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Ensuring customers are not subject to unnecessary recovery action, additional costs or hardship

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Dear Vale of Glamorgan Council,

A council taxpayer who owes more than just the current year's liability runs the risk of incurring additional recovery costs through a further application for a liability order if payments which are intended for the current year's liability are allocated by the council's computer to the previous year's liability. This would most likely happen where a non specific payment is made and the computer software is set to automatically allocate these payments to the oldest year's debt.

Councils computer systems have the necessary flexibility to be set to allow non specific payments to be allocated to the arrears or the current year's liability.

I understand that the majority of billing authorities have their computer software set to ensure that their customers are not subject to unnecessary recovery action, additional costs or hardship, i.e. so non specific payments are allocated to the current year's liability.

How does Vale of Glamorgan Council have its computer software set to deal with non specific payments. Current or oldest year's liability?

Yours faithfully,

Gwyn Worth

FOI Unit, Vale of Glamorgan Council

Dear Sir/Madam,

Thank you for your recent request for information which is currently being processed.

Please note our reference: RFI17 5762

We aim to respond to you within the statutory time scale of 20 working days.

Kind regards,

Information Governance Officer
Freedom of Information Unit
Democratic Services
Vale of Glamorgan Council / Cyngor Bro Morgannwg

Visit our Website at www.valeofglamorgan.gov.uk
Ewch i'n gwefan yn www.bromorgannwg.gov.uk

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FOI Unit, Vale of Glamorgan Council

Dear Sir,

 

Thank you for your Freedom of Information/EIR request received on (DATE)
(MONTH) .

 

You requested the following information:

How does Vale of Glamorgan Council have its computer software set to deal
with non-specific payments. Current or oldest year's liability?

 

 

Your request has been forwarded to the relevant Officer and I can advise
non-specific payments are allocated to the oldest debt first.

 

I hope that this information is of assistance but if you are dissatisfied
with this response and would like to have this reviewed, please contact
the council’s Monitoring Officer (Legal Services) at the Civic Offices ,
Holton Road Barry CF63 4RU.

 

Further information regarding FOI and the appeals process is available at
[1]www.ico.org.uk

 

Kind regards,

 

 

 

 

Information Governance Officer

Freedom of Information Unit

Democratic Services

Vale of Glamorgan Council / Cyngor Bro Morgannwg

 

Visit our Website at [2]www.valeofglamorgan.gov.uk

Ewch i'n gwefan yn [3]www.bromorgannwg.gov.uk

 

[4]Find us on Facebook / Cewch ddod o hyd i ni ar Facebook

[5]Follow us on Twitter / Dilynwch ni ar Twitter

 

 

From: Gwyn Worth [mailto:[FOI #444417 email]]
Sent: 08 November 2017 09:30
To: FOI Unit
Subject: Freedom of Information request - Ensuring customers are not
subject to unnecessary recovery action, additional costs or hardship

 

Dear Vale of Glamorgan Council,

A council taxpayer who owes more than just the current year's liability
runs the risk of incurring additional recovery costs through a further
application for a liability order if payments which are intended for the
current year's liability are allocated by the council's computer to the
previous year's liability. This would most likely happen where a non
specific payment is made and the computer software is set to automatically
allocate these payments to the oldest year's debt.

Councils computer systems have the necessary flexibility to be set to
allow non specific payments to be allocated to the arrears or the current
year's liability.

I understand that the majority of billing authorities have their computer
software set to ensure that their customers are not subject to unnecessary
recovery action, additional costs or hardship, i.e. so non specific
payments are allocated to the current year's liability.

How does Vale of Glamorgan Council have its computer software set to deal
with non specific payments. Current or oldest year's liability?

Yours faithfully,

Gwyn Worth

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Dear FOI Unit,

Response to this request is delayed. By law, Vale of Glamorgan Council should normally have responded promptly and by 7 December 2017

Yours sincerely,

Gwyn Worth

FOI Unit, Vale of Glamorgan Council

Dear Sir,

Thank you for your email received on 9th December.

I can advise the response was sent to you on 9th November and can be seen in the chain of emails below.

Kind regards,

Information Governance Officer
Freedom of Information Unit
Democratic Services
Vale of Glamorgan Council / Cyngor Bro Morgannwg

Visit our Website at www.valeofglamorgan.gov.uk
Ewch i'n gwefan yn www.bromorgannwg.gov.uk

Find us on Facebook / Cewch ddod o hyd i ni ar Facebook
Follow us on Twitter / Dilynwch ni ar Twitter

show quoted sections

Dear FOI Unit,

I apologise, I see you have already sent a response. I was thrown by reading only the beginning of the answer, ie; "Your request has been forwarded to the relevant Officer"

Anyway, thank you for stating that 'non-specific payments are allocated to the oldest debt first'.

Would you please confirm whether or not any measures are in place to check that allocating an unmatched payment to the oldest debt in these circumstances would have the consequences of putting the current year's liability also in arrears, and if so, in accordance with R. v Miskin Lower Justices [1953] 1 Q.B. 533, whether the payment would be moved in respect of the current year's account to avoid unnecessary recovery action, additional costs etc.?

Yours sincerely,

Gwyn Worth

FOI Unit, Vale of Glamorgan Council

Dear Sir,

Thank you for your recent request for information which is currently being processed.

Please note our reference: RFI17 5865

We aim to respond to you within the statutory time scale of 20 working days.

Kind regards,

Information Governance Officer
Freedom of Information Unit
Democratic Services
Vale of Glamorgan Council / Cyngor Bro Morgannwg

Visit our Website at www.valeofglamorgan.gov.uk
Ewch i'n gwefan yn www.bromorgannwg.gov.uk

Find us on Facebook / Cewch ddod o hyd i ni ar Facebook
Follow us on Twitter / Dilynwch ni ar Twitter

show quoted sections

FOI Unit, Vale of Glamorgan Council

Dear Sir,

 

Thank you for your Freedom of Information request received on 11^th
December.

 

You requested the following information:

Would you please confirm whether or not any measures are in place to check
that allocating an unmatched payment to the oldest debt in these
circumstances would have the consequences of putting the current year's
liability also in arrears, and if so, in accordance with R. v Miskin Lower
Justices [1953] 1 Q.B. 533, whether the payment would be moved in respect
of the current year's account to avoid unnecessary recovery action,
additional costs etc.?

 

Your request has been forwarded to the relevant Officer and I can advise
the Council must follow Government Regulations. However, where Government
Regulations are open to interpretation or where they do not specifically
cover certain areas then case law exists where decisions have been
challenged in the higher courts. The judge(s) ruling in these court
hearings are then binding on all lower courts and as a result the Council
must then follow the principles established.

 

Whilst payment allocation is not specifically covered by Government
Regulations there is well established case law that dictates how payments
should be allocated.

 

The most significant cases concerning payment allocation are:-

 

Peter v Anderson (1814) – This case held that where there is no indication
from the debtor, the creditor may apply payments as they think fit.

 

Stepney Corporation v Osowsky (1937) – This case 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.

 

R v Miskin Lower Justices (1953) – This case held that where an amount so
obviously relates to a specific liability, it would be an unwarranted
assumption to allocate the payment elsewhere.

 

It is not the case that allocating payments to the current financial year
will always benefit the customer as you suggest. It is often the case that
recovery action is pending on a previous years debt (e.g. awaiting
referral to an enforcement agent)  and therefore if the payment was
allocated to the current financial year then the customer could incur
considerable fees if the oldest debt is subsequently referred for
additional action. As a result, in these circumstances, it is clearly
beneficial to the customer for the payment to be allocated to the oldest
debt.

 

The Council will always endeavour to allocate the payment as intended by
the customer, whether express or implied, but where this is not possible
the payment will be allocated to the oldest debt. In addition, if a
customer contacts the Council within a reasonable period following payment
allocation and requests that a payment is reallocated then the Council
would, in the vast majority of cases, comply with any request to have the
payment moved between financial years.

 

I can therefore confirm that the Council is satisfied that its approach to
payment allocation is both fair and reasonable and also complies with the
decisions handed down by the Courts.

 

I hope that this information is of assistance but if you are dissatisfied
with this response and would like to have this reviewed, please contact
the council’s Monitoring Officer (Legal Services) at the Civic Offices ,
Holton Road Barry CF63 4RU.

 

Further information regarding FOI and the appeals process is available at
[1]www.ico.org.uk

 

Kind regards,

 

 

Information Governance Officer

Freedom of Information Unit

Democratic Services

Vale of Glamorgan Council / Cyngor Bro Morgannwg

 

Visit our Website at [2]www.valeofglamorgan.gov.uk

Ewch i'n gwefan yn [3]www.bromorgannwg.gov.uk

 

[4]Find us on Facebook / Cewch ddod o hyd i ni ar Facebook

[5]Follow us on Twitter / Dilynwch ni ar Twitter

 

 

From: Gwyn Worth [mailto:[FOI #444417 email]]
Sent: 11 December 2017 10:02
To: FOI Unit
Subject: RE: RFI17 5762

 

Dear FOI Unit,

I apologise, I see you have already sent a response. I was thrown by
reading only the beginning of the answer, ie; "Your request has been
forwarded to the relevant Officer"

Anyway, thank you for stating that 'non-specific payments are allocated to
the oldest debt first'.

Would you please confirm whether or not any measures are in place to check
that allocating an unmatched payment to the oldest debt in these
circumstances would have the consequences of putting the current year's
liability also in arrears, and if so, in accordance with R. v Miskin Lower
Justices [1953] 1 Q.B. 533, whether the payment would be moved in respect
of the current year's account to avoid unnecessary recovery action,
additional costs etc.?

Yours sincerely,

Gwyn Worth

show quoted sections

Dear FOI Unit,

Thank you for clarifying your response. I consider that the Vale of Glamorgan Council has provided the information I requested, however, the purpose of this exercise was to ascertain whether or not the principles surrounding the appropriation of payments were being adhered to.

R v Miskin Lower Justices (1953)

It was held in R v Miskin Lower Justices, that where an amount obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere.

If no instruction is given at the time of payment, then the council has a duty to allocate payment to the account which it is most beneficial to the debtor to reduce. That would be in the majority of cases (see *NOTE*) the current liability if the consequences of allocating payment to the arrears meant that the customer was subject to unnecessary recovery action, additional costs etc.

I understand by the council stating that there are no measures in place to ensure that unspecified payments are allocated to the account which it is least burdensome for the debtor (other than relying on customer contact) that the laws surrounding the appropriation of payments are not being complied with. If the laws of appropriation were being complied with, an unmatched payment allocated to the oldest debt (having the consequences of putting the current year's liability also in arrears) would be reallocated to the current year's liability on account of the circumstances implying that this was the debtor's intention (least burdensome for the debtor).

If it appears I have misunderstood anything from what I have stated above I would appreciate if you would correct me.

*NOTE*: It can not be assumed that a customer who has arrears is not making payments as required on his outstanding liability as well as making payment (unmatched possibly) on his in-year account. A system which blindly allocates unmatched payments in this scenario without any checks prior to action being taken would certainly end up burdening the customer unnecessarily with recovery costs etc. in respect of his in-year liability.

P.S. The case authorities relied on in your response I believe have been quoted from an article which was published by the Institute of Revenues Rating and Valuation (IRRV), interpreting various case law on appropriation of payments. The article was written by consultant and trainer Paul Russell who made the disclaimer that "the views given in this column are personal views and should not be construed as a legal opinion"

Quoted from the Revenues Rating and Valuation (IRRV) magazine:

QUOTE
' “Where should payments be allocated – to the oldest or youngest debt, to current liability or to arrears?”

Allocation of cash

This is often a difficult decision. A debtor who owes several debts may make a payment which equates to neither an installment or repayment plan, nor to a balance outstanding. I am often asked where payments should be allocated – to the oldest or youngest debt, to current liability or to arrears?

There is no council tax or business rate regulation which relates to the allocation of cash. Case law has held as follows:

Peter v Anderson (1814) held that where there is no indication from the debtor, the creditor may apply payments as they think fit.

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.

Stepney Corporation v Osowsky (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 a discretion unless there is no indication by the debtor.

R v Miskin Lower Justices (1953) held that where an amount obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere.

Thus, if the amount of the payment identifies the debt, then it must be allocated to that debt. Where the debtor states or implies that the payment should be allocated to a specific debt, the creditor must abide by that statement. Where the debtor does not make any reference as to where the payment should be allocated and the amount gives no clue, then it is up to the creditor (local authority) to make the choice. In the latter situation, Albermarle provides that the debtor cannot take issue with the way in which the payment has been allocated.

There is total discretion afforded to the local authority, but only where there is no indication by either the amount of the payment or by the indications from the debtor.'
QUOTE END

The following information relevant to the appropriation of payments which has previously been published may be of interest.

The general principles, which take into consideration the relevant case law (relevant to the debtor’s rights) are set out in Chitty on Contracts (31st Edition) Volume 1 at Para 21-061 (see below, note R v Miskin Lower Justices):

'21-061
Debtor’s right to appropriate. It is essential that an appropriation by the debtor should take the form of a communication, express or implied, to the creditor of the debtor’s intention to appropriate the payment to a specified debt or debts so that the creditor may know that his rights of appropriation as creditor cannot arise [353]. It is not essential that the debtor should expressly specify at the time of the payment which debt or account he intended the payment to be applied to. His intention may be collected from other circumstances showing that he intended at the time of the payment to appropriate it to a specific debt or account [354]. Thus, where at the date of payment some of his debts are statute barred and others are not, it will be inferred (in the absence of evidence to the contrary) that the debtor appropriated the payment to the debts that were not so barred. [355]

353 Leeson v Leeson [1936] 2 K.B. 156, 161; Stepney Corp v Osofsky [1937] 3 All E.R. 289; Thomas v Ken Thomas Ltd [2006] EWCA Civ 1504, [2007] Bus. LR 429 at [19].

354 Newmarch v Clay (1811) 14 East 239, 244; Shaw v Picton (1825) 4 B. & C. 715; Young v English (1843) 7 Beav. 10; Nash v Hodgson (1855) 6 De G.M. & G. 474; R. v Miskin Lower Justices [1953] 1 Q.B. 533.

355 Nash v Hodgson (1855) 6 De G.M. & G. 474; cf. a balance owing on a current account: Re Footman Bower & Co Ltd [1961] Ch. 443 (and see below, para. 21-067). '

It was held in R v Miskin Lower Justices, that where an amount obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere. Hence, if the laws of appropriation were to be complied with, an unmatched payment allocated to the oldest debt (having the consequences of putting the current year's liability also in arrears) would require reallocating to the current year's liability. The circumstances would imply that this was the debtor's intention as it would be least burdensome for him and would be an unwarranted assumption to do differently.

There is another source providing guidance on the appropriation of payments here:

https://www.whatdotheyknow.com/request/4...

"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)."

Of further interest

It was held in Fernando v. Fernando (Sri Lankan case around the time of Miskin) that 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".

http://www.lawnet.gov.lk/wp-content/uplo...

Yours sincerely,

Gwyn Worth

FOI Unit, Vale of Glamorgan Council

Dear Sir,

Thank you for your email sent on 13th January.

However it is unclear what recorded information you are requesting.

To assist us in answering your FOI request, please can you clearly state the recorded information you wish to access.

Kind regards,

Information Governance Officer
Freedom of Information Unit
Democratic Services
Vale of Glamorgan Council / Cyngor Bro Morgannwg

Visit our Website at www.valeofglamorgan.gov.uk
Ewch i'n gwefan yn www.bromorgannwg.gov.uk

Find us on Facebook / Cewch ddod o hyd i ni ar Facebook
Follow us on Twitter / Dilynwch ni ar Twitter

show quoted sections

Dear FOI Unit,

Thank you for your email of 7th February.

I haven't requested any further information, I was just commenting on the response. However, if there is anything relevant which the council can add then it would be appreciated if it would do so.

Yours sincerely,

Gwyn Worth

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