RE: ARGUMENT AGAINST ROSS AND ROBERTS LIMITED

OPINION

1.

The opinion to which the council rely has its argument weighted on the matter "of whether a walking possession agreement which leaves the goods on the debtor's premises constitutes a seizure within the terms of regulations 45(4)". The analysis of several judgments where distress has been contested has possibly been largely unnecessary in arriving at the intended purpose of the redemption fee described at head H of Schedule 5.

2.

Whether within that regulation, the term "seizure" may relate to goods left on the premises, has less significance when compared with the advertising aspect, which when introduced to the Council Tax Regulations was described as: "Reasonable costs and fees incurred in respect of advertising" (ref: SI 1993/773).

3.

If we assume it was intended that pursuant to head H, a person levying distress may recover the cost of advertising in respect of goods kept on the debtor's premises, it could then be focussed more on the circumstances under which it would be lawful. In getting the overall picture, other components making up the array of charges connected with distress should be looked at in respect of what work they compensate, in particular levying distress (head B) and taking possession of goods (head E). It should also be questioned in what way the charges in respect of advertising, described under head G, differ from the redemption charges (head H).

4.

The redemption fee was an addition to Schedule 5 (charges connected with distress), amended by the Council Tax (Administration and Enforcement) (Amendment) (No. 2) Regulations 1993. Presumably it replaced the then head G provision for recovering

"Reasonable costs and fees incurred" which were described under that head as "other expenses incurred in connection with a proposed sale where there is no buyer in relation to it". Incidentally the provision for a payable fee for one attendance with a vehicle etc., was similarly an addition to the fee Schedule amended by the 1993 Regulations.

5.

The constant undergoing no change, other than the head under which it appears, is currently head G (auctioneer and advertising costs): "G For other expenses of, and commission on, a sale by auction (i) where the sale is held on the auctioneers premises: The auctioneers commission fee and out-of-pocket expenses (but not exceeding in aggregate 15 per cent. of the sum realised), together with reasonable costs and fees incurred in respect of advertising. (ii) where the sale is held on the debtors premises The auctioneers commission fee (but not exceeding 7 per cent. of the sum realised), together with the auctioneers out-of-pocket expenses and reasonable costs and fees incurred in respect of advertising."

6.

It can be deduced from the descriptions (and percentages) that three distinct elements can make up the payable charges under head G. In respect of where the sale is held on the auctioneers premises, there is provision for all three elements, i.e., advertising costs, the auctioneers commission fee and (presumably attributable to having to store goods and room hire to conduct the auction), the auctioneers out-of-pocket expenses.

7.

This can be contrasted with where a sale is held on the debtors premises. Here only two elements can make up the payable charges: the advertising costs, and because the prescribed maximum can not exceed 7 per cent (15 per cent in respect of the auctioneers premises), only the auctioneers commission fee (NOT an element of the auctioneers out-of-pocket expenses).

8.

At paragraph 14 of the Ross and Roberts document, the commentary deals with the charges which may be payable in respect of an auction either at a debtor's or auctioneer's premises and would, in respect of the first two sentences at least, be difficult to argue with. "Thus it is clear that following the levy (and thus the completion) of the distress the goods can either be removed elsewhere or left on the debtor's premises pursuant to a walking possession agreement or closed possession. Further the sale by auction can take place either at the auctioneer's premises or at the debtor's premises...."

9.

However, there may be grey areas in the suppositions which follow: ".....It is clear from paragraph 1 of the Schedule that the charges under head H can be recovered in addition to those levied under the other heads. There is thus no reason it seems to me why charges under head H should not be levied if the goods are left on the debtor's premises pursuant to a walking possession agreement with the intention that they should eventually be sold by auction at those premises."

10.

The author has stated here that charges under head H can be recovered in addition to those levied under the other heads, but does not define the charges (those which can be charged under head H). This is significant, especially in the case of Wrexham Council which has stated that the charge is not just in respect of advertising but covers other expenses (perhaps in connection with the Walking possession agreement).

11.

Going back to paragraph 13 of the R&R document where the charges connected with distress were summarised, the charge is described in the following terms: "(viii) expenses following seizure where no sale takes place (head H)."

12.

Whether intended or inadvertently causing ambiguity, the above raises a question as to whether, in addition to advertising costs, there may be other costs for which the person levying distress is entitled to recover under the head H fee.

13.

Even if it was not clearly stated under head H that the charges were in respect of advertising costs, the person involved in recovery would have already imposed charges for levying distress and most likely for taking walking possession.

14.

If you were to compare a scenario where goods were sold at the debtor's premises under Head G with another where no sale took place by reason of payment under Head H where goods are left at the debtor's premises under a walking possession agreement, further insight could be gained into what expenditure the fees covered. Carefully looking at the two actions reveals no expenditure in respect of handing back control of goods could be incurred additional to the advertising costs and auctioneers commission which is the only recoverable costs under head G. It would therefore be difficult to argue that additional expenditure in respect of "the actual costs incurred" as described under head H could refer to anything other than costs in connection with a proposed sale. Certainly there would be no justification to add further to fees already incurred by the debtor such as levying goods, taking walking possession etc. etc.

15.

However, in practice it would be unlikely many cases, where goods are left at the debtor's premises under a WPA, the person levying distress actually incurs costs in connection with a sale that does not go ahead by reason of payment. In respect of such cases (found to be disproportionately high), if costs had in fact been incurred, it should be possible that the person levying distress would be able to produce invoices as verification.

16.

Although up to now it has been assumed a person levying distress may recover costs payable under head H in respect of goods kept on the debtor's premises, some arguments put forward in the R&R Opinion don't appear to stack up and are worth highlighting in relation to the description under head H: "Where no sale takes place by reason of payment or tender in the circumstances referred to in regulation 45(4)" Regulation 45(4) states the following: "Where an authority has seized goods of the debtor in pursuance of the distress, but before sale of those goods the appropriate amount (including charges arising

up to the time of the payment or tender) is paid or tendered to the authority, the authority shall accept the amount, the sale shall not be proceeded with and the goods shall be made available for collection by the debtor."

17.

In paragraph 15 of the Opinion the author has put emphasis on the meaning of the word "seized" used by the draftsman.

18.

It appears that "the circumstances" referred to in head H may not refer to all of the circumstances described in paragraph 4 to Regulation 45. Certainly the reference to goods "made available for collection by the debtor" (acknowledged in the "Opinion" paragraph 17) could not apply in circumstances where goods have been left at the debtor's premises under a WPA. If one anomaly exists, it may be argued that the reference to seized goods may have been used in the sense of removing goods for the purpose of charges payable under head H.

19.

In paragraph 16 it states: "Further whilst using the word "seized" in regulation 45(3) and (4), where the draftsman clearly intends to refer to removal of the goods from the premises he uses other words. In head C and D of Schedule 5 there is clear reference to "removal" of the goods. It seems to me to be a powerful argument that, had Parliament intended in regulation 45(4) to limit that situation to that where goods had physically been removed from the premises, it would have said so and not have used the particular word seized. "

21.

The author's point can be argued on three basic grounds. Firstly, paragraph 4 to Regulation 45 gives secondary importance to the charges payable under head H and deals primarily with payment of the appropriate amount (including charges arising up to the time of the payment) with respect to halting recovery. Secondly, there could have been little option other than the draftsman using the term "removal" in relation to head C and D as goods will have ordinarily been seized in separate action carried out previous to the removal or view to the removal, whichever the case may be. Thirdly, in regards the assertion made that if Parliament intended to limit that situation to that where goods had been removed, it would not have used the word seized; for similar reasons made

in the first point, regulation 45(4) deals primarily with another matter and to have used the word removed to clarify the description under head H would have rendered regulation 45(4) flawed for its primary purpose.

TO CONLUDE

22.

The "Opinion" on which the council relies in support of imposing this charge, makes no compelling argument for applying it where the bailiff has in his possession no goods belonging the debtor for him to make available for collection. However, there can be little doubt from the extensive arguments put forward that the term "seized goods" can refer to goods, either which have been removed or which are held on the debtor's premises pursuant to a walking possession agreement for example, but that I would think has never been disputed.

23.

It wasn't made so black and white that the term "seized goods" appearing in regulation 45(4), when referenced by head H, can take on the meaning of goods held on the debtor's premises.

24.

If it was wished merely to distinguish between costs incurred in respect of an actual sale and those for which no sale takes place, the draftsman of Schedule 5 would need simply to have formulated head H similarly to that of head G but with a clause providing for "where no sale takes place". That it now refers to circumstances described in regulation 45(4), suggests the government intended providing a mechanism to recoup the costs of arranging for the collection of goods (possible only where goods are removed).

25.

To support this view, the circumstances of regulation 45(4) are described specifically so that before goods are made available for collection, the appropriate amount must be paid. The appropriate amount includes charges arising up to the time of the payment. You would therefore expect the payment to include charges in respect of out-of pocket expenses for a proposed sale. In practice then, there would potentially only be a sum outstanding equal to an amount for which the person levying distress is out-of pocket in respect of making available goods for collection. This is why before applying head H charges it is a requirement that goods have been removed.

26.

To reiterate, paragraph 4 to Regulation 45 states: "Where an authority has seized goods of the debtor in pursuance of the distress, but before sale of those goods the appropriate amount (including charges arising up to the time of the payment or tender) is paid or tendered to the authority, the authority shall accept the amount, the sale shall not be proceeded with and the goods shall be made available for collection by the debtor."

27.

There is next the ambiguity as to whether the fee under head H is raised solely in respect of advertising or perhaps other expenditure as well. This arises from; i) it expressly stating in the second 1993 amendment: "Reasonable costs and fees incurred in respect of advertising", and ii) in the 1998 amendment, it stating, so far as relevant: "(b).... (c) in relation to head H (prior payment etc.), for Reasonable costs to the end of the Table there is substituted Either (i) [24.50], or (ii) the actual costs incurred, to a maximum of 5 per cent. of the amount in respect of which the liability order was made, whichever is the greater.

28.

This is likely down to a lack of attention to detail in the Regulation's drafting, which incidentally, would not be the only area surrounding council tax and Business rates where sloppily written laws leave them open to abuse by local authorities. It seems the Department for Communities and Local Government is quite happy for them to continue being abused, even when rigorously persuaded they are not paying attention.

29.

The then Government Department responsible for local Authorities (Department of the Environment Transport and the Regions) provided in its fourteenth council tax information letter, compelling evidence to support an argument that the fee under head H is solely raised in respect of advertising and where goods have been removed, hence the phrase: "...and the goods have been returned to the debtor". The relevant part of the information letter, Item 6 of ANNEX B "......6. Review of Fees .... viii) the introduction of a fee maximum of 5% of the amount of the liability order for advertising costs where a sale does not take place because the debt has been paid and the goods have been returned to the debtor.

A fee maximum was accepted in principle, but it was pointed out that for small debts this would not cover the costs of advertising. Therefore, we intend to amend secondary legislation with effect from 1 April 1998 setting a fee of 20 or actual costs incurred up to a maximum of 5% of the liability order, whichever is the greater."

30.

Perhaps the most importance thing to note is, that under whatever circumstances the Government intended the head H fee to be raised, at the very least, steps must have been taken to engage in the sale of seized goods and incurred costs for doing so. To reiterate what was said earlier, it would in practice be unlikely many cases, where goods are left at the debtor's premises (as are in at least 99% of cases), that the person levying distress would incur costs in connection with a sale that does not go ahead. However, if that assertion were wrong, there would, in respect of those cases, surely not be a problem providing proof.