Following an application made by the Rotherham Metropolitan Borough Council in 2015, His Honour Judge Robinson has ordered that interest does accrue on Liability Orders made by a Magistrates Court, at a rate of 8% per annum.
In early 2015 we, on behalf of Rotherham Metropolitan Borough Council (the “Council”) lodged an application for a charging order over a debtor’s property to secure monies due under liability orders made in respect of unpaid council tax, and interest.
Following District Judge Baddeley’s (sitting at the County Court in Rotherham) consideration of the Council’s application, the councils request for an Interim Charging Order was refused on the basis that ‘there was no statutory basis for the claim for interest’.
District Judge Baddeley had evidently erred in law by refusing to grant an interim charging order on these bases.
Accordingly, we thought it only appropriate, not only for the benefit of our client Council but all other Borough Council’s, to appeal the decision of District Judge Baddeley. The grounds on which we lodged our appeal are as follows:
- The Council’s application for a charging order over the Debtor’s property was made pursuant to Regulation 50 of the Council Tax (Administration and Enforcement) Regulations 1992 and Part 73.3(1) of the Civil Procedure Rules 1998, as amended, to secure the sums due under Liability Orders.
- Liability Orders are orders for payment of a sum of money made by a court of common law and thus, under section 18 of the Judgments Act 1838 (“the Act”), have the effect of a Judgment. The Council is deemed to be a Judgment creditor within the meaning of the Act.
- Paragraph 17 of the Act states as follows:
- Judgment debts to carry interest.
(1) Every judgment debt shall carry interest at the rate of 8 pounds per centum per annum from such time as shall be prescribed by rules of court until the same shall be satisfied and such interest may be levied under a writ of execution on such judgment.
The Council’s appeal was listed for hearing before His Honour Judge Robinson (“HHJ Robinson”).
HHJ Robinson ordered that the Order of District Judge Baddeley refusing to make an interim charging order in favour of the Council, be set aside on the basis that District Judge Baddeley ‘fell into error in refusing to make an interim charging order only on the basis that there is “no statutory basis for the claim for interest”’.
HHJ Robinson upheld our submissions that interest may be added to the sums due under Liability Orders made in the Magistrates Court under Section 17 of the Act provided the Liability Order fell within the remit of Section 18 of the Act, namely ‘rules of courts of common law…whereby any sum of money…shall be payable to any person…’.
HHJ Robinson also upheld our submissions in relation to a Liability Order, made by a Magistrates Court, being a rule of a court of common law within the meaning of Section 18 and that, accordingly, ‘interest could be added to the sum due under the Liability Order since that sum ranks as a Judgment debt under section 18 of the Act’.
The decision of HHJ will have a significant impact on all future claims bought by councils against individuals and companies in respect of unpaid Council Tax/non-domestic rates.
Going forward council’s will be entitled to claim interest on Liability Orders made in the Magistrates Court at a rate of 8% per annum. It is hoped that individuals and Companies alike will consider this ‘sanction’ before failing to pay their tax/rates as they fall due!