IN THE GRIMSBY MAGISTRATES COURT

Ref: 550XXXXXXX

CIVIL JURISDICTION (COUNCIL TAX)

APPLICATION FOR LIABILITY ORDER

BETWEEN:
NORTH EAST LINCOLNSHIRE COUNCIL
Complainant
and
XXXXX XXXXX
Defendant

DEFENDANTS GROUNDS OF APPEAL

INTRODUCTION
1.

The issues in the complaint arise from the provisions of the Council Tax
(Administration and Enforcement) Regulations 1992 (the Regulations"). Part V of the
Regulations deals with the billing of persons liable to pay Council Tax; Part VI deals
with the enforcement of their liabilities to billing authorities such as the Complainant
(the Council"). Part V requires where the notice is issued before the beginning of the
relevant year that liability be paid in 10 instalments, in accordance with Regulation 21
and Part I of Schedule 1 to the Regulations.

2.

Under Part VI, Regulation 33, a liability order cannot be applied for unless a reminder
notice under Regulation 23(1) or a final notice, showing the amount for which the
application is to be made, has been served. A final notice need not be served where a
debtor fails to pay any instalments due within seven days of the issue of a reminder
notice.

3.

Once a demand notice, that is, the Council Tax bill, has been issued and one or more of
the statutory scheme instalments have become due and less than the full amount(s) has

been paid, the billing authority must issue a reminder notice to the taxpayer giving
seven days for the outstanding instalment(s) to be paid.
4.

Demand for payment in respect of tax year 2015/16 was such that the first payment was
due 1.4.15 with remaining instalments due on the first of each subsequent month with
the final payment on 1.1.16.

5.

The taxpayer (the Defendant) met the first two instalments (April and May) in
accordance with the demand notice, i.e. 88.91 in respect of the first payment and
91.00 (as were the remaining instalments) for the second. The following instalment due
1.6.15 was paid by the due date but from two different bank accounts. A payment error
resulted in a 1.00 overpayment thus 92.00 was paid in total.

6.

The Defendant received an auto-generated reminder dated 12 June 2015 stating that
there was an overdue amount of 59.00 at the above date. The reminder continued as
follows:
This overdue amount, together with any other instalment that becomes due in the
next 10 days, must be received by the 26th June 2015. If payment is not received
in accordance with this request the instalment facility will be withdrawn and the
total balance of 696.00 will become payable immediately.
The next paragraph warned that:
If payment is not received a summons will be issued without any further notice
being given to you and you will incur 60.00 costs.
It is of central importance, so far as the matters giving rise to this appeal are concerned,
to contrast the above paragraph with the corresponding text as was standard in the notice
before costs were reviewed. The paragraph previously relevant to costs is stated as
follows:
If recovery action is taken there will be costs of 32.00 if a summons is issued,
and further costs of 25.00 if an application is made to the Magistrates Court for a
Liability Order.
The review had the effect of increasing the overall costs by 23% and because both
charges had been consolidated into one, the summons rose by 120% (then 70).
Advantages of front loading all costs to the summons stage, to which will be referred in
detail later, commenced in April 2011 when changes were implemented.

7.

Reminders rely entirely on the Council Tax processing system so there is no possibility
of spotting anomalies before being sent out. Notwithstanding that the Defendants
account was in credit by 1.00 (not overdue by 59.00), the total remaining balance was
636.00 not 696.00 stated on the reminder. The reminder went on to state that if you
have made payment since the date of this letter, please ignore this reminder which the
Defendant did as his account was not only up to date but in fact in credit.

8.

The fourth instalment due 1.7.15 was paid by the due date but a sum of 90.00 instead
of the sum specified on the demand notice (91.00) so that the account was no longer in
credit. The balance was therefore 546.00 and the correct sum outstanding for the
remaining six instalments of 91.00 to pay off the 2015/16 account.

9.

The Defendant received a second auto-generated reminder dated 14 July 2015 stating
that there was an overdue amount of 60.00 at the above date. The reminder continued
as follows:
This overdue amount, together with any other instalment that becomes due in the
next 10 days, must be received by the 28th July 2015. If payment is not received in
accordance with this request or you fall in to arrears again, your instalment facility
will be withdrawn and the total balance of 606.00 will become payable
immediately.
If payment is not received a summons will be issued without any further notice
being given to you and you will incur 60.00 costs

10.

Notwithstanding that the Defendants account was up to date (not overdue by 60.00),
the total remaining balance was 546.00 not 606.00 stated on the reminder. The
reminder went on to state that if you have made payment since the date of this letter,
please ignore this reminder which the Defendant did as his account was up to date.

11.

The fifth instalment due 1.8.15 was paid by the due date but similarly to the third
instalment, paid from two different bank accounts with the same payment error resulting
in a 1.00 overpayment, thus 92.00 was paid in total. The balance was therefore
454.00 (1.00 in credit) which would have been 455.00 but for the overpayment and
the correct sum outstanding for the remaining five instalments of 91.00 to pay off the
2015/16 account.

12.

The Defendant received an auto-generated final notice dated 12 August 2015 which
stated so far as is relevant, as follows:

It appears from our records you have again overlooked payment of your account.
Please arrange for the full remaining balance of 514.00 to be received at the
Council Offices before 26 August 2015 to avoid further recovery action.
If further action is taken there will be costs of 60.00 if a summons is issued.
13.

The unpaid balance becomes payable immediately in accordance with regulation 23(3)
of the Regulations arising from the failure to pay within 14 days from the issue of the
reminder notice. Regulation 23(3) provides as follows:
(3) If, within the period of 7 days beginning with the day on which a reminder
notice is issued, the liable person fails to pay any instalments which are or will
become due before the expiry of that period, the unpaid balance of the estimated
amount shall become payable by him at the expiry of a further period of 7 days
beginning with the day of the failure.

14.

The Defendants account was in credit by 1.00 and payment had at no stage been
overlooked. Both reminders and the final notice had been sent erroneously by the
Council as the account was either up to date or in credit at all times so the demand for
payment under regulation 23(3) was unlawful. In any event, the total remaining balance
was 454.00 not 514.00 stated on the final notice. The Council also attempted to
exploit the final notice to further its campaign of securing a greater take-up of direct
debit, stating so far as is relevant, as follows:
We may consider re-instating your instalments if you bring your account up to
date immediately, including your next monthly instalment and pay the remaining
balance by Direct Debit....

15.

The final notice went on to state that if you have made the above payment since the
date of this letter, please ignore this reminder which the Defendant did as his account
was again not only up to date but in fact in credit.

16.

The sixth instalment due 1.9.15 was paid by the due date but similarly to the fourth
instalment, the sum of 90.00 paid instead of that specified on the demand notice
(91.00) so that the account was no longer in credit. The balance was therefore 364.00
and the correct sum outstanding for the remaining four instalments of 91.00 to pay off
the 2015/16 account.

17.

Part VI, Regulation 34(1), provides that if an amount has fallen due under 23(3) Part V
of the Regulations and remains unpaid in whole or in part, then the billing authority may

apply to a magistrates court under the provision of regulation 34(2) for a summons to
be issued, requiring the debtor to appear before the court to show why the sum stated
had not been paid.
18.

The Council was not legally entitled to seek a liability order (or add court costs) but did
so by applying to the magistrates court for a summons on 15.9.15 and on 19.9.15, a
summons was served at the address of the Defendant, in so far as relevant, the following
terms:
Complaint has been made before me, the undersigned Clerk to the Justices, by
The Executive Director Resources of North East Lincolnshire Council that you,
being a person duly subject to and liable for Council Tax, have not paid the sum(s)
set out below:
COUNCIL TAX
SUMMONS COSTS
TOTAL AMOUNT PAYABLE

424.00
60.00
484.00

If the total amount outstanding as stated above including summons costs is paid to
North East Lincolnshire Council before the date of the hearing, all further
proceedings will be stopped.

19.

The total amount payable on the summons was 484, an amount 120 in excess of the
Council Tax outstanding. The remaining sum outstanding was at the time of the
summons, 364.00. Half of the sum (60.00) accounted for the unlawfully applied
summons costs, and the remaining sum is with almost all certainty the cause of the
Council Tax processing system misallocating payments to an account from another tax
period, thus increasing the current years liability by an equal amount. The sum (60.00)
relates to 86% of summons costs (70.00) which were disputed as being unreasonable
by the Defendant in an appeal to the High Court by way of a case stated in respect of a
previous tax year (2012/13).

20.

The sum has appeared on the Defendants bill each year since as a separate balance
from the current liability described as a sum subject to court proceedings. It is unlikely
that there will ever be a determination of the costs as the Magistrates court has made
every attempt to prevent the case coming before the High Court. The Council Tax bill
states as follows:

Memorandum Note
Your instalments for 2015/16 do not include your 2014/15 account balance
As at 27-FEB-2015 your 2014/15 Council Tax account balance is 60.00
60.00 of the total is subject to court proceedings
21.

The Council has taken recovery action on two previous occasions since the 60.00 sum
subject to court proceedings has been incorporated into the Council Tax account. The
Defendant has each time taken the trouble to explain to the Council how, and under
what circumstances, its Council Tax processing system misallocates payments. On this
third occasion, it has occurred to the Defendant that the Council would again unlikely
address the issue and continue allowing the recurring software glitch to trigger
unnecessary recovery action, and took the view that defending the complaint may have
more impact on the Council to resolve its system failures.

22.

The Council had no legal right to serve a summons and demand the outstanding debt,
the Defendant therefore intended to continue paying in accordance with the original
instalment scheme which entailed a further 4 monthly payments of 91.00 commencing
on the 1st of October 2015. The summons costs, which the Council also had no legal
right to apply had been added to the Defendants account, somewhere between 13th and
18th of September 2015. The Defendant has since paid Octobers instalment (the 7th) on
30th September 91.00 thus leaving a balance outstanding of 364.00 and the correct
sum outstanding for the remaining three instalments of 91.00 to pay off the 2015/16
account.

23.

The evidence should be sufficient to satisfy the Magistrates court that the Council had
no legal entitlement to pursue recovery and so dismiss the complaint outright. The
Defendant will be able to provide records of payment as proof if necessary but the
burden of proof lies with the Authority: see Tower Hamlets LBC v Fallows and Fallows
[1990] RA 255.

24.

There is however in these proceedings an opportunity to make representations about the

Councils standard costs in reference to the Regulations, looking at for example, the
level at which theyre set and how they were arrived at, and what costs they represent.

THE LEVEL OF COURT SUMMONS COSTS & THEIR APPLICATION

25.

Regulation 34 provides that if, after the summons has been issued, an amount is paid,
equal to the unpaid balance of the estimated amount and an amount in respect of the

costs incurred by the authority, then the authority must accept the payment and stop the
proceedings. The relevant part being paragraph 5 which follows:
(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.
(6)....
26.

The billing authority may not itself add an amount to the outstanding liability in respect
of instituting proceedings, yet it stated that the total amount outstanding for which the
Defendant was liable included summons costs. The complaint at that stage had not been
heard and so adding 60 court costs on or around 15.9.15 to the Defendants account
was pre-empting the bench awarding the amount applied for (see below para 35).

27.

The Defendant had paid in accordance with the Regulations and so the court, if it is to
follow due process, must dismiss the Councils complaint (the court has no discretion in
the matter). That, however, does not render the remaining representations academic as
the 60.00 summons costs have already been unlawfully added and the level, and what
costs they represent etc., involve a matter of general public importance.

28.

The costs incurred by the Council in respect of issuing the summons (60.00) may
lawfully (by virtue of their application on the summons issue) only include the
Councils expenditure up until that point. A costs breakdown produced by the council,
to which will be referred in detail later, proves without any doubt that the majority of
expenditure is not provided for in the Regulations and those regulations do not provide
for the summons costs income to cover the cost of running the service, which is clearly
a mistaken belief that the Council holds.

Case of significant relevance to these proceedings

R (on the application of Reverend Nicolson) v Tottenham Magistrates
29.

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

Tottenham Magistrates) the claimant sought judicial review of the decision of
justices to make an award of costs in favour of the Interested Party, London Borough of
Haringey (LBH) following the granting of a council tax liability order concerning
unpaid council tax. It was adjudged that an order for a council tax summons was
unlawful because the court had insufficient information to determine the reasonableness
of costs claimed, then failed to inquire further into how the sum was calculated (and
elements it comprised of) and because the applicant was denied a fair opportunity to
challenge the lawfulness of the order before it was made.
Councils policy to review court costs and produce annual breakdown

30.

Pressure from various quarters has been the trigger for the Council to keep under review
its level of court costs and to produce a breakdown annually supporting them. The first
published set of accounts appeared on the Councils website, based on activity in
2012/13 informing the standard costs charged during 2013/14.

31.

A Cabinet report dated 17.2.14 reviewing council tax court costs provided the legal
framework supporting the Councils decision to reduce its standard summons costs from
70 to 60 which its subsequent years breakdown (2014/15) reflected.

POINTS OF LAW
32.

The matters central to this challenge arise from the provision of regulation 34 of the
Regulations. The provision enables a billing authority to recover its costs by recharging
an amount reasonably incurred to the defendant in relation to an application to the
Magistrates Court to obtain a Liability Order. Regulation 34 makes provision for
applying costs in three distinct circumstances which are set out in paragraphs (5), (7)
and (8).

33.

Under paragraph 5 of the Regulations (see above para 25), expenditure which the
Council may lawfully claim in respect of instituting the summons is described as costs
reasonably incurred. Therefore the billing authority is under a legal duty, before
levying the sum, to have properly accounted for each element in arriving at the figure

and ensuring that each element it claims is in fact incurred in connection with the issue
of the summons.
34.

Costs described under paragraph (5) are distinct from those under paragraphs (7) and (8)
in that there are no court proceedings (the latter two require the case be brought before
Magistrates). Paragraph (5) provides that if, after a summons has been issued but before
the application is heard, there is paid or tendered to the authority the aggregate of the
sum outstanding, and 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.

35.

Consequently, a defendant settling in the circumstances described under paragraph (5)

will not be subject to any costs awarded by the court. This conflicts with the general rule
that costs follow the event and the understanding of the way a party to court
proceedings is normally awarded costs. It is for this, and examining the primary
legislation, that it is viewed that the Regulations, which provide that the parties may
agree costs prior to the case being heard, are ultra vires the enabling Act. The
incompatibility of bringing the argument into one contesting the defendant parties
compliance with the Regulations makes it inappropriate to expand on here; nevertheless,
the rationale for asserting that the Regulations are ultra vires the enabling Act is
provided separately (see Annex A).

36.

Paragraph (7) provides that if after a summons has been issued and the sum has not been
paid, an order shall be made in respect of an amount equal to the aggregate of the sum
payable, and a sum of an amount equal to the costs reasonably incurred by the applicant
in obtaining the order. Paragraph (8) provides that the court shall, subject to an
application by the billing authority, grant an order solely in respect of costs, if after the
issue of a summons but before the liability order has been made by the court a debtor
settles only the sum outstanding (see Annex B).

37.

Pursuant to regulation 35, liability orders may be dealt with individually, or, where the
court thinks fit may be dealt with collectively. The impracticality of magistrates hearing
a thousand or so defendants all summonsed to the same court at the time and on the
same day means that debtors are steered away from appearing. It is those defendants not
attending who will generally by default have admitted liability and be the ones whose
cases will be considered appropriate to be aggregated. It does not mean that because the
established practice is to include all cases in a bulk application, the Council has any less

legal duty to properly account for the costs individually where a defendant seeks to
make representations, nor ensuring that costs it claims are properly referable to the
relevant enforcement process in respect of an individual's circumstances.
38.

In the Defendants aforementioned High Court application (see above paras 19-21) the
questions of law on which the opinion of the High Court were sought were presented to
the Magistrates court in the following terms:
The questions focus on two principle points of law with regards regulation 34 of
the Council Tax regulations (SI 1992/613).
Those points being, whether
i)

costs being disputed as unreasonable should have been awarded by

the court without evidence from the council to support them.

ii) costs specifically incurred by the council for obtaining the liability
order should have been charged at the summons issuing stage.
39.

In Nicolson v Tottenham Magistrates it was held unlawful for the court to award costs
without having sufficient relevant information from the billing authority to support
them. Consequently the first question of law in the Defendants appeal (which has not,
and unlikely to be determined) appears to be resolved in Nicolson v Tottenham
Magistrates judgment at paragraph 61 which states as follows:
This application for judicial review of the decision taken by the Magistrates must
therefore succeed. I was told that since the hearing the order for costs against the
Claimant has been withdrawn, but that does not render the proceedings academic;
as I have said, it raises issues of wider public importance. Had the order not been
withdrawn, I would have quashed it. Since it has been withdrawn, I will declare
that the order was unlawful, because:
i)

the Magistrates did not have sufficient relevant information before them
to reach a proper judicial determination of whether the costs claimed
represented costs reasonably incurred by the Council in obtaining the
liability order;

ii) the Magistrates erred in law by failing to make further inquiries into
how the 125 was computed and what elements it comprised; and
iii) the Claimant was denied a fair opportunity to challenge the lawfulness
of the order before it was made, by reason of the failure to answer his

requests for the provision of information as to how the sum of 125 was
arrived at.
40.

It would be helpful at this point to consider the matter in the context of two Freedom of
Information (FOI) requests submitted to the Council, after which, the opinion of the
Information Commissioner and subsequently the Information Rights Tribunal was
sought on whether on the balance of probabilities a calculation was held by the Council
and whether the Regulations provided a legal obligation to be able to support its costs.

41.

Firstly some conflicting evidence should be highlighted that arises from the Councils
representations which are recorded in the draft statement of the case (the Draft Case)
produced on 22.7.13 in relation to the Defendants High Court appeal, which potentially
brings into question the reliability of the Councils evidence. The Draft Case claimed
(3(d)), as follows (emphasis added):
The level of costs sought had been calculated to reflect both administrative and
legal costs in bringing the proceedings to court, including the court fees.
The above was stated despite the Councils fervent denial of the existence of a
calculation in both FOI requests, the first of which (see below paras 52-53) was
submitted on learning that the Council had increased the summons costs by 120%, but
before the Magistrates court and the Defendants High Court proceedings commenced;
the second submitted subsequent to both. Both the Information Commissioner and
Information Rights Tribunal agreed unanimously with the Council that on the balance of
probabilities such a calculation was not held and with whom it also agreed there was
nothing legally obliging it to support its costs.

42.

The second FOI request focussed solely on the Councils incurred expenditure to issue a
summons (the matter central to the Defendants High Court appeal) which escalated to
an appeal to the First-tier (Information Rights) Tribunal (FtT), 'Gilliatt v Information
Commissioner' (Appeal No: EA/2013/0285). The appeal relied in part on the Council
being legally obliged to demonstrate how it came by the figure in order to persuade the
FtT that it would in fact know this cost and enable its disclosure.

43.

The Response to the FtT appeal (4.2.14) supported the Commissioners findings in the
Decision Notice (the DN) reference FS50505226, which were reiterated to the extent
necessary to respond to the appeal grounds. In the matter of a legal requirement, and

with reference to the Governments good practice guide1, it records in paragraph

27(1) of the Commissioners Response that the documentation is merely guidance and
does not entail a legal obligation to hold the information requested (DN, para. 16). In
the same matter, but with reference to regulation 34(5) of the Regulations, it records in
paragraph 27(2) of the Response, as follows:
The legislative provisions referred to by the Appellant, specifically regulation
34(5) of the [Regulations], provide that public authorities shall not proceed with
summonses for unpaid council tax if there is paid/tendered to the authority both
the outstanding sum and a sum equal to the costs reasonably incurred by the
authority in connection with the application up to the time of the payment or
tender [of the outstanding council tax payment]. However, neither this provision,
nor any other statutory provisions, provides any obligation on local councils to
hold information enabling them to provide a breakdown of those reasonable
costs (DN, paras. 17, 19).
In Judge Farrers Final Decision dated 22.5.14 dismissing the appeal it is evident that
the FtT had been persuaded that a local authority is under no legal obligation to be able
to support the incurred costs it recharges to those debtors against whom complaint is
made. Under heading The Tribunals Decision (paras 7 and 8) it is held, so far as is
relevant, as follows (emphasis added):
7 Regulation 34(5) of the [Regulations] does not oblige a council to hold the
requested information. It reads (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) ......
(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,

In June 2013 the Government produced a guide entitled Guidance to local councils on good practice in the
collection of Council Tax arrears." Paragraph 3.4, the document states as follows:
Local Authorities are reminded that they are only permitted to charge reasonable costs for the court summons
and liability order. In the interests of transparency, Local Authorities should be able to provide a breakdown, on
request, showing how these costs are calculated. While it is likely that authorities will have discussed costs with
the Clerk to Justices it should be recognised 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.

the authority shall accept the amount and the application shall not be
proceeded with.
8 The obligations imposed are those set out in the last line, no more. A council
may use a standard estimate of the costs that it reasonably incurs but, as the
Guidance says, a court may question it so keeping the relevant data is good
practice. This basis for rejecting the Councils denial therefore fails. Even had
there been such an obligation, that would not have demonstrated that the
Council must have complied with it.
44.

The Appellant applied for permission to appeal to the Upper Tribunal contending that
the judge was wrong in law to have considered that the Council was under no duty to
hold the requested information by virtue of regulation 34(5) of the Regulations. The
grounds of challenge to the FtT determination in paragraphs 7 and 8 are set out in the
application for permission to appeal (3-5). The appellant attempts to persuade the FtT
(para 5) that the issue involves the interpretation of regulation 34(5) because the judge
held that a legal obligation for a council to show how the sum it claims in costs is
arrived at does not exist explicitly in the statutory language. The Appellants
interpretation is summarised as follows:
After a summons has been issued but before the case is heard, Magistrates have no
jurisdiction over costs until the case is brought before the court where they then
may fall under scrutiny. There is no prescribed amount and the court can not, in a
legal context, agree a standard sum, so is open to the council to accept payment,
mindful that the amount may vary from case to case. Proceedings are not yet
before the court, so if on payment or tender, the authority fails to agree the sum,
then it must, by virtue of regulation 34(5)(b) be obliged to support its claim in
order to justify the sum is no more than costs reasonably incurred. To proceed
once an amount has been paid or tendered would be unlawful, as it clearly states:
the authority shall accept the amount and the application shall not be proceeded
with

45.

Permission to appeal was refused by the FtT in a Decision promulgated on 4.7.14

(DRP). The FtT declined to review the decision because it was not satisfied that any
arguable issue of law arose from its decision to dismiss the appeal, which states at
paragraph 5, so far as is relevant, as follows:
Its response remains the same as in its Decision; Reg. 34(5) does not impose the
asserted duty and, if it did, the Tribunal was entitled to find as a matter of fact that
NELC did not comply with it by holding the requested information.

46.

The FtT was concerned in determining whether on the balance of probabilities the
Council had any demonstrable way of supporting its costs, so the mere existence of a
legal duty would not in itself be evidence. It was nevertheless something that the FtT
had a duty to assess, which in the context of Nicolson v Tottenham Magistrates (61)
had done erroneously. Having no way of verifying its costs, the Council is left unable to
provide Magistrates with sufficient relevant information...to reach a proper judicial
determination of whether the costs claimed represented costs reasonably incurred.

47.

Though the matter was FOI and concerned information the Council held rather than
what it should hold, there may be merits in considering the FtTs reasons for declining
to review its decision to better understand how it fits within the context of this challenge
and as a point of comparison in Nicolson v Tottenham Magistrates. Paragraph 6 of the
DRP states, so far as is relevant, as follows:
As to the supposed duty, it is evidently based on the claim that the duty under
Reg. 34(5) to accept the paid or tendered amount can only be discharged if, in
every case, the taxing authority is able to specify precisely the ...amount equal to
the costs reasonably incurred by the authority in connection with the application
up to the time of the payment or tender, (Reg. 34(5)(b))
There is nothing in that wording to preclude the application of a standard charge,
provided it represents a reasonable estimate of the average cost of the application
at the prescribed time.

48.

Nicolson v Tottenham Magistrates agrees (46) in so much as it considers in principle,

provided that due consideration is given to the dangers of artificially inflating costs, it
may be a legitimate approach to provide an average figure which could be levied across
the board in "standard" cases. It does however go further and add that such costs could
be amplified in circumstances where there was justification for incurring additional
legal and/or administrative costs.

49.

This approach would require the average figure being derived from the aggregate
recoverable costs, which (i) excluded any expenditure that was not common to every
application, and (ii) be properly referable to the summons/liability order. That is to say
in broad terms the exclusion of those elements which are referred to later (see below
paras 78-115). It would then be open to the council in cases where it incurred additional
administrative costs (where they were lawful and there was justification to do so) to
amplify the standard costs, but again subject to them always being properly referable to
the enforcement process. There is however another factor arising due to the fact that the

standard summons costs is added to the taxpayers account routinely at the point when
the processing software triggers the summons issue. In doing this the Council has
imposed upon itself a greater restriction in the amount of expenditure it may lawfully
claim than otherwise regulation 34(5) entitles. This could be viewed as a policy which
backfires but for the fact that there has thus far been a free rein given by the
Magistrates court for the Council to set its own costs and apply them in a way without
regard for the Statutory Instrument that governs them.
50.

It is open to those against whom the council proceeds, to challenge the application, and
where representation is made about costs, Magistrates must look at the case on an
individual basis but need not involve the onerous task of calculating the level of costs
incurred in each individual case. In seeking to standardise costs, the very least
requirement would be to have a standard sum for the summons and another for the
liability order; then only where costs are challenged or an amount tendered, as per the
Regulations, would they need individually assessing to ensure that the debtors are
treated lawfully.

51.

The Governments good practice guide states (see above para 43) 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 because the Regulations provide
for individual costs. Moreover, the court would not require satisfying on an individual
basis for any arbitrary reason, but because an individual sought to challenge the costs,
which is why regulation 35(1) of the Regulations provides that a single liability order
may deal with one person and one amount. Regulation 35, so far as is relevant, is as
follows:
Liability orders: further provision
35.(1) A single liability order may deal with one person and one such amount
(or aggregate amount) as is mentioned in regulation 34(7) and (8), or, if the court
thinks fit, may deal with more than one person and more than one such amount.

The court was provided no evidence supporting a 120% summons costs rise
52.

A copy of a breakdown was asked for via FOI that was assumed would be supplied by
the Council to the Magistrate's Court in support of a near 120% increase of its standard
council tax summons costs. The Councils 2011/12 budget setting revealed it aimed to

achieve savings by generating 188,000 additional each year in court costs income and
was what brought about the request.
53.

The FtT (in whose hands the matter had been placed) took the decision to strike out the
appeal on the basis that there was no reasonable prospect of the case, or any part of it,
succeeding. Though plainly the attempt to obtain a breakdown via the FtT was
unsuccessful, it has nevertheless provided formal judgment in support of the Magistrates
not having sufficient relevant information before them to reach a proper judicial
determination of whether the costs claimed were reasonably incurred by the Council.
See paragraph 4 of the Appendix to the Order of Judge Taylor dated 27.4.12 striking out
the appeal in case 'Gilliatt v Information Commissioner' (Appeal No: EA/2012/0050):
Following a complaint to the Information Commissioner, a Decision Notice was
issued concluding that the Council had complied with the Freedom of Information
Act 2000 (the Act), and no further information was held. This was because on
the balance of probabilities the Council had provided all of the information it held
that fell within the scope of the information request, and:
a. The Information Commissioner considered the Council had explained
why it did not hold more information falling within the scope of the
request there was no business need for it to hold information in the detail
and context requested.
b. Request A: The Council had explained that it had not supplied the
Magistrates Court with a breakdown of the increased summons costs. It
had explained that it did not hold a breakdown for the calculation of the
70.00 fee, as it was based on comparisons with the fees charged by
neighbouring authorities (including Hull City Council and East Riding of
Yorkshire Council) and then compared against national averages, and as
previously identified checked to ensure that the monies raised from costs
would not be greater than the cost of the service.

Further conflicting evidence Draft Case in Defendants High Court application

54.

Paragraph 3.4 of the Governments good practice guide (see above para 43) is
reproduced in Nicolson v Tottenham Magistrates (56) where it is affirmed thereafter
that the information was asked for in that case and was not forthcoming. Paragraph 57
which states as follows:
The Claimant asked for that information and it was not forthcoming. The
Magistrates did not have that information before them either. It was not good

enough for them to be told in general terms that the costs had something to do
with administrative time and the number of people who were involved in the
process for making the application. Nor was it good enough for them to be told
that some arrangement or agreement had been reached in 2010 between the
Council and the clerk to the justices about the level of the costs without carrying
out any investigation of what the agreement was and the basis for it. Looking to
see whether the costs were broadly in line with costs being charged by other local
authorities was all well and good, but it was not enough to discharge the courts
obligations.
It was also found unsatisfactory in Nicolson v Tottenham Magistrates (29) that the
Magistrates accepted LBHs justification that the costs claimed were reasonably
incurred on the basis that they were no more than the standard amount claimed in every
case. Paragraph 29 states so far as is relevant, as follows:
The Magistrates sought to rely on the fact that the 125 claimed was no more
than the standard amount claimed in every case; but the fact that a standard sum is
attributed to costs recoverable in every case where a summons has been issued
was one of the matters that gave rise to the Claimants concerns. That is why the
Claimant was seeking to find out how it was computed and what was the
Councils justification for claiming it across the board. For all he knew, there
might well have been a plausible justification, but in the absence of further
information he was in no position to tell and neither were the Magistrates.
55.

It was also in the Defendants High Court case broadly the same criteria that satisfied
Magistrates that the costs were reasonably incurred. The Councils representations are
recorded in the Draft Case in sub-paragraphs (a) to (d) of paragraph 3 which are
summarised as follows:
The costs were the same level as were sought in all similar proceedings arising in
cases on or after 1.4.11 which was a sum previously notified to the Court on
4.3.11. They did not exceed the prescribed amount described in regulation 34(8) of
the Regulations and were within the range sought by other local authorities in
similar proceedings. The level sought had been calculated to reflect both
administrative and legal costs in bringing the proceedings to court, including the
court fees.

56.

The courts findings are recorded in sub-paragraphs (a) to (g) of paragraph 7 of the
Draft Case which are summarised as follows:
We recognise that in all cases where costs are claimed we have discretion whether
to order them and in what sum, so the fact that the Council asked for the normal
amount did not prevent us from reducing the sum or refusing to order any costs.

The Council has taken a broad approach to the question of costs and has sought a
similar amount to all others in the same court list. This is normally appropriate,
though we accept we must look at each case individually, so in principle, the
respondent could have sought a greater amount in an individual case where more
costs were incurred, subject to any limitations set by regulations, had it chosen to
do so.
The amount requested in all cases before us was a sum advised to the court over a
year before these proceedings commenced and the court in the intervening period
has considered it appropriate by making orders in favour of the respondent in that
sum. That fact of course did not prevent us from considering the amount requested
here. A court fee payable in respect of each application as well as other
administrative and legal costs of bringing the proceedings satisfied us that 70 was
an amount reasonably incurred by the respondent in making the application before
the court and obtaining the liability order.
On the basis of the information presented to us by both parties, the contention that
the amount claimed by the Council was in the nature of general revenue raising
did not succeed and we were satisfied that it was instead an amount to cover the
cost of bringing council tax enforcement proceedings to court. This case had no
features to distinguish it significantly from other cases in our list to suggest a
different level of costs. The appellant should pay the full amount of the costs
sought. We could not see that it was just to order the appellant to pay less or we
would have so ordered. We ordered that the costs requested by the respondent
should be paid by the appellant in the proceedings and made a liability order
against him to enable that sum to be recovered.
57.

There is nothing left to question or take apart any further from the accounts. The
Magistrates in the Defendants High Court case clearly sought to rely on the same
criteria that satisfied Magistrates in Nicolson v Tottenham Magistrates which had in that
case all been considered unsatisfactory. There is however a need to focus on the
declarations which raise issues beyond simply whether or not they were considered
satisfactory.

58.

The court expressed in the Draft Case (7(f)) that the case had no features to distinguish
it significantly from other cases in its list to suggest that a different level of costs should
be considered. It is understood that the data provided on the complaint list relating to
each case simply consists of the defendants personal details, liability period, summons
notice value, costs and the total, therefore unrealistic to expect that this information
would enable the court to go through a judicial exercise of distinguishing different
levels of costs from one case to another.

59.

The Council declared under representations in the Draft Case (3(b)) that the level of
costs sought did not exceed the prescribed amount described in regulation 34(8) of the
Regulations which is an incorrect reference to costs (See Annex B). Regulation 34(8)
describes the expenditure incurred in bringing the case before the court and obtaining
the liability order whilst the costs contended were those of instituting the complaint in
regulation 34(5). This was similarly misconceived by the court as evidenced by the fact
that in its findings in the Draft Case (7(d)) it stated that they considered 70 was an
amount reasonably incurred by the Council in making the application before the court
and obtaining the liability order.

60.

Apart from there being an incorrect reference in the Defendants High Court case, it was
implied that the then 70 costs (the same whether a case proceeds to court or payment
renders a hearing unnecessary) included an element of front loaded expenditure in
applications which were not proceeded with.

61.

The remaining question to be determined in the Defendants High Court case i.e.
whether the costs of obtaining an order which have not been incurred are claimed
lawfully in respect of instituting the complaint has now been established in Nicolson v
Tottenham Magistrates. The judgment focuses on the legislative provisions that sets
apart costs which may be claimed in respect of obtaining the liability order and those
which are limited to a lesser amount (by virtue of payment or tender) under the
provision of regulation 34(5) of the Regulations. It concludes (37-38 & 49-50) that
additional costs in obtaining an order (which have not been incurred) may not be
lawfully claimed in respect of instituting the complaint.
Costs set at same level whether applied at the summons or liability order stage
and/or including costs arising post liability order

62.

A legislative provision for capping costs in Welsh authorities (See Annex B 8-10) is
set out in the Council Tax and Non-Domestic Rating (Amendment) (Wales) Regulations
2011 (the Amendment). The Amendment and particularly its Explanatory
Memorandum suggest that the Regulations were formulated, intending to give a person
issued a summons an incentive to settle liability before the case proceeded to court.
Although there is no provision for each stage to be capped independently, the language
is implicit (Annex B 9) that costs in respect of instituting the complaint, form one
distinct part of an aggregate amount (capped at 70) in respect of the authoritys total
incurred expenditure to obtain a liability order.

63.

LBH made representations in Nicolson v Tottenham Magistrates defending the setting

of costs at the same figure, regardless of whether payment was made before the case is
heard. The Explanatory Memorandum provided the rationale behind why the councils
approach to applying costs was legitimate, which on the face of it, appeared not in
accordance with the Regulations. The explanation is contained in paragraph 49 of the
judgment which, in so far as relevant, is reproduced below (emphasis added):
.....It explains why the limit was not set at 35 for each of the two stages, on the
basis that during the consultation process "several local authorities pointed out
that the greatest amount of work is incurred before the initial summons is issued
and argued that the charge should be higher at this stage. Ms Henderson said
that this explained why in the case of some local authorities, such as the Council
in the present case, the costs were set at the same figure regardless of whether
payment was made after the summons was issued. The costs of obtaining a
liability order were very small in comparison with the costs incurred in connection
with the issue of the summons.
The explanation was accepted in principle but it expressed that in practical terms the
approach provides no incentive....to pay up after the summons is issued. It concluded
(in that matter) in paragraph 50, so far as relevant, as follows:
.....What matters is that the costs that it does decide to claim are properly
referable to the enforcement process.

64.

Observing legislative restrictions that limit costs to expenditure incurred up to the point
where an amount has been paid or tendered and that some authorities claim an
identical sum in cases that proceed to court then those that make no distinction would
be falling foul of the law if the further cost incurred in obtaining an order were not
borne by the taxpayer. The same would be true if continuing expenditure incurred by the
authority after obtaining the order in respect of securing payment etc. was claimed as
court costs (at either stage). However, in order that the cost of recovery does not fall on
the taxpayer as a whole, many billing authorities express a view that rechargeable costs
in respect of applying for a liability order should extend to cover all expenditure which
is considered attributable to recovery and enforcement (See Annex C).

65.

In this respect there is some assistance to be derived from Chiltern District Councils 16
March 2010 Cabinet report into Court costs (See Annex D), see in particular paragraph
4, where the essential point being made is that, the majority of costs it incurs arise from

the court hearing to obtain the order and the additional work required to secure payment
thereafter. Paragraph 4 of the report is as follows:
The level of costs should be realistic but reflect the fact that we do not believe in
principle that it is fair to pass on the costs of recovery from the few people who
default on payment of Local Taxes to the vast majority who do not. Most of the
costs the Council incurs arise from the application for a liability order at Court and
the additional work required to secure payment once we have the liability order.
66.

Understandably, expenditure varies in proportion to the authoritys size and may be

affected by economies of scale, but that has no bearing on at what stage in the process it
is incurred. It is therefore rational that one authority incurs recovery expenditure in
much the same way as another.

67.

With it established that a billing authoritys priority is to ensure that no cost of recovery
is borne by the taxpayer, the following line of reasoning must lead to the conclusion that
billing authorities in general, account for expenditure in their standard court costs which
falls outside the boundaries defined by law:

68.

a billing authoritys incurred expenditure in securing a liability order makes

up only a small element of its overall cost of recovery due to non and late
payment (Annex C 2-3); however

billing authorities endeavour to ensure that no cost of recovery is borne by the

council tax payer in general; but

the law restricts costs that can be recharged, to an amount incurred in

obtaining a liability order, or limited further to an amount in connection with
instituting the complaint (in the circumstances described under regulation
34(5) of the Regulations).

In context of the Defendants case the Council implies that its priority is to safeguard
the taxpayer from having to bear any element of recovery administration by setting its
standard court costs at a level which includes expenditure that falls outside the
boundaries defined by law (Annex C 4-10). The Councils Cabinet report, Review of
Council Tax court costs, dated 17.2.14 briefly outlines the risks of members opting
either to levy a higher level of court costs than recommended or a lower level. The
relevance in this context, was the risk outlined which was associated with opting for a
lower level than recommended, as follows:

Members may choose to levy a lower level of costs than that recommended,
however, this would mean that additional costs incurred by the Council due to
non-payment are borne by those Council Tax payers who pay on time in
accordance with their instalment plan.
69.

Responses by the Council to FOI requests asking for breakdowns of its costs underpin
this. For example, as a final safeguard in a series of checks to be satisfied its costs are
claimed lawfully, the Council consistently refers to ensuring that the monies raised
from costs do not exceed the cost of the service (see above para 53).

70.

If the law made provision for the cost of the service to be recharged to the taxpayer, it
might be good enough, but that reference has been confirmed to relate to the costs
reasonably incurred for Council Tax collection and recovery. The cost of the service
must include expenditure attributable to the court application but only as an element of
the aggregate amount and so the idea of ensuring income is kept within this budget is
misconceived as a measure of what might be lawful.

71.

The Council implies that because court costs income is within its annual budget (1.1
million) for all activity associated with recovery of Council Tax etc., it considers that its
claim is lawful. The DN (ref: FS50400874) records this in para 6:
...The [Regulations] do not require the Council to justify the amount charged to
each individual, only that the costs have been reasonably incurred by the authority
in connection with the application up to the time of payment or tender. The annual
budget for all activity associated with recovery of Council Tax and Business rates
amounts to approximately 1.1 million.
It is reinforced further at paragraph 15 of the DN that the Council sets it costs, not at a
level to cover the court application, but for recovering Council Tax, ultimately in a bid
to safeguard the taxpayer from having to bear any element of recovery administration:
...The monies raised from costs are not greater than the cost of the service. The
increase in summons costs does not represent income generation but a saving
that can be made in the cost of the delivery of the service, that would otherwise
ultimately be passed on to the Council Tax payers of North East Lincolnshire...
As stated the costs raised from the increased Summons costs are to cover the
cost of recovering Council Tax, and do not represent income generation but a
saving that can be made in the cost of the delivery of the service for the benefit of
all Council Tax payers of North East Lincolnshire

72.

The view held by perhaps all billing authorities that costs claimed in an application for a
liability order should encompass all recovery and enforcement administration, appears
to be endorsed by the Ministry of Justice (the MoJ). In a response to a FOI request on
related matters (FOI-87328) the MoJ stated that the level of costs applied for is
calculated by reference to the actual expenditure incurred in recovering council tax
debts...
Policy to review court costs and produce annual breakdown

73.

The calculation produced by the Council, subsequent to the Defendants High Court
application, attributed the vast majority of expenditure to instituting the complaint (the
summons). Only 5% of what was accounted for as the Gross Recoverable costs was
estimated as being attributed to further work in obtaining a liability order. The
breakdown shows, in apparent compliance with the law, that the estimated 5% was
deducted from the gross figure before dividing that sum by the number of summonses
issued to arrive at the average cost per summons.

74.

In accounting terms therefore, the relatively small cost attributed to additional work in
obtaining a liability order after a summons has been issued is absorbed by the taxpayer.
In this matter it is agreed in Nicolson v Tottenham Magistrates (50) that In principle
there is no reason why a local authority should not decide to limit the costs it claims to
the costs in connection with issuing the summons.

75.

The breakdown allowed the Council to demonstrate, in theory at least (or to an

acquiescent body willing to endorse the figures), that the requirements of the
Regulations were met. Under proper scrutiny however, validation would require further
proof that the expenditure was reasonably incurred and the gross recoverable costs
were in fact lawfully recoverable. The very minimum that would be expected from the
court to be satisfied of this would be that:
a)

estimated further work attributed to obtaining the liability order was not
determined as negligible, merely to justify charging all costs up front,

b)

average costs do not include subsidy for bad debt arising from waived or
unrecoverable costs,

c)

costs do not include subsidy for administration expenditure arising from

setting up payment plans, dealing with queries etc. (Annex H 9)

d)

costs claimed do not include any element attributable to the expenditure of

enforcing the order after it is obtained

a) Further work to obtain liability order determined as negligible

76.

The calculation would have to be dismissed on the basis that it provides nothing at all
that could satisfy the court that the expenditure attributed to obtaining the liability order
only represented 5% of the gross recoverable costs, based as it appeared to be on an
arbitrary estimate. In any event, the Councils claim to incur the vast majority of
expenditure in respect of instituting the complaint conflicts entirely with Chiltern
District Councils view (see above para 65) as to where most of the costs arise which
would reinforce justification for the court to require evidence.

77.

The probability that the split is random is reinforced further by the fact that the Council
once weighted costs contrary to how they are applied now. In 1998/99 there were no
summons costs applied; only debtors against whom liability orders were obtained had
costs added. From then on the weight shifted until after the April 2011 review, the entire
costs were applied on instituting the complaint (Annex E).
b) Subsidising bad debt arising from waived or unrecoverable costs

78.

The Councils breakdowns are to be dismissed similarly because they have established
that the standard costs included a subsidy for bad debt. It is clear from subsequent
breakdowns relating to 2013/14 (Annex F) and 2014/15 that the standard sum recharged
to customers in respect of summons costs include a significant element of bad debt
brought about by defendants, who for example, may have no means to pay. Those
debtors are then being subsidised by those from whom payment is more easily
recovered. The Councils Cabinet report, Review of Council Tax court costs, dated
17.2.14 confirms this, as follows:
The Council recognises the difficulties some residents have encountered in
paying Council Tax as a result of Welfare Reform changes, and as a result has
been more flexible with instalment arrangements. In cases where residents owe a
modest amount, and have subsequently made an arrangement which clears the
balance within the financial year, costs have not been applied. It is anticipated that
such action will continue into 2014/15.

79.

It is estimated from the Councils breakdown (and number of summonses issued in

2013/14) that at least 42% of taxpayers against whom complaint was made were

summonsed without costs applied2. Put in context, at least 25 was added to the
standard sum for the remaining debtors, which is conservatively estimated because no
element of bad debt has been factored in to account for unrecoverable costs in those
cases where they were applied.
80.

The calculation confirms that the average cost per summons is determined by dividing
its gross recoverable expenditure by an estimated number of summonses requested
where costs are applied. The recorded number of summons issued (17,197) was
significantly higher than the estimated number of summons requested where costs were
applied (10,000) used in the Council's 2013/14 calculation. The relevant part of the
Councils breakdown is presented as follows:

Gross Recoverable costs

Estimated number of summons requested in 2013/14,
where costs applied
Cost per summons

Cost rounded to nearest

81.

597,160

10,000

59.72

60

Clearly if the true number of summons issued (17,197) was substituted for the 10,000
figure above, the cost per summons, based on the Councils method of calculating the
sum (disregarding other questionable expenditure), would return a sum of 34.72.

82.

The disparity between the number of summonses issued and the figure used has almost
certainly arisen from the effects of the Welfare Reform Act 2012 (Annex G). However,
even before the Acts introduction in April 2013 (albeit to a lesser degree), the average
cost included expenditure attributable to instituting the complaint, which in a percentage
of cases could not be recovered from the person summonsed. That element of
expenditure was therefore subsidised by those from whom payment was obtained.

The dividing figure used in the Council's 2013/14 calculation was 10,000, but the figure submitted to the
Chartered Institute of Public Finance and Accountancy (CIPFA) relating to the number of summonses issued in
2013/14 was 17,197.

c) Subsidising administration cost for customer contact

83.

The calculation would be impermissible because it includes a disproportionate amount

of staff time attributable to customer contact under the budget category, Council Tax.
This expenditure arises from dealing with queries/calls etc. as a consequence of issuing
summonses. A second category, Debt Recovery, also includes a disproportionate
amount of staff time that accounts for expenditure in negotiating, setting up and
monitoring payment arrangements etc. The vast majority of this expenditure will not
have been incurred by the Council in a proportion of cases, for example where the
application does not proceed (by virtue of payment or tender) or where it does proceed it
does simply without staff contact.

84.

The gross recoverable costs under the Council Tax budget is 191,730. Based on the
Councils computing method, this adds 18 to the cost per summons, though an element
of this would arguably be legitimate only in cases where the debtor had taken up
resources by engaging staff in matters connected with the summons, as this is the basis
upon which the expenditure is justified.

85.

The breakdown explicitly sets out that its recoverable costs (after deducting 50% for
routine billing activity from the Council Tax budget) is in the ratio of calls arising
from summonses to calls arising from reminders that do not result in a summons. The
final recoverable costs for those proceeding to summons is a sum estimated as 50%
(191,730) with the other half attributed to what the Council categorises as those
paying on time.

86.

None of the expenditure could have lawfully been incurred by the Council in respect of
the Defendants summons simply because the assumptions on which the calculation was
based were that each person against whom complaint is made would take up resources
by engaging with staff in one way or another in matters connected with the summons.

87.

Gross recoverable costs under the Debt Recovery budget are 327.480 and add 31 to
the cost per summons. A 3 fixed cost is budgeted for in this category and payable on
making complaint to the justices for each application. This element is therefore justly
claimed in respect of every summons issued, if it was lawful and reasonable to apply,
which in the Defendants case it wasnt and can not have been considered reasonably
incurred by the Council.

88.

Where accounts are settled on receipt of the summons, none of the other expenditure
could have been incurred by the Council in respect of those summonses because there
would be no outstanding liability. No resources would therefore be called upon to
negotiate, re-schedule or monitor any payment plan and the whole element of costs
relevant to the Debt Recovery budget, except 3 court application fee would be
impermissible.

89.

In broader terms, the majority, if not all (see below paras 99-102) of the costs appear
questionable even in those cases where resources are required to re-schedule and set up
payment plans etc.

90.

Additional to the statutory Regulations instalment scheme, regulation 21(5) provides

for an agreement to be made between the billing authority and the liable person either
before or after the annual bill is issued. In such cases, a debtor may, if the agreement is
kept, avoid incurring summons costs. However, this is enabled by, and at the cost of the
Council re-scheduling and monitoring the plan which must exceed any that would have
been incurred from simply allowing the pre-set parameters in its council tax processing
system trigger the appropriate action uninterrupted by recovery staff.

91.

Additional administration costs incurred by the Council due to the interruption of the
automated process cannot lawfully be included in the recoverable costs from which the
average summons is computed because the extra recovery work caused is unrelated to
those cases that result in a summons. Neither can the cost be recovered from customers,
for whom the re-scheduled payments are made3, because the measure is taken to prevent
(or instead of) taking recovery action.

The law cannot have been enacted with the intention of giving billing authorities powers to increase costs in
respect of one debtor from whom collection is easy in order to subsidise another's costs whose payment is more
difficult to obtain. Neither would the same be intended to entirely fund those defendants costs who simply dont
pay them, perhaps because theyre waived for example.
The disparity can be no better illustrated than comparing two account holders, who after being served
summonses, respond differently as follows. One having contacted the billing authority enters into a payment
arrangement and by doing so has his costs waived; the other simply settles his liability, including payment of the
standard costs, in accordance with the demand.
The individual who escapes paying all costs has clearly caused the authority the majority of extra work in respect
of dealing with the enquiry, setting up a payment plan and the ongoing monitoring of that account. On the other
hand, the individual who straightforwardly settles the debt without causing this work is left standing the losses
that arise from staff negotiating favourable terms for the authority that see the defendants costs waived.

92.

This expenditure must therefore be absorbed by the Council in a way consistent with
other administrative functions processing benefit claims for example. The line of
reasoning that follows removes any ambiguity that the Regulations might allow for this
administration cost to be subsidised by those against whom complaint is made to the
Magistrates court:

93.

in order for a billing authority to recharge costs to the debtor, it is required

first to make complaint to the Magistrates court; but

where applications to the court are not made (by virtue of flexible payment
plans being arranged), potential rechargeable administrative costs in those
cases are rendered unrecoverable from those for whom the concessions are
made

expenditure can therefore only be met by inflating the standard sum or

alternatively having the cost borne by the taxpayer; however

where complaint is made, the amount claimed must not exceed what is
reasonably incurred by the authority in an individual case. Clearly no
expenditure attributable to assisting the debtor avoid recovery is incurred by
the Council which is referable to those debtors summonsed because none of
those for whom concessions are made are proceeded against;

to that end, it would have to be treated as an unavoidable cost in

administering council tax as it would be unlawful to have this element of
expenditure subsidised by inflating the standard costs.

Notwithstanding that there is no legislative provision to recover this cost, the sheer size
of the estimated recoverable component, indicates that it must be funding far more
resource intensive functions than merely an automated process, upon which instituting
the summons relies. Engaging with customers for example, would far outweigh the
demand on resources and it likely that even expenditure in respect of work done after
securing the order is included, as almost a third of a million pounds annually is
accounted for.

94.

Even before the Welfare Reform changes the Council has implied through various
documents, reports etc., that its standard costs include subsidy for bad debt and/or for
administration expenditure attributable to assisting the debtor avoid recovery. In a
budget consultation in 2010 (Annex H, particularly 6) the Council stated that the
number of summons issued has reduced over the last 2 financial years due the work that
is being done to make more flexible arrangements with debtors at an early stage.

95.

On 29.11.12, the Grimsby Telegraph published an article informing readers how council
tax arrears are recovered. At the final notice stage it stated the council gives the
opportunity to bring the account up to date and continue with instalments if the
customer agrees to a direct debit

96.

The Council has a Debt Management Strategy which provides more insight into how
the subsidy element of court costs is increased to fund the Councils campaign to secure
a greater take-up of account holders who pay by direct debit. Paragraphs 10.7 & 10.8
state so far as is relevant as follows:
10.7

When recovery action has commenced payment arrangements will only be

entered into when the debt is secured by a liability order or the debtor
agrees to make payment by direct debit......
......................

10.8

97.

In exceptional circumstances special payment arrangements may be made

by authorised staff prior to a liability order being obtained and without the
debtor agreeing to pay by direct debit.

This raises two issues; one that expenditure is incurred by the Council for work
attributed to customer contact in setting up payment arrangements, for example, where
payment is agreed by direct debit, and as a consequence, no order is obtained nor court
costs incurred by the debtor. The other concerns the Councils application for an order
to protect its interest where circumstances are not exceptional, and where no agreement
is made to pay by direct debit (thus costs are incurred by the debtor).

98.

Inflating the standard sum for the purpose of subsidising bad debt has been asserted
already to be unlawful. However, there is also an exploitative element linked to the offer
of having court costs withdrawn as bargaining power to persuade taxpayers to sign up to
the Council's preferred payment method. This goes beyond just subsidising bad debt as
it exploits those against whom costs are applied by inflating summons costs to directly
fund the Councils campaign to secure a greater take-up of direct debit the success of
which depends entirely on the volume of costs that are waived.

99.

Where the Council allows for an arrangement to be entered into, conditioned upon
obtaining a liability order to protect its interests, those debtors are liable for costs so
theoretically that expenditure is recovered from those driving the level of activity. It is
however contested, even under these circumstances, that the law makes no provision for

its recovery. In that case, no cost referable to the Regulations, whether attributable to
bad debt or subsidising arrangements before recovery has begun, will be recoverable.
100. As a simple matter of statutory construction, it is evident that the Regulations do not
condition that a liability order may be applied for where there has been tendered to the
authority the aggregate of the two sums described in parts (a) and (b) of sub-paragraph
34(5), as follows (emphasis added):
(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.
101. Considering the relevant provisions of the Regulations in the context of a payment
arrangement being agreed once recovery action had commenced, it is a reasonable
understanding that the re-scheduling is made as a consequence of a formal offer or
proposal. It is also a reasonable understanding of the terminology used in regulation
34(5) that a tender is used in the context of a formal offer, in response to which the
authority must accept and the application not be proceeded with.
102. In that case, it would not simply mean there was no longer a lawful avenue to proceed
further and request a liability order, but also that the cost attributable to the work
involved in making the arrangement could not lawfully be included in the costs claimed.
Expenditure may only be recharged that has been incurred by the authority up to the
time of the tender and clearly resources called upon by engaging staff in the matter
would occur after the payment was tendered.
103. It follows therefore that the associated costs, even in cases were payment plans are rescheduled (pre or post enforcement commencing), can not include any element of
expenditure which is attributable to controlling or monitoring those plans as this activity
must logically follow reschedulement. Gross recoverable costs under the Control &
Monitoring budget are 109,380 and add around 10 to the cost per summons and

would, if referring to rescheduled payment plans (in whole or in part) be unrecoverable

in the appropriate proportion.
104. If the recoverable amount under the Control & Monitoring category budgets for
checking account details before instituting recovery, then that would be wholly
unjustifiable because there are no demonstrable checks. All papers served on the
defendant in connection with the application are generated as a consequence of settings
in the council tax software. Parameters are agreed in advance by the relevant manager
and set in its Council Tax processing system relating to the number of days behind and
the monetary value etc., and summonses issued on this basis.
105. If any doubt arises that the Council does not totally rely on the automated procedure and
there may possibly be staff double checking the bulk court applications, then this can be
disproved beyond all reasonable doubt. It is provable that the Defendant has (on this
occasion, and previously), where all payments have been up to date, been subjected to
recovery by the Council due to a deficiency in its Council Tax processing system which
would have been highlighted if a manual check into payments made on the account had
been carried out prior to instituting the complaint (Annex J).
106. In explaining how the recovery action had wrongly been instituted it is helpful if some
background is provide into the payment system relied upon by the Council to
automatically allocate payments when the council is owed money for past years as well
as the current year.
107. The Councils software has built in allocation rules to ensure, so far as is practical in an
automated system, that the law with respect to specified payments is met. Case law from
1814 (Peters v Anderson (1814) 5 Taunt 596) still relevant, held that "A person who is
indebted to another on two several accounts, may, on paying him money, ascribe it to
which account he pleases...and his election may either be expressed....or may be
inferred from the circumstances of the transaction.
108. In respect of payment allocation for different years accounts, processing systems rely
on transactions matching exactly the instalment amount set for the relevant year in the
softwares parameters. Inevitably payments for various reasons will not always be made
in the exact manner that the system requires to function correctly, so the system can not
be claimed to provide a fail safe solution to ensuring the law is complied with.

109. If a payment is made which doesn't exactly match an instalment amount, where a
taxpayer has more than one account with an outstanding balance, then the system
automatically allocates payment to the oldest debt. If payment was intended for the
current years liability then potentially that account will go unpaid and may lead to
instalment withdrawal, demand for the whole balance immediately and ultimately being
charged court costs.
110. During the period in which the court has unreasonably protracted proceedings in the
Defendants High Court appeal, the Defendants liability has included an additional sum
subject to court proceedings which appears on the bill as a separate balance from the
current liability. Complexities have caused the Councils system to misallocate
payments to the additional sum on three occasions because parameters have triggered
payment to reduce the previous years liability. In respect of the first misallocation,
recovery was halted before a summons was served because the Local Government
Ombudsman intervened. For the subsequent mistakes (including this occasions),
recovery did proceed further and resulted in a summons being served on both occasions.
111. Checks would have verified that payment was made in full and that the balance against
which payment was allocated incorrectly, related to court costs that were in any event
suspended until the outcome of the proceedings. The absence of manual checks is an
obvious concern as is the unreliable way payment allocation relies on exact sums
matching set parameters; however, these are secondary to the matters in the Defendants
present case. It is not the issue that there are no manual checks, rather, there can be no
justifiable expenditure attributable to debt recovery officers monitoring accounts in
respect of checks that are not carried out.
d) Administration cost of enforcing the order after it is obtained
112. The judgment in Nicolson v Tottenham Magistrates goes a step further than clarifying
the position regarding recharging expenditure for obtaining the liability order in respect
of the costs which are applied in connection with serving the summons (the second
question of law on which opinion was sought in the Defendants High Court appeal).
Paragraph 35 of the judgment states as follows (emphasis added):
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.
113. At around 0.3m, the Debt Recovery budget which adds 31 to each summons has
been shown to be disproportionate for processes that are largely automated. The most
feasible explanation would be that expenditure in respect of work done after securing
the order is included. Administrative work at this stage does not seem to lend itself to
automation and is much more likely to be performed manually considering the type of
activities which are undertaken. This would give credence to Chiltern Councils claim
(see above paragraph 65) that the work to secure payment once having obtained the
liability order is one of the stages from which most costs arise.
114. To put the additional recovery expenditure incurred into context, staff engage in
activities ranging from notifying the debtor of possible further action to applying to the
court for commitment to prison. Information must be obtained about the debtors
circumstances in order to assess whether accounts are more suitable for attachments of
earnings, deduction from benefits or referral to bailiffs. Where those measures fail to
obtain payment then staff might engage in further recovery work, for example applying
to the court for charging orders or instigating bankruptcy. Similarly to pre court action
arrangements, terms of mutually acceptable payment plans might simply be agreed,
albeit still requiring resources to correspond with debtors, re-schedule instalments and
then monitor accounts until settled. For all stages, staff must be available for dealing
with queries whether by telephone or written correspondence.
115. It is therefore believed, that on the balance of probabilities (regardless of the
Regulations not making provision), these costs are recharged to the debtor in a bid to
minimise the financial burden on the taxpayer in general, which would appear to be the
ends for which disregarding the law is justified.
Unreasonable steps taken to enforce costs
116. A three stage test is set out in Nicolson v Tottenham Magistrates (34) to establish
whether the costs order made by magistrates was lawful. For a proper judicial decision
to be made it is established that the Magistrates must be satisfied: (i) that the local
authority has actually incurred those costs; (ii) that the costs in question were incurred
in obtaining the liability order; and (iii) that it was reasonable for the local authority to
incur them. The judgment considers (51) whether the costs claimed have been

"reasonably" incurred, after it is established to the satisfaction of the court that the costs
were incurred and properly referable to the enforcement process. It offers the below
examples to clarify the kind of challenge that it might be the courts duty to consider
(emphasis added):
.....there may be individual cases in which it would be open to the respondent to
argue that the costs were not reasonably incurred, for example, if it was not
reasonable for the local authority to take steps to enforce payment, or if the costs
which were incurred were excessive e.g. if the local authority sent a QC along to
argue a simple point of law in the Magistrates' Court.
117. In the Defendants case, there is little to convince Magistrates that the Council was
reasonable in its actions, particularly in view of the process relied on to institute the
complaint being entirely automated and the Defendants case required no call on
resources to correspond on matters relating to the alleged debt. It is contended therefore
that the Councils motivation to proceed was punitive and/or to generate additional
revenue. It is well established that costs are not to be awarded as a penalty and should
not exceed the proper costs incurred: see R v Highgate Justices ex parte Petrou [1954] 1
ALL ER 406.
Costs set at levels for improper purposes
118. Evidence has been discovered confirming that the Council has historically manipulated
costs in order to generate income to meet a number of different objectives.
Encouraging behaviour (deterrent / penalty)
119. It is documented in relation to a review of costs in 2001/02 that prompt payment of
Business Rates could be encouraged as well as generating additional income by
charging in those cases (which had before the review been identical) three times the cost
of a Council Tax summons (Annex I 2-4).
120. It is well established that costs should be awarded as compensation, not as punishment.
In R v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406 it was held that costs
should not exceed the proper costs incurred and should not be a penalty. In that case the
Appellant owned premises which were let to another party for use as a club. The other
party was charged with offences relating to the supply of alcohol and the appellant was
joined to show cause why the club should not be struck off the register. The justices
convicted and fined the other party and ordered him to pay 20 guineas of the

prosecution costs of 21 guineas and also ordered the Appellant to pay 100 costs. On a
motion for an order of certiorari it was held that since the other party had already been
ordered to pay all but one guinea of the prosecution costs, the order against the appellant
was a penalty in the guise of costs.
121. It is clear from the Councils 2001/02 review that the decision by authorities to set the
level of costs disproportionately high was made on the basis that the level of costs (the
penalty) might be considered so small in comparison to the amount owed in Business
Rates.
Resolve issues caused by IT system failures
122. A Cabinet report in 2002/03 identified ways of funding additional resources to ensure a
backlog of work that had arisen due to changes in the IT system were addressed (Annex
I 5-8). The summons costs were increased by 50% in order to raise additional revenue
to meet funding to pay for additional staff.
123. In 2013 the High Court ruled against Barnet Borough Council budgeting for a surplus of
income from residential parking schemes to be used to meet other transport expenditure.
In Attfield v the London Borough of Barnet [2013] EWHC 2089 (Admin), it was held
that a local authority must not attempt to raise revenue where there is no clear statutory
power to do so. In the Defendants case, the statutory power expressly limits costs that
may be claimed to the expenditure incurred by the Council in connection with
instituting the complaint.
124. The decision to increase summons costs did not arise because of an increase in the cost
of instituting the complaint, rather for the clear intention of funding additional resources
to overcome the backlog of work that had arisen in the administration of Council Tax,
Business Rates and Housing Benefit due to delays in implementing a new IT system.
The Council had therefore acted for an improper purpose namely to raise revenue as it
clearly intended to use the surplus to defray other administration expenditure and reduce
the need to meet the cost, by for example increasing council tax, using reserves or
cutting down on waste. This purpose was not authorised under the Regulations and
therefore the decision was unlawful.

Budget savings and alternative to charging for non statutory services

125. The Council forecasted that it could raise an additional 0.752 million in costs income
over a four year period by increasing the overall court costs and front loading all the
charge in respect of instituting the complaint (Annex I 9-17). This was proposed as
one of a number of possible ways it could save or increase income to meet its 29.7
million target set out in the Councils 2011/12 draft budget and medium term financial
plan for the period 2011-2015. Increasing summons costs was the preferred measure
in response to public consultation over alternative proposals to introduce a charge for
replacement bins or garden waste collections.
126. Clearly increasing costs in order to plug a gap in its finances had no legal basis, just like
there was no statutory power to set them disproportionately high for the purposes of
offsetting expenditure for waste services. The public were able to influence the level of
court costs, and probably elected the increase to avoid paying additional for services
(Annex H). The Council had acted for an improper purpose by increasing summons
costs on account of the majority of respondents preferring to raise additional money this
way over introducing charges for waste services.
127. It was wrong in law to increase costs based on criteria other than by reference to an
increase in the Councils incurred expenditure. Though indicative of the Council
functioning democratically, the publics preference was not, in the context of the law, a
relevant factor to be considered. The statutory power which provides for reasonably
incurred costs, by definition, renders the determining of them by a democratic process
unlawful.
Set targets for court costs income
128. The Council has a budgeted income stream for court costs which is evident from
published reports showing outturn variances for this income. A report of the Audit
Committee (Final Accounts 2004/05) compares the outturn with the budget to show
major variations. A surplus of 0.125 million to its summons costs income target is
recorded at Appendix 2 of the report of 28.7.05 (page 15) as follows (emphasis added):
Finance Restructure resulted in vacancy savings (597K), additional benefit
subsidy income arising from changes in subsidy rules and grant received on
benefits overpayments (1,004K) Revenues and Benefits also exceeded their
income target in respect of Council Tax and NNDR summons income (125K)
and housing benefit overpayments (116K)

129. The provision of a budgeted income stream has presented a means for the Council to
influence its financial position. That is evident with Revenues & Benefits exceeding its
summons income target, leaving a 125k surplus, for example to off-set overspending in
other areas or transfer to reserves. The system is clearly open to abuse with income
targets unquestionably creating a perverse incentive to summons.
130. Costs were set at a level such that a significant surplus was achievable, which in
2004/05 amounted to 125k. The Council had therefore raised revenue for an improper
purpose, namely to prop up other budgets, and in doing so acted unlawfully (see above
paras 123-124).

CONCLUSION
131. It is contested that enforcement should have never proceeded to the stage where the
Council applied for a liability order as the Defendants account had at no stage fallen in
arrears. There was for that reason no cause for the reminders or the final notice to have
been sent. However, the fact that the Council did proceed does not render these
representations invalid as the Magistrates actions and the Councils approach to
supporting its costs raises matters of general public importance.
Case for impermissible costs
132. It is established that the Council sets its standard costs at a level to ensure that no cost of
recovery is borne by the taxpayer in priority to complying with the Regulations that
restrict the amount that can be recharged in costs to the court application. It is therefore
contended that an element of the standard 60 costs can not be compliant with the
Regulations, based as they are on the premise that any expenditure considered
attributable to recovery and enforcement activity (however tenuously linked) is
recoverable by recharging it to the defendants through costs claimed in an application
for a Liability Order.
133. The breakdown of costs which the Council has undertaken to keep under review
provides evidence that in the circumstances relating to the Defendants case the vast
majority of expenditure it claimed was not incurred for the issue of a summons so is
contended that the claimed costs represent a sum outside that which the law provides.
Moreover it is contended that under any circumstances where the Council makes use of

the court (whether to obtain an order, or merely institute the process) the costs detailed
in its breakdown are not properly referable to regulation 34 of the Regulations.
134. For the reasons set out above the Court is respectfully invited to determine a realistic
level of costs which are compliant with regulation 34(5) of the Regulations either at this
hearing, or at a hearing to be arranged.

Annex A
Statutory Instrument ultra vires
It has become evident from engaging further in this appeal that the Statutory Instrument, the
Council Tax (Administration and Enforcement) Regulations 1992 (the Regulations) which
provide that the parties may agree costs prior to the case being heard may be ultra vires the
Enabling Act.

1.

The primary legislation laying down the boundaries from which the Regulations derive is the
Local Government Finance Act 1992 (the 1992 Act). Schedule 4 of the 1992 Act provides
the necessary powers to enable the Secretary of State, by Regulations, to make provision for
the enforcement of Council Tax. The relevant powers conferred on the secretary of state to
make provision for obtaining a court order are under paragraph 3 ('liability orders') of
Schedule 4 of the 1992 Act.

2.

It is understood that conventionally a party who is successful in litigation is entitled to costs.

The general rule being that costs follow the event and the determination is a matter of judicial
discretion. When recovering unpaid sums of Council Tax, the power to award costs lies with
the Court on hearing the complaint. Section 64 of the Magistrates Courts Act 1980, provides
so far as is relevant, as follows:
"(1) On the hearing of a complaint, a magistrates' court shall have power in its
discretion to make such order as to costs
(a) on making the order for which the complaint is made, to be paid by the
defendant to the complainant;
(b) ....
as it thinks just and reasonable...
(2)

3.

The amount of any sum ordered to be paid under subsection (1) above shall be
specified in the order, or order of dismissal.....

Regulation 34(5) of the Regulations provides that the parties may agree costs (and settlement
of the debt) prior to the case, in which case the application shall not be proceeded with. In
reality, local authorities tend to interpret this to mean that they are permitted to impose court

costs on a Council Taxpayer in respect of issuing a summons (and the hearing itself) before
the case has been brought before the bench (See 75-82, Annex A). This is in conflict with
the general rule that costs follow the event and which would be understood by most people to
be the way a party to court proceedings is normally awarded costs. The relevant part of
regulation 34 is provided below:
(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
(c) 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.
(6)....
4.

In contrast, the Statutory Instrument which provides for costs in the comparable procedure for
the recovery of Business Rates DO NOT provide that if, after the summons has been issued,
the outstanding balance and an amount equal to reasonable costs incurred is paid or tendered
to the authority, the application shall not be proceeded with.

5.

The relevant law governing liability order applications for Business Rates is the NonDomestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (the 1989
Regulations). Regulation 34(5) of the Regulations has no equivalent in the 1989
Regulations, the provision in its entirety has been omitted which leaves no doubt that an order
for costs may only be made by the court when the case is heard.

6.

With exception to paragraph numbers which are (5), (6) and (7) of regulation 12 in the 1989
Regulations, the following is worded identically in both Statutory Instruments, but in the case
of the 1989 Regulations there is no equivalent of regulation 34(5) preceding it:
(2) 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.
...............

(6) The court shall make the order if it is satisfied that the sum has become payable by
the defendant and has not been paid.
(7) An order made pursuant to paragraph (6) shall be made in respect of an amount
equal to the aggregate of
(a) the sum payable, and
(b) a sum of an amount equal to the costs reasonably incurred by the applicant in
obtaining the order.
(8) Where the sum payable is paid after a liability order has been applied for under
paragraph (2) but before it is made, the court shall nonetheless (if so requested by the
billing authority) make the order in respect of a sum of an amount equal to the costs
reasonably incurred by the authority in making the application.
7.

The Statutory Instrument governing Business Rates recovery unmistakably makes no

provision for a billing authority to apply costs to a ratepayer's account.
Clearly a summons would be issued in respect of the SUM outstanding (the SUM being
the unpaid rates excluding costs). It would be then open to the ratepayer, if after receiving a
summons, to pay the SUM before the application is made.
The application would then be made on the day of the court hearing, and would be made
regardless of any amount paid. However, in cases where the SUM has been paid before the
application is made, the authority has the option (not a requirement) of requesting that the
court make the order in respect of costs alone.
It is unquestionably the courts decision to agree the level of expenditure incurred by the
authority at the Liability Order hearing and only when the order has been granted would the
council be justified in stating an amount (with respect to costs) to be added to the ratepayer's
account.

8.

It is only the existence of regulation 34(5) of the Regulations that allows the applicant in
Council Tax cases to circumvent the law of costs with the provision for them being agreed
with the defendant before going to court. The provision does not exist in the 1989
Regulations, which would appear to be the more correct legal procedure but ironically the
majority of billing authorities, when enforcing Business Rates dismiss the 1989 Regulations
and instead (with regard to applying costs) apply the law in the same way as Council Tax.

9.

The 1992 Act appears not to provide enabling powers that confer power on the Secretary of
State to prescribe a procedure whereby parties may agree costs prior to the case being heard.
Schedule 4 of the 1992 Act under paragraph 3 ('liability orders') provides so far as is relevant,
as follows:
Liability orders
3

(1) .......
(2)

The regulations may include provision that the order shall be made in respect
of an amount equal to the aggregate of
(a) the sum payable; and
(b) a sum (of a prescribed amount or an amount determined in accordance
with prescribed rules) in respect of the costs incurred in obtaining the
order.

(3)

The regulations may include provision that, where the sum payable is paid
after the order has been applied for but before it is made, the magistrates
court shall nonetheless make the order in respect of a sum (of a prescribed
amount or an amount determined in accordance with prescribed rules) in
respect of the costs incurred in applying for it.

(4) ......
Sub-paragraphs (2) and (3) confer power on the Secretary of State such that provision may be
made that the court shall make the order in respect of an amount, either including costs or
costs alone where the sum payable is paid after the order has been applied for but before it is
made. Neither power enable the Regulations to make provision in respect of a billing authority
raising its own court costs which are agreed by the parties and paid (or tendered) to the
applicant prior to the case being heard, as enacted in regulation 34(5) of the Regulations.
10.

The 1992 Act provides further enabling powers for prescribing steps to be taken and
procedures to be followed at sub-paragraph (4) to paragraph 3 of Schedule 4. Though
unreasonable to expect any should extend so far as allowing the law of costs to be
circumvented by having them agreed without proceeding to a judgment, they will be
mentioned here for completeness. Those that are of relevance are as follows:
Liability orders
3

(1) .......

(4)

The regulations may include

(a) provision prescribing steps to be taken before an application may be
made;
(b) .....
(c) provision prescribing the procedure to be followed for the initiation of
an application (which may include provision as to form);
(d) provision prescribing the procedure to be followed in dealing with an
application;
(e) .........

Clearly regulation 33 of the Regulations (Liability orders: preliminary steps) has been enacted
pursuant to enabling powers provided at paragraph (a) which prescribe steps to be taken
before an application may be made. Regulation 33 (as amended) provides so far as is relevant,
as follows (emphasis added):
Liability orders: preliminary steps
33.(1) Subject to paragraph (3), before a billing authority applies for a liability
order it shall serve on the person against whom the application is to be made a notice
(final notice), which is to state every amount in respect of which the authority is to
make the application.
(2)......
Though it is inferred by regulation 33(1) that an element of costs will make up the aggregate
of an amount in respect of which the authority is to make the application, this would only
inform the Taxpayer of the sum that will be asked for when the case is heard.
Paragraphs (c) and (d) which enable the provision for prescribing procedures to be followed
etc., form part of the enabling powers under which regulation 34 of the Regulations
(Application for liability order) is evidently made, along with those in sub-paragraphs (2) and
(3) to paragraph 3. It appears however, that regulation 34(5) of the Regulations has not relied
on any enabling powers provided under paragraph 3 of Schedule 4 (Liability orders), but those
under para 17 of the same Schedule (Termination of proceedings).

11.

The 1992 Act under para 17 of Schedule 4 enables that the Regulations may provide that the
authority shall take no further steps as regards its recovery where the outstanding amount is
paid or tendered to the authority. Sub-paragraphs (2) and (3) define the outstanding amount,
which includes in cases where costs and charges are relevant a sum in respect of costs and
charges incurred in the proceedings up to the time of payment or tender. Paragraph 17 enables
the following provision:
Termination of proceedings
17 (1)

Regulations under paragraph 1(1) above may provide that in a case where
(a) proceedings under the regulations have been taken as regards the
recovery of any sum mentioned in paragraph 1(1) above; and
(b) the outstanding amount is paid or tendered to the authority to which it is
payable;
the authority shall accept the amount, no further steps shall be taken as
regards its recovery, and any person committed to prison in pursuance of the
proceedings shall be released.

12.

(2)

The outstanding amount is an amount equal to the sum concerned or to so

much of it as remains outstanding (as the case may be).

(3)

In a case where costs and charges are relevant the outstanding amount shall
be treated as augmented by a sum (of a prescribed amount or an amount
determined in accordance with prescribed rules) in respect of costs and
charges incurred in the proceedings up to the time of payment or tender.

The enabling power upon which regulation 34(5) of the Regulations relies is evidently subparagraph (3) above. It is of relevance that in the case where a defendant settles the debt
before the hearing, no prescribed charges have been raised, and until the Magistrates' court has
granted an order there are no costs. Therefore, the enabling power relied on to make the
provision to have been used with due regard for the legal powers it confers would have
required regulation 34(5) inserting (with different wording) at the end of regulation 34, i.e.,
after that which is regulation 34(8) of the Regulations.

13.

The same power at para 17 (Termination of proceedings) also forms part of the enabling
powers under which provision is made in respect of the charges connected with levying
distress. Regulation 45 provides so far as is relevant, as follows (emphasis added):

Distress
45. (1) Where a liability order has been made, the authority which applied for the
order may levy the appropriate amount by distress and sale of the goods of the debtor
against whom the order was made.
(2) The appropriate amount for the purposes of paragraph (1) is the aggregate of
(a) an amount equal to any outstanding sum which is or forms part of the
amount in respect of which the liability order was made, and
(b) a sum determined in accordance with Schedule 5 in respect of charges
connected with the distress.
(3) If, before any goods are seized, the appropriate amount (including charges arising
up to the time of the payment or tender) is paid or tendered to the authority, the authority
shall accept the amount and the levy shall not be proceeded with.
(4) Where an authority has seized goods of the debtor in pursuance of the distress, but
before sale of those goods the appropriate amount (including charges arising up to the
time of the payment or tender) is paid or tendered to the authority, the authority shall
accept the amount, the sale shall not be proceeded with and the goods shall be made
available for collection by the debtor.
(5) .......
14.

In contrast with regulation 34(5), as clearly set out above, any levy fees, which are prescribed
in Schedule 5 of the Regulations, will have been distinctly raised prior to the payment or
tender (for which enforcement must cease). In this respect, the enabling power relied on to
make the provision has been used with due regard for the legal powers it confers.

15.

Sub-paragraph (3) of paragraph 3 to Schedule 4 of the 1992 Act (See 9, this Annex) confers
powers on the Secretaries of State such that the regulations may include provision that, where
the sum payable is paid after the order has been applied for but before it is made, the
magistrates court shall nonetheless make the order in respect of a sum in respect of the costs
incurred in applying for it.

16.

It is of importance that the enabling Act uses the words applying for it. The Regulations with
regards regulation 34(8) appears to have been enacted without the legal powers of the primary
legislation. Regulation 34(8) is as follows (emphasis added):
(8) Where the sum payable is paid after a liability order has been applied for under
paragraph (2) but before it is made, the court shall nonetheless (if so requested by the

billing authority) make the order in respect of a sum of an amount equal to the costs
reasonably incurred by the authority in making the application.
17.

The primary legislation does not give legal powers such that the regulations may include
provision that the court shall make the order in respect of a sum of an amount equal to the
costs reasonably incurred by the authority in making the application.

18.

There is an important distinction in that the primary legislation provides for an order in
respect of the costs incurred in applying for it. This means that if the respective Secretary of
State had made the regulations within the powers conferred on him, regulation 34(8) would
make provision for where the sum payable is paid after a liability order has been applied for
but before it is made, the court shall nonetheless (if so requested by the charging authority)
make the order in respect of a sum of an amount equal to the costs reasonably incurred by the
authority for instituting the complaint.

19.

The importance is that this would essentially be a lesser sum than whatever sum is claimed to
be an amount equal to the costs reasonably incurred by the council in obtaining the order
(regulation 34(7)(b) of the Regulations). The rationale being that it is open to the authority
(having discretion) not to bring proceedings before the court that incur additional expenditure
and so the costs limited to those in respect of instituting the complaint.

20.

The same is duplicated in the equivalent of regulation 34(8) in the Statutory Instrument
governing Business Rates (regulation 12(7) of the 1989 Regulations).

Annex B
Instituting the complaint reg 34(5) vs. obtaining the order regs 34(7) and (8)

1.

Regulation 34 provides at paragraph 8 that the court shall, subject to an application by the
billing authority, grant an order for the costs alone, where payment of the council tax has been
made after the issue of a summons but before the liability order has been made by the court:
(8) Where the sum payable is paid after a liability order has been applied for under
paragraph (2) but before it is made, the court shall nonetheless (if so requested by the
billing authority) make the order in respect of a sum of an amount equal to the costs
reasonably incurred by the authority in making the application.

2.

There is no provision in regulation 34(8) for the court to make the order in respect of costs,
where in addition to the sum payable, an element of costs is paid. Paragraph 8 provides that
the court, if requested by the billing authority, shall make the order in respect of costs, in
circumstances where only the sum payable is paid to the authority.

3.

The sum payable is defined as the outstanding liability (excluding costs). Regulation 34(7)
confirms this as it describes the sum as one distinct part of an aggregate amount of which
costs reasonably incurred is the other. Regulation 34 provides at paragraph 7 as follows:
(7) An order made pursuant to paragraph (6) shall be made in respect of an amount
equal to the aggregate of
(a) the sum payable, and
(b) a sum of an amount equal to the costs reasonably incurred by the applicant in
obtaining the order.

4.

The appeal is concerned in circumstances where a reasonable sum of costs had also been paid,
therefore the relevant provision under which costs were appropriate were those described
under regulation 34(5) not 34(8). Nonetheless, the Council proceeded with the application and
applied for costs under regulation 34(8) which the bench ordered in the sum of the standard
70 sought by the Council.

5.

Costs under regulation 34(5) are raised in respect of instituting the application prior to any
hearing and paid without an order if settled along with the sum payable before the hearing.

Whereas under regulation 34(8) the court grants an order on the application being made, so
include costs of bringing proceedings before the court. However, a 70 standard sum is
imposed whether in respect of regulation 34(5) or 34(8), despite costs of instituting the
application being in respect only of part of the total incurred. Individual costs raised under
regulation 34(5) derive from the Councils aggregate, split between however many defendants
appear on the complaint list, which in 2011/12 averaged 970 for each of the 12 applications
made that year.
6.

The process is controlled automatically in accordance with parameters set in the Council Tax
software package. The system compiles particulars of all account holders requiring issue of a
summons. The complaint list is generated from the individual entries contained in the
database (including the amount outstanding and costs to be applied for at the hearing) and
delivered to the court where reviewed by a legal adviser who issues the summonses.

7.

As a budgetary measure, the Council proposed increasing overall costs and changing the
composition so all costs, including those for making the application, would be imposed in
respect of instituting the complaint. Approximately one quarter of account holders who are
summonsed settle in full before the hearing, so front loading costs would largely account for
the forecasted additional 188,000 each year it would generate.

8.

A case to argue that the total costs should not be incurred in respect of instituting the
application is made in the Regulations as amended and applying to Welsh billing authorities.

9.

A legislative provision for capping costs is set out in the Council Tax and Non-Domestic
Rating (Amendment) (Wales) Regulations 2011. Though not applying in England, where
there is no cap, they nevertheless amend the Regulations governing England and Wales.
Rather than the cap itself which applies only in Wales, attention here is on the references
made to paragraphs (7)(b) and (8) to regulation 34. Regulation 3 of the 2011 Welsh
amendment provides so far as is relevant, as follows, (emphasis added):
3. (1) The Council Tax (Administration and Enforcement) Regulations 1992 are
amended as follows.
(2) In regulation 34 (application for liability order)
(a) in paragraph (7)(b), after the order insert (which costs, including those of
instituting the application under paragraph (2), are not to exceed the
prescribed amount of 70);

(b) in paragraph (8), after the application insert (which costs, including those
of instituting the application under paragraph (2), are not to exceed the
prescribed amount of 70);
Clearly, cases proceeding to court and incurring costs under paragraph (7)(b) or (8) can
include those of instituting the application. It cannot mean conversely that cases which are
instituted but not prosecuted can include costs of making the application and obtaining the
order. It is explicit in its references that those cases for which liability is settled prior to a
hearing will only incur costs of instituting the application. Parliament must have intended that
the regulations were formulated so as to provide a person issued a summons the opportunity to
reduce the otherwise higher costs by settling liability before the hearing date.
10.

The Explanatory Memorandum to the 2011 Welsh amendment, prepared by the Welsh
Assembly Government further reinforces the assertion that the law provides court costs at two
stages. The Memorandum provides so far as is relevant, as follows (emphasis added):
4.2. When council tax payers...fail to make their payments as scheduled in their
demand notices, they will receive reminder notices, second reminder notices and final
notices. Should they still fail to pay the amount outstanding or come to an agreement
with the local authority, a summons may be issued for their appearance at the
Magistrates Court. The issue of a summons adds a cost to the debtors account.
4.3. If the debtor is unable to pay the balance in full prior to the court hearing date they
are required to attend court. The Council will request that the Magistrates Court grant a
liability order for the debt in question. This procedure will incur a further cost for the
debtor.
4.4. The Council Tax (Administration and Enforcement) Regulations 1992...provide that
the costs added to the debtors account at these two stages should cover the costs that are
reasonably incurred by the authority. However, the amount that is charged varies
considerably between local authorities in Wales so taxpayers in some authority areas
may pay up to twice as much as those in other areas.
The opportunity arises for the billing authority to apply appropriate costs firstly in respect of
instituting the summons and secondly where the complaint has proceeded to court where the
appropriate costs include additional expenditure in prosecuting the case.

Annex C
Misconceived view that costs in respect of the court application
should extend to all expenditure attributable to recovery and
enforcement
1.

Many billing authorities express a view that rechargeable costs in respect of applying for a
liability order should extend to cover all expenditure which is considered attributable to
recovery and enforcement. Interpreting the law this way is seemingly justified by the fact that
it serves to keep the financial burden on the general taxpayer to a minimum, even though the
law in fact provides only for application costs.

Wigan Metropolitan Borough Council

2.

The extent to which liability order court costs fund council tax administration is clearly
documented in a response to a request for Information made to Wigan council (ID 6534)
asking for the amount claimed in costs for issuing summonses. The council stated so far as is
relevant, the following (emphasis added):
The level of costs is calculated to reflect the cost of taking action against each
individuals who does not pay in accordance with their bill. It is a calculation of the
staffing and administration costs, legal fees, stationary, printing and postage, IT systems,
telephony, office accommodation costs and other costs incurred in the processes of
issuing reminders, final notices and summonses, negotiating and monitoring payment
arrangements, chasing non payment of arrangements, tracing and contacting debtors and
determining and implementing the next course of action until a case is paid. These costs
are recoverable from the debtor, thus minimising the financial burden on taxpayers of
the authority in general.
The council clearly considers expenditure in respect of activities carried out beyond having
secured the liability order is recoverable, not because the law provides for this but because it
feels a responsibility to the taxpayer in general.
Waltham Forest Borough Council

3.

Similarly it was evident from a response to another request for information (Ref: FOI 20140879) that the relevant regulations providing for court application costs were not recognised,
or the council interpreted them in a way that they were not written. The relevant response
follows (emphasis added):

....the court costs charged reflect not only the issue of the summons itself and the
administration relating to the issue of the summons but also to the on-going enforcement
action carried out within the Revenues Department. This will also include staffing, IT,
accommodation and other central support costs.
The recovery of Council Tax debts continues after the issue of a summons in order to
secure payment of the debt through the various recovery methods available. The costs
charged assist with funding these actions
North East Lincolnshire Council
4.

After what is presumed to be the combination of pressure from a legal challenge to the
reasonableness of costs and the effects of the benefit reforms introduced in April 2013, the
billing authority proposed that it reduce the summons costs. A report (Review of Council Tax
court costs 17 February 2014) seemed to imply that the increased volume of court applications
since April 2013 would put the authority at risk of exceeding expenditure with the additional
income generated if the standard costs were not lowered. The report briefly outlined the risks
of members opting either to levy a higher level of court costs than recommended or a lower
level. It implied that the costs raised through the court application should cover all the
additional costs incurred by the Council due to late or non-payment.
Members may choose to levy a lower level of costs than that recommended, however,
this would mean that additional costs incurred by the Council due to non-payment are
borne by those Council Tax payers who pay on time in accordance with their instalment
plan.
A higher level of costs would leave the council open to legal challenge over the
reasonableness of its charges under the Council Tax (Administration & Enforcement)
Regulations.

5.

The court is being made use of to recover all administration expenditure through liability
order applications, even though the law does not extend to such provision. Mindful that
applying for court orders is discretional, there is scope to minimise recovery work which can
not lawfully be re-charged to the defendant through court costs. Administration could
therefore be significantly reduced by curtailing the over enthusiastic use of the courts in
unnecessary cases, for example, where there is unlikely to be a long term delay in payment.

6.

Notwithstanding that the law makes no provision to recover all administration expenditure, it
is normal within the way council services are provided that all residents, regardless of whether
they benefit from a service, must nevertheless pay towards it. It therefore can not be justifiably

argued that because the taxpayer as a whole might bear some cost of collection that the law be
creatively interpreted so they dont.
A variety of administration activities are carried out within the Revenues & Benefits section.
The Service is primarily responsible for Council Tax and Business Rates Billing,
administering Housing Benefit and processing Council Tax Benefit Claims. Various other
sections providing support make up the service including Customer Service teams, System
Support/IT etc.
Employees are also required in an investigatory capacity, for example in Benefits, staff engage
in the control and recovery of Housing Benefit Overpayments or where appropriate
investigate and prosecute Benefit fraud. The Recovery Section sends out reminders,
summonses and deal with court applications for late payers. Staff will be required to deal with
account queries and where appropriate engage with debtors for re-scheduling and monitoring
payment plans.
Further recovery expenditure is incurred by the council in respect of those persons against
whom liability orders are made. Staff engage in activities ranging from notifying the debtor of
possible further action to applying to the court for commitment to prison. Information must be
obtained about the debtors circumstances in order to assess whether accounts are more
suitable for attachments of earnings, deduction from benefits or referral to bailiffs.
Where those measures fail to obtain payment then staff might engage in further recovery
work, for example applying to the court for charging orders or instigating bankruptcy.
Similarly to pre court action arrangements, terms of mutually acceptable payment plans might
simply be agreed, albeit still requiring resources to correspond with debtors, re-schedule
instalments and then monitor accounts until settled. For all stages, staff must be available for
dealing with queries whether by telephone or written correspondence.
7.

Clearly the additional expenditure incurred by the Council due to non-payment far exceeds
that which the law provides may be applied for against defendants in respect of costs incurred
by the Council in court applications. However, the Council has set its standard summons costs
at a level which ensures that the Council Tax payer as a whole pays none of these additional
costs. There is because of this, the Councils erroneous belief that the law is being complied
with and would be legally at risk, only if levying a higher level of costs.

8.

The costs are based on a broad estimate of overall recovery expenditure which disregards the
law that provides only for recharging court application costs incurred, and further provides
where debt is settled prior to the hearing, only summons costs may be sought.

9.

Failure in recognising the regulations further provision that a lesser amount than the overall
costs incurred are sought in respect of the summons is admitted under the reports Risk
Assessment.
Failure to review the appropriate level of costs levied leaves the council at risk of
levying costs which exceed the overall costs of making applications for Liability Orders.
This could contravene government regulations and leave the council at risk of
challenge.
However, it is recognised from the above together with the report earlier stating that it has a
duty to ensure that the level of costs does not exceed reasonable costs incurred in obtaining a
liability order that this does not extend to additional costs incurred by the Council due to
non-payment.

10.

The Councils commitment to ensuring no element of recovery administration costs is borne

by the ratepayer as a whole appears to be the ends for which disregarding the law is justified.
This might be defended based on the idea that if everyone paid their Council Tax on time
there would be no recovery costs.
If so argued it would highlight inconsistencies in the way services are funded. It would serve
the same logic for an authority to state that if nobody owned motor vehicles there would be no
public cost for road repairs. To that end, non-drivers should not have to subsidise additional
costs incurred by the Council for those causing wear and tear to the roads. Therefore, in order
for there to be consistency, the authority would need to ensure that no public services are
funded from Council Tax of any ratepayer not using or benefiting from them.
It would require radical changes in the way public services are delivered to achieve consistent
funding so that only services which a ratepayer uses or benefits from are financed through his
Council Tax. For the foreseeable future, it remains that expenditure, however tenuously linked
with recovery, is covered exclusively by ratepayers using that facility but another service, a
public library to quote an alternative example, is funded by all taxpayers whether they use it
or not.

Annex D
Chiltern District Council (CDC) case study
1.

A Cabinet report (16 March 2010) set out how CDC could achieve a 10% saving on its
Revenues Service budget by increasing court costs for late payment of council tax without the
need to make cuts in staffing levels. Prior to the review, CDC levied no charge on the issue of
a summons and costs were only applied for on making an application for a liability order in
the Magistrates Court. Consequently, only those taxpayers who had not paid their liability by
the hearing date incurred all the 83 standard costs.

2.

The report set out how, over a four year period, it could raise additional income of an
estimated 49.5k in the first year rising to nearly 97.4k by the fourth based on recovery
activity projected over that period by introducing costs on the issue of summonses and
incrementally increasing the overall amount over the four years. CDC has gone from levying
no charge on issuing the summons to charging 65 which is 52% of its current total 125
costs for obtaining a liability order in the Magistrates Court in council tax cases.

3.

Meeting budget cuts by manipulating income generated from court costs raises concern
because the basis upon which the level derives is plainly not from the amount of expenditure
incurred. It is also unlawful to account for cases that proceed to court and recharge that
expenditure to defendants who have received a summons but settled their liability before the
date of the hearing. It is similarly unlawful to recharge expenditure (either summons or
liability order) incurred arising from the additional work required to secure payment once
having obtained the liability order. However, the following is revealed in paragraph 4 of its
Cabinet report:
4.

4.

The level of costs should be realistic but reflect the fact that we do not believe in
principle that it is fair to pass on the costs of recovery from the few people who
default on payment of Local Taxes to the vast majority who do not. Most of the costs
the Council incurs arise from the application for a liability order at Court and the
additional work required to secure payment once we have the liability order.

The preceding paragraph in CDCs Cabinet report describes the steps taken to obtain a
liability order prior to the review where there were no costs applied on the issue of a

summons. There it confirms that the reference to an application for a liability order at Court
refers explicitly to the court hearing at which the application is made, thus removing any
doubt that it may possibly refer to instituting the complaint (application for a summons).
Paragraph 3 of the Cabinet report states, so far as is relevant, as follows (emphasis added):
3.

5.

.....if payment is still not forthcoming the Council will serve a court summons on the
debtor to appear before the Magistrates Court. At the hearing the Council applies for
a liability order which gives further powers to recover the debt. On making the
application for a liability order the Council may ask for a contribution towards the
costs of the action.....

CDC apparently admits that although there are legislative restrictions it nevertheless justifies
using the application as an opportunity to claim (in court costs) all expenditure attributable to
recovery. Also, despite admitting to incurring most of the expenditure in respect of the court
hearing and thereafter, it has manipulated the composition so that the majority of its costs are
levied in respect of instituting the summons as a budgetary measure to plug a gap in its
finances by achieving a 10% saving on the Revenues Service budget.

6.

If in the case of CDC, most of the costs incurred arise from the application for a liability order
at Court and the additional work required to secure payment once obtaining the liability order,
then it is likely all local authorities will incur costs similarly. The report therefore provides a
persuasive case to question the legitimacy of councils giving greater weight to the cost of
issuing a summons; however, those that front load the costs entirely in respect of instituting
the summons, the case is even greater. The more questionable practice highlighted by the
report seems to be that it is likely that post liability order expenditure, which may not lawfully
be included in court costs, is in fact recharged to the defendant.

Annex E
Composition shift between summons and liability order costs

1.

In April 2011, after notifying the Magistrates Court of its decision to increase and front load
court costs, the Council implemented the standard 70 sum. All account holders summonsed
from then on routinely incurred the revised fee, even taxpayers who before the review only
incurred part costs; i.e., those, who under regulation 34(5), settled in full before the hearing.
All costs in respect of making the application and obtaining the order are now incurred by all
taxpayers summonsed regardless of their cases going ahead.

2.

It is evident that the Council merely informed the Magistrates' Court of the standard sum it
had decided it would impose as costs and provided no evidence as to how they were arrived
at, and what costs they represented. The Councils letter to the Deputy Justices Clerk, dated
4.4.11 details the matter, so far as is relevant, as follows:
I am writing to advise you that North East Lincolnshire Council has taken the decision
to increase the court costs which it charges to tax payers for the non payment of Council
Tax and National Non Domestic Rates.
The costs to be charged for a summons for Council Tax and National Non Domestic
Rates will be 70.00. There will be no additional costs for the liability order. The
increase will take effect from 1st April 2011.....

3.

Before the review, costs had in some respects been applied in line with the Regulations. The
Council imposed a set amount of 32 under regulation 34(5), whereas if the case progressed
to a hearing, a costs order would be made by the court in the sum of 57 (32 + 25) under
either regulation 34(7) or if in respect of costs only, regulation 34(8). Therefore, only part
costs equal to 56% of the total costs ordered on the complaint being heard were deemed to be
incurred in respect of instituting the complaint.

4.

The following charts the changes that the summons and liability order costs have undergone
over a period commencing 1998/99 through to 2013/14.

5.

1998/99

Summons 0.00
Liability Order 40

2004/05

Summons 30
Liability Order 25

2000/01

Summons 10
Liability Order 32.50

2006/07

Summons 32
Liability Order 25

2001/02

Summons 10
Liability Order 35

2011/12

Summons 70
Liability Order 0.00

2002/03

Summons 15
Liability Order 35

2013/14

Summons 60
Liability Order 0.00

Remarkably in 1998/99 there were no summons costs, suggesting that the Council deemed the
expenditure incurred in respect of that stage to be so insignificant that only debtors against
whom liability orders were obtained had costs added. After that the costs appear arbitrarily
split between the summons and liability order. The tendency to proportion costs in favour
of the summons is evident with weight shifting over time to the more frequently incurred
charge. In 2001/02 it was deemed only 22 per cent was incurred in respect of instituting the
complaint (summons) whilst the following year this had risen to 30 per cent, and in 2006/07
considered to account for over a half of the total costs of securing the liability order. Asserting
that it incurs the entire costs in respect of the summons enables the Council to obtain
maximum revenue.

6.

There must be an accounting for why costs, once weighted in respect of the court hearing and
having only a fifth attributed to instituting the complaint are all now incurred at that stage. A
regime change in administration is unlikely to have contributed as regulations relevant to the
application have gone unchanged over the period. The fee payable per entry on the complaint
list to the Magistrates Court accounts for a small change in composition. This was increased
by 2.30 in 2006/07 from 0.70 to 3 under the provision of the Magistrates' Courts Fees
Order 2005, which came into force on 10/01/06 and would account for the summons costs
rising by 2 in that year. The fee in respect of instituting the complaint has undergone no
further changes to the level by any subsequent amendments to the Court Fees Order.

Annex F
Summons cost calculation (2013/14)

Gross Collection and Recovery expenditure

A0191/
A1549
Council
Tax

A0187/
A1551
Debt
Recovery

A0184
Control
&
Monitoring

798,700

673,000

546,900

Total

2,018,600
-

Less recharges between cost centres that

results in duplication of cost

31,782

Estimated enforcement costs budget codes

LL103 13,600 summons multiplied by 3
Enforcement Costs - staff and overheads (see
debt recovery salaries tab)
Collection costs for taxpayers who pay before
summons issued (see calculation tab)

40,800

40,800

164,372

164,372

575,189

575,189

Estimate of Control and monitoring time on

non council tax summons activity (80%)

437,520

Debt recovery costs for NDR/Housing

Benefit/Sundry debtors (30%)
Gross Recoverable costs (including liability
orders)

140,348

191,730
24%

327,480
49%

Further work to liability order (estimate at 5%

of Gross Recoverable costs)
Gross Recoverable costs
Estimated number of summons requested in 2013/14, where costs applied
Cost per summons
Cost rounded to nearest

31,782

437,520

140,348

109,380
20%

628,589
31%

31,429
597,160
10,000
59.72
60

Council Tax activity levels

Collection
costs non
summons

Gross cost of Council Tax section

Less recharge from debt recovery
Adjusted gross cost

Collection
cost
summons

798,700
-

31,782
766,918

50% of activity on routine billing activity

383,459

383,459

50% of activity on reminders/final bills/queries

383,459

191,730

191,730

575,189

191,730

Estimated no of reminders/final for 2013/14

39,176

Estimated no of council tax summons

13,600

No of reminders not resulting in summons

25,576

48%

No. of calls arising from issue of each summons is at least twice as many as for reminders, therfore
Weighted number of summons

27,200

Adjusted total

52,776

52%

ESTIMATE THAT NON ROUTINE BILLING ACTIVITY IS SPLIT 50/50 BETWEEN

THOSE PAYING ON TIME AND THOSE PROCEEDING TO SUMMONS

Annex G
Impact on costs income Welfare reforms
1.

Costs have only ever increased, suggesting that measures have never been taken that would
improve efficiency and reduce incurred expenditure. This seems unlikely given the increasing
trend for authorities to share resources, outsource services and exploit the latest technology. It
would suggest too that volumes of bulk applications have remained constant. For example, if
volumes increased significantly, it would be reasonable to expect lower costs due to
economies of scale. The standard costs sought, that is, each defendants share of the total,
would require adjusting to ensure no profit was made. However, costs raised by the Council
increased by 67% in respect of figures obtained in 2013 compared with the same period in
2012. No adjustment was made to the standard costs sought, and the court continued to award
costs which were applied for.

2.

Changes to the benefit system are the likely cause for the significant increase in numbers
unable to meet council tax payments. Claimants, who before the reforms where exempt from
paying any council tax, had to pay 8.5% of their liability in the year subsequent to the
introduction because of reduced funding4. Incomes for these people must therefore have fallen
below levels which the government once deemed was a minimum amount needed to live on
frugally. Whatever is behind the soaring numbers, costs raised have escalated as the Council
has opted to seek court orders to enforce payment in those cases.

3.

In anticipation of there being an increase in summonses issued from when the benefit reforms
were implemented, data was obtained for the purpose of monitoring this. Costs raised for the
months May to August in 2012 (before the reforms) was 333,480, whilst for the same
months subsequent to the reforms the figure increased by around 67% to 556,220.

4.

Local Authorities can apply for costs which they have reasonably incurred to bring the matter
to court, rather than a sum being fixed in law. The procedure, for example, at both Leeds and
Grimsby Magistrates Courts is that the local authority writes to the court with the proposed

Councils were incentivised on the first year of the scheme with extra funding to limit this amount to 8.5%. Initially
councils were keen to take up the offer but funding was available for the first year only so there was no incentive to
limit payments after that. North East Lincolnshire Council was one of those councils that initially limited payments to
8.5%. It has since increased this so that claimants who were previously exempt now have to pay 25% of their liability.

reasonable charges and these charges are considered by the Justices Clerk and the Judicial
Leadership and Management Group. If the charges were considered unreasonable for the work
carried out then the Justices Clerk would express that opinion and would also advise the
Magistrates hearing the cases accordingly. The amount of costs awarded is at the discretion
of the Justices.
5.

The number of householders receiving council tax summons has substantially increased since
changes to the benefit system took effect in April 2013. Additional costs raised due to this
could not have been considered so inconsequential by the parties involved that they deemed
no preventative measures were necessary to mitigate the risk of exceeding incurred
expenditure.

6.

To ensure a surplus is not available to fund other expenditure, e.g. Council Tax
administration, the noticeably higher application volumes since the removal of council tax
benefit need to be met with the standard sum of costs substituted with a lower amount. This
follows the basic principle that the Councils incurred expenditure must be divided between a
greater number of defendants. To do as billing authorities have, i.e., continue having
Magistrates rubber stamp the same costs must have elevated income generated to levels
exceeding expenditure.

7.

It is on this principle (and evidence they are mindful of economies of scale) that some billing
authorities justify charging higher levels of costs for Non Domestic Rates cases than for
Council Tax. Far fewer summonses are issued for Non Domestic Rates which is the rationale
for why billing authorities that do make a distinction justify a higher charge. Reigate &
Banstead Borough Councils costs have been consistently higher for Non Domestic Rates than
Council Tax and in justifying the difference offers the following explanation:
....the basic differences are that there are two separate teams dealing with the issuing of
Council Tax and Non Domestic Rates summonses. As there are fewer Non Domestic
Rates summonses the cost per summons is greater than Council Tax.

8.

Once satisfied that the substantial increase in court applications were linked to the welfare
reforms, it was open for the Council to inform the Magistrates Court that it had experienced a
change in the number of summonses it was dealing with that required a reduction of the
standard costs. However, in light of the Councils negligence in notifying the court, it was
nevertheless the courts duty, on receiving the rising volume of complaints (and costs), to

inquire further to ensure sums claimed were lawful and en-masse applications were not
exploited for profit. Economies of scale and their effect on pro rata costs would be the most
obvious area to raise concerns, which if appropriately addressed would have required a
reduction in the standard costs (see above para 7, this Annex).
9.

It is well established that a decision whether to issue a summons pursuant to information laid
involves the exercise of a judicial function, and is not merely administrative: see R v
Brentford Justices ex parte Catlin [1975] QB 455. Lord Chief Justice, Lord Widgery, in
giving judgment, held that:
....before a summons or warrant is issued the information must be laid before a
magistrate and he must go through the judicial exercise of deciding whether a summons
or warrant ought to be issued or not. If a magistrate authorises the issue of a summons
without having applied his mind to the information then he is guilty of dereliction of
duty....

10.

Concerns about magistrates failing in their legal duty were brought to the fore in a national
news article: see Shes at the door: Britains first 1m bailiff

. More broadly, the Council

obtained (over a five year period) a total 3,528 liability orders for initial debt of 50 or less
despite being the Councils policy to only pass accounts for enforcement where the debt owed
was above 50. This, along with summonses containing incorrect and out of date information
issued on 3,361 accounts for a single hearing suggests a serious failure to follow due process.
Moreover, these anomalies make it difficult to accept that from the 1.13 million annually
(2011/12 Revenues budget), 100k+ is a credible figure for the expenditure incurred by the
Council in respect of monitoring liability order applications.

Sunday Times 13 November 2011 Debt collection on behalf of councils is booming as people are chased for as
little as 1p.A freedom of information request to North East Lincolnshire council revealed it issued 1,387 court orders
for debts of less than 25 between 2006 and 2011 including 82 for less than 10 and three for just one penny..

Annex H
North East Lincolnshire Councils 2010 budget consultation
1.

The public and interested groups were invited to participate in a budget consultation exercise
during November 2010 prior to the presentation to Cabinet of the 2011/12 draft budget and
medium term financial plan for the period 2011-2015. The process included an interactive
budget simulator on the councils website where respondents could move sliders to adjust
funding up or down and/or tick boxes to select the options according to their preference for
where savings could be made.

2.

An introductory explained that the council must save 29.7 million over the next four years.
This was the headline figure displayed on the Simulator and the sum after which selection of
the various money saving options would reduce correspondingly.

3.

The various budgets/saving options were split into groups, for example, the first category,
where we spend money allowed respondents to adjust spending by setting sliders to the
appropriate level. The second, how we can bring money in, offered two options to obtain
additional revenue, which respondents could apply by ticking the box of the relevant tab.

4.

One of the two proposals to bring money in was to Increase court costs for summons and
liability order for Council Tax and Business Rates debtors. Selecting read more from the
tab provided information necessary for the respondent to make an informed decision, as
follows:
Where a case of non-payment of Council Tax or Business Rates requires a court
summons the debtor is charged for summons issue (32 for Council Tax summons, 47
for Business Rates equivalent), then a further charge of 25 if a liability order is
obtained.
Latest national information shows that the average cost charged by other unitary
councils for Council Tax summons is 57, the average liability order cost is 21.
For Business Rates the average cost per summons is 81, liability order 35
Our charges for Liability Order are above average but this is outweighed by our low cost
of summons.
In 2009/10 11,700 Council Tax summons and 1100 Business Rates summons were
issued.

We could increase summons cost to 70 with no costs for liability order, bringing NELC
into line with similar Authorities across the country.
5.

It appears the Council justified its proposed increase based on the level other authorities
charged rather than on administrative costs that could be proved were additional. The cost of
issuing a summons only takes into account the administration involved meaning the amount
recharged to the defendant may not be manipulated to balance budgets in a way fees and
charges might. Neither is it justified to match other councils levels as there is nothing in
legislation to support an increase in either case.

6.

To assist the respondent make an informed decision, the potential disadvantages for bringing
in money in the suggested ways became available after selecting the option consequences on
the tab. In the case of increasing summons cost the information revealed was as follows:
Likely increase in complaints and may affect people who already have financial
difficulties (i.e. those who cant rather than wont pay).
However, the number of summons issued has reduced over the last 2 financial years due
the work that is being done to make more flexible arrangements with debtors at an early
stage.

7.

If the measure intended bringing in additional money then it must have relied on maintaining
the number of people summonsed at or around a certain level. However, the statement made
in the second paragraph (in mitigating the first) is in direct conflict with this idea because of
the effort put in to reducing the number of summonses issued. This would seem not only to
fail in its objective but bring about extra work for staff in respect of arranging/monitoring
payment plans and subsequently dealing with queries when arising.

8.

The drive to reduce summonses therefore brings about increased recovery expenditure for the
council. Ironically then, as the taxpayer who would have defaulted now benefits from having
payments rescheduled and avoids a summons, those costs are not recharged to the debtor who
faced difficulty and caused the work.

9.

Though undeniably better to have policy that prevents increasing the indebtedness of those
facing financial difficulty, it is another matter that the additional recovery expenditure must be
funded elsewhere. It would be consistent with how other administration is funded if absorbed
by the ratepayer in general, like for example staff processing housing benefit claims. If
however, the work is funded by the council claiming a greater level in court proceedings, then

those who are summonsed would incur costs that were increased to subsidise work assisting
others avoid court. As costs must be incurred in respect of the court application, and by virtue
of flexible arrangements, applications are not made in those cases, then none of this
expenditure is incurred in respect of any of the debtors who are summonsed6 (See 67, this
Annex).
10.

The Council presented a much lower estimate to the public than it did Cabinet in respect of
the additional revenue that increasing summons costs would generate.

11.

The annual figure put forward to Cabinet in respect of additional revenue was 188k, so in the
four year period the total equivalent budget saving was estimated at 752k, however, the
budget simulator indicated savings of 247k. It would have been reasonable to assume the
figure represented annual savings and so selecting the option would reflect a 988k reduction
on the Simulators counter. It would be feasible that an allowance, roughly 25%, had been
factored in for bad debt by the time members convened that accounted for the 752k put
forward to Cabinet and the implied 988k that the simulator indicated would be saved.

12.

The 247k figure was in fact the overall savings made over 4 years (not annually) according
to the simulator, confirmed by the balance reducing only by that amount after selecting the
option, i.e., from 29.7m to 29.453m. The 4 year savings presented to the public was
underestimated by more than half a million pounds than the more realistic figure put forward
to Cabinet.

In respect of this bad debt element it is evident that those incurring costs are subsidising the work done in respect of
the court action that is taken against those from whom costs are unrecoverable (see ref 3 in 91, main body of
representations)

Annex I
Costs set at levels for improper purposes
1.

The Regulations do not provide for the Council to impose costs for anything other than
covering reasonably incurred expenditure. There are however, costs reviews, publicly
available setting out how the Council has historically manipulated costs in order to generate
income to meet a number of different objectives.

Encouraging behaviour (deterrent / penalty)

2.

Comparing council tax costs with those similarly imposed for Business Ratepayers allows for
a clearer picture of how manipulating the level and/or composition has enabled doing so to act
as a penalty as well as generating additional income.
Council Tax / Business Rates costs raised per summons and liability order:

Council Tax
Summons

3.

Business Rates

Liability Order

Summons

Liability Order

2000/01

10

32.50

10

32.50

2001/02

10

35

30

35

2002/03

15

35

30

35

2004/05

30

25

45

25

2006/07

32

25

47

25

2011/12

70

70

A review in 2001/02 disclosed that if the Council were to follow the trend of other billing
authorities by charging more in respect of Non-Domestic Rates than for Council Tax, the
extra cost would encourage prompt payment. It was forecast that charging three times more
for what had been identical costs would also improve cash flow with the overall effects of the
review potentially generating additional income of 38k per annum. A report of the Director
of Finance to the Cabinet Committee (Review of Recovery Costs 6 April 2001), details at
paragraphs 4, 5 and 6, the relevant matter, as follows:
"4. The proposal would be to increase by 2.50 to 35, the amount charged for a
Liability Order for Council Tax debts. However, with regard to Non-Domestic Rates,

the Summons cost would rise from 10 to 30 in addition to the 2.50 extra for a
Liability Order.
5. The decision to charge more in respect of Non-Domestic Rates is one which other
local authorities are taking in increasing numbers. (There are two in this region
currently, Bradford and Sheffield.) The reasoning behind this is that it is believed
that some businesses deliberately delay payment of Rates as the penalty for late
payment is so small in comparison to the amount that might be owed. The extra cost
is seen as a way of encouraging prompt payment.
6. If the proposal is accepted, then based on the number of Summonses issued and
Liability Orders obtained in the current year, an extra 38,000 of additional cost
income would be generated bringing the total to approximately 390,000.
4.

The cost of issuing a summons should only take into account the administration involved and
not a deterrent element, as there is nothing in the legislation to support an increase in costs
on this basis. Whether it was an effective measure to improve cash flow was immaterial
because regulations make no provision that a penalty may be imposed. The law only provides
for the Council to claim costs which have been reasonably incurred.
Resolve issues caused by IT system failures

5.

The 2002/03 increase was detailed in a report to the Cabinet Committee identifying ways of
funding additional resources to ensure the backlog of work that had arisen due to changes in
the IT system were addressed. Recommendations were that the Council Tax summons cost be
increased by 50% with immediate effect. The forecasted additional revenue would easily
produce the 30k per annum that had been costed to pay for additional staff. The Director of
Finances report (Revenues and Benefits Service Staffing Issues 8 November 2002), details
the relevant matter, as follows:

SUMMARY

The report identifies ways of funding additional

resources to ensure the backlog of work that has
arisen due to changes in the IT system are
addressed.

RECOMMENDATIONS:

That Cabinet consider the following recommendations:

.....

that the Council Tax establishment is increased by two members

of staff.

that the Council Tax summons cost be increased from 10 to 15

with immediate effect.

........
14.

6.

As far as Council Tax administration is concerned it is suggested

that, as an interim measure pending the full review of the
establishment as agreed within the Best Value Review process, two
additional staff be employed. These additional staff will not only
assist in the clearing of the backlog of work but also in maintaining
the day to day work at an acceptable level in order to improve the
current level of recovery being achieved. The additional costs of
these staff can be met by an increase in the level of summons costs
from 10 to 15. This increase would produce additional income in
excess of 30,000.

The Council seems to have used liability order applications as an instrument to manipulate
income generated by the authority for purposes other than meeting costs incurred exclusively
for the work attributable to instituting the complaint. The report implied that the Council
could rely on at least 6,000 residents being caught per annum with a Summons thus raising in
excess of the additional 30,000 required to fund two extra staff to clear the backlog of work
caused by IT complications.

7.

Aside from inappropriately increasing costs to fund additional staff to clear the backlog, the
figure upon which the calculation was based misrepresented the average and if based on a
typical number of summons served each year would have required only half the increase to
fund two proposed members of staff. The number summonsed based on the subsequent three
years average was 12,277 not 6,000 meaning the increase had the potential to fund in excess
of four staff which was more than twice the proposed resources.
Council Tax costs raised per summons, number and total raised
Costs

No of Summonses

Summons costs raised

2001/02

10

11,465

114,650

2002/03

15

6,140

92,100

8.

2003/04

15

10,632

159,480

2004/05

30

13,995

419,850

2005/06

30

12,205

366,150

There is no recorded information to justify the summons costs doubling to 30 in 2004/05, but
to put it into context, the 260,370 raised additional to the previous year would be sufficient
to fund an additional seventeen staff members, based on the previous employment costing.
Budget savings / alternative to charging for non statutory services

9.

The public and interested groups were invited to participate in a budget consultation exercise
during November 2010 prior to the presentation to Cabinet of the 2011/12 draft budget and
medium term financial plan for the period 2011-2015. The process included an interactive
budget simulator on the councils website where respondents could move sliders to adjust
funding up or down and/or tick boxes to select the options according to their preference for
where savings could be made.

10.

An introductory explained that the council must save 29.7 million over the next four years.
This was the headline figure displayed on the Simulator and the sum after which selection of
the various money saving options would reduce correspondingly. The question whether the
consultation was conducted properly (in a fair way for example) is not the focus; but rather
that the level of court costs and the manner in which they were applied should never have
been open for public consultation. The costs incurred by the Council in respect of issuing a
summons had either increased by 120% or they hadnt and therefore not appropriate that the
public were asked for its opinion. To determine the level of expenditure on the strength of a
ballot is a concept alien to normal accounting practices and incompatible with legislative
provisions which restrict costs in respect of instituting the summons to the authoritys
reasonably incurred costs.

11.

The Council forecasted that it could raise an additional 0.752 million in costs income over
the relevant four year period by increasing the overall court costs and front loading all the
charge in respect of instituting the complaint. This was the preferred measure over alternative
proposals to introduce a charge for replacement bins or garden waste collections in a sub
category of the overall possible ways it could save or increase income to meet its 29.7
million target.

12.

The information made available to potential respondents did not go far beyond setting out the
current arrangement for applying costs and the proposed changes. Statistics were provided
relating to the number of summonses issued in 2009/10 and a comparison with other billing
authorities with respect to the level etc. Other than that it was suggested there would be a
likely increase in complaints as a consequence of increasing the costs and may affect people
who already have financial difficulties.

13.

The Council therefore justified its proposed increase based on the level other authorities
charged rather than on administrative costs that could be proved were additional. The cost of
issuing a summons only takes into account the court fee and the administration involved so
the amount recharged to the defendant may not be manipulated to balance budgets in a way
fees and charges might. Neither is it justified to match other councils levels as there is
nothing in legislation to support an increase in either case.

14.

Even if costings were provided and respondents told that charges would be front loaded they
still lacked knowledge to make properly informed decisions on whether the proposals were
lawful unless they had legal background to interpret the Regulations. That also goes for
council members who agreed the proposal on account of the publics preference to increase
the costs.

15.

The outcome of the consultation is recorded in a budget report dated 14.2.11 with the matter
relevant to the appeal under the heading Income Generation documented at paragraph 1.52,
so far as is relevant, as follows:
In relation to proposed areas for charging to be introduced [out of 242 respondents], 81
per cent favoured increased charges for summonses compared to 57 per cent who
supported charging for replacement bins or garden waste collections. Only 15 per cent
were not in favour of any charges being introduced.
In a later email (26.5.11) it was further confirmed by the Council that the consultation
influenced its decision to make the proposed changes in the following statement:
The decision to increase the summons charge and make no subsequent charge for a
liability order was agreed by members following public consultation in relation to the
budget proposals.

16.

Clearly increasing costs in order to plug a gap in its finances had no legal basis, just like there
was no statutory power to set them disproportionately high for the purposes of offsetting
expenditure for waste services. The public were able to influence the level of court costs, and

probably elected the increase to avoid paying additional for services. The Council had acted
for an improper purpose by increasing summons costs on account of the majority of
respondents preferring to raise additional money this way over introducing charges for waste
services.
17.

It was wrong in law to increase costs based on criteria other than by reference to an increase in
the Councils incurred expenditure. Though indicative of the Council functioning
democratically, the publics preference was not, in the context of the law, a relevant factor to
be considered. The statutory power which provides for reasonably incurred costs, by
definition, renders the determining of them by a democratic process unlawful.

Annex J
Council Tax Recovery Complaint
1.

On the 13 May, 2013 the Defendant contacted the LGO (Ref: 13 002 919) in connection
with issues he had with the Council. The complaint concerned a sum for which the
council had a liability order relating to the 2012-13 tax year (as relates to the present
complaint). This sum had been consolidated with the liability relating to the 2013-14 tax
year and the cause of reminder letters etc. being sent for non-payment when in fact
payments were up to date.

2.

Monies were eventually re-allocated so the account no longer in default and the threat of
court / recovery action ceased. However, the outstanding sum relating to 2012-13
continued to be part of the total outstanding liability (and still is) and the allocation
issues never addressed.

3.

This has led to another occurrence which more seriously resulted in a summons being
served for non-payment, when again, payments were up to date.
The complaint

4.

A reminder notice was sent dated 13 October 2014, the cause thought to be because an
instalment payment was made in two separate transactions (Council Tax processing
systems appear to be programmed so that when transactions dont match exactly the
instalment sum they allocate monies to the oldest account).

5.

The Defendant emailed the Council on 16th October (the day he received the reminder)
explaining what was likely to be the error and asked that they reallocate payment to the
current year's account and if there was another reason for the anomaly that they explain.

6.

Other than an automated acknowledgement stating that the Council aimed to respond
within 10 working days it never did. Neither did it appear from viewing the account
balance on the Councils website that they'd addressed the issue and re-allocated funds.

7.

It was noticed from viewing the account balance on the councils website on 10
November 2014 that it had increased by 60. This amount is the Council's standard
summons costs, so it was reasonably assumed that the query (16 October) had not been

looked into and the summons sent without any checks made to see if it had legitimate
reason for instituting court action.
8.

On 10 November the Defendant emailed a second time informing the Council that if it
had made complaint to the Magistrates' court, it had done so unlawfully and was
evidence of maladministration, more so, given that the Council negligently failed to
address the first email.

9.

It was made known that if that query was similarly ignored and the concerns not
remedied it would be reported to the police as attempted fraud.

10.

The Council did not respond and so on the 11 November 2014 the incident reported to
the police via the website Action Fraud.

11.

A summons arrived in the post on 12 November 2014 which meant the Defendant
suspected correctly that the 60 added to his account on 10 November was the costs it
added in respect of issuing the summons. The hearing date was 28 November.

12.

The Council responded 27 days after it was contacted (12 November 2014) simply
stating that the payments had been reallocated, there was no longer need to go to court,
the costs had been removed and the summons withdrawn.

13.

The seriousness of these events can not be overstated as it proves not only that the
authority fraudulently added the costs, but it has no way of justifying that sum had been
reasonably incurred. The proceedings have been instituted solely on account of its
computer system. There had been no cost to the Council other than the 3 for the
Magistrates court fee and a few pence for its discounted postal service.
Note:

14.

The council obviously makes no checks before instituting court action and can have no
legitimate claim regarding such expenditure. If checks were made it would have been
discovered that the payment default was caused by a glitch in its council tax software.
This has previously been spelt out to the Council (LGO, re: 13 002 919) and clearly no
lessons have been learned.

15.

It should not be overlooked that included in the amount demanded on the summons was
a sum of 60 from a previous tax year (2012-13) for which an order had been granted.

In other words, the Council had made complaint to the court to obtain a liability order
permitting enforcement of the same sum it was already authorised to enforce.
Apparent flaws in Council Tax processing systems
16.

Where a council taxpayer owes money for past years as well as the current year, a
billing authority is legally obliged to assign payment to the years debt that the person
specifies, and his election may either be expressed, or may be inferred from the
circumstances of the transaction.

17.

The shift toward automation has inevitably prompted billing authorities to find ways of
complying with the law, but with the minimum amount of staff input. With respect to
payment allocation for different years accounts, processing systems are set to do this
when transaction amounts match the parameters setting. Reliance on exact sums
matching for correct allocation has its obvious limitations, as inevitably payments for
various reasons will not always be made in the exact manner that the system requires to
function correctly.

18.

When a council taxpayer has more than one account with an outstanding balance and a
payment is made which doesn't exactly match an instalment amount then the system
automatically allocates payment to the oldest debt. A taxpayer, making such a payment,
and believing his current years account was up to date would then be unaware of why
the inevitable recovery action triggered by the misallocated monies had commenced.

19.

The billing authority would no doubt be satisfied that the allocation complied with the
law because it considered the preference of the account was expressed by virtue of the
transaction not matching exactly the instalment amount.

20.

That would of course not be true because it is held by the relevant case law that the
election may either be expressed or may be inferred from the circumstances of the
transaction. It is only rational that a person indebted on two separate accounts would
intend payment to be made against the current year if failing to would also subject that
account to default. Knowing a council may then withdraw instalments and demand the
whole balance immediately with further risk of being charged summons costs, these
consequences would be sufficient to infer that it was the intended account.

21.

It is not a legitimate argument (not for the Council at least) that misallocated payments
may be reallocated if brought to the Councils attention. As detailed earlier, the Council

was alerted that a reminder had been wrongly sent and wasnt until 27 days had elapsed
(in which time it had begun court proceedings) that it responded by reversing the effects
of the error.
Adding costs in anticipation of the court awarding them
22.

Notwithstanding that the summons was applied for erroneously, the Council added the
summons costs before the date that was set for the court hearing (even before the
summons had been served). It is reasonable to assume that this was not a one-off and is
normal practice even where the council is lawfully entitled to pursue recovery through
the court.

23.

It is the Magistrates' decision to agree the level of expenditure incurred by the Council
at the liability order hearing and only when the order has been granted would the
council be justified in stating an amount, with respect to costs, is recoverable. The law
does not provide that costs may be awarded by the Magistrates' court on applying for the
summons. The application is merely to request that a summons is issued to the person
for a court hearing as per regulation 34(2) of the Regulations.
Prohibit cumulative court costs from the council tax account

24.

It is evident from the unacceptable gross injustice caused by these actions that it is
wholly inappropriate for costs awarded in the court (a distinct matter from council tax)
to be applied to the debtors council tax account.

25.

The failure to treat monies separately has contributed significantly to the gross injustice
that has protracted over a period approaching three years. It is likely, given that these
procedures rely on automation, that if the Council continues treating court costs as part
of the council tax, a similar situation will recur.

26.

It should be added that as well as the difficulty experienced with resolving these matters
(both with the Council and the court), the injustice has been compounded by the Council
refusing to remove the disputed costs from the Defendants account whilst at the same
time threatening to enforce the sum, though not having made a decision how it would do
so. A letter dated 8 February 2013 sent by the councils Local Taxation & Benefits
Shared Service Manager states as far as is relevant, as follows:
Thank you for your e mail of 6th February [2013]

I am not prepared to apply to the Magistrates Court to quash the liability order
obtained on 2nd November 2012. The liability order was correctly obtained for the
outstanding balance due at that time.
No decision has been taken at the present time regarding further action to enforce
the debt

27.

In a letter sent to the Local Taxation & Benefits Shared Service Manager on 21 May
2013, the Defendant specifically requested that the sum outstanding on the liability
order is considered as a separate balance at all times to avoid issues reoccurring. It is a
reasonable assumption that with the situation unaltered approaching three years and the
numerous difficulties caused with the sum remaining on the Defendants account that
the Council is out to cause him the maximum amount of gross inconvenience it is
capable of.

Dated this 1st day of October 2015

Signed:

The Defendant