R (Mohammed) v London Borough of Southwark
| Jurisdiction | England & Wales |
| Judgment Date | 24 February 2009 |
| Neutral Citation | [2009] EWHC 311 (Admin) |
| Docket Number | Case No: CO/9714/2006 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 24 February 2009 |
[2009] EWHC 311 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Geraldine Andrews QC (sitting as a Judge of the High Court)
Case No: CO/9714/2006
The Claimant appeared in person
Mr Ali Reza Sinai (instructed by the Legal Services Department, Southwark Council) for the Defendant
Hearing date: 30th January 2009
Miss Geraldine Andrews Q.C.:
This matter concerns a liability order (“the Order”) made on 18 th August 2006 by a District Judge sitting at Camberwell Green Magistrates' Court on the application of the Defendant (“the Council”). The Order related to council tax in the sum of £1,243.47 that was said to have fallen due and remained unpaid in respect of premises at 90 Woolstaplers Way, Rotherhithe, London SE16. The Claimant, Mr Mohammed, was resident at those premises. According to the Summons for non-payment of council tax that led to the making of the Order, the sum of £1,243.47 comprised £297.35 in respect of the period of liability from 25 th November 2005 to 31 st March 2006, £881.02 in respect of the period of liability from 1 April 2006 to 31 st March 2007, and £65 costs.
Mr Mohammed seeks an order that the Order be quashed because, he says, it is unlawful and the Council should not have applied to the magistrates' court for a liability order against him in that or indeed any sum. Mr Mohammed does not dispute that he was the person who was liable to pay council tax in respect of those premises. However, he relies on the fact that a bankruptcy order was made against him on 25 th November 2005. At the time of the Order he was still an undischarged bankrupt. The Council was aware of this, because it was the petitioning creditor.
According to the witness statement of Laurence Fleming, who is a client officer in the Council's Benefits & Revenue Client Unit, the Order made on 18 th August 2006 covered sums falling due in respect of council tax for the period from 1 st April 2005 to 31 st March 2006 that had already been the subject of a previous liability order obtained by the Council in June 2005. This was a reference to the sum of £297.35 that is described in the Summons as relating to the period from 26 th November 2005 to 31 st March 2006. The element of duplication did not simply mean that the Order was for too great a sum. Mr Fleming also accepted that the Council should have proved in Mr Mohammed's bankruptcy for the element of indebtedness for the financial year 2005–2006 mistakenly encompassed in the August 2006 Order.
A further problem for the Council, which was very properly drawn to the Court's attention by Mr Sinai who appeared on its behalf, was that a creditor of the bankrupt in respect of a debt provable in the bankruptcy may only commence legal proceedings against the bankrupt before his discharge with the leave of the Court, which may impose terms on the grant of leave (section 285(3)(b) of the Insolvency Act 1986). Leave was neither sought nor granted before the Council sought the Order. There is a conflict of authority on whether such leave may be granted retrospectively so as to “cure” proceedings brought without permission, but I was not asked to address that question, as the Council did not seek to validate the process by which it obtained the Order in August 2006.
After Mr Justice Ouseley had granted Mr Mohammed permission to apply for judicial review on 13 th May 2008, the Council wrote to the Administrative Court on 11 th June 2008 and confirmed that it would not pursue the council tax for the period 26 th November 2005 to 31 st March 2006 and would instead treat the sum of £297.35 as a bankruptcy debt. The letter suggested that this removed any grounds for judicial review, but Mr Mohammed demurred.
At first sight, what Mr Fleming has told the Court only makes sense if Mr Mohammed was already liable in June 2005, when the original liability order was made against him, (or by the latest on 25 th November 2005 when he was adjudged bankrupt) to pay council tax in respect of the period between 26 th November 2005 and 31 st March 2006. For reasons that will become apparent later in this Judgment, the question of when a liability to pay council tax (or a sum on account of council tax) arises is a matter of some importance in this case.
The Council submitted that it should not have been named as the Defendant to this application for judicial review, but rather as an Interested Party, since the Order complained of was made by the magistrates' court. However, the statutory scheme by which such orders are made clearly envisages that the court acts upon the information provided to it by the billing authority, (in this case, the Council) which the court is entitled to assume is accurate, at least in the absence of contrary information from the taxpayer.
Regulation 32 of the Council Tax (Administration and Enforcement) Regulations 1992 defines a “liability order” as “an order under regulation 34 or regulation 36A(5)”. Regulation 34 essentially provides that if an amount has fallen due under certain provisions in Part V of the Regulations to which I shall refer in detail later in this Judgment, and remains unpaid in whole or in part, then the billing authority may apply to a magistrates' court for an order against the person by whom it is payable. The billing authority institutes the application by making complaint to a justice of the peace and requesting the issue of a summons directed to that person to show cause why he has not paid the outstanding sum. The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid. It is therefore envisaged that the magistrates' court will rely upon on the information provided to it by the billing authority, unless the taxpayer is able to demonstrate that it is inaccurate. Once a liability order has been made, it authorises the Council to engage bailiffs to distrain upon the taxpayer's goods.
Regulation 36A provides a mechanism for quashing a liability order made pursuant to Regulation 34 if the authority on whose application the order was made “considers that it should not have been made”. This Regulation also gives power to the magistrates' court to substitute for the quashed order a liability order in respect of a lesser sum payable, if the court is satisfied that an order in that sum could have been obtained the first time round. However, the only person that can bring an application under Regulation 36A is the billing authority. The disgruntled taxpayer cannot use that route to quash a liability order.
It follows that the statutory scheme expressly envisages that the failure by the court to issue a lawful liability order may be directly attributable to a decision by the Council to provide the court with information about the amount due that turns out to be incorrect. However, as I have already mentioned, the present case was not just a simple case of the Council mistakenly overstating the amount. As it now accepts, the Council should not have been going through this procedure at all, at least as regards the claim for £297.35, which was already subject to the bankruptcy regime and could not be enforced outside it. The fact that an unlawful Order was made was not Mr Mohammed's fault. Indeed, he contacted the magistrates' court in response to the Summons and informed a court official that he was an undischarged bankrupt. He even referred the official to s.382 of the Insolvency Act, on which he relies.
The essence of Mr Mohammed's complaint against the Council is that it was responsible for the magistrates' court making an unlawful Order, and in my judgment that is sufficient to found a claim against the Council for judicial review. Nothing would be gained by joining the magistrates' court to the proceedings. This Court can declare that the Council was not entitled to seek a liability order for £1,243.47 in these circumstances, and it has power to quash the Order made by the magistrates' court as a direct result of an application that should not have been made by the Council.
Given the consensus that the Council was not entitled to an Order in those terms and the Magistrates' court should not have made the Order, the next question that arises is whether the Court should quash it, or accept an undertaking offered at the hearing by Mr Sinai on behalf of the Council that it will not enforce the Order and will go through the Regulation 36A process.
Mr Mohammed, who very ably represented himself, submitted that the defect in the Order did not just encompass the £297.35 conceded to be a bankruptcy debt; it extended to the balance, because the council tax demanded for the period of liability from 1 st April 2007 to 31 st March 2006 (£881.02) was also a “bankruptcy debt”. By section 281(1) of the Insolvency Act, the discharge of the bankrupt from bankruptcy released him from all bankruptcy debts. Mr Mohammed would have been discharged automatically from his bankruptcy after a year, that is, on 25 th November 2006.Thus, he submits, the Council cannot go back and seek a liability order against him in respect of the £881.02 plus costs either by means of Regulation 36A, or by making a fresh application for a liability order in that sum if this Court quashes the Order. It is obviously sensible for the Court to resolve this matter now, and I heard full argument on the point.
A “bankruptcy debt” is defined by s.382(1) of the Insolvency Act, so far as is...
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