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IN THE MATTER OF COMPLAINT TO THE
LOCAL GOVERNMENT OMBUDSMAN UNDER
THE PROVISION OF PART III OF THE LOCAL
GOVERNMENT ACT 1974
21 January 2016
(postponed from January 2015)
COMPLAINT AGAINST
NORTH EAST LINCOLNSHIRE COUNCIL
Supporting documents (SD) listed below are in the order first referred to in this complaint. It is important that all are to hand, and a copy requested in the case of any missing document:
LIST OF SUPPORTING DOCUMENTS (SD) (in order of occurrence in complaint)
No # DATE DESCRIPTION FILE NAME
1 19 July 2013 Bailiff fee fraud allegations (FOI data redemption fees)
FOI data 19 July 2013.pdf
2 24 July 2013 Bailiff fee fraud allegations (FOI data vehicle fees) FOI data 24 July 2013.pdf
3 15 Mar 2014 Formal Complaint Formal Complaint 15 March 14.pdf
4 14 July 2014 Formal Complaint (supplementary letter) Formal Complaint 15 March (14 July) 14.pdf
5 15 Sept 2014 Councils Final Decision to formal complaint Council response 15 Sept 2014.pdf
6 June 2013 Guidance to local councils on good practice in the collection of Council Tax arrears
Guidance on enforcement of CT arrears.pdf
7 22 Apr 2014 Request for certificate of refusal to state a case for an appeal to the high court Cert - refusal to state case 22 April 2014.pdf
8 Various Letters to head of revenues /Auditor/ evidence for Magistrates court between 16 September 17 October 2012 reference: NG/CTR/12912
Evidence 16 Sept 17 Oct 2012.pdf
1
9 22 Nov 2012 Application to state a case for an appeal to the high court
Application to appeal to high court.pdf
10
Chronology of events (case bundle draft document high court application)
Chronology draft.pdf
11 8 Feb 2013 Refusal to apply to have court order quashed 20130208 NELC.pdf
12 14 Feb 2013 Disputing order was correctly obtained T S & L Order Feb 14 2013.pdf
13 28 July 2014 Formal Complaint (escalate to final stage) Formal Complaint 15 March (28 July) 14.doc
14 21 Feb 2011 Explanatory Memorandum to The Council Tax and Non-Domestic Rating (Amendment) (Wales) Regulations 2011
Explanatory Memorandum Regulations 2011.pdf
15 17 Feb 2014 Review court costs to mitigate risk of exceeding expenditure and being legally challenged
Review of Council Tax court costs.pdf
16
Leicester City Councils court costs calculation 2011-12
Costs calc 2011 12 Leicester.xls
17 April 09/10 South Gloucestershire Councils costs calculation 2009 and 2010
SGC cost calculation 09 and 10.TIF
18 Great Yarmouth Borough Councils costs Calculation 2014-15
Court Costs increase 2014 15.xls
19 5 Sept 2013 Business Rates summons fraud Business Rates summons fraud 05 Sept 2013.pdf
20 19 Aug 2013 Draft case stated for appeal to the high court and Representations made on the case
Case stated Draft representation.pdf
21 20 Sept 2012 Refusal to correspond further 20120920 NELC.pdf
22
Grounds of appeal (case bundle draft document high court application)
Grounds of appeal.pdf
23
Consent Order (case bundle draft document high court application)
Consent order.pdf
24
Skeleton Argument (case bundle draft document high court application)
Skeleton Argument draft.pdf
25 6 May 2015 High court Judgment in the matter of an appeal of Council Tax court summons costs
R (on the application of Reverend Nicolson) v Tottenham Magistrates.doc
26 2 Sept 2014 Complaint to Advisory Committee (Magistrates / Justices Clerks conduct)
Judicial complaint 2 Sept 2014.pdf
2
Table of Contents
Introduction.......................................................................................................
Matters subject / not subject to investigation.................................................... Twelve months time limit................................................................................
Achieving the desired outcome.......................................................................
What do you think the body did wrong?........................................................
Chronology of events....................................................................................
Matters immaterial to complaint investigated...................................................
Final Decision contention I............................................................................
Final Decision contention II...........................................................................
Increase / front load costs to raise additional 188k per annum.................
Additional 38,000 per annum cost income..............................................
Hike in summons to fund additional staff..................................................
Final Decision contention III..........................................................................
Auditors involvement.............................................................................
Case study into local authorities court costs............................................
Leicester City Council.........................................................................
South Gloucestershire Council.........................................................
Great Yarmouth Borough Council.....................................................
Final Decision contention IV..........................................................................
Magistrates courts Dereliction of duty.....................................................
Summarising what the council did wrong........................................................
Summarising how the 70 Summons costs claim was unjustified.....................
How has this affected you?............................................................................
What do you think the body should do to put things right?.........................
Annex A (Letter to Magistrates Court) ...........................................................
3
4
5
6
7
7
9
10
11
17
19
20
22
23
27
27
28
29
30
32
37
38
40
41
44
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Annex B (Article August 9, 2013).................................................................... Annex C (Article June 27, 2013).................................................................... Annex D (Article October 1, 2013)................................................................. Annex E Supplementary Complaint (Summons sent in error) ....................... Annex F High Court ruling unlawful costs in Council Tax court hearings....
49
51
53
56
61
Introduction
1. This is a complaint under the provision of Part III of the Local Government Act 1974 (the Act) against North East Lincolnshire Council (NELC) being an Authority subject to investigation pursuant to section 25 of the Act.
2. The concerns raised in this complaint are matters of general public importance including issues concerning the Ministry of Justice, for which the LGO has no direct jurisdiction. It is therefore suggested that the main body of the complaint and the matter of the Magistrates court perverting the course of justice are jointly investigated in conjunction with the Parliamentary Ombudsman under powers granted by 2007 Regulatory Reform legislation 1.
3. Another related matter which is outside the scope of this complaint concerns the spurious bailiff fees charged by NELCs enforcement contractor (See article Annex B). The aggregate value of fees 2 of around a third of a million pounds was found to be added fraudulently to householders council tax accounts with respect to vehicle attendances and for returning goods which had never been removed from premises in the first place. Data obtained through Freedom of Information covering a six year period from 2007/08 confirms these allegations.
1 The Regulatory Reform (Collaboration etc. between Ombudsmen) Order 2007, under powers granted by the
Regulatory Reform Act 2001 empowers the Parliamentary Ombudsman and LGO to conduct joint investigations, thus enabling both organisations to work together collaboratively to address the issues raised by the complainant. 2 Evidence sent to Humberside Police in letters 19 and 24 July 2013 See SD #1 and #2
4
4. It is therefore suggested that the sample material provided is evaluated, and if found through preliminary investigations to suggest there has been large scale fraud, then the matter be referred to the Serious Fraud Office.
5. The main body of the complaint surrounds matters raised in a formal complaint3 which were not properly investigated by NELC as the Final Decision 4 revealed. It was evident that the matters, which concerned Council Tax summons costs, were either not understood or there was deliberate intent to obfuscate the salient points to focus on irrelevancies for example, defending its own actions of following correct procedures but were nonetheless irrelevant to the concerns raised.
6. NELC focussed its investigation on the statutory notices and determined that they had been served in accordance with the Department for Communities and Local Governments good practice guide 5 (the Guidance). This however, was wholly irrelevant to the complaint. Some aspects of the complaint were addressed but only in terms of the authoritys Collection and Recovery expenditure, rather than the specific concerns of the complaint which were the application of costs with respect to the
regulations.
7. There were inconsistencies in how NELC viewed the relevance of the Guidance. On one hand it used its contents as the entire basis for supporting its decision not to uphold the complaint, whilst on the other, dismissing the validity of the paragraph referring to reasonable costs claimed in any individual case 6.
Matters subject / not subject to investigation (S 26(6) / Schedule 5 of the Act).
8. In order that it be made clear, the dispute has its roots predominantly in NELCs application (and level) of costs with respect to Council Tax recovery as are provided for in regulation 34 of the Council Tax (Administration and Enforcement) Regulation 1992 (the Regulations).
9. Although these costs are applied on issue of the summons the amount stated is merely to
3 Formal Complaint 15 March and supplementary 27 July 2014 SD #3 and #4
4 Council response 15th Sept 2014 (Final) SD #5
5 Guidance to local councils on good practice in the collection of Council Tax arrears SD #6
6 3.4 of the Guidance (SD #6)
5
inform the debtor what sum will be asked for if the case proceeds to court. They are therefore not subject to the courts powers until such time when NELC (if necessary) applies for a Liability Order on the day the hearing is scheduled and an order granted by the court (See below, 114117).
10. Schedule 5 of the Act would therefore not render the complaint invalid to be considered for investigation; it is not strictly a complaint about the commencement of court action or what happened in court. Rather the complaint surrounds costs which NELC claim to be reasonably incurred and which it publishes as standard on its website and quotes on reminder notices etc.
11. Nevertheless, the gross inconvenience caused by NELCs error in this particular matter has prolonged for over three years, as of January 2015. In theory there has been a remedy by way of proceedings available in the high court which is an avenue that has been pursued (this complaint, 2426). However, due to unknown reasons, the Magistrates court is obstructing proceedings by both failing to produce the case stated and respond to a request 7 for a certificate of refusal.
12. Although I am pursuing the available remedy, and have never withdrawn my appeal, it is reasonable that the Ombudsman would consider the matter out of my control, and for practical purposes deem that resolve via the High Court is not a reasonable alternative to the LGOs involvement. Section 26(6) of the Act provides that the Ombudsman may decide to investigate a complaint under these circumstances.
Twelve months Time limit (Section 26(4) of the Act)
13. Section 26(4) of the Act provides that a complaint shall not be considered unless it is made within twelve months from the day the matters alleged in the complaint were known about. However, the Ombudsman has discretion to conduct an investigation if he considers that it is reasonable to do so.
14. This complaint was all set for submission in January 2015 but delayed in order to tie-up the high court appeal papers which were in various stages of completeness. It was
delayed further due to another case (judicial review) with significant relevance to
7 Letter requesting Justices produce certificate of refusal to state a case for an appeal to the high court SD #7
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matters raised in my appeal being determined8 the claimant was successful in contesting the decision of justices to make an award of costs in favour of the council. The papers were therefore updated to reflect the judgment in that case. Additionally, a significant amount of work has been necessary to prepare detailed representations to defend a liability order application made by NELC in September 2015 which is the third occasion9 recovery has been brought about because of misallocated payment to the disputed and unresolved sum from November 2012.
15. The matter alleged in the complaint could legitimately be considered to be NELCs handling of the concerns which had not been investigated with due consideration of the grounds submitted in the formal complaint. The Final Decision was dated 15 September 2014 and had this complaint been submitted as intended in January 2015, would on that basis have been within the 12 months time limit, however, delays have pushed that to around 18 months.
16. Though the completion of this complaint has exceeded 12 months time limit, the matters alleged herein have recurred, never been properly addressed and continue. The most recent being the fraudulent application to the court in September 2015 which is likely to involve bailiff recovery and enforcement fees on top of additional court costs. These new issues occurring and relevant information becoming available requiring the need to update the complaint has meant the necessary delay in submitting these concerns. Considering this, it would be reasonable that the Ombudsman use discretion, especially when the delay is a direct result of Grimsby Magistrates court and NELC failing to cooperate.
Achieving the desired outcome
17. There appears to be many investigations closed after initial enquiries that are attributable to the Ombudsmans belief that the outcome the complainant wants is unachievable. See further, 165 174.
8 Annex F of this complaint R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin)
9 This matter is currently the subject of a formal complaint; details will therefore not be included here other than
to briefly outline the issue. The matter concerns NELC wilfully making a statement material in court proceedings which it knew not to be true. The statement claimed that the High Court appeal had been withdrawn, knowing it had not, to mislead the court that it was justified in misallocating payment to the disputed sum, thus engineering default for the current year enabling a further court application and attaching another claim of costs.
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What do you think the body did wrong?
Chronology of events
18. The complaint arises from the billing authority sending out a Council Tax reminder dated 12 September 2012 leading to a summons 10 being served on 17 October 2012 to appear before the Magistrates Court on 2 November 2012 to answer the said complaint. The summons stated alternatively that all further proceedings would be stopped if the amount outstanding including summons costs was paid before the date of the hearing.
19. Payment was made on 17 October 2012 which included the outstanding Council Tax liability and an amount (10) in respect of reasonable costs incurred. The amount disputed as being reasonably incurred by the billing authority in respect of instituting the summons was 70; hence the sum of 60 would probably have been considered a shortfall by the authority.
20. The authority was notified by letter 11 and sought whether it would proceed to obtain a court order to enable enforcement of the element of costs which the council may have considered unpaid.
21. On 17 October 2012 the billing authority acknowledged receipt of the letter, and advised that it had been forwarded to its Court Enforcement Officers to deal with. There was no further response in relation to the issues raised so assumed it would proceed to obtain a liability order.
22. On 26 October 2012 the Magistrates Court was notified 12 that the liability had been settled and advised that unless the application for a liability order was withdrawn the complaint would be defended at the hearing of 2 November 2012. A summary accompanied the letter to support several documents asserting that the sum sought by the billing authority was an unreasonable claim for costs.
23. The complaint was heard in the Magistrates Court on 2 November where the bench granted a liability order for 60 which was the sum that remained outstanding of the 70
10 Evidence 16 Sept 17 Oct 2012 (letter 1 October 2012) SD #8
11 Evidence 16 Sept 17 Oct 2012 (letter 17 October 2012) SD #8
12 Annex A of this complaint (letter 26 October 2012)
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costs which the billing authority claimed it incurred.
24. The Magistrates Court was contacted on 5 November 2012 expressing the wish to appeal the courts decision to grant the order. It then advised that a Liability Order could only be challenged by an appeal to the High Court by way of either a case stated on a point of law or a judicial review.
25. An application to state a case for an appeal to the high court (see SD #9) was served on both parties, that is, the billing authority and Magistrates' Court on 22 November 2012.
26. I will not elaborate further regarding the application to the high court other than to say that despite a second application (judicial review) for mandatory order, the case stated has still not been delivered. The justices' clerk also refuses to respond to communications regarding the case. Further details can be found in the attached chronology of events document (SD #10).
27. The council was contacted on 6 February 2013 to suggest as an alternative remedy for it to apply for the order to be quashed. The council replied on 8 February stating it was not prepared to do this as it was correctly obtained (SD #11).
28. This was disputed in a letter dated 14 February 2013 (SD #12), on the grounds that the application should have ceased when the aggregate of the sum outstanding and an amount equal to the costs reasonably incurred by the authority was paid.
29. A complaint was submitted to the council 15 March 2014 (SD #3) regarding my Council Tax demand (bill) listing a sum of 60 as being subject to court proceedings. The purpose of the complaint was to have the council remove this sum from my account.
The letter went into some detail as to why there were procedural errors regarding applying costs in obtaining the Liability Order and that the costs could not have been reasonably incurred to the level it imposed.
30. There was a dispute regarding the person nominated by the council to investigate the complaint and so shelved until a supplementary complaint letter was submitted 14 July 2014 (SD #4).
31. The letter of the 14th provided further evidence as to the procedural errors. Additionally there was an analysis of a calculation that the council produced to support its costs. The
9
calculation provided evidence that expenditure had been included in its 70 standard costs which had no basis in law with regards to instituting the summons.
32. The council provided a response which was deemed unsatisfactory and so a request to escalate the complaint to second (final) stage submitted on 28 July 2014 (SD #13).
33. The Final Decision dated 15 September 2014 (SD #5) was not upheld. However, the complaint had not been investigated with due consideration of the grounds that
were submitted.
Matters immaterial to complaint investigated
34. It is fair to say that the council, in concluding that the complaint was unfounded, sought to justify its actions by inappropriately focussing its investigation on whether it had correctly served statutory notices leading up to obtaining the Liability Order. However, whether the notices (reminder, summons etc.) had been served in accordance with the Council Tax Regulations was not the concern raised in the complaint. The issues were raised specifically with reference to costs levels and their application.
35. It was demonstrated that councils are not allowed free rein to elect which budgets they cover with court costs. For example, the regulations do not allow councils to cover, or aim to cover their gross collection and recovery expenditure, but make provision only for costs that they reasonably incur. Defining boundaries confine these costs still further to include only expenditure incurred by the authority in obtaining the order, therefore not to include ongoing costs of maintaining and monitoring payment plans etc.
36. It was further demonstrated that in cases where, after receiving a summons, the debtor elected (or made a proposal) to pay the outstanding debt before the hearing under which circumstances the application would not proceed the boundaries were confined still further to include only costs incurred in connection with instituting the summons. Similarly as per the previous paragraph it is not legitimate to include costs of setting up and monitoring payment plans etc., where payment is by agreement under regulation 21(5) of the regulations (see below 106110).
Note: Regulation 21(5) makes provision for re-scheduling payments. In such cases, a debtor may, if the agreement is kept, escape incurring summons costs.
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37. The Final Decision provides no evidence that the investigation seriously considered concerns about how costs were applied or the level with respect to the law. However, some related matters were briefly mentioned in the report's finding so I will highlight and comment on them here.
Note: Nothing other than that mentioned below (Contention I to IV) had relevance to the complaint.
Final Decision contention I
38. The Investigating Officer states in her Final Decision:
"It is Mr Xxxxx's belief that North East Lincolnshire Council is obliged to calculate the level of costs incurred in individual cases who exercise their legal right to challenge them. The Council Tax (Administration and Enforcement) Regulation 1992 (The Regulations) allow the Council to make an order in respect of a sum of an amount equal to the costs reasonably incurred in obtaining the order, the regulations do not specify what expenditure may or may not be included within the level of cost charged to the non-payer."
39. NELC provides clear evidence that it has not understood the key issues surrounding the complaint with regards the law providing court costs at two stages. The procedure is clarified in an Explanatory Memorandum prepared by the Local Government Finance Division of the Welsh Assembly Government (See 4.24.5 of SD #14) under the heading Summons/ Liability Order (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
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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.
40. The opportunity arises for the council 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.
41. The costs which are the subject of my complaint relate only to those initially applied in respect of instituting the summons (34(5)(b)). The council fails to recognise this as emphasis is on the regulations providing for an order in respect of a sum of an amount equal to the costs reasonably incurred in obtaining the order (34(7)(b)). This is a fundamental misunderstanding of the issues which are that costs in respect of obtaining the order are front loaded to those in respect of instituting the summons, i.e., in breach of the regulations.
42. The council has only loosely got it right by stating that the regulations do not specify what expenditure may or may not be included within the level of cost. As has been detailed briefly here already, the regulations do in fact define boundaries confining these costs. It has also been proved, with the assistance of the council's supporting calculations, that expenditure outside these confines is inappropriately included.
Final Decision contention II
43. The Investigating Officer states in her Final Decision with reference to NELCs 17 February 2014 Cabinet report (SD #15):
"The Cabinet report from 17/2/14 explains that it is not practical to calculate the level of costs incurred in each individual case and therefore a reasonable estimate must be made of the total of such costs, divided by the estimated number of applications to be made for a summons. The Regulations do not place any statutory requirement on the Council to calculate the costs on an individual basis."
44. Again the focus has been on total expenditure with no consideration for the law and its provision for applying appropriate incurred cost at relevant stages of proceedings. The authority cannot lawfully disregard the Regulations to justify streamlining operations. It
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is fundamentally misunderstanding the Regulations to state that they do not place any statutory requirement on the Council to calculate the costs on an individual basis
45. It is open to those against whom the council proceeds, to challenge the application in their individual cases. Therefore, the authority should at least where representation is made about the costs and where liability is straightforwardly settled be able to determine the appropriate expenditure incurred to ensure that its customers are treated lawfully.
46. The Guidance states 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 there is in fact provision made for individual costs under regulation 35 of the Regulations (Liability orders: further provision).
47. The Court would require satisfying on an individual basis, not for any arbitrary reason, but specifically because an individual sought to challenge the costs, and because regulation 35(1) provides that (as well as a bulk order) a single liability order may deal with one person and one amount. Therefore, in the face of such a challenge, the Court would require satisfying that the amount claimed by way of costs in that particular case would be no more than that reasonably incurred by the authority. This is why the law provides that a single liability order may deal with one person and amount in which case the order shall be in the form specified as Form A in Schedule 2. However, a form distinct from that specified as Form B, may if the court thinks fit, deal with more than one person and amount.
48. The relevant part of regulation 35 follows. Below that are the relevant Schedule 2 forms (Form A and Form B)13:
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) (in which case the order shall be in the form specified as Form A in Schedule 2, or a form to the like effect), or, if the court thinks fit, may deal with more than one
13 Regulation 35 was amended by SI 2003/2211 and the the forms A and B de-prescribed. However, the
provision for a Liability Order to deal either with a single person or more than one person was not affected by the amendment. According to an explanatory note, the forms were de-prescribe to make way for a new set of forms to be used in Magistrates' Courts that all had a consistent style.
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person and more than one such amount (in which case the order shall be in the form specified as Form B in that Schedule, or a form to the like effect).
(2)......
FORM A Regulation 34 of the Council Tax (Administration and Enforcement)
Regulations 1992 LIABILITY ORDER IN RESPECT OF COUNCIL TAX
.....Magistrates Court
Date: Defendant: Address:
On the complaint of [name of billing authority] that the sum of [ ] is due from the defendant to the complainant under Part V of the Council Tax (Administration and Enforcement) Regulations 1992 and is outstanding, it is adjudged that the defendant is liable to pay the aggregate amount specified below, and it is ordered that that amount may be enforced in the manner mentioned in Part VI of those regulations accordingly.
Sum payable and outstanding: Costs of complainant:
Aggregate amount in respect of which the liability order is made:
Justice of the Peace [or by order of the Court Clerk of the Court]
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FORM B Regulation 34 of the Council Tax (Administration and Enforcement)
Regulations 1992 LIABILITY ORDER IN RESPECT OF COUNCIL TAX
.....Magistrates Court
Date:
On the complaint of [name of billing authority] that the sums specified in the Table below are due under Part V of the Council Tax (Administration and Enforcement) Regulations 1992 due from the defendants so specified to the Complainant and are outstanding, it is adjudged that the defendants are liable to pay the aggregate amounts specified in respect of them in the Table, and it is ordered that those amounts may be enforced in the manner mentioned in Part VI of those regulations accordingly.
TABLE
Name and address of defendant
Sum payable and outstanding
Costs of complainant
Aggregate amount in respect of which the liability order is made with respect to the defendant
Justice of the Peace [or by order of the Court Clerk of the Court]
49. Turning to the Cabinet report and its explanation that it is not practical to calculate the level of costs incurred in each individual case. The task need not be so onerous that it would be necessary to calculate 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.
50. What is of relevance here is the council, before its 2011 budget, applied costs in accordance with the regulations; initially at a lesser sum than the total in respect of the summons and a further sum on being granted the liability order. In reviewing its policy (involving raising the overall costs as well as front loading them) the cost with respect to instituting the summons saw an overnight hike of 120%.
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51. The councils decision to no longer carry out the procedure in accordance with law was a budgetary measure that intended to raise an additional three quarters of a million pounds (752,000) in costs income over a four year period. This was the preferred measure in response to public consultation over alternative proposals to introduce a charge for replacement bins or garden waste collections. (re, Cabinet budget report 14th February 2011).
52. The council provided additionally 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.
53. The minutes of the councils Scrutiny Chairs Liaison Group (re, minutes 28 Jan 2011) reveal that a Councillor raised his concern about the impact this proposal would have on the most vulnerable people. The councils Executive Director of Business Services answered with no relevance whatsoever saying that the Council had a duty to collect monies owed.
54. The Councillors concerns were about the authority wanting to front load and increase summons costs with the intention of raising 0.75 million additional revenue over 4 years. The director failed to grasp this as his apparent understanding was that the issues concerned the council pursuing (or not pursuing) recovery through the Magistrates' court.
55. If he was suggesting that inflating costs would achieve improved collection of monies owed by virtue of deterring late or non-payment, then this idea would be at odds with the proposals objective. Achieving the forecasted 188,000 additional income each year was reliant upon householders being caught out with recovery. Inflicting penalties to coerce prompt payment would have the exact opposite effect.
56. It seems a fair assessment that the Councillors objections were a minor inconvenience for the councils Executive Director of Business Services who showed neither any understanding of the concerns raised nor regard for the legal implications so consequently dismissed the matter.
57. Of more serious concern however, was the failure of the democratic process which
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allowed the proposal. The report provides no evidence of any member in attendance challenging the Executives response, which leads one to believe that the group was toothless and the meeting merely a formality with the implementation of the proposal a foregone conclusion.
58. It should be noted that although elected members had the opportunity to scrutinise the detail behind the proposal at consultation scrutiny meetings, they took place in private as the details were deemed exempt from publication under the Access to Information rules of the Local Government Act 1972. Despite the secrecy, there is a publicly available summary of the response to the budget consultation dated 31 January 2011 where under the recommendations relating to proposing an increased summons costs it states the following:
The SCLG [Scrutiny Chairs Liaison Group] supports this proposal in principle. However members sought reassurance that increase in charges would not create a perverse incentive to summons.
Interestingly the Council Tax summons count for 2013-14 was 62% higher at 17,197 compared with the 2010-11 figure of 10,675.
59. The seriousness of official error and contempt senior officers had for the law can not be overstated. It was clearly acting ultra vires to propose a money making scheme that involved manipulating court costs and made more serious with its implementation being solely dependent on the outcome of a ballot, as opposed a true evaluation of expenditure.
60. The costs incurred in respect of issuing a Summons had either increased by 120% or they hadnt and not appropriate for consultation. Whether it was preferred by the public to raise additional money this way over introducing charges for waste services was not a relevant factor.
61. It is because of the councils inappropriate focus on procedure in serving statutory notices and misunderstanding of the costs issues that the following is detailed here to reinforce the assertion that the specific concerns of the complaint had not been dealt with.
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Increase / front load costs to raise additional 188,000 per annum
62. Below is a record of historical costs, going back to 1998/99, showing the composition, i.e., split between Summons costs (regulation 34(5)) and Liability Order costs (regulation 34(7)). Figures are also provided for Business rates (NNDR) for reasons which will become apparent later in this document (See below 69, Additional 38,000 per annum cost income).
Council Tax Business Rates Summons Liability Order Summons Liability Order 1998/99 00 40 00 40 1999/00 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 2013/14 60 70
Table 1: Council Tax / Business Rates costs raised per summons and liability order
63. In April 2011, after notifying the Magistrates Court of its decision to increase and front load court costs, NELC 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
64. Regarding their application, costs were in line with the Regulations before the 2011 review. NELC 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.
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65. Costs appear arbitrarily split between what are termed 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 summons charge.
66. In 1998/99, it appears that expenditure incurred in respect of instituting the summons was considered by NELC to be so insignificant that none of the total 40 charged in obtaining the order was attributable to it. Presumably the council recognised the potential for generating more income and perhaps using the summons costs as a deterrent against householders defaulting with its introduction of summons costs the following year. However, in contrast with the councils current policy (2011/12) to attribute all the costs to the summons; in 2001/02 it was deemed only 22 per cent was incurred in respect of instituting the complaint. Perhaps the fact that this had risen to 30 per cent the year after and in 2006/07 considered to account for over a half of the total costs of securing the liability order, the chance for generating more income and /or to encourage prompt payment was too tempting an opportunity.
67. There must be an accounting for why costs, once weighted in respect of the court hearing and having less than a quarter attributed to instituting the complaint when introduced in 1999/00 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.
68. There is no provision for the billing authority to impose costs for anything other than covering reasonably incurred expenditure. There are however, publicly available documents detailing how, by reviewing costs, it would benefit either from additional income and/or encouraging behaviour. 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 this.
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Additional 38,000 per annum cost income
69. A review in 2001/02 disclosed that if the billing authority were to follow the trend of other councils 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 annum14. 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.
70. A liability order is simply the vehicle allowing billing authorities to pursue monies owed. Importantly, an account holder defaulting does not compel the authority to apply to the court; rather it has discretion, and if intending to utilise any of the enforcement measures authorised, is required by law to obtain an order. Having this discretion, it could be seen as exploiting the judicial system in cases where complaint is made purely to penalise a debtor with added costs.
71. The 2001/02 review provides clear evidence of the council's disregard for the law with its abuse of the judicial system. The cost of issuing a summons should only take into account the administration involved and not a deterrent element, as there is nothing in
14 Article, Annex C Council Tax Summons earn town halls millions each year
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the legislation to support an increase in costs on this basis. It might have been considered an effective measure for improving cash flow, but until it is legislated that a penalty may be imposed, the law only provides for the billing authority to recharge costs to the resident which have been reasonably incurred.
72. To leave absolutely no doubt, the liability order does not function to punish late or non-payment neither can the costs which may be reclaimed from the respective debtor function as a fine or penalty nor used to encourage prompt payment.
Hike in summons to fund additional staff / failure in implementing new IT system
73. 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. 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
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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.
74. The billing authority 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 billing authority 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.
75. Aside from inappropriately increasing costs to fund additional staff to clear the backlog, the figure used on which it based its calculations was unusually low and if based on a typical number of summons served each year would have needed only half the amount it was increased to pay for the two proposed members of staff. However, the figure based on the subsequent three years average was not 6,000 but 12,277 householders liable for the summons penalty. The 50% or 5 increase in the Summons fee would therefore pay for in excess of four staff; more than double what it was looking to fund by residents caught out with these penalties.
Costs No of Summonses Summons costs raised 2001/02 10 11,465 114,650 2002/03 15 6,140 92,100 2003/04 15 10,632 159,480 2004/05 30 13,995 419,850 2005/06 30 12,205 366,150
Table 2: Council Tax costs raised per summons, number and total raised
76. There is no recorded information to justify the summons costs doubling to 30 in 2004/05. However, if like the previous increase, it was to fund additional staff, then the 260,370 raised additional to the previous year would be sufficient to fund another seventeen, based on the previous employment costing.
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77. Turning to the Final Decision of the Investigation; regardless of the failure to consider the law as it applies, NELC misleadingly states that the total costs are divided by the estimated number of applications to be made for a summons. It was highlighted in the complaint that a substantial number of householders summonsed were not included in the estimated number of applications, therefore artificially inflating the individual cost.
78. The impact this has on the individual cost can be appreciated when the figure submitted to the Chartered Institute of Public Finance and Accountancy (CIPFA) relating to the number of Council Tax summonses issued in 2013/14 was 17,197. Set this against the dividing figure used in the Council's 2013/14 calculation of 10,000 and it is obvious that the defendants actually paying the costs are paying an inflated sum to either compensate for the councils error of judgement or subsidise the costs of those others having them waived for the most likely reason being that they agree to switch to Direct Debit (see 106110, 36).
Final Decision contention III
79. The Investigating Officer states in her Final Decision:
Mr Xxxxx also believes that North East Lincolnshire Council inappropriately raises revenue through Magistrates summons costs. The Guidance states that local authorities are only permitted to charge reasonable costs for the court summons and liability order and that in the interests of transparency they should be able to provide a breakdown, on request, showing how these costs are calculated. North East Lincolnshire Council provided a detailed breakdown based on activity and costs on it's website for 2012/13, this was updated for 2013/14. These breakdowns have been through stringent checks both internally and by the District Auditors.
80. The council before investigating the complaint held evidence that the costs applied in my case included expenditure which according to the regulations is not attributable to issuing the summons and therefore unlawful. Details are in the letter dated 14 July 2014 (SD #4) and so will not be reiterated here. The concern is that this content was not considered in the investigation; rather the council instead opted to imply with its reference to the District Auditor that the calculation might be a true and accurate account.
81. The Auditors involvement has not been covered in any correspondence of the
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complaint so is appropriate that the limited knowledge I have of this is dealt with here.
Auditors involvement
82. The Auditor was contacted on 5 October 2012 and furnished with the same correspondence as had NELCs head of revenues in raising concerns about its recovery. These were subsequently submitted as written evidence to the Magistrates court for my defence against the councils application for a Liability Order (Evidence 16 Sept 17 Oct 2012, SD #8). Communications since have indicated that none of the detail had fallen within the Auditors responsibilities.
83. It is therefore safe to say that any satisfaction shown by the District Auditor would only have been based on the accounts being mathematically sound, i.e., that the figures add up. Percentage estimates will have had to be largely accepted; attributable costs, in terms of both allowable expenditure and the regulations would have unlikely played a part. Given that the matter of costs did not fall within the Auditors responsibilities and therefore figures not subject to audit, it is difficult to see how the councils reference to stringent checks has relevance to its investigation and response.
84. Various communications regarding the District Auditor reinforces my assertions that its involvement had no relevance to the councils investigations.
85. The Information Commissioner for example at paragraph 21 of Decision Notice FS50505226 stated:
....the council confirmed that....it has entered in to consultation with District Audit with regards to publishing a document it has since created which details a breakdown of the reasonable costs incurred for the court summons and liability order. In the interests of transparency, it is the council's intention that, once consultation has concluded with District Audit, the spreadsheet will be made available on the council's website and will be updated annually in adherence with DCLG's best practice guidance.
86. The spreadsheet referred to had appeared on the council's website and was therefore assumed that consultation with District Audit has concluded and as a consequence requested on 17 December 2013 that NELC disclose all recorded information in relation to the consultation.
87. NELC responded on 16 January 2014 stating that it had not received any comments
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from District Audit relating to summons costs." However on 9 September 2013, NELC had served the following representations to the interested parties in the judicial review application (see above, 26):
North East Lincolnshire council Liability order costs
North East Lincolnshire council (NELC), an interested party in this action, fully supports HMCTS submission. The costs are raised under the Local Government finance Act 1992 which allows for costs reasonably incurred by the applicant billing authority in obtaining that order.
NELC is currently in talks with the district auditor to justify the reasonable level of costs that it incurs in bringing cases to liability order. NELC contends that 70 is a reasonable figure to cover the expense of brining an account to court for a liability order. The figure is in line with other local authorities in the area and lower than many Nationally. The Grimsby Magistrates Court has also agreed that these costs are reasonable given the work required to obtain a Liability order.
88. The signals all along seemed to imply that the Auditors involvement would attach some authenticity to a set of accounts supporting the reasonableness of costs when in fact the figures were not subject to audit and NELCs external audit contractor (KPMG) was not willing to have a reference to District Audit on the Councils website.
89. It wasnt until NELC made a statement on 29 January 2014 reviewing the one it made on the 16th that it admitted receiving a report from District Audit relating to summons costs which it summarised as follows:
I have reviewed our response and have found that correspondence has been received from District Audit in relation to summons costs although this is not in the form of recorded information held by North East Lincolnshire Council.
There has not been any formal consultation between North East Lincolnshire Council and District Audit. A summary of this correspondence has been provided for your reference:
District Audit were pleased with the intention to publicise the calculation in relation to court costs, but stressed that the calculation is not subject to audit and would therefore not want a reference to District Audit on North East Lincolnshire Councils website. District Audi were happy with the information supplied but advised that it is a matter for the Court to decide whether or not the
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calculated costs are reasonable. District Audi suggested that costs should be reviewed on a regular basis to ensure that any changes in activity and/or expenditure is reflected.
90. The date NELC received the information for which the above summarises is unknown but not unlikely to have been around the time I had been contacted by KPMG to set out its position regarding the allegations aimed at NELC of fraud. The content of the email (below) suggests in light of the Councils summary that something similar had also been sent to NELC.
From: Yyyy, Yyyy To: Xxxx Sent: Wednesday, November 13, 2013 Subject: RE: North East Lincolnshire Council - Fraud
Mr Xxxxxx,
Further to your latest e-mail request of 5 November for an update report and your previous e-mails relating to North East Lincolnshire Council we have set out our position below.
Following our initial review regarding council tax summons costs, we have exchanged correspondence with the Council on several occasions regarding its approach. We understand that the Council is intending to publish information shortly on its website to show its calculations of the summon costs for 2012/13. (We cannot be more precise on timing as that is a matter for the Council.) The Council will show the total costs of council tax collection and what elements have been excluded to arrive at recovery costs which may then be recoverable through summons costs. The figures have not been subject to audit as it is not within our audit responsibilities. Ultimately it is a matter for the courts to determine which costs are allowable.
This should be followed by the publication of the Councils forecasts for 2013/14 although we have not seen any specific figures in relation to the latter.
Publication of such calculations is consistent with an increased open and transparent approach which we have encouraged the Council to adopt, through discussions with the Corporate Management Team and the Audit & Governance Committee, in accordance with its own values.
Regarding the other matters upon which you have sent correspondence, you
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copied us into correspondence regarding bailiffs fees which you have sent to the Humberside Police Economic Crime Unit. This is the appropriate agency to deal with fraud which is your primary allegation. We do not see any other matters which would fall within our responsibilities. You also raised the matter of business rates summons being charged at 70 rather than the Council requesting actual costs at court. Again we would see this as a matter for the Court to determine. We presume you have asked the Council directly on this matter, although we do not recollect any of your correspondence specifically confirming that this was done.
In case we have not previously done so, we enclose a copy of the Audit Commissions updated leaflet on your rights as a local government elector.
Kind regards John
91. None of the correspondence relating to District Audit provides any evidence that checks have been made to ensure summons costs are in line with lawful provisions. The most checks can hope to confirm is that the way in which costs are calculated is transparent, nothing more. The Auditor has no interest whether expenditure falls inside or outside the boundaries defined by law, only that a breakdown is given.
92. Even transparency is disputed with it brought into question its openness in the way debt recovery staffs salaries are accounted for, highlighted in the 2013/14 calculation (See Annex B to SD #4). A separate breakdown apparently exists which supports the way recovery staffs wages were accounted for because of a reference to a debt recovery salaries tab which is not present. From this it is reasonable to assume that a calculation has been omitted and implies a more comprehensive spreadsheet exists including additional information on separate pages which is kept from the public.
93. This calculation has been asked for more than once but NELC point blank refuses to disclose it. The refusal suggests that the calculation has not had stringent checks and the breakdown is far from transparent. It is reasonable to suspect that this secrecy enables the council to conceal evidence of falsely representing their accounts for which openness would expose.
94. This might lead one to suppose that NELC may have followed in the footsteps of other councils which have also produce accounts to support their costs but have been less
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cautious in shielding the workings behind their sums. A brief case study into three of these authorities suggests areas of unlawful expenditure that NELC might be hiding by keeping a tight grip on its breakdown.
Case study into local authorities court costs
Leicester City Council
95. Leicester City Council (LCC) produce accounts in support of its costs (see spreadsheet, SD #16) where it reveals that it accounts for staff time twice. Quite openly the hourly rate for staff dealing with recovery is calculated at 13.94 then doubled to 27.88. This is justified on the basis that the cost of employing staff to cover for non-recovery work whilst staff are dealing with recovery work is considered to be an additional cost attributed to recovery. The Councils own words are that:
We have a fixed number of staff for billing and processing work and whilst they engage in recovery tasks that gap has to be filled. This has to be an additional cost attributed to recovery as staff duties have transferred from their normal work.
96. However skilfully one argues its legitimacy the fact remains that for each hour that was claimed to be spent on staffs wages, the council tells the court it pays two.
97. The expenditure incurred by the council in respect of filling the "gap" is not attributable to recovery. This cost is attributable to everyday billing and processing work. The council (by sleight of hand) doubled its estimated expenditure for the purposes of justifying higher costs. It is inconceivable that high ranking officers are not aware these accounts are being falsely represented and would think on the balance of probabilities it would be those at the top who would be responsible for sanctioning this move.
Note: There would appear to be Criminal implications.
98. The judgment defining dishonesty used in criminal prosecutions is the court of appeal case (R v Ghosh [1982] EWCA) from which a test to define dishonesty was developed requiring two stages. The first, an objective test, where a jury would be required to decide if an act was one that an ordinary decent person would consider to be dishonest and the second, a subjective test where a jury would need satisfying that the accused
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must have realised that what he was doing was, by those standards, dishonest. The second test (subjective) is not applied if objective test fails
The judgment of the Court that is material to the test is as follows:
"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."
99. Clearly a properly informed jury as to the facts of the case would have no difficulty establishing the objective test. Similarly, there can be no doubt that even if executive officers of the council held genuine beliefs that their actions were morally justified, they must realise that ordinary people would consider them to be dishonest.
South Gloucestershire Council
100. It may be that NELCs less than open approach to releasing a transparent breakdown is down to something incriminating in its accounting which makes LCCs doubling of its hourly rate look like small change.
101. South Gloucestershire Council (SGC) for example shows in its costs calculations how it ramps up its employment expenditure. SGC employs a method whereby it calculates the number of man hours (and other costs) attributable to producing 1,000 summonses and then factors that up to an estimated number of summons for its breakdown.
102. In its April 2009 estimate (SD #17), the number of staff hours (excluding IT costs) attributable to producing 1,000 summonses was 1,132 and ranged from the highest hourly rate of 173.21 to the lowest of 32.56. The majority of the time (900 hours) was
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attributable to Recovery and Council Tax Officers where the hourly rate applied was 47.21. When you compare this with LCC, even after it dodgily doubled its rate to 27.88, this is a 70% increase; however, comparing it with its legitimate rate this increase is around 240%.
Great Yarmouth Borough Council
103. The lack of transparency makes the task of evaluating whereabouts in the recovery process staff costs are attributable. NELCs mistaken belief that all recovery costs may be recharged to the defendant, regardless of what the law states, may explain why it thinks there is no need to provide a clear breakdown.
104. Great Yarmouth Borough Council (GYBC) has openly attributed costs both before and after the period of recovery for which the law allows. This is useful in helping demonstrate how, if NELC had been similarly open, its breakdown would likely to have been equally incriminating.
105. The breakdown tells us (SD #18) that roughly 75 is calculated as the total sum of costs incurred in obtaining a liability order. Around 5% of this (it estimates) is attributable to additional costs it incurs from after issuing the summons until the order is obtained. The matter which GYBC seem unconcerned about is that by imposing this same sum in cases where the defendant merely receives a summons as for those progressing to court, they are breaking the law. There requires no legal knowledge to see from the spreadsheet that inappropriate expenditure (liability order costs) are front loaded to the summons.
106. In perhaps a less obvious way, the calculation identifies there are costs attributable to work involved after the court case which are incorporated unlawfully into the summons costs. The regulations permit expenditure only up until the liability order has been obtained, but included in a sum of almost 400,000 are post liability order activities such as making attachments of earnings/benefits, dealing with arrangements and administration costs in referring cases to bailiffs.
107. Of particular relevance to NELC is its policy surrounding payment arrangements. If a potential defendant accedes to the councils preferred payment method of direct debit, he is given as an alternative to the council demanding full payment/obtaining a
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liability order the opportunity to bring the account up to date. The upshot is that the debtor, ordinarily liable for the whole years tax (plus court costs) at once, can continue as normal paying by instalments.
108. In cases such as these, NELC has clearly incurred costs for the extra work needed to make payment arrangements. In addition, and as a consequence of the arrangements, there are costs in respect of having to monitor these accounts. Importantly however, for
the purposes of accounting for summons expenditure, these costs cannot legitimately be recharged via the summons because the extra recovery work is not connected with those cases as those cases did not result in a summons.
109. Ironically, in comparison with account holders who avoid summons costs by entering into payment arrangements, those who do have summons costs applied cause less extra work for the council.
110. These costs, along with those in respect of payment arrangements, monitoring accounts and other administration costs incurred after the liability order make up a significant amount of gross collection and recovery expenditure. However, it cannot be overstated that there is no lawful basis for the billing authority to include this element in the gross recoverable costs from which it then determines a standard sum for an individual summons.
Final Decision contention IV
111. The Investigating Officer states in her Final Decision:
The Clerk to the Justices is kept informed of the costs that are to be charged for a summons for Council Tax. The Guidance highlights that 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. In Mr Xxxxxx's case he chose to attend court and provide evidence to the magistrates outlining why he felt that the remaining 60 summons costs were unreasonable, in this case the Liability Order was granted for the outstanding amount, this would indicate that the Court were satisfied that the amount claimed was reasonably incurred by the Council.
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112. It should be borne in mind that that the complaint concerned NELC making the application for a liability order in circumstances where the regulations provide that the application shall not be proceeded with (complaint letters, SD #3 & #4). This had already been stressed in the letter asking for the complaint to be escalated to the councils final stage of its formal complaints procedure (SD #13).
113. Despite it being made clear that NELC erred in law by applying for a Liability Order in the Magistrates court, the council has chosen (as well as in its first response) to hide behind the negligent decision of the Magistrates Court to grant a court order.
114. Evidence as to why NELC had no lawful basis to make the application has been covered already and will not be reiterated here. However, that is with the exception of the courts jurisdiction over the costs level in proceedings where after a summons has been issued, but before the application is heard, the amount outstanding plus the costs incurred up to the time of payment is paid or tendered.
115. In these circumstances the court has no jurisdiction and the reason why NELC had a minimum obligation (if not accepting payment) to at least support its costs in the face of being challenged as to their reasonableness.
116. The relevant part of regulation 34(5) is provided for reference 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
(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)....
The following explains why the regulations relevant to costs provide no involvement for the court to determine the level in proceedings where payment is made before the application is heard:
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i. After a summons has been issued but before the case is heard, the court has no jurisdiction over the level a council may claim in costs and is of no consequence whether deemed reasonable by the court (only at the hearing would the court have power to question them).
ii. The amount paid or tendered to the authority is neither prescribed nor can a standard sum in a legal sense be agreed by the Court. It is therefore open to the council to accept payment at this stage, being mindful of the amount tendered as may vary from case to case.
iii. If an amount was paid or tendered, and the council failed to agree the sum (the court yet has no power), then a council, by virtue of regulation 34(5)(b) must be obliged to support its claim in order to justify the sum is no more than costs reasonably incurred.
iv. Proceeding with the application once an amount has been paid or tendered would be breaching regulation 34(5), as it clearly states:
the authority shall accept the amount and the application shall not be proceeded with
117. NELCs Investigating Officer chose to address the courts involvement which I hope now has been shown to have been irrelevant to the complaint. However, in light of the courts negligence in granting an order the reasons for its dereliction of duty will be dealt with here too.
Magistrates courts Dereliction of duty
118. NELC is aware that each of its monthly conveyor belt style proceedings earns it hundreds of thousands of pounds from costs with substantial sums going to the court itself. It also knows that these orders are rubber stamped in their thousands without the court having the slightest knowledge or interest as to whether or not the costs asked for have been reasonably incurred in accordance with the law.
119. It is stretching it to say the least for the council to hold genuine belief that the court granted the order on being satisfied that the amount claimed was reasonably incurred. NELC sought to point the finger so responsibility for the maladministration was solely with the court, when in fact responsibility for the error was equally NELCs.
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120. NELC will unlikely be aware that soon after the court hearing a transcript of the proceedings was produced which is retained on file. Referring to the records it is clear that the bench chairman held the belief that a democratically elected body had set the costs. NELC must have overlooked this whilst producing its Final Decision as it would have indicated that (in his own mind) he had no discretion to vary the level of costs, not that he was satisfied that the amount claimed was reasonably incurred.
121. It was put to the bench that a breakdown of expenditure should have been submitted by the authority from which it could determine appropriate costs. The Clerk advised that this should be the way to go and the bench agreed.
122. The councils prosecution then stated they were not required to justify costs to the court and had never submitted a breakdown but proceeded to describe in general terms that the costs covered Council Tax collection and recovery, IT systems, employment of staff and Her Majesty's Court Service for the use of their facilities.
123. This was admitting to the bench that costs were being claimed for Council Tax collection. It was submitted in evidence that financing the Council Tax department was not an overhead it could lawfully fund through court costs. The bench however, seemed satisfied with the councils statement and made it obvious that he believed the use of the court should make up some of the summons costs.
124. With the challenge being that costs in respect of the court hearing were being unlawfully incurred in respect of instituting the summons, it showed the benchs ineptness to deem expenditure for the use of court premises could be legitimately recharged in respect of issuing the summons.
125. The bench remained uninterested in the evidence, preferring instead to accept the councils irrelevant responses which concluded with the statement that "there is no need to justify the amount".
126. Many aspects of the written evidence were presented orally to the court which had a zero impact. The bench it seemed had decided, most likely before the hearing that it would favour the council even in the absence of a breakdown to support its costs.
127. Even the Clerk to Justices word held no sway when confirming that the set recovery
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procedure involved the summons issue and then later preparations for court, for which regulation 34 provided progressive costs.
128. Clearly, cases proceeding to court incur costs which include expenditure of issuing the summons. It cannot mean conversely that cases for which a summons has been issued, but not progressed to a hearing, can include costs of making the application and obtaining the order.
129. The regulations are explicit in their references that those cases for which liability is settled prior to a hearing will only incur costs of instituting the application. By formulating the regulations this way, it must have been parliaments intention to provide a person issued a summons the opportunity to reduce the otherwise higher costs by settling liability before the hearing date.
130. It says something if on receiving a summons, a debtor settling the outstanding sum, incurs no less costs than if he had not paid and the case proceeded to court. This is true where councils have elected to front load all the costs and apply them on issuing the summons. Once receiving a summons therefore, a debtor might as well not bother paying until after an order has been obtained and subsequent enforcement notices sent. This however, would impact negatively on collection and the reason why the regulations were not devised this way.
131. NELCs annual budget for council tax recovery totalled 1.13 million for which 100k+ was attributed to Control & Monitoring. A case was argued for this to have been claimed under false pretences as there appeared no effective monitoring of liability order applications. A news article 15 Shes at the door: Britains first 1m bailiff reports. The letter 1 October 2012 (see Evidence, SD #8) provides comprehensive details and will only briefly be mentioned here.
Note: A recent summons issued in error (5.11.14) further supports the assertion that there is a failure to monitor accounts and court proceedings are instituted by the authoritys Council Tax processing system. See Annex E.
15 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..
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132. Regina v Brentford Justices ex parte Catlin [1975] QB 455 was referred to in disputing the level of expenditure that was attributed to monitoring and control. It was contested that over a five year period, a total 3,528 Liability Orders had been issued for initial debt of 50 or less despite being policy for the council to pass accounts to enforcement for amounts over 50. This along with summonses containing incorrect and out of date information issued on 3,361 accounts for a hearing of 2 June 2011 pointed to neither the Magistrates court nor more crucially the local authority incurring costs in respect of
monitoring liability order applications.
Note: Numbers of householders receiving council tax summonses has substantially increased since the benefit reforms. Though this should have had the knock on effect of lowering the standard costs sought per individual, councils have continued requesting the same level and Magistrates courts continue awarding them 16.
133. In the case between "Regina v. Brentford Justices, Ex parte Catlin" it was held that a decision by magistrates whether to issue a summons pursuant to information laid, involves the exercise of a judicial function, and is not merely administrative.
Lord Chief Justice, Lord Widgerys closing judgment:
....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....
134. Negligence was similarly apparent with neither NELC nor the court being mindful of the fact that the laws governing court costs differ in Council Tax and Business Rates cases. NELCs March 4, 2011 letter (See Annex B to SD #3) informed the court that its decision to increase costs charged for a Council Tax summons would apply similarly to Business Rates. Annex C of the same document (SD #3) shows that the court had noted this in its 8 March response. It is apparent that the court, without evidence supporting the 120% hike, approved the costs and had not contested procedural errors in liability order applications for Business Rates
135. Unlike Council Tax, nothing in the regulations governing Business Rates provides that a
16 Article, Annex D Council Tax prosecutions hit new high as benefit reforms take hold
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defaulter may halt proceedings, if payment is made of the outstanding liability plus incurred summons costs, before the case is heard.
136. The law states that in the case of Business Rates applications, an order for costs must be made by the court. However, NELC instructs defaulters that on receiving a summons, if they pay the full amount owing including all costs before the date of the hearing no further action will be required.
137. It appears in those circumstances, the council does not apply to the court for an order of costs; in the year 2011-12, statistics reveal out of 932 business ratepayers summonsed, 33% of those incurred 70 costs where no liability order had been granted 17.
138. The evidence was not going to sway the bench chair as he was implying he had no discretion in the matter of ordering costs. His claim, whether he believed it or not, was that a democratically elected body had set these costs and so that was the end of it.
139. It has been highlighted already that the courts judgment in ordering the costs was exploited by the councils investigating officer to support the decision which rejected the complaint as being unfounded. However, more evidence tending to suggest that neither the court nor NELC can be trusted to carry out public duties is uncovered in the Justices draft statement 18 which was brought about by an application to the court to state a case for an appeal to the high court:
We recognise that in all cases where costs are claimed we always have a discretion as to whether to order them, and if so, in what sum. Although the appellant admitted the matter of complaint and costs would therefore normally follow the event, the fact that the respondent asked for the normal amount of costs in this case did not prevent us from reducing the amount or refusing to make an order for costs at all.
The justices and NELC are without doubt motivated by self interest and change their position in a way which advantages their argument at the given time.
140. The bench chairman gave his assurance he had thoroughly read the submitted evidence and proceeded to deliver the decision but first singled out one paragraph from the forty
17 Letter to Humberside Police Business Rates summons fraud 05 Sept 2013 SD #19
18 Draft case stated for appeal to the high court and Representations made on the case SD #20
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or so pages. It seems he didnt read it to consider the evidence but to find just one thing that would give him an excuse to justify invalidating the entire submission.
141. The evidence was a copy of the series of correspondence sent to the head of revenues prior to the court proceedings alleging that the procedure regarding the application of costs which NELC had adopted was unlawful.
142. The paragraph singled out appeared in the letter dated 25 September 2012 (see Evidence SD #8) where it was suggested both the Magistrates' court and NELC were complicit in unlawfully profiting through the costs claimed in council tax liability order applications. He had determined this to be contempt of court, though it seemed more like he was exploiting this as leverage to justify dismissing the evidence; perhaps to imply he would overlook the contempt issue if his blatant disregard for the facts and error in judgement were not pursued in an appeal.
143. In concluding this part, the council must be mindful that if the Court held genuine belief that the expenditure claimed was reasonably incurred by the Council and all aspects of the costs application were lawful, it would not be phased with the prospects of the case being scrutinised by the high court. The justices have gone to extraordinary lengths to ensure progress of the appeal is obstructed with the application ultimately being stopped in its tracks.
Summarising what the council did wrong
144. The council served a reminder notice in respect of council tax for payment that had not been made by the due instalment date. This was correctly served in accordance with the relevant regulations; however, there were concerns that the notice, which warned of the issue of a summons if the demands were not met, also carried the threat of incurring court costs of 70.
145. A letter responding to this was sent to the head of revenues outlining the reasons why the level of costs quoted could not have been reasonably incurred and consequently an unlawful demand (Evidence, SD #8 letter 16 September 2012). It was informed that there would be more letters to come providing further supporting evidence of my allegations.
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146. The head of revenues responded in a letter 20 September (SD #21) stating that she was not prepared to enter into further correspondence regarding this matter by which time letters of 16, 17, 18 and 19 September had been sent (Evidence, SD #8). It was informed in an email of 21 September that all correspondence intended for the council would continue being sent despite the refusal to communicate further.
147. The councils failure to act on the supplied information meant it continued unlawfully applying costs and so a sum of 70 was added to my outstanding liability in respect of court (summons) costs. Further consequences being that the application for a liability order was made when proceedings should have halted owing to the aggregate of the outstanding debt and reasonably incurred costs being paid to NELC.
148. The error was compounded because of the councils failure to make contact after the head of revenues was informed of the payment and request to be notified in advance of the hearing date if the application would be proceeded (Evidence, SD #8 letter 17 October 2012).
149. Since erroneously obtaining the liability order, NELC has had the opportunity to apply to the Magistrates court to have it quashed but not done so. I have twice formally asked for the council to do this but it has refused on both occasions.
Summarising how the 70 Summons costs claim was unjustified
Bad debt
150. It is evident from the councils expenditure breakdown that the standard sum recharged to Taxpayers in respect of summons costs (70) include an 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.
151. This is confirmed in the calculation (See Annex B to SD #4) where it determines the average individual costs by dividing its gross expenditure by an estimated number of summons requested where costs applied. There is a significant difference between the number of summons requested, and the number of summons requested where costs are applied. The dividing figure used in the Council's 2013/14 calculation was 10,000, but the figure submitted to CIPFA relating to the number of summonses issued in 2013/14 was 17,197.
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152. The reason for the difference does not really matter, nor is it of any consequence that the authority has not recovered its costs (from the defendant summonsed) in 7,197 cases. However, the matter that is of concern is that NELC has incurred costs in respect of each one requested, which in over 7,000 cases it has been unable to recover from the defendant summonsed. Instead it has added that expenditure to the costs of those against whom court proceedings are brought and the costs paid. It is obvious that the defendants actually paying the costs are paying an inflated sum to either compensate for the councils error of judgement or subsidise the costs of those others having them waived.
Council Tax Admin and Recovery Staff expenditure included in standard costs
153. Standard costs include a broad average of expenditure, so all include an element of staff time attributable to customer contact, for example, setting up payment arrangements, dealing with queries etc., plus additional work being necessary to moni
