Local Government Ombudsman

PO Box 4771 Grimsby

Coventry North East Lincolnshire
CV4 0EH DN32

28 June 2017

Ref: 17 003 081

Dear Ms Gooch

Complaint against North East Lincolnshire Council

The draft decision does not specifically relate to my present complaint. I was concerned that the
specific issues of the present matter would be linked to my previous complaints and therefore be
considered outside the Ombudsmans remit for the same reasons stated by the Ombudsman at
those times.

It was because of this concern that I attempted to be clear from the outset that the area to be
investigated was an entirely separate issue from what the Ombudsman had previously considered.
I stated in my online application of 20 May 2017 the following:

For the avoidance of doubt, I must stress that the matter of my complaint is entirely
isolated from the issues involving the High Court application. The matter primarily
concerns the Council refusing to deal with my complaint because if it did investigate the
matter properly it would reveal serious maladministration.

The draft decision does not make any reference to the specific issue of the present matter which is
effectively the Council refusing to address my complaint to underhandedly achieve avoiding
accountability.

However, the draft decision seems to elaborate on issues which the organisation previously
considered to be outside its remit, but evidently done so without considering the representations I
made on its original findings. I will therefore separately;
 i) further clarify why my present complaint does not concern the High Court
application nor the laws surrounding appropriation of payments (thus irrelevance of
the draft decision), and

ii) point out any factual errors I have found /consider the draft decision and make
representations on the findings.

i) irrelevance of the draft decision to my present complaint

Paragraph 6 of the decision notice has no relevance to my present complaint as it deals with laws
surrounding appropriation of payments specifically the way local authorities attempt to comply
with the principles where payments are processed automatically by computer systems.

To ensure that the Ombudsman recognises where my present complaint differs in this area it is
essential to understand that the issues have nothing to do with how the council tax processing
system is set to allocate unspecified payments (those not exactly matching instalments).

The 60 from 2012 to which payment was allocated had been suspended until the outcome of the
proceedings and therefore wrongly allocated to that sum. The authority, so it says, made the
decision to no longer [hold] action in attempting to recover the outstanding amount on the basis
that I had withdrawn the appeal disputing the costs.

The councils criminal actions which I allege have not been set out to be considered here and so
are irrelevant to my present complaint. Whether dishonesty was involved is not a factor because
what matters is that the council was at fault for refusing to deal with a formal complaint because it
is inconceivable how it could have investigated the matter credibly without revealing that its error
had caused me gross injustice which it did not want to be held accountable for.

It states erroneously in the draft decision in paragraph 11 that the Council applied for a liability
order because I had not paid my council tax. My council tax had been paid, moreover payments to
my account were either up to date or in credit at all times at least up until the council instituted
recovery through the Magistrates court.

It also states in paragraph 11 that had I paid the amount stated on the bill then my payments
would have been allocated to 2015/16. This is irrelevant because as aforementioned this particular
matter deals with how the councils system is set to allocate unspecified payments (where there
are outstanding balances relating to more than one year/account). Where a council taxpayer has
outstanding monies relating only to the current years liability, then payment, whether or not the
sum matches the instalment amount can only reduce the indebtedness of the council tax account
which is current at the time of payment. In other words the possibility is removed of payments
being automatically allocated by the councils computer system to another sum, potentially
resulting in unnecessary recovery.

These were the circumstances relating to my account because the sum from a previous year had
been suspended until the outcome of the appeal (only the current years liability was outstanding).
Payment was allocated to the disputed sum only because the council was at fault by no longer
holding action in attempting to recover the outstanding amount on the basis that I had withdrawn
the appeal.

All that matters as far as my present complaint is concerned is that;

(a) my assertion is true that the 60 court costs, which I dispute, were suspended by the
council until the outcome of the proceedings,

(b) the council no longer held action in attempting to recover the outstanding amount on
the basis that I had withdrawn the appeal disputing the costs in 2013, and

(c) I had, in fact, never withdrawn the appeal disputing the costs

The first of the above (suspended court costs) can be pretty much verified by a letter of 19 July
2013 sent by the councils Mrs Richardson-Smith (see attached letter NELC 19 July 2013
suspended costs).

The councils Witness Statement (last page paras 68 to 70), verifies that the council no longer
held action in attempting to recover the outstanding amount on the basis that it believed I had
withdrawn the appeal, and reinforces Mrs Richardson-Smiths letter that court costs were
suspended until the outcome of the proceedings. (see attached NELC last page of Witness
Statement):

68. The Council is aware that the defendant has taken matters further with regards to
disputing the 60.00 costs incurred from November 2012.
 69. Correspondence received from the defendant as of 20th November 2013 stated that
he had withdrawn his application for the Judicial review of the costs (NELC12)

70. Given this the Council no longer held action in attempting to recover the outstanding
amount.

The recent decision from the court service which I submitted in support of my online application
of 20 May 2017 provides conclusive evidence that I had never withdrawn the appeal disputing the
costs.

Although my present complaint focuses solely on the councils refusal to consider new evidence,
which proves conclusively that the liability order was applied for in error, it would perhaps be as
well to point out that the council had no credible reason to believe that the appeal had been
withdrawn. In fact, the council had been copied in to correspondence after November 2013 which
documented the ongoing difficulties I was having progressing the case with HMCTS, which
proved beyond all doubt that I had never withdrawn the appeal disputing the costs (see attached
document, Pursuing appeal correspondence). The letters were sent electronically as email
attachments dated 10 January, 13 February and 22 April 2014. Details relating to when the emails
were sent and to whom etc., reveal that Mrs Richardson-Smith was copied in on all three.

I have produced a case providing far more detail and damning evidence than has been mentioned
here regarding the councils false statement/perjury, however, I dont propose forwarding it at this
time but will do at the request of the Ombudsman if he considers it may assist, perhaps to prove a
case of misconduct in public office for example.

As a consequence of what is set out above, paragraphs 10 to 12 of the draft decision are irrelevant
as the appropriation of monies was supported by the council on the basis that it believed the
appeal had been withdrawn. It is immaterial to this complaint whether the council genuinely
believed the appeal had been withdrawn - or - as my evidence supports beyond all doubt it was
fully aware it had not. The councils fault was to bury its head to new evidence, which proves
conclusively that the liability order was applied for in error.

The commencement of proceedings before a court of law

Paragraphs 3 and 10 refer to the Ombudsman being restricted by the Local Government Act 1974,
Schedule 5, from investigating a complaint if someone has commenced court action about the
matter. However, according to the publicly available LGO Guidance on jurisdiction (February
2017) at page 56 the idea is expressed that court proceedings may be the injustice as opposed to
the fault, particularly concerning cases where, had no fault occurred, court proceedings could
have been avoided. The relevant paragraph is as follows:

The exclusion of court proceedings from the Ombudsmans jurisdiction was intended to
prevent us considering those matters decided by the courts using different evidential
standards, and applying the more restrictive test of legality as opposed to
maladministration. But there is no prohibition of an investigation about whether, had fault
not occurred, court proceedings could have been avoided. This is because, in such cases
the court proceedings are the injustice as opposed to the fault. We have in the past
criticised councils for taking bankruptcy proceedings where even though the application
was successful we did not feel it was a proportionate response to enforcement of a debt,
given the prohibitive nature of the costs involved for the person being made bankrupt. We
have also found fault with councils obtaining Liability Orders from the courts for unpaid
Council Tax where they should not have done so.

Though it is clear that the Ombudsman is referring to the appeal in 2012 it has been demonstrated
that the application to the High Court is irrelevant to the present complaint (the disputed costs had
been suspended). However, the Ombudsman may consider Schedule 5 to be applicable as a
legislative bar regarding the court proceedings which commenced in 2015, but if the LGO
Guidance on jurisdiction was applied to the decision making it would be reasonable to conclude
that court proceedings could have been avoided, had fault not occurred.

The Local Government Act 1974, section 26(6), provides another legislative bar in that the
Ombudsman shall not conduct an investigation in respect of any action where the person affected
has or had a remedy by way of proceedings in any court of law (a subtle difference from having
commenced court action). However, it is clear that a clause is provided in sub-section 6 of section
26 which allows the Ombudsman discretion as it states as follows:

Provided that a Local Commissioner may conduct an investigation notwithstanding the

existence of such a right or remedy if satisfied that in the particular circumstances it is not
reasonable to expect the person affected to resort or have resorted to it.

It could be said that I had a remedy by way of appealing the Liability Order that was made against
me in 2015 to the High Court, but the far simpler solution would be if the council applied to the
Magistrates court under the provision of the Local Government Act 2003. This was a remedy
enacted purposely to enable magistrates' courts powers to quash liability orders where there is no
dispute about the facts, hence the cost involved is unwarranted. In normal circumstances a High
Court appeal would be considered unwarranted, but the recent decision from the court service is
enough evidence to justify that it would be wholly unreasonable to expect that I resorted to this
remedy.

ii) factual errors I have found

Paragraph 7 of the decision notice states that I had a debt of 60 from 2012 but omits to record
the very relevant matter that the council had put in writing that the sum was suspended until the
outcome of the proceedings.

In the same paragraph, clarification is required regarding the sum stated misleadingly as being
85 which I paid in May 2015. I had already paid Mays instalment on 21 April 2015 which was
91; the 85 which was paid on 28 May contributed to Junes instalment and paid out of a
different bank account than that which a later payment of 7 was made. The aggregate of the two
payments settled the amount due for Junes payment and were made by the due date.

Paragraph 8 omits to say what my complaint aimed to accomplish regarding the suspended costs.
Below is quoted from an email of 12 January 2017 to the Councils Monitoring Officer, Tony
Maione, which explains more clearly:

If the Magistrates' court were to quash the liability order granted on 30 October 2015
then the 60 costs added in September 2015 would have been invalid and require
removing from my account. The misallocated payment of 60 would require reallocating
to the 2015/16 account and the disputed costs would remain suspended until the High
Court appeal had concluded.

To reiterate what I stated earlier, paragraph 11 incorrectly says that I had not paid my council tax.

Paragraph 12 incorrectly states that the court considered the points Id raised at the court hearing.
The court did not consider my evidence because it was clear that the District Judge was satisfied
with an argument contained in the Councils Witness Statement relying on Devaynes v Noble
(1816) 35 ER 781. It was this case which the Council sought authority to support its assertion that
unspecified payments are presumed to be appropriated to debts in the order in which the debts are
incurred and if no election is made the earliest debts are paid first, and cited the following from
the judgment: it is the first item on the debit side of the account, that is discharged, or reduced,
by the first item on the credit side.

The case, however, concerned how payments were dealt with in relation to a "running Account"
(banking account), where all the sums paid in form one blended fund, the parts of which have no
longer any distinct existence. This case did not have any relevance to Council Tax whereby the
accounts relate to distinct insulated debts, between which a plain line of separation can be drawn.

The following I hope will be of use to the Ombudsman

A more recent case, R v Miskin Lower Justices (1953), held that where an amount so obviously
relates to a specific liability, it would be an unwarranted assumption to allocate the payment
elsewhere. It could be drawn from this that where an unspecified payment is made it must be
carried to that account which it is most beneficial to the debtor to reduce.

The fact that it would be to the taxpayers detriment if allocated to the oldest debt is sufficient to
infer that the payment is intended to reduce his current years liability. The 1953 case law, clearly
serves, in these circumstances, to protect the taxpayer from the right of appropriation falling on
the Council when its election may be to the taxpayers detriment. It can be concluded that billing
authorities which have their systems set so non-specified payments are posted by default to the
most current debt is because it would be an unwarranted assumption to allocate monies to a sum
in arrears if it is likely to also put the current year's liability in arrears.

The council can change its system's settings so that non-specified payments are automatically
allocated to the current year's account thus eliminating this element of unwarranted applications
to the court. It has been discovered that a number of councils have their council tax processing
systems set up this way or at least ensure that an unspecified payment is not allocated to the
oldest debt if doing so would put the current year's account in arrears in accordance with R v
Miskin.

Middlesbrough Council

"The Council Tax administration system uses an automated process to allocate payments
received against an individual account. There are a series of checks made by the system,
but in summary where a payment that has not been marked as received from an attachment
source or enforcement agent fails to match a debt or instalment amount due then the
payment would be allocated to the current year debt."

Castle Point Borough Council

"If payments are received that do not match the instalments that are due or as per an
arrangement that has been made to cover the current or previous years, the payment will
be allocated to the current year first."
Croydon Borough Council

Croydon's council tax system has a complex set of rules for cash allocation; for each
payment received the system looks to match it to the most relevant debt based on the
amount - for example if the payment matches an instalment amount for a payment
arrangement for arrears, it will be allocated against that debt. If the amount paid does not
match any instalment plan or other rule within the system, the payment will be allocated to
the current years debt.

Durham County Council

Where there is more than one year of Council Tax debt outstanding, payments are checked
to ensure monies are allocated appropriately.

In accordance with internal procedure, firstly accounts are reviewed to determine

If the customer has indicated where the payment is intended

Whether the amount is similar or the same as an instalment

Whether the payment is as a result of the issue of recent documentation

Whether the payment is from a third party, i.e. a direct deduction (monies will be
allocated to the relevant debt)

Is there any impending action that would result in additional costs or hardship for the
customer that could be avoided

Should none of the above apply, consideration will be given to ring-fencing the older debt
and allocating payments to the current financial year.

Southwark Borough Council

With effect from 10 October 2016 payments are allocated as follows:

Payments received that exactly match an instalment are automatically allocated to the
year the instalment relates to.

If the payment amount does not exactly match an instalment the payment is
automatically allocated to the most recent financial year.

If a payment has been received in respect of a particular Liability Order (e.g. subject to
an Attachment of Earnings, Attachment of Benefits or a Charging Order) it is manually
allocated to the financial year(s) the Liability Order in question related to.

Prior to 10 October 2016, payments that did not exactly match an instalment and were not
received to settle a particular Liability Order were allocated to the oldest debt first

Great Yarmouth Borough Council

 "Where money is paid to the Council for Council Tax, if the sum paid matches an agreed
instalment it is automatically allocated to the year the instalment relates to. Where the sum
paid does not match any agreed instalment plan the amount paid is allocated to the current
outstanding bill.

Lambeth Borough Council

The council tax regulations are silent as regards payments allocations. Therefore we
follow the general principles

that a payment tendered in an amount which matches an instalment calculated under the
regulations, or has been otherwise agreed with the taxpayer in advance of payment, will be
allocated against that instalment,

where the tax payer gives clear instructions at the time of, or shortly after, the payment is
made the payment will be allocated in accordance with those instructions,

in the absence of clear instructions the council will allocate payments to the current year
or youngest debt first and arrears after that is clear.

Eastleigh Borough Council

Yes this is correct re, if it is likely that allocating an unmatched payment to the oldest
debt would put the current year's liability ALSO in arrears, the payment would be
allocated to the current year?

Note:

It appears to be the Ombudsmans opinion that he considers the costs should be paid regardless of
the High Court having not considered the appeal and consequently there being no outcome.
However, more worryingly is the signal being sent out that resorting to perjury to achieve this
requiring a further court summons and costs is an acceptable approach if it is the actions of a
local authority.

Yours sincerely