PLT Masthead 430

Comment and Analysis Masthead

Cost liabilities for liability orders

Money iStock 000008683901XSmall 146x219Michael Paget analyses an important ruling on recovery of the costs of unsuccessful challenges to liability orders.

The Administrative Court has decided that any unsuccessful challenger to a Liability Order places themselves at risk in costs – The Queen (otao Khan) v Feltham Mags and Hounslow LBC [2017] EWHC 3042 (Admin). This decision will help local authorities to recover the costs of resisting applications; something Magistrates' Courts have been quite unwilling to allow.

Where council tax remains unpaid, the billing authority can obtain a Liability Order (LO) from the Magistrates' Court. There are certain grounds upon which an LO can be set aside even where the Council Tax remains unpaid. Before this case, there had been some uncertainty about whether the set-aside proceedings were covered by section 64 Magistrates' Court Act 1980 (MCA 198'). Previous cases – The Reverend Paul Nicholson v Tottenham Mags & Haringey LBC [2015] EWHC 1252 (Admin) – have dealt with costs and expenses incurred in obtaining an LO this case deals with costs incurred in maintaining an LO.

The case

Between 2006 and 2013, nine LOs had been obtained against Mr Khan. On 1 February 2016, Mr Khan sought to re-open the LOs (that application was prompted, not unusually, by Hounslow LBC issuing bankruptcy proceedings against Mr Khan). It was unsuccessful and Mr Khan was ordered to pay Hounslow LBC's costs, assessed at £13,072.

Mr Khan sought a judicial review of the Magistrates' Court power to award costs with a Wednesbury challenge to level of those costs. He contended that the application to set-aside an LO is not a 'complaint' and so is not covered by s.64 MCA 1980. He argued that as the application requires no laying of an information and was only requesting the Magistrates to exercise a discretion it was not a complaint.

There is no statutory definition of complaint. Hounslow LBC, as the interested party, argued that the application could be viewed as a complaint itself or as ancillary to the original complaint when the LO was granted. As a matter of statutory interpretation an express power carries implied statutory powers when needed – see Attorney General v Great Eastern Railway Co (1880) 5 App C 473.

Cockerill J, in her first decision following her full-time appointment, accepted that the Magistrates had jurisdiction to award costs following either interpretation (at §35 and 36).

As such an application to set aside within that Part might naturally be regarded as a complaint in itself for the purposes of [section 64], it being the case that there is no particular formality required for a commencement of a complaint.

Equally, the application could be regarded as being part of the original complaint. If I had to choose between the two routes on which the jurisdiction might be said to arise, which, as I said I do not think I do, I would in fact favour the latter approach.

If it were otherwise there would be a lacuna and LOs could be challenged with no cost risks.

The costs jurisdiction under section 64 MCA 1980 is separate to that under the Council Tax Regulations which allows billing authorities to recover pre-issue costs. The Wednesbury challenge was dismissed.

Lessons learned

This is a decision on court procedure. Surprisingly Magistrates' Courts had been unsure whether or not local authorities were entitled to recover their costs. There is now certainty. If LOs are unsuccessfully challenged the applicant, rather than council tax payers generally, should pay for the privilege.

Michael Paget is a barrister at Cornerstone Barristers. He acted for Hounslow London Borough Council instructed by Brian McKenna of McKenna & Co. Michael can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..

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