in respect of the in-year liability (the amount secured by the previous court order reduced to £28.00). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £75.00 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,276.95 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 £75.00 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