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

The request was partially successful.

Dear Manchester City Council,

The Council makes the statement quoted below from the document link:
https://www.whatdotheyknow.com/request/4...

"I can confirm that where a payment received does not match the expected amount in the profile issued to the Council Tax payer, it will allocate the payment to the oldest outstanding debt."

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

Information Compliance, Manchester City Council

Dear Sir or Madam
Re: Request for Information - Reference No: TRE / BG5DAW
Thank you for your request for information received by Manchester City
Council on 18 September 2019.
Please note that it may take up to 20 working days (16 October 2019) for
the Council to consider your request and to provide a formal response.   
If this timescale needs to be extended to consider an exemption you will
be notified and kept informed. 
If you have any queries, please do not hesitate to contact me. 
Yours sincerely
Jerry Frys
Democratic Services
PO Box 532
Town Hall
Manchester
M60 2LA
Email:  [1][MCC request email]
Website:  [2]www.manchester.gov.uk

show quoted sections

Paul O'Keefe, Manchester City Council

Dear Sir or Madam

 

Re: - Request for Information Reference Number: TRE/BG5DAW

 

Thank you for your request for information, which was received by
Manchester City Council on 18 September 2019 and has been considered under
the provisions of the Freedom of Information Act 2000 (“the 2000 Act”).

 

The officer dealing with any particular payment would use their
professional judgment to allocate the payment as appropriate.

 

In relation to your specific request for information the City Council does
not hold the information that you have requested

 

Please note if you are not satisfied with this response you may ask for an
internal review. If you wish an internal review to be undertaken you
should contact the Democratic Services Legal Team, whose address is, PO
Box 532, Town Hall, Manchester, M60 2LA, email:

[1][MCC request email] in the first instance. A copy
of the Council’s information rights complaint procedure can be downloaded
from
[2]http://www.manchester.gov.uk/downloads/d....
If you do not have internet access and require a paper copy, please let me
know.

 

If you are not content with the outcome of the internal review process,
you have the right to apply directly to the Information Commissioner for a
decision.

 

The Information Commissioner can be contacted at:

 

Information Commissioner's Office

Wycliffe House

Water Lane

Wilmslow

Cheshire

SK9 5AF

 

Tel: 0303 123 1113

Fax: 01625 524510

[3]www.ico.org.uk

 

If you have any queries about this letter please contact me. Please
remember to quote the reference number above in any future communications.

 

Yours sincerely

Paul O'Keefe
Council Tax Operations Manager
Revenues and Benefits Unit
Manchester City Council 
PO Box 3
Manchester 
M15 5BA.
Tel: 0161 219 6140
Internal 801 36140
[mobile number]
Fax 0161 274 7211
Email: [4]p.o'[email address]
[5]www.manchester.gov.uk

show quoted sections

References

Visible links
1. mailto:[MCC request email]
2. http://www.manchester.gov.uk/downloads/d...
3. http://www.ico.org.uk/
4. mailto:[email address]
5. http://www.manchester.gov.uk/
6. http://www.manchester.gov.uk/emaildiscla...
7. http://www.manchester.gov.uk/privacy

Dear Paul O'Keefe,

I would have expected that the information would be held because 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.

Yours sincerely,

S Staffordson

Dear Manchester City Council,

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

I am writing to request an internal review of Manchester City 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

Information Compliance, Manchester City Council

Dear Mr Staffordson

 

Thank you for your email dated 17 December 2019  regarding the Council's
response to your request for information.

 

The Council responded to your request on 16 October 2019 . In line with
the Councils complaint procedure you would then have 40 working days to
complain about the response you received.  The procedure is available on
the Council’s web site at    

 

[1]http://www.manchester.gov.uk/downloads/d...

 

As you complaint was received outside the normal timescale your complaint
will not be considered.

 

You can make another Freedom of Information request if you wish to do so.

Kindest regards,

Jerry Frys

Legal Officer
Democratic Services Legal Team
Manchester City Council
Legal Services
PO Box 532 Town Hall
Manchester
M60 2LA

External :0161 953 8404
Internal: 48404
informationcompliance[2]@manchester.gov.uk

[3]www.manchester.gov.uk

show quoted sections

References

Visible links
1. http://www.manchester.gov.uk/downloads/d...
2. mailto:[email address]
3. http://www.manchester.gov.uk/
4. http://www.manchester.gov.uk/emaildiscla...
5. http://www.manchester.gov.uk/privacy

Dear Information Compliance,

I expressed my reasons for wanting a review on 16 October. It was therefore well within the 40 working days. I can not be responsible for the council ignoring it.

Yours sincerely,

S Staffordson

Information Compliance, Manchester City Council

Dear Mr Staffordson
Re: Request for Information - Internal Review - Reference No: TRE /
BG5DAW - IR
Thank you for your email dated 17 December 2019 regarding the Council's
response to your request for information.
Your email will be treated as a request for internal review of that
original decision and will be dealt with in accordance with the Council’s
Access to Information Complaint Procedure.  The procedure is available on
the Council’s web site at    
[1]http://www.manchester.gov.uk/downloads/d...
Please note your request will be handled as speedily as possible and a
response should be issued no later than 17 January 2020. 
If you have any queries, please do not hesitate to contact me. 
Yours sincerely
Kindest regards,

Jerry Frys

Legal Officer
Democratic Services Legal Team
Manchester City Council
Legal Services
PO Box 532 Town Hall
Manchester
M60 2LA

External :0161 953 8404
Internal: 48404
informationcompliance[2]@manchester.gov.uk

[3]www.manchester.gov.uk

show quoted sections

Charles Metcalfe, Manchester City Council

1 Attachment

Dear Sir/Madam
Please find attached  a response to your above request
Regards
Charles Metcalfe
Head of Corporate Revenues
Revenues, Benefits and Shared Services
I City Road East
Manchester
M15 4PN
tel: 0161 219 6382
Int. 36382

show quoted sections

References

Visible links
1. http://www.manchester.gov.uk/emaildiscla...
2. http://www.manchester.gov.uk/privacy

Dear Charles Metcalfe,

Thank you for your response. I don't see any point in pursuing this but further to my email of 17 December 2019 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; "where a payment received does not match...", 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 Charles Metcalfe,

I indicated in my last correspondence that I did not want to pursue this further but suggested the matter was put before the Monitoring Officer (because of the potential legal implications). I might as well take the opportunity to add the following which is another perspective from which the Monitoring Officer might want to look at it:

Let's say a Customer has an outstanding balance of £70.50 secured by a Magistrates' court Liability Order from a previous year's charge. This gives councils the power to use various enforcement methods to collect the debt and adds costs to the arrears. The standard costs rubber stamped by the court are in the sum of £79.50 so the total amount owing the council for that year's charge has increased to £150.00. The customer now has his in-year Council Tax obligation to meet as well as the amount secured by a court order from the previous year's charge.

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

It is therefore reasonable to suspect that the council allocates non-matching payments to the arrears thus imposing an additional £79.50 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 £79.50 debt. This by definition is penalising the customer with imposed costs which is impermissible according to established case authority. It was held on judicial review of a licensing case R v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406 that costs should not exceed the proper costs incurred and should not be a penalty.

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

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

Each year's liability is a distinct debt so if the council has a secured debt in respect of one year's charge it cannot use the same court order to enforce payment if a customer defaults in a subsequent year (another order must be obtained from the court). However, the court order securing £150.00 debt from a previous year was effectively used to collect the sum of £122.00 which was actually paid in respect of the in-year liability (the amount secured by the previous court order reduced to £28.00). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £79.50 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,281.45 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 £79.50 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