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The Woolcock Case: Prison for Failing to Pay Council Tax?

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Adiba Firmansyah (Regular Writer)

Adiba is currently studying for her LLB at Middlesex University, Dubai. Her main areas of interest are human rights and public law. Outside of the law, Adiba enjoys running, cycling and drawing.

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Sentenced to prison for 81 days after she was unable to pay off her council tax debt, Melanie Woolcock’s case was one of 305 similar cases over the past six years that ended with imprisonment. Bringing into the spotlight numerous issues including wrongful imprisonment by magistrates after failures to conduct proper inquiries, as well as the broader question of whether people should face harsh criminal punishment for such debt, Woolcock’s case demonstrates the problems surrounding debt collection in the public sector.

In light of the Welsh government’s recent abolition of custodial sentences for non-payment of council tax, this article discusses the effects of the Woolcock case and sets out the efforts that have been made for reform of an area of law that has disproportionately affected the poorest of society and has, until very recently, been given little academic and practical attention.

Background: What is council tax?

Council tax is a system of local taxes first introduced by the Local Government Finance Act 1992 (‘1992 Act’). It is, first and foremost, a property tax on dwellings. A dwelling can fall under one of eight bands, with local authorities setting a tax rate for each band. Council tax is used in England, Wales and Scotland to fund nearly a quarter of local services, including adult social care, children’s services, and schools to name a few. Since the laws and procedures that apply on council tax are similar in England and Wales, the courts treat them as materially the same.

The Local Government Finance Act 1992

The Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992 No 613) (‘1992 Regulations’), made under paragraph 1 of Schedule 4 to the 1992 Act, allow for council tax to be collected every month. In particular, Regulation 23 requires a local authority to send a reminder to a taxpayer if they miss an instalment. The taxpayer then has 7 days to pay what is left of the instalment; if they still do not pay, then they lose the right to pay in instalments and have to pay the entire amount of council tax. If the taxpayer still does not pay and does not respond to a final reminder, the local authority can seek a ‘liability order’ from the Magistrates’ court under paragraph 3 of Schedule 4 to the 1992 Act. The magistrates require fourteen days’ notice, and so, during that time, the taxpayer has another opportunity to pay off their debt. Importantly, in England, paragraph 3.5 of the Secretary of State’s 2013 Guidance to the Regulations requires a local authority to take all reasonable steps to exhaust all other options before they seek a liability order.

A liability order sets out the name and identity of the liable person and the amount of debt they have left to pay. This means that it is, in many ways, similar to a judgment. The liability order can be enforced in several ways, as set out in Regulation 52 of the 1992 Regulations. These methods include deducting sums from state benefits, making an application to the county court for a charging order, taking the debtor’s goods and selling them, and bringing insolvency proceedings.

It is paragraph 8 of Schedule 4 to the 1992 Act which allows for a council tax debtor - who has been given a liability order and who does not own enough goods to be sold to cover the debt - to be sent to prison. In much the same way, Regulation 47 of the 1992 Regulations details a similar procedure to the ones in paragraph 8 of Schedule 4. The relevant rules are those in Regulation 47(1), which allows the authority to apply to a Magistrates’ court for a warrant to commit the debtor to prison. Moreover, Regulation 47(2) requires the Court to inquire into the means of the debtor and ask whether the failure to pay is due to his ‘wilful refusal or culpable neglect’.

The Melanie Woolcock Case

In R (Woolcock) v Secretary of State for Communities and Local Government, Secretary of State for Justice, and Welsh Ministers [2018], the High Court dealt with these regulations governing liability for unpaid council tax through imprisonment. Here, the claimant had asked the Court for a declaration that the system currently operating in England and Wales is unfair and unlawful. Her case was brought against the Secretary of State for Communities and Government (‘SSCLG’) and the Welsh Ministries, who were responsible for the regulations in England and Wales, respectively. She also brought the case against the Secretary of State for Justice (‘SSJ’), who is responsible for magistrates’ courts and the training of magistrates.

Facts

The claimant is a single mother and lives with her son. She failed to pay council tax for her two properties in Porthcawl and, over 2009-14, owed a debt of £4,741. She was summoned to attend court in September 2014 but failed to attend. She was then arrested after a warrant was granted and eventually attended a hearing in October 2015.

The court held an inquiry into her means of paying throughout the time she was in debt. The claimant accepted that she had ‘buried her head in the sand’ over the council tax she had left to pay. She then said that she was not well enough to work and was therefore receiving child tax credit and child benefit. Through this inquiry, the magistrates found Woolcock guilty of culpable neglect, which Woolcock herself accepted. The claimant offered to pay £5 a week per property to pay off her arrears, which the court agreed was a realistic sum for her to pay.

Woolcock paid this amount for the first few months before suddenly stopping. When the council ordered her to pay £50, she was given a notice that she may be imprisoned again if she failed to pay the total amount of £4,500 left. She was then due to attend a hearing in July 2016, which she failed to attend, and so in her absence she was sentenced to prison for 81 days. While the claimant did pay £100 in August that year, she was imprisoned a few days later.

She asked for a judicial review, first, to the magistrates’ decision to impose a warrant for imprisonment, and second, to challenge the system by which a person may be imprisoned for non-payment of council tax.

In January 2017, in Woolcock (No 1), Lewis J found that the magistrates had indeed failed to conduct a proper and adequate inquiry into whether the claimant had the means to pay the £10 per week for her two properties. This failure meant that the payment period she was given was unreasonable and unlawful, such that part of the debt should be remitted. Since the payment order was flawed, the imprisonment warrant based on it was also ‘inevitably unlawful’.

The second, substantive ground on whether the system under which she was imprisoned was also unlawful was left for the High Court to decide.

Judgment

In Woolcock (No 2), Hickinbottom LJ’s judgment focused on Regulation 47, noting that it has regularly been considered by the courts. Consequently, there are many authorities that have interpreted and applied this Regulation. They include Gordon v Gordon [1946] 1 All ER 247, R (Wandless) v Halifax Magistrates’ Court [2009], R (Aldous) v Dartford Magistrates’ Court [2011], as well as the earlier judgment of the case itself in R (Woolcock) v Bridgend Magistrates’ Court [2017].

In citing these cases, Hickinbottom LJ reiterated the propositions that the courts had construed from the legislation. Importantly, he highlighted that these are well-established and uncontroversial. The first is that the power to commit is coercive. Therefore, it is intended to be used to extract debt from those who are able to pay, and is not to punish the debtor. To that end, the authority is required to carry out an inquiry into the debtor’s means. From this, if the court decides there has been wilful refusal or culpable neglect, it may then fix a term of imprisonment, the maximum term being three months. There is no general way of appealing against this decision and it may only be challenged by way of judicial review or by taking the individual case for appeal.

Since the claimant had brought her case mainly on the grounds that the magistrates had failed to comply with the requirement that these instalment period orders not be paid over an excessively long period of time, a key part of the judgment was a discussion over how much time the courts will give someone to pay off their debt in instalments. In assessing this length of time, Hickinbottom LJ referred to a number of cases, notably R v Guiness [2009], in which he had stated that it is rare for this instalment period to be more than 2 or 3 years. Additionally, he emphasised that the courts have no power to remit council tax.

In light of this, the claimant accepted that Regulation 47, as construed by the courts, was clear and well-established. However, she then clarified that the ground for judicial review was that the magistrates had failed to apply this clear and well-established law. As she argued, this was because they had imposed an instalment period that was unreasonably long and had made the committal or the imprisonment order in absentia. Pointing to the sheer number of these imprisonment orders, she contended that there was something inherently wrong with the system and that this was to do with ‘ignorance of the law’ on behalf of the magistrates, legal advisers and representatives. This, she emphasised, leads to an unacceptable risk of a council tax debtor being subject to a system of procedural unfairness. Based on this, she asked the High Court for a declaration that the system under the 1992 Regulations was unlawful.

The High Court dealt with this ground in two parts. First, by looking at the nature of such ‘systemic challenges’ through judicial review. Second, by looking at the evidence put forward that may or may not allow the ground to succeed.

Systemic Challenges

Referring to previous case-law on the issue of systemic challenges, Hickinbottom LJ summed up the propositions they had developed. Explaining that these are challenges concerning the fairness of a procedure used by a public body, he then stated that the question of whether the procedure used is fair is a matter for the court. He went on to cite Laws LJ in R (S) v Director of Legal Aid Casework [2016] in setting out the ‘dividing line between multiple instances of unfairness and of inherent failure in the system,’ which, he says, is a matter of degree. However, in proving unfairness, the threshold is high, as he emphasised.

The claimant had relied on the case of Child Maintenance and Enforcement Commission v Gibbons and Karoonian [2012] when arguing that it is not necessary to identify any one particular decision as being unlawful. However, Hickinbottom LJ distinguished this case on the basis that Gibbons was not a systemic challenge at all; rather, Gibbons was an appeal against decisions on failing to pay child support. This was sufficiently different from the case at hand that Hickinbottom LJ said that they did not undermine any of the propositions he had set out before.

The claimant also relied on the case of R (Detention Action) v Secretary of State for the Home Department [2014], which involved very tight procedural time limits concerning a Detention Action practice. However, Hickinbottom LJ rejected assertions that this case had any real relevance to the claimant’s case since the relevant policy in the former was not unlawful ‘in its terms’ but, rather, in its implementation, which had been carried out with legal representatives. Thus, the case fell in line with the authorities to which Hickinbottom LJ had already referred and did not further the claimant’s case.

Evidence of a systemic failure

One such piece of evidence that the claimant put forward to justify arguments that there was systemic failure was data concerning the 134 orders for imprisonment handed to 95 individuals over 2011-2017. The claimant submitted that the instalment period for 52 of these orders were excessively long, in excess of three years. Secondly, she pointed to the practice of ordering imprisonment in the debtors’ absence.

Hickinbottom LJ’s judgment takes a surprising turn here. For the first piece of evidence, he stated that the 52 orders for imprisonment were, indeed, unlawful. While acknowledging the difficulty of getting a full picture of these cases in the absence of their specific facts, he accepted that it was unlawful for a handful of the individuals in these cases to have been subject to orders allowing the repayment period to span over five years.

As for the second piece of evidence relating to giving out orders for imprisonment in absentia, Hickinbottom LJ pointed to the limited areas in which this practice had occurred and court clerks who were able to say that the practice is no longer adopted in these areas and has been abandoned.

Decision

After considering all these factors, Hickinbottom LJ was ‘entirely unpersuaded’ that there was any basis for a systemic challenge by way of judicial review. He acknowledged that it was ‘regrettable’ that there had to be imprisonment of the socially vulnerable, including of the claimant. However, he urged her to consider the evidence in its full context, particularly that there was no support from the data that the magistrates had not been careful in imposing orders in absentia.

Crucially, he emphasised that imprisonment for council tax is ‘one small part of a sophisticated system set up by Parliament’ and that it is, overall, efficient at recovering debt. This system was therefore not designed to put people in prison, rather to encourage them to pay after receiving numerous reminders of debt.

One of the last, crucial points he made was that ‘one can only speculate as to the extent to which the ultimate sanction of imprisonment is effective in ensuring such a high rate of recovery’ but that he agreed with the defendants that any error rates in imprisonment should be seen against the wider efficiency of the system.

Since the claimant could not prove that there was anything inherent in the system of enforcing council tax payment which was unlawful and thus gave rise to an unacceptable risk of procedural failure, the High Court dismissed her claim for judicial review.

Impact

Following Woolcock (No 2), the Welsh government abolished imprisonment orders for non-payment of council tax, which came into force in April 2019. It is important to note that their stance on this issue is now aligned with Scotland and Northern Ireland, neither of which punishes non-payment of council tax through imprisonment.

The main issues that were raised in Woolcock (No 2) – the significant rates of wrongful imprisonment, and the most socially vulnerable of people being simply unable to pay the debt – are still to be resolved. However, Parliament has made no sign to move towards amending Regulation 47, especially in light of Hickinbottom LJ’s praise of how efficient the public sector system is at collecting debt.

Reform efforts

Statutory reform should not be ruled out yet. Campaigners have taken up the issue and are pushing for urgent change in the law. One such campaign was launched by the Centre for Criminal Appeals, through which Naima Sakande, a women’s justice advocate, was working to convince the government that:

Prison should be reserved for the most serious of offences. It is unconscionable that we use the sanction for such a thing as civil debt.

Others, such as Allistair Chisholm from free debt advice provider ‘PayPlan’, have been carrying out research into the use of imprisonment for council tax debt, highlighting a gap in the literature on the effects of public sector debt collection.

Highlighting the problems with public sector debt collection, there have also been county borough council spokespersons who have pointed out that the responsibility to collect council tax rests on the local authorities and that, whatever their views on the imprisonment of debtors, they have no influence over court decisions.

Conclusion

While the Woolcock cases brought public attention to the issue of imprisonment for council tax debt, it did little to raise Parliament’s attention. It may seem as though there was very little reason to give this issue any attention after Hickinbottom LJ’s judgment praised the efficiency of public sector debt collection, but as he himself acknowledged, the issue of imposing the ultimate sanction of imprisonment for council tax debt is an issue on which ‘one can only speculate’. Perhaps it is time for this speculation to turn into understanding, by carrying out more research on the actual effects of imprisonment for council tax on the wider system of tax collection, as well as on the socially vulnerable individuals subjected to it.

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Tagged: Criminal Law, Public Law, Tax Law

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