IN THE HIGH COURT OF JUSTICE

CO Ref: CO/

/20XX

QUEENS BENCH DIVISION

ADMINISTRATIVE COURT

BETWEEN:
[XXXX XXXXX]
Appellant
and
[XXXXX XXXXX]
Respondent

WITNESS STATEMENT OF XXXXX

[DRAFT]

1.

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

Tottenham Magistrates), Mrs Justice Andrews considered in respect of instituting the
complaint under regulation 34(5) of the Council Tax (Administration and Enforcement)
Regulations 19921 (the Regulations) whether including administrative costs of serving
reminder and final notices is justified. Though there is no definitive outcome, it could be
drawn from the judgment that the point from which expenditure becomes a justifiable
cost is the stage in the process where the decision is taken to enforce. (See: Nicolson v
Tottenham Magistrates, para 43)
Apart from the costs of the final notice, which can arguably be justified on the
specific basis adverted to by Ms Mountfield, (though only in those cases where a
summons is issued) it seems to me, both as a matter of language and purposive
interpretation, that it would be difficult to justify including any other costs
incurred prior to the decision being taken to enforce (which is a matter of
discretion under Regulation 34(1)). In order for costs to be incurred in connection
with the making of the application, a decision to make such an application must
have been taken. It is only then that the process of enforcement gets underway.
Indeed Regulation 34(5), which includes that phrase, is specifically addressing the

Annex A of these representations

scenario where a summons has been issued, and thus the decision to enforce has
been taken.
2.

Though uncertainty surrounds the final notice (above), a decision leans towards
disregarding the cost upon considering the Explanatory Memorandum to an amendment
introducing a cap on recoverable costs in Wales. Paragraph 47 of Nicolson v Tottenham
Magistrates, advises so far as is relevant, as follows (emphasis added):
..... Consistently with my interpretation of the Regulation it ties the costs
recoverable to the issue of the summons and the making of the liability order
(rather than costs incurred at any earlier stage, including, I note, the issue of the
final notice).

3.

However, it remains generally the opinion of those whose interest it serves that
expenditure attributable to serving reminder and final notices (additional to summons) is
considered rechargeable to defendants in respect of instituting the complaint under
regulation 34(5) of the Regulations. The argument has even been made by Lambeth
Borough Council (LBL) that all the costs incurred onward from the Council Tax being
set at the beginning of each financial year (implying the cost of the demand notice)
should be recharged to those against whom the council has begun recovery through the
court. The Institute of Revenues Rating and Valuation (the IRRV) which shall be
referred to in more detail later, also suggests this cost might be fair game as a
rechargeable expense, on account of the demand notice being a prerequisite of recovery.

4.

Correspondence relating to a Complaint made to LBL regarding Council Tax court

processes and costs provides a rationale for why it may legitimately account for all
administration costs presumably which would include Council Tax bills and even
implies that costs incurred after the Liability Order has been obtained are legitimate. A
response from LBLs Client Performance Manager, dated 14 July (ref: 2015 70166126 /
78604156) stated the following with relevance to the matter:
Court Costs
The council is considering the implications of the High Courts ruling in [Nicolson
v Tottenham Magistrates]. One of the key points is that costs can be claimed once
the decision to enforce has been taken. At Lambeth we took a decision at the
beginning of each financial as that we would enforce as soon as an account is in
arrears. The council tax system was then updated with the various recovery
parameters and timetable for action. We are satisfied therefore that all actions in

respect of accounts in arrears are costs legitimately incurred in the enforcement of

collection.
5.

The attempts to justify discretion being exercised (not fettered) were founded on
extremely tenuous grounds, but apart from that its an assertion which incriminates the
Council, as it admits that once the Council Tax processing system is set-up the entire
operation runs itself. (Letter dated 20 October 2015)
The decision to enforce is more than a policy decision; it is implemented by
setting the recovery parameters in the council tax system at the start of the year. No
other action or intervention is required pursue debtors. The system is set so that,
with a limited number of pre-defined exceptions, those who have an amount to pay
and have not paid it in accordance with, or in advance of, the appropriate instalment
plan will be automatically summonsed.
Consequently, the vast majority of the budget attributed to cost incurred to enforce
collection would appear falsely claimed. Moreover it is misconceived to consider that
all expenditure incurred in the enforcement of collection is permissible. The
application, for which the Council may claim costs, simply involves a process to obtain
the courts permission to enforce payment and nothing more. There is no vehicle
through which a billing authority may lawfully recharge expenditure it incurs to the
defendant beyond that process and in any event, the process which makes up the vast
majority of costs (122 of the total 127) is referable to regulation 34(5) of the
Regulations and so must be limited to nothing exceeding the costs of issuing the
summons, an automated process.

6.

The IRRV offer courses focussing on Local Taxation with recent ones being aimed at
local authorities wanting to maximise their costs income whilst minimising their
exposure to legal challenge. These have evidently been triggered by the judgment in
Nicolson v Tottenham Magistrates, which provided general guidance as to the type of
expenditure billing authorities may lawfully recharge to defendants in the process of
seeking Magistrates permission to enforce unpaid council tax. The presentation slides
accompanying the 28 September 2015 course (Local Taxation Update) imply what has
been generally suspected which is that local authorities aim to cover the full budget for
their recovery of Council Tax administration. The slides state on page 12 of their
documented version, as follows:

 Council Tax
When calculating the costs no account should be taken of anything as follows:
Post LO
General administration of Council Tax
no way now to include the full costs of the Recovery section !
7.

Subsequent advice, 30 September 2015 (Court Costs: An Update) offered IRRV

customers an argument for why it might be legitimate to include demand notice costs
based upon them being a prerequisite of recovery. However, the transcript revealed that
though the presenter could see the argument and didnt necessarily disagree with it, he
expressed caution, in order to avoid the risk of challenge for what effectively would be
only covering the postage costs as the operation was so automated.

8.

To argue that a blanket decision to enforce on all accounts in arrears is made at the
start of each year (LBL) and the demand notice being a prerequisite of recovery (IRRV)
would appear misconceived in the context of marking the point where discretion is
exercised to enforce. The Reminder (or Final Notice) would need to be sent, and full
payment not be received by the stated due date before the actual decision to enforce in
any one instance could be taken.

9.

Even if the popular reliance on charging for compulsory steps is to be considered, then
only the costs of the compulsory steps in that individual application could be included,
not every account not paid on demand, as LBL do. The bill is also a compulsory step,
and it would be unreasonable and unique to include the cost of that. Likewise, the
reminder to pay is just that, a reminder to pay, issued to primarily to benefit cash flow
not as a legal requirement for later litigation. In the majority of instances it has the
required effect of obtaining payment. That it must have been sent in order for a
summons to be applied for is no reason to suddenly charge for it any more than the
original demand. The methodology to include it is an attempt to justify covering the
entire costs of the recovery department which legislation has not been designed to
sanction.

10.

There is nothing on the bill or the reminder to indicate that this one notice could be
valued at 60 in the event of non-payment, or a Final Notice 33, and it is unreasonable
that either is deemed to have such a value.

11.

Removal of the contentious elements in LBLs instance reduces the summons cost from
122 to 6.12.

12.

Considering the IRRV transcript (costs update) once more, the caution expressed in the
presentation with regard to including the demand notice expenditure, did not extend to
reminder and final notices. It is made clear that what it considered reasonable is the
expenditure incurred from the reminder stage onwards, despite the contrary expressed in
Nicolson v Tottenham Magistrates. The only glimmer of doubt that arose in the
judgment in that respect was whether the expenditure incurred in serving a final notice
was a cost that could be legitimately recharged in respect of instituting the complaint.

13.

This doubt warrants further investigation into whether, when exercising discretion to
issue a final notice, this can justly be considered to be when the decision to enforce is
taken. It is to be observed that a final notice is not always a necessary step before a
billing authority may apply for a liability order; the circumstances dictate when one is
required and is possible for an order to be applied for after one reminder without being
required to serve a final notice.

14.

The requirement for the billing authority to issue reminders (maximum two) is
dependent on whether an account is brought up to date after the first one in the financial
year. For example, if after the first reminder an account is brought up to date in
accordance with the demand, another must be sent if payments are subsequently missed.
If the account is not brought up to date after being issued a first reminder a liability
order may be applied for requiring no final notice. (paras 3 and 4 of regulation 23,
Annex B):

15.

Regulation 33 (as amended2) clarifies the position regarding when a final notice need
not be served if the debtor fails to pay any instalments due within seven days of the
issue of a reminder notice:
Liability orders: preliminary steps
33.(1) Subject to paragraph (3), before a billing authority applies for a
liability order it shall serve on the person against whom the application is to be
made a notice (final notice), which is to state every amount in respect of which
the authority is to make the application.

Amended by Regulation 14 of the Council Tax (Administration and Enforcement) (Amendment) Regulations
1992 (SI 1992/3008) and Regulation 5 of the Council Tax (Administration and Enforcement) (Amendment)
Regulations 1994 (SI 1994/505)

(2) A final notice may be served in respect of an amount at any time after it has
become due.
(3) Nothing in paragraph (1) shall require the service of a final notice in the
circumstances mentioned in paragraph (3) of regulation 23 (including that
paragraph as applied as mentioned in regulation 28A(2)).
16.

It is also clear that for those cases where it is a requirement to serve a final notice, the
discretion to do so must be exercised prior to applying to the court for an order under
regulation 34(1) of the Regulations. However, it has been established in Nicolson v
Tottenham Magistrates that the stage in the procedure at which the costs may be
rechargeable is regulation 34 (or at least it would be difficult to justify including any
other costs incurred prior to that point).

17.

In those cases where a final notice requires serving, the decision is made to enforce
beforehand (or at least a decision is made to secure the option) and could be argued that
the cost of serving that notice is legitimately recoverable. Though even after a final
notice has been served, the billing authority is under no obligation to proceed to make
complaint to the court. There is still discretion under regulation 34(1) and in any event if
the defendant pays in accordance with the final notice, the discretion no longer exists
and could be argued that similarly to where there is no requirement to serve a final
notice, the decision to enforce can not be taken until there is provision to under
regulation 34. In both scenarios that is a decision that cant be made until the Council
Taxpayer has failed to comply with the reminder or final notice, which is to settle the
unpaid balance of the estimated amount which has become payable within 7 days.

18.

The billing authority has discretion whether or not to serve a final notice under
regulation 33 but must do so if subsequently it intends to proceed to make complaint to
the court. Reminders, however, are mandatory (para 1 of regulation 23, Annex B) and it
is only the discretion in the former that arguably shifts when the process of enforcement
gets underway to before the provision described under regulation 34. Nevertheless,
weighing up both arguments it is evident that the decision to enforce can not properly be
taken by the billing authority until either the mandatory reminder or discretional final
notice has failed to obtain payment, which in both cases is a decision which can not be
taken before the point in proceedings provided under regulation 34(1).

Annex A
Regulation 34 of the Council Tax (Administration and Enforcement)
Regulations 1992
Amended by regulation 15 of The Council Tax (Administration and Enforcement)
(Amendment) Regulations 1992
(SI 1992/3008)
Application for liability order
34.(1) If an amount which has fallen due under paragraph (3) or (4) of regulation 23
(including those paragraphs as applied as mentioned in regulation 28A(2)) is wholly or partly
unpaid, or (in a case where a final notice is required under regulation 33) the amount stated in
the final notice is wholly or partly unpaid at the expiry of the period of 7 days beginning with
the day on which the notice was issued, the billing authority may, in accordance with
paragraph (2), apply to a magistrates' court for an order against the person by whom it is
payable.
(2) The application is to be instituted by making complaint to a justice of the peace, and
requesting the issue of a summons directed to that person to appear before the court to show
why he has not paid the sum which is outstanding.
(3) Section 127(1) of the Magistrates' Courts Act 1980(1) does not apply to such an
application; but no application may be instituted in respect of a sum after the period of six
years beginning with the day on which it became due under Part V.
(4) A warrant shall not be issued under section 55(2) of the Magistrates' Courts Act 1980 in
any proceedings under this regulation.
(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.
(8) Where the sum payable is paid after a liability order has been applied for under
paragraph (2) but before it is made, the court shall nonetheless (if so requested by the billing
authority) make the order in respect of a sum of an amount equal to the costs reasonably
incurred by the authority in making the application.

Annex B
Regulation 23 of the Council Tax (Administration and Enforcement)
Regulations 1992
Amended by regulation 3 of The Council Tax (Administration and Enforcement)
(Amendment) Regulations 1994
(SI 1994/505)

Failure to pay instalments

23.(1) Subject to paragraph (2), where
(c) a demand notice has been served by a billing authority on a liable person,
(d) instalments in respect of the council tax to which the notice relates are payable
in accordance with Part I of Schedule 1 or, as the case may be, a Part II scheme,
and
(e) any such instalment is not paid in accordance with that Schedule or, as the case
may be, the relevant scheme,
the billing authority shall serve a notice (reminder notice) on the liable person stating
(i) the amount which is the aggregate of the instalments which are due under
the demand notice or any subsequent notice given under paragraph 10 of
Schedule 1 and which are unpaid and the instalments that will become due
within the period of seven days beginning with the day on which the
reminder notice is issued;
(ii) that the amount mentioned in sub-paragraph (i) above is required to be paid
by him within the period mentioned in that sub-paragraph;
(iii) the effect of paragraph (3) below and the amount that will become payable
by him in the circumstances mentioned in that paragraph; and
(iv) where the notice is the second such notice as regards the relevant year, the
effect of paragraph (4) below.
(2) Nothing in paragraph (1) shall require the service of a reminder notice
(a) where all the instalments have fallen due; or
(b) in the circumstances mentioned in paragraphs (3) and (4).
(3) If, within the period of 7 days beginning with the day on which a reminder notice is
issued, the liable person fails to pay any instalments which are or will become due before the

expiry of that period, the unpaid balance of the estimated amount shall become payable by
him at the expiry of a further period of 7 days beginning with the day of the failure.
(4) If, after making a payment in accordance with a reminder notice which is the second
such notice as regards the relevant year, the liable person fails to pay any subsequent
instalment as regards that year on or before the day on which it falls due, the unpaid balance
of the estimated amount shall become payable by him on the day following the day of the
failure.