Many people are unaware that local authorities enforce liabilities for council tax and non-domestic business rates via an application to the local Magistrates’ Court for a Liability Order. These Orders are granted by Magistrates exercising their civil jurisdiction and are then enforceable in the same was as a County Court Judgment in the civil Courts or in insolvency proceedings, be that Winding Up or Bankruptcy. Such Orders are also enforceable by way of committal proceedings, though many local authorities are now reluctant to commit their taxpayers to prison for non-payment of taxes.
However, unlike a County court Judgment, the procedure for setting aside or appealing a Liability Order is far from straightforward. The correct way to challenge such Orders is by way of an appeal to the High Court by way case stated, pursuant to Section 111 of the Magistrates’ Court Act 1980. An application following this procedure serves to refer the decision to grant the Order to the High Court, the High Court will request that the Magistrates state their case as to why they believe that the Order in question should have been granted. The High Court is then able to determine whether or not the Magistrates over-stepped their legal authority in granting the Order.
Such appeals are based on the High Court determining whether the decision to grant the Order was either wrong in law or exceeded the Magistrates’ jurisdiction. As with any appeal, there are strict time limits applicable and therefore the application must be made to the Magistrates’ Court within 21 days of the Order being granted.
An alternative procedure for challenging the grant of a Liability Order is to apply to have the Order set-aside, pursuant to the Magistrates’ inherent jurisdiction. However, this procedure is usually only available where some element of the Court’s procedure is at issue. The conditions for setting aside an Order, as confirmed by the Administrative Court in R (On the application of Brighton & Hove City Council) v. Brighton & Hove Justices and & Michael Hamdan  EWHC 1800 (Admin) are:
- There must be a genuine and arguable dispute as to the Defendant’s liability to the Order in question;
- The Order must have been made as a result of a substantial procedural error, defect or mishap; and
- The application to the Magistrates for the Order to be set aside must be made promptly after a Defendant learns that it has been made or has notice that an order may have been made.
The High Court has previously elaborated in relation to the above conditions, providing examples of the Defendant’s solicitors writing to the Magistrates to request an adjournment where the Magistrates were unaware of the solicitor’s correspondence was such an error. Similarly, the High Court has stated that the Defendant’s failure to attend the hearing at which the Order was made when the Defendant knew of the hearing but chose not to attend is not a valid reason to set the Order aside.
Further, “promptness” normally requires action to be taken within days or at most a few weeks. It is not open to a Defendant to make an application where they have delayed when they had knowledge that an Order may have been made (such as when they had knowledge of the hearing).
The third and final way of challenging a liability Order is by way of an application to the Administrative Court for Judicial Review of the Magistrates’ decision. Judicial Review proceedings are costly and usually need to be commenced within three months of the making of the decision which is to be reviewed. There is also High Court authority to suggest that the correct manner to challenge the Magistrates’ decision to grant a Liability Order is by way of the case stated procedure detailed above.
The procedures detailed above are costly and time consuming. It is therefore preferable to enter into negotiations with the Local Authority before enforcement action is taken.