Exercising discretion when applying to the court for a Council Tax Liability Order

Helen Barker made this Freedom of Information request to Thurrock Borough Council

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Dear Thurrock Borough Council,

The Council Tax (Administration and Enforcement) Regulations 1992 (the "Regulations") confer a duty on the billing authority to exercise discretion under regulation 34(1) when deciding whether to institute a complaint to the Magistrates' court to enforce payment.

Regulation 34(1) as amended by Regulation 15 of SI 1992/3008 states, with the relevant part emphasised, as follows:

"If an amount which has fallen due under paragraph (3) or (4) of regulation 23 (including those paragraphs as applied as mentioned in regulation 28A(2)) is wholly or partly unpaid, or (in a case where a final notice is required under regulation 33) the amount stated in the final notice is wholly or partly unpaid at the expiry of the period of 7 days beginning with the day on which the notice was issued, THE BILLING AUTHORITY MAY, in accordance with paragraph (2), apply to a magistrates' court for an order against the person by whom it is payable."

Regulation 34(2) states as follows:

"The application is to be instituted by making complaint to a justice of the peace, and requesting the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding."

The following are examples (but by no means exhaustive) of what are reasonable factors a recovery officer should take into account in exercising discretion to institute a complaint to the Magistrates court under paragraph (2) of regulation 34 of the Regulations:

1. the level of debt outstanding

2. any payments made subsequent to the full amount becoming due and time remaining of the financial year

3. are circumstances indicative of the debt being settled without resorting to enforcement

4. consider if enforcing the debt would unnecessarily subject the taxpayer to additional costs etc. and therefore amount to a penalty (see 3 above)

5. ensure monies have been prioritised to maintaining the in-year debt

6. allocate to the in-year any monies posted to arrears (or sufficient of it) that would if it had not been misallocated prevented the in-year liability also falling in arrears (see 5 above)

7. check for benefit claims or appeals already in the system and refrain from taking enforcement action where such genuine cases are unresolved

Q1. Does Thurrock Borough Council exercise discretion before proceeding under regulation 34(2) of the Council Tax (Administration and Enforcement) Regulations 1992 to request a summons from a justice of the peace (it may be an automated process)

Q2. If yes to (1) what factors are taken into consideration

Yours faithfully,

Helen Barker

Information.Matters@thurrock.gov.uk, Thurrock Borough Council

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Information.Matters@thurrock.gov.uk, Thurrock Borough Council

2 Attachments

Dear Ms Barker,

 

Thank you for your recent communication which is being managed in line
with the Freedom of Information Act under the above reference number.  The
details of your request are outlined below together with the council’s
response.

 

Your request

 

1. Does Thurrock Borough Council exercise discretion before proceeding
under regulation 34(2) of the Council Tax (Administration and Enforcement)
Regulations 1992 to request a summons from a justice of the peace (it may
be an automated process)

2. If yes to (1) what factors are taken into consideration

 

Our Response

 

 

1.    Yes, where contact is established.

2.    As stated in request there is a legislative process that a Council
must be able to demonstrate has been applied prior to an application being
made. In addition to required notices being produced and sent at the
appropriate times in the collection cycle, Thurrock Council also utilises
the following processes/methods in order to reduce the need to make such
an application.

 

          i.        With every collection letter sent there is an
attachment encouraging contact is made to resolve the issue, signposting
those experiencing difficulties to relevant organisations such as Citizens
Advice, and advising charging payers of the costs that can be incurred
should they not make contact or payment.

         ii.        Letters are also sent requesting the charge payer
makes contact to a specific member of staff to discuss the situation. This
letter also offers an appointment date and time at the Council to come and
have a face to face meeting with this member of staff. The appointment
date and time can of course be changed. Charge payers attending these
meetings can of course see the Benefits Advisors and visit the Citizens
Advice that is just a 5 minutes’ walk away. Many charge payers contacting
the Council have other debt, and the Citizens Advice can offer holistic
support aiding the prioritisation of their debt position.

        iii.        Proactive outbound telephone calls are made by the
team in an attempt to make contact and resolve the situation

        iv.        When possible letters are sent advising members of
staff will be available to take out of hours calls (before 9am, after 5pm
or on a Saturday) for those unable to make contact during office hours.

 

Thurrock Council takes every opportunity to minimise the need to make an
application for a Summons. For those that will not engage or make contact
we have no option but to apply for a Summons. However, the strategies
shown above also continue after a Summons is obtained where appropriate.

 

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Many thanks

 

Tina Barrell

 

Tina Barrell l Complaints & Information Governance Assistant I HR, OD &
Transformation

[3]thurrock.gov.uk l ext: 64882

Thurrock Council, Civic Offices, New Road, Grays, Essex RM17 6SL

 

Please note my working hours are 8.30am-2.00pm Monday-Thursday, please
copy in [4][Thurrock Borough Council request email] in relation to all FOI
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The information in this e-mail and any attachment(s) are intended to be
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cannot accept any responsibility for the accuracy or completeness of this
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Dear [email address],

Thank you for your response. It does not constitute discretion if a decision of whether to apply it or not depends on being prompted by the customer, parameters being agreed in advance relating to the outstanding monetary value of a customer's account or other information that can be input so the council tax processing system can detect it when running the complaint list. Discretion could only be appropriately applied at a stage when the summons is normally requested, i.e. when all the relevant circumstances are known about the customer's account at that particular time.

The council's website, its FOI response and various other information I have seen indicates that discretion is not exercised at the point where a decision is needed to be made about whether to request a summons. The actual process of running the complaint list and the summonses is automated via the Council’s computer system.

From those sources I have seen the defendant incurs a £65.00 sum for that action. However, that sum actually covers the council's additional expenditure in respect of officer time assessing customers' accounts to determine acceptable payment arrangements which are conditioned upon the council obtaining a Liability Order (to secure the debt) adding a total £95.00 court costs comprising summons costs of £65.00 plus a further £30.00. This sum (£30.00) is added to the £65.00 costs already incurred for the request of the summons in respect of the accounts of all customers who have not paid the total amount outstanding of their liability, whether or not they take advantage of the pre-arranged payment plan. This is presumably to compensate the council for the officer time attributed to making the application for a Liability Order (on day of the hearing).

Although its possible for a customer to avoid potential summons costs, for example, a taxpayer who is struggling may avoid being taken to court if she makes contact with the council early enough and agrees an alternative payment arrangement.

So the costs in reality cover the council's expenditure (additional to the issue of the summons) attributable to before the summons is requested, after summons is requested but before the liability order hearing and after the liability order has been obtained in respect of officer time engaging with customers who agree to enter into payment arrangements.

Additionally the fee paid to HMCTS which is incorporated into the summons cost was reduced a year or two ago. The £3.00 fee was reduced by £2.50 to £0.50 after a detailed review had been carried out by the Ministry of Justice (it identified that the court were making a profit). However, the costs recharged to the customer didn't reflect the council's reduction in expenditure, the total costs remained at £95.00.

It is generally accepted by billing authorities that defences against the issue of a Liability Order at the court hearing which are considered to be valid are very restricted. However, there are six obvious additional defences that would be valid if no discretion is exercised prior to requesting the issue of a summons and expenditure incurred by the council prior to and once the summons has been issued are included in those costs. They would be that;

1. the billing authority has not (does not) comply with regulation 34(1) of the Council Tax (Administration and Enforcement) Regulations 1992;

2. expenditure amounting to £50.00 was not incurred by the council in respect of instituting the complaint;

3. the costs have been inflated to subsidise customers who opt to make payment in line with the pre-arranged payment plans;

4. the costs in respect of instituting the summons include expenditure which is incurred by the council after that action;

5. the costs have been inflated specifically by an amount equal to the reduction of the fee payable to HMCTS for each application; and

6. the costs in general have been inflated to subsidise expenditure incurred in respect of potential applications to the court but which are not made by virtue of payment plans being arranged for those who agree them and for whom benefit from avoiding the costs

I would appreciate the council reviewing my request and confirming that the response to my request is "No" to (Q1) and therefore "N/A" in respect of (Q2).

Yours sincerely,

Helen Barker

Information.Matters@thurrock.gov.uk, Thurrock Borough Council

2 Attachments

Dear Ms
Barker,                                                                                

 

Please see follow up response below which has been provided by our Debt
Recovery Team:

 

I cannot agree with your comment that Thurrock Council does not exercise
discretion at the point of applying for a Summons.

 

All collection notifications sent by Thurrock include details and the
costs of further escalation and sign posting information for those in
difficulty. These notifications encourage contact with the Council. In
addition, proactive outbound calls are made to enable engagement and
resolution. Notices sent include invites to attend the offices to discuss
their accounts and opportunities to engage via email, and of course by
telephone.

 

A de minimus value is within the system, to prevent low values not
progressing through the Summons process.

 

Cases are also manually checked at various stages of the collection cycle
and excluded from progression as required. All cases are manually reviewed
at the Summons stage and excluded from the complaint list as required.
Furthermore they are again reviewed after an application is made and
before the Hearing. Court, and after the Hearing once the Liability Order
is obtained. Costs can of course be removed at any stage post Liability if
new information suggests they are not appropriate.

 

Thurrock prides itself on its proactive approach and supporting its
residents.

 

Many thanks

 

Tina Barrell

 

Tina Barrell l Complaints & Information Governance Assistant I HR, OD &
Transformation

[1]thurrock.gov.uk l ext: 64882

Thurrock Council, Civic Offices, New Road, Grays, Essex RM17 6SL

 

Please note my working hours are 8.30am-2.00pm Monday-Thursday, please
copy in [2][Thurrock Borough Council request email] in relation to all FOI
matters.

 

Thurrock: an ambitious and collaborative community which is proud of its
heritage and excited by its diverse opportunities and future

[3]cid:image002.png@01D542FF.BD4CAC30

Save time, do it online

[4]facebook.com/thurrockcouncil | [5]twitter.com/thurrockcouncil |
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From: Helen Barker <[FOI #658710 email]>
Sent: 13 May 2020 10:00
To: [email address]
Subject: Re: RESPONSE FOI 9954

 

Dear [8][email address],

Thank you for your response. It does not constitute discretion if a
decision of whether to apply it or not depends on being prompted by the
customer, parameters being agreed in advance relating to the outstanding
monetary value of a customer's account or other information that can be
input so the council tax processing system can detect it when running the
complaint list. Discretion could only be appropriately applied at a stage
when the summons is normally requested, i.e. when all the relevant
circumstances are known about the customer's account at that particular
time.

The council's website, its FOI response and various other information I
have seen indicates that discretion is not exercised at the point where a
decision is needed to be made about whether to request a summons. The
actual process of running the complaint list and the summonses is
automated via the Council’s computer system.

From those sources I have seen the defendant incurs a £65.00 sum for that
action. However, that sum actually covers the council's additional
expenditure in respect of officer time assessing customers' accounts to
determine acceptable payment arrangements which are conditioned upon the
council obtaining a Liability Order (to secure the debt) adding a total
£95.00 court costs comprising summons costs of £65.00 plus a further
£30.00. This sum (£30.00) is added to the £65.00 costs already incurred
for the request of the summons in respect of the accounts of all customers
who have not paid the total amount outstanding of their liability, whether
or not they take advantage of the pre-arranged payment plan. This is
presumably to compensate the council for the officer time attributed to
making the application for a Liability Order (on day of the hearing).

Although its possible for a customer to avoid potential summons costs, for
example, a taxpayer who is struggling may avoid being taken to court if
she makes contact with the council early enough and agrees an alternative
payment arrangement.

So the costs in reality cover the council's expenditure (additional to the
issue of the summons) attributable to before the summons is requested,
after summons is requested but before the liability order hearing and
after the liability order has been obtained in respect of officer time
engaging with customers who agree to enter into payment arrangements.

Additionally the fee paid to HMCTS which is incorporated into the summons
cost was reduced a year or two ago. The £3.00 fee was reduced by £2.50 to
£0.50 after a detailed review had been carried out by the Ministry of
Justice (it identified that the court were making a profit). However, the
costs recharged to the customer didn't reflect the council's reduction in
expenditure, the total costs remained at £95.00.

It is generally accepted by billing authorities that defences against the
issue of a Liability Order at the court hearing which are considered to be
valid are very restricted. However, there are six obvious additional
defences that would be valid if no discretion is exercised prior to
requesting the issue of a summons and expenditure incurred by the council
prior to and once the summons has been issued are included in those costs.
They would be that;

1. the billing authority has not (does not) comply with regulation 34(1)
of the Council Tax (Administration and Enforcement) Regulations 1992;

2. expenditure amounting to £50.00 was not incurred by the council in
respect of instituting the complaint;

3. the costs have been inflated to subsidise customers who opt to make
payment in line with the pre-arranged payment plans;

4. the costs in respect of instituting the summons include expenditure
which is incurred by the council after that action;

5. the costs have been inflated specifically by an amount equal to the
reduction of the fee payable to HMCTS for each application; and

6. the costs in general have been inflated to subsidise expenditure
incurred in respect of potential applications to the court but which are
not made by virtue of payment plans being arranged for those who agree
them and for whom benefit from avoiding the costs

I would appreciate the council reviewing my request and confirming that
the response to my request is "No" to (Q1) and therefore "N/A" in respect
of (Q2).

Yours sincerely,

Helen Barker

show quoted sections

Dear [email address],

Since I submitted my review request a number of anomalies have come to light regarding the enforcement procedure in the area concerned. However, I do not wish to pursue this, though the council might want to reconsider its actions regarding the recovery of Council Tax in light of the issues. Note later on under the heading 'NO LEGAL BASIS TO PURSUE LIABILITY ORDER ONCE AN AMOUNT AGREED' the point discussed is not a discretionary matter. I suggest this and the other points raised are considered by the Monitoring Officer, but that is of course a matter for the council.

Further to my 13 May email it is evident that discretion is not exercised at the point where a decision is needed to be made about whether to request a summons but rather at the other stages mentioned and consequently the costs must with absolute certainty cover the general administration of the council tax and enforcement departments.

RELEVANT LEGISLATION AND CASE LAW

I understand that the council must adhere to the Council Tax (Administration and Enforcement) Regulations 1992 and also be mindful of all established case law regarding the area concerned.

I am aware of a number of cases but particularly two which I would like to refer to regarding your response namely R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin) and Williams v East Northamptonshire [2016] EWHC 470 (Admin).

Williams v East Northamptonshire [2016] EWHC 470 (Admin)

The council's summons document states that the customer incurs the costs (£65.00) due to the issue of the summons. I am making the assumption that the costs are actually added to the customer's account at this point because it is generally the approach taken by local authorities.

I am aware that in the East Northamptonshire case, the judgment went to some lengths to clarify the position with regard to when, i.e. at what stage it was permissible for a billing authority to add summons costs to a customer's account. In essence, what the judgment determined was that it was entirely lawful for the billing authority to inform the customer by stating on the summons the amount of costs it would ask for in the event it proceeded to make the application at court for a Liability Order. Implicit in this is that it is impermissible to add to the customers account at this point the costs claimed by the billing authority because there is only any legal basis to do so once the court has granted the Liability Order. The following in paragraph 28 of the judgment bears this out:

"...I have come to the clear conclusion that the summons is not an abuse of the process or otherwise invalid by reason of the fact that it includes reference to a claim for costs. The heading of the summons makes clear it seeks recovery of the Council Tax only. The complaint is therefore only as to the non payment of the Council Tax. The tax due is the Council Tax which is separately identified both on the first page and on the subsequent page. It is abundantly clear that the subject matter of the summons is therefore the recipient’s liability for the Council Tax...."

NO LEGAL BASIS TO PURSUE LIABILITY ORDER ONCE AN AMOUNT AGREED

The council's summons document indicates that when a summons is issued, but before the Court hearing, it is possible to agree a payment arrangement but is implied to be on the basis that the court will still be asked to grant a Liability Order and that the payment plan will include the costs incurred in obtaining the Liability Order (£65.00 summons and £30.00 liability order).

These costs are incurred at a point after the customer has tendered payment. Therefore, the cost attributable to this activity could not lawfully be included in the costs claimed because expenditure may only be recharged that has been incurred by the authority up to the time of the payment or tender and clearly resources called upon by engaging staff in the matter would occur after payment was tendered. Expenditure incurred by the authority after that point falls on the wrong side of line to be referable to the summons and would only be lawfully recharged (if eligible) in respect of those who had not paid or tendered to the authority the aggregate of the outstanding amount and costs before the court hearing because only those customers may be proceeded against further and incur additional costs.

To be clear, it is not just the costs in these circumstances which are artificially inflated by either front loading or being charged where there is no legal basis at all which is a point of contention. The consequences are that for all those cases against whom the council proceeds in order to secure the debt once an amount has been agreed (the payment arrangement), the action is unlawful because regulation 34 of SI 1992/613 provides that the authority shall accept the amount and the application shall not be proceeded with in these circumstances.

Paragraph 34(5) of the regulations, are as follows (with emphasis):

“(5) If, after a summons has been issued in accordance with paragraph (2) but before the application is heard, there is paid or TENDERED to the authority an amount equal to the aggregate of—

(a) the sum specified in the summons as the sum outstanding or so much of it as remains outstanding (as the case may be); and

(b) a sum of an amount equal to the costs reasonably incurred by the authority in connection with the application UP TO THE TIME OF THE payment or TENDER,

the authority shall accept the amount and the application shall not be proceeded with.”

The authority could not defend its actions on the grounds that an arrangement does not constitute payment therefore it is entitled to obtain a liability order to secure the debt because the law does not say that the amount must be paid for the application not to be proceeded with, only that the amount tendered is accepted (the aggregate of the outstanding amount and costs). By agreeing a payment plan which encompasses the outstanding amount and costs (costs which are properly referable to the enforcement process) the authority has accepted the amount and so there is no legal basis to proceed to obtain a liability order from the Magistrates' court.

Notwithstanding the lack of provision to proceed once the aggregate of the outstanding amount and costs has been agreed by the council, even if it were permissible, these costs and any other incurred would have further criteria to meet for the court to be satisfied that they were reasonably incurred.

R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin)

The Tottenham case provides in the judgment some general guidance regarding Council Tax Liability Order court costs and give clues (paragraphs 35 and 46) as to what should not be included in the costs and an approach that might be legitimate in respect of averaging the costs.

“It is clear that there must be a sufficient link between the costs in question and the process of obtaining the liability order. It would obviously be impermissible (for example) to include in the costs claimed any element referable to the costs of executing the order after it was obtained, or to the overall administration of council tax in the area concerned.” (Paragraph 35)

"In principle, therefore, provided that the right types of costs and expenses are taken into account, and provided that due consideration is given to the dangers of double-counting, or of artificial inflation of costs, it may be a legitimate approach for a local authority to calculate and aggregate the relevant costs it has incurred in the previous year, and divide that up by the previous (or anticipated) number of summonses over twelve months so as to provide an average figure which could be levied across the board in "standard" cases.." (Paragraph 46)

However, the above does not go so far as to specify what the right types of costs and expenses are, plus the 1992 Council Tax Regulations (and associated guidance) also apply so any provisions in those capable of establishing what are "relevant costs" need taking into account. Crucially, the possibility that the approach of averaging the costs is conditional upon the right types of costs and expenses being taken into account and being mindful of the dangers of artificially inflating the costs.

Government guidance from 1993 and 2013 both provide within them that "the Court may wish to be satisfied that the amount claimed by way of costs in any individual case is no more than that reasonably incurred by the authority". They do so because the court is obliged to hear individually anyone wishing to raise a defence and regulation 35(1) of the Regulations provides that a single liability order may deal with one person and one amount.

The streamlining of the process, i.e. by hearing cases of all the defendants in a bulk application who decline the invitation to defend themselves would if the law was properly applied be met with a forfeiture of costs income because only expenditure which is common to every defendant may lawfully be included in a standard sum. For example, even if expenditure attributable to engaging with customers agreeing payment arrangements was not impermissible for the reasons discussed, they would not otherwise be deemed "relevant costs" to be included in the calculation because the expenditure is not common to every defendant but also because it would be impermissible to include in the costs any element referable to the overall administration of council tax in the area concerned (para 35, Tottenham judgment).

There is also the anomaly that the customers who to the greatest degree drive the level of activity are ironically avoiding the recovery process and not incurring any costs. These are generally those customers who have negotiated their instalments being re-instated, whilst customers who settle their debt without causing additional work are left subsidising this expenditure when bizarrely none is incurred in connection with their summonses.

Expanding further on the concept of "reasonably incurred". If the costs are to be recharged lawfully to the customer it must have been reasonable for the council to have incurred them. Any expenditure recharged to the customer in respect of costs has not been reasonably incurred which is attributable to activity carried out by the council above what is necessary to secure the court order. Obtaining the order is merely a formality and it functions simply as the vehicle empowering the council to make use of a range of enforcement measures to pursue monies owed should it be necessary once it is in place, so with that in mind and that applications are made en masse, then the vast majority of costs typically claimed by local authorities are not necessary in a process which amounts to no more than seeking permission from the court.

Expenditure attributable to work carried out, which is clearly by its nature referable to the overall administration (in the area of council tax concerned) would not by virtue of it coinciding with when the complaint is in progress be sufficient to link it to the actual process of obtaining the liability order. This is separable from any that is permissible to be included in the costs claimed and would need omitting from the calculation because it would not be reasonable to expect those paying them to subsidise general administration or to be exploited as a means of funding revenues/recovery staff - and - because it is not common to every defendant.

Below is a revised list of eight obvious additional defences that would be valid if no discretion is exercised prior to requesting the issue of a summons and expenditure incurred by the council outside the process of applying for and obtaining a liability order is included in those costs. They would be that;

1. the billing authority has not (does not) comply with regulation 34(1) of the Council Tax (Administration and Enforcement) Regulations 1992;

2. expenditure amounting to £65.00 was not incurred by the council in respect of instituting the complaint;

3. the costs have been inflated to subsidise customers who opt to make payment in line with the pre-arranged payment plans;

4. the costs in respect of instituting the summons include expenditure which is incurred by the council after that action;

5. the costs have been inflated specifically by an amount equal to the reduction of the fee payable to HMCTS for each application;

6. the costs have been inflated to subsidise expenditure incurred by the council in respect of potential applications to the court but which are not made by virtue of negotiations that have taken place to reinstate instalments;

7. the costs in general have been inflated to subsidise expenditure incurred by the council in respect of officer time monitoring arrangements and/or engaging with customers after the process of applying for and obtaining the liability order has ended; and

8. the costs in general have been inflated to fund the running of the council tax and enforcement departments and/or the overall administration of council tax in the area concerned.

Yours sincerely,

Helen Barker

Information.Matters@thurrock.gov.uk, Thurrock Borough Council

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