Councils unlawfully charging Liability Order and Summons costs at the same time

[outlawlgo]

Many councils are charging liability order costs at the same time as those incurred at the summons stage of recovery. This action is effectively catching out a larger proportion of those residents who will become liable for both of these penalties.

However, the Council Tax (Administration and Enforcement) Regulations 1992 state under Regulation 34 that these fees must be incurred independently when the summons is issued and when the liability order is granted. It also states in Regulations R34(5)(b) and (7)(b), that the costs should be reasonably incurred by the authority.

Application for liability order

34.–(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 court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid.

(7) An order made pursuant to paragraph (6) shall be made in respect of an amount equal to the aggregate of—

(a) the sum payable, and

(b) a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.

Councils are therefore unlawfully collecting penalties from debtors settling their accounts prior to any court action. This procedure is not in accordance with Regulation 34(5) of the Council Tax Regulations, which requires that the authority shall not proceed with the application if the aggregate of the outstanding debt and costs reasonably incurred by the authority is paid or tendered to it.

Essentially authorities are not lawfully permitted to charge debtors the liability order costs detailed in Regulation 34(7)(b) in such circumstances, however, by charging these costs prematurely at the summons stage, they are doing exactly this.

This was covered in the Sunday Telegraph: We shouldn't let our Councils Cheat us out of 25 Billion a Year


Does this mean many of our local authorities could be open to criminal investigations?

[Guest]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Technically its a criminal offence, but not the sort a local police CID can look into.

This is an en-masse complex fraud that requires specialist knowledge in council tax adminstration, and that can only be the Serious Fraud Office.

http://www.sfo.gov.uk/fraud.aspx

The only routes to the SFO is via your MP, or a confidential helpline. They would need a very good reason if they choose not to make an investigation. That reason might only be obtainable via a Freedom of Information Act request, and even then, it could well be exempt information.

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Incidentally, I attended a court hearing yesterday to have a liability order made against me by North East Lincolnshire council quashed if the district Judge thought there was good reason to do so.

Whether or not he thought there was good reason, he quashed the order. However, the Judge had read several pages of notes I'd prepared, before the hearing.

Details, as those in my first post, were contained in my notes. The Judge made nothing of these neither was he interested that I'd accused the council of attempting to defraud me through its appointed bailiffs Rossendales.

[CleverClogs]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Technically its a criminal offence, but not the sort a local police CID can look into.

This is an en-masse complex fraud that requires specialist knowledge in council tax adminstration, and that can only be the Serious Fraud Office.

http://www.sfo.gov.uk/fraud.aspx

The only routes to the SFO is via your MP, or a confidential helpline. They would need a very good reason if they choose not to make an investigation. That reason might only be obtainable via a Freedom of Information Act request, and even then, it could well be exempt information.

Would the attached file - which tells of councils getting a cut or "bung" from bailiff companies - help at all?

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

The Judge was also handed a copy of the summons document to accompany my notes as per the image below:



The text in my notes, relating to the summons document went something like this:

....Another important point, which brings into question the procedure of these bulk council tax court applications, is the limited attention it is possible to give each individual summons. This relates to both the council’s enforcement manager, responsible for delivering the complaints to the court, and the court’s legal adviser who issues the summonses. This number was over 3,300 in the case of the 2 June court hearing.

My summons document was posted to me by the council, complete with a glaring error, and due to the ‘conveyor belt’ nature of these applications; it is likely that 3,000 plus summonses would have also contained the same.

The summons stated:

“If the total amount outstanding as stated above including summons costs is paid to North East Lincolnshire Council before the date of the hearing, all further proceedings will be stopped. However, if a Liability Order is granted the Council will apply for further costs of £25.00 being reasonable costs incurred.”

As mentioned previously, the council’s costs had been consolidated into one penalty charge, with the debtor effectively incurring both summons and liability order costs at the summons stage of enforcement. The document’s format had obviously not been updated to reflect the changes in the council’s costs structure.

It is negligent that the council and court had permitted these summonses to be issued, but even more remarkable is that according to the council, it had informed the Magistrates’ court by letter of its intention to increase summons costs and that there were no longer costs for a liability order.

It’s unlikely the procedure involves the exercise of a judicial function with evidence pointing to the process being merely administrative. There must be serious doubt as to whether summonses are being issued without information actually being laid before the magistrate.

Chief Justice Lord Widgery stated in the case between "Regina v. Brentford Justices, Ex parte Catlin" that:

“before a summons or warrant is issued the information must be laid before a magistrate and he must go through the judicial exercise of deciding whether a summons or warrant ought to be issued or not. If a magistrate authorises the issue of a summons without having applied his mind to the information then he is guilty of dereliction of duty and if in any particular justices' clerk's office a practice goes on of summonses being issued without information being laid before the magistrate at all, then a very serious instance of maladministration arises which should have the attention of the authorities without delay.”

There is further evidence that the procedure is unlikely to involve the exercise of a judicial function.

The council have revealed that over the last 5 years, it has obtained a total of 3,528 liability orders for an initial debt of £50 or less. Among these, 1,387 were issued for outstanding debt of less than £25 with orders even being made for debts of only a penny. This is despite the Chief Executive of NELC stating that:

“The council's collection team checks the accuracy of all accounts before passing them to the enforcement stage. Accounts are only progressed to enforcement for amounts over £50.”

The Judge must have deemed this information to be of no consequence.

[CleverClogs]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

It was certainly of no relevance to the case immediately in front of him.

It would be of significance were the judge to have been asked to consider the council's efficiency.

[Guest]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Would the attached file - which tells of councils getting a cut or "bung" from bailiff companies - help at all?

Fraid not, its only a white paper. It refers to 'profit sharing' but the document posted by outlawlgo says its costs.

Telephone the magistrates court and ask for the amount on tbe liability order, that is all you have to pay.

If the £75 has been added, start the formal complaints procdure and get the invoices and receipts paid by the council as proof it is costs for work done in getting a summons. If they cannot show evidence, then the council is unable to show its reasonable costs. Summons fee = £0.00

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Happy Contrails,

The Judge quashed the liability order, but I thought I'd have a go at highlighting to him the failings of the procedures involved in these liability order applications.

As you've brought it up though, this is North East Lincolnshire council's feeble attempt at justifying the costs for obtaining the summonses.

Bear in mind these figures have been rearranged in a more presentable format. The council obnoxiously dumped raw data from their computer system into an email so they could say they had supplied the information.

My best guess from attempting to decipher these figures, is they include costs which are not directly related to recovery. They are more than likely trying to recover the entire costs of administrating council tax with these court fees.

2011/12 REVENUES BUDGET (debt recovery)

A0184 CONTROL & MONITORING

Total revenue expenditure budget – £507,000
£ recharged income – £0
Percentage recovery work – 20%
Cost attributable CT recovery – £101,400

A0187 DEBT COLLECTION

Total revenue expenditure budget – £738,500
£ recharged income – (£121,800)*
Percentage recovery work – 100%
Cost attributable CT recovery – £616,700

A0191 COUNCIL TAX

Total revenue expenditure budget – £826,900
£ recharged income – £0
Percentage recovery work – 50%
Cost attributable CT recovery – £413,450

TOTAL £1,131,550

*cost of sundry debt collection recharged to other directorates

[CleverClogs]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Fraid not, its only a white paper. It refers to 'profit sharing' but the document posted by outlawlgo says its costs.

The white paper does suggest there is a possible conflict of interest, or even an actual motive for some / many councils to have a bailiff company recover Council Tax arrears, as that would boost the company's profits and hence increase the 'commission' paid to the council.

If the £75 has been added, start the formal complaints procdure and get the invoices and receipts paid by the council as proof it is costs for work done in getting a summons. If they cannot show evidence, then the council is unable to show its reasonable costs. Summons fee = £0.00

If the council does provide any data, they are likely to be the running costs for that department or that section of the Council Tax department as a whole, rather than any data for just one summons. The swivel 'servants' may then aver that the cost per summons can be calculated by dividing the gross cost of the section or department by the number of summonses issued and, at first sight, that might seem plausible.

It would, however, be rather misleading as that 'individual cost' would include an apportionment of fixed costs that would be incurred by the council whether 100, 1000 or 10000 summonses were issued; whilst the number of employees involved might have to rise if more summonses are issued, it would be foolish to suppose there was a direct mathematical relationship between the number of summonses issued and the number of staff required. Other administrative costs, such as computer hardware and software, should also be excluded from the calculation of the mean, direct costs per summons.

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

.....It would, however, be rather misleading as that 'individual cost' would include an apportionment of fixed costs that would be incurred by the council whether 100, 1000 or 10000 summonses were issued; whilst the number of employees involved might have to rise if more summonses are issued, it would be foolish to suppose there was a direct mathematical relationship between the number of summonses issued and the number of staff required. Other administrative costs, such as computer hardware and software, should also be excluded from the calculation of the mean, direct costs per summons.

So, if you were very very cynical, you might think a local authority wanting to justify and charge £100 for the summons/liability order penalty, would 'by hook or by crook' take approximately 10,000 residents to court if their forecasted recovery costs were £1,000,000 each year.

Following on with this logic, if the authority were forced by the Magistrates' court to reduce this penalty to £75, their target for taking residents to court would increase to approximately 13,330 each year.

[Guest]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

outlawglo, why dont you write a FORMAL COMPLAINT to the council and ask what legislation sets the fees they are charging?

Fees that are not prescibed cannot be enforced unless the magistrate has said otherwise. The other old gag is the Head H fee, charged by bailiffs under a pretence the debtor has had to go to the bailifffs warehouse and collect his goods upon tender. Head H is a goods redeption fee.

Have you tried the advice line at the Serious Fraud office? have ducks in a row before you call. http://www.sfo.gov.uk/

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Happy Contrails,

Officers at North East Lincolnshire council are aware – and if they're not, they should be – that I'm after making sure some of these become answerable (in an arrow suited way) for the part they play in the systematic fraud in council tax liability order applications and the subsequent crime they abet with their appointed bailiff firm Rossendales.

Dealing with them though is proving difficult as they have only the other day refused to deal with a formal complaint I took the trouble to send them.

As per this response:

I can make you aware that North East Lincolnshire Council will not be raising your concerns as a formal complaint and will not enter into further dialogue regarding the issues you have raised.

Allowing their bailiffs to unlawfully charge the head H fee you mentioned, has also been put to them. The council denies it has records of debtors who have been charged this fee. The evidence below suggests they do hold, or, can access this information if they so wanted.




EDIT:

I'm working on presenting all the information so I can bring it to the attention of the Serious Fraud Office. Thanks for the link, I have previously wasted my time dealing with the Humberside Police's Economic Crime Section.

[CleverClogs]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

outlawglo, why dont you write a FORMAL COMPLAINT to the council and ask what legislation sets the fees they are charging?

Fees that are not prescibed cannot be enforced unless the magistrate has said otherwise. The other old gag is the Head H fee, charged by bailiffs under a pretence the debtor has had to go to the bailifffs warehouse and collect his goods upon tender. Head H is a goods redeption fee.

See the attached document.

It would appear that the appropriate fee under H would be £(940.91 / 20) = £48 when rounded up to the nearest pound. Hence, the stupid council cannot even overcharge correctly.

I rather doubt that the Serious Farce Office would be interested, but the Local Government Ombudsman - link - should be.

[outlawlgo]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Re; post#8

Can't believe something so obvious hadn't struck me till now.

These are North East Lincolnshire Council's figures they supplied to give an itemised breakdown of costs, justifying that bringing court action against each resident would total £70.




If you look at how R34(5)(b) and (7)(b) are worded under the header "Application for liability order" in the Council Tax (Administration and Enforcement) Regulations 1992, it doesn't permit costs for "DEBT COLLECTION" to be included in the costs reasonably incurred by the authority in connection with the summons penalty.

According to the following from the regulations: 34(5)(b) and 34(7)(b) permit only costs reasonably incurred by the authority up to obtaining the order. Regardless of the council unlawfully combining the two fees, the regulations do not provide for costs, after the order is obtained, to be included in the costs reasonably incurred.

Application for liability order

34.–(5)(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, (relates to summons penalty)

(7)(b) a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.

So clearly, (discounting everything else for now) the £616,700 detailed under "DEBT COLLECTION" should not be included as costs attributable to obtaining a liability order.

The new total would now be £514,850, this is without analysing the other dubious costs.

This is not the end of the matter however. It seems irregular that a figure of £738,500 is listed under the header "DEBT COLLECTION" when councils boast that private bailiff firms come at nil-cost to the authorities.

[A54]

Re: Councils unlawfully charging Liability Order and Summons costs at the same time

Incidentally, I attended a court hearing yesterday to have a liability order made against me by North East Lincolnshire council quashed if the district Judge thought there was good reason to do so.

Whether or not he thought there was good reason, he quashed the order. However, the Judge had read several pages of notes I'd prepared, before the hearing.

Details, as those in my first post, were contained in my notes. The Judge made nothing of these neither was he interested that I'd accused the council of attempting to defraud me through its appointed bailiffs Rossendales.

Not to detract from your main point about the unlawful charging for liability orders, hope you don't mind me asking...

what was your reason for quashing the liability order?

I'm in a similar position that I need to apply to have a total of 11 LO's quashed, the problem is that as the present law stands, only the council involved have the 'authority' to ask a court to quash an LO, a citizen has no legal right to apply to quash it even if he can prove he did not owe the alleged debt.

I have seen some cases such as yours where an application to set aside an LO has been successful but only when you are able to 'prove' that the LO should not have been made in the first place.

proving you did not owe the debt is not a viable reason for the LO to be set aside, you have to 'prove' there was an error (as in my case) such as a summons was not served.

in my case, I only received one summons which I disputed and was told that court proceedings would not go ahead (it did!) and never received summons for the other 10 LO's, I don't think a judge would be believe me but its true.

The point I'm trying to make is that I don't think LO's are democratic or justifiable as the defendant is barred from defending himself against such an order even if he can prove he did not owe the alleged debt.

If a judge is satisfied that a summons was served he does not have to look at details as to whether or not the debt is genuine.

I'm in a position where the last 4 LO's have been used in a Stat Demand to make me bankrupt, once I've dealt with this I'm going to see if I can get a judicial review on the remaining 7 LO's, I think its only right that if you can reasonably show the debt is disputed, a citizen should have the legal grounds to ask a judge to quash the LO.

Councils appear to be systematically victimising the most vulnerable of its residents because 'they can' thanks to the undemocratic nature of LO's. This is a loophole above all others that needs to be shut.

Sorry for the rant, hope not have gone too far off topic.

best of luck with your case.