England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/03/2006

Peter Smith J :

INTRODUCTION

1. This is an appeal by Mr Ayo Mohammed against the Bankruptcy Order made by Deputy Registrar Middleton made on 25^th November 2005 when he made Mr Mohammed bankrupt on the Petition of the Respondents.
2. The Petitioner/Respondent is the London Borough of Southwark. It petitioned for £4,025.29 on the basis that Mr Mohammed was liable to pay council tax for the years 1999/2000 to 2002/2003. However on the basis of evidence provided to the Respondent referred to in the witness statement of Catherine Kilroy on behalf of the Respondent the amount was reduced to £3,201.88. This reflected material provided by the University of Greenwich which included council tax certificates for the period commencing on 11^th February 1999 for one year and a further period commencing on 16^th September 1999 and expiring on 30^th June 2000. Mr Mohammed disputed the genuineness of this material but there was nothing to justify challenging the genuineness in my opinion.
3. That judgment arose out of a hearing on 25^th October 2005. That was adjourned for judgment. Notice of intending to give that judgment was given for the 25^th November 2005. It transpired that the Deputy Registrar did not see Mr Mohammed's letter of 26^th October 2005 when he prepared his draft judgment. He accordingly prepared his supplemental judgment also dated 25^th November 2005. I believe that judgment was given orally and a transcript was to be provided. A transcript was on the file and it was provided to the Appellant and the Respondent at the hearing of the appeal before me.

BACKGROUND

4. As I have said above the Respondent seeks recovery of council tax for the years 1998 to 2004 (less the sums already conceded). Mr Mohammed's primary contention is that no council tax is payable by him for the entirety of that period because at all material times he was in full time education at Greenwich University. The only certificates he has are for the two periods identified above which the Respondent conceded.
5. This is confirmed by the correspondence the Respondent has received from Greenwich University (see the letter of Angela Ware dated 3^rd August 2005). She is the Student Affairs Officer and enclosed by that letter the two certificates to which I have made reference.
6. In addition to his primary ground Mr Mohammed challenges the making of the Bankruptcy Order on a number of other grounds. They are set out in his notice of appeal. I can deal with a number of those quite shortly.

THE PETITION DEBT WAS OVERSTATED IN THE STATUTORY DEMAND

7. That is not a basis for setting aside the statutory demand unless of course the amount due falls with over statutory minimum of £750. See Re A Debtor (490-SD1991) [1992] 1 WLR 507 and rule 6.25 (3) IR 1986. In the present case the actual amount after taking into account the overstatement has not been paid by Mr Mohammed.

DEBT NOT LIQUIDATED

8. In my view the debt as referred to in the petition was liquidated and as reduced was liquidated.

STATUTORY DEMAND SHOULD HAVE BEEN SET ASIDE

9. This is a complaint that Registrar Simmonds on 21^st February 2005 refused Mr Mohammed's application to set aside the statutory demand. I do not with respect understand his submission in this regard. He chose not to appeal that order. Nevertheless it is established that notwithstanding the failure to set aside the statutory demand any argument at that stage can be redeployed by Mr Mohammed on hearing the petition. Deputy Registrar Middleton was aware of that (see paragraph 6 of his judgment).

PENDING APPEAL AGAINST HIS COUNCIL TAX LIABILITY

10. Mr Mohammed after the statutory demand which was served on 8^th October 2004 and the further statutory demand dated 10^th January 2005 and after the dismissal of his application to set aside by Registrar Simmonds and the presentation of the petition on 30^th March 2005 decided to appeal to the valuation tribunal on 1^st October 2005.
11. In that appeal Mr Mohammed seeks to rerun the arguments which are the same arguments which he wishes to deploy in opposition to the Bankruptcy Petition.
12. The valuation tribunal on 24^th October 2005 sought completion of the form for the formal appeal process.
13. The Deputy Registrar referred to this ground in paragraph 17 of his judgment. He decided to elicit further information in respect to the Appeal and dealt with it in paragraph 19 – 21. He dismissed this as a ground for appeal because the Tribunal would decide the same principle. In my view he was right so to act.
14. The courts strive to avoid having different tribunals being seised of the same issues because of the potential of conflict that that might occasion. The Bankruptcy proceedings are in train for the purposes of determining (amongst other things) the validity of Mr Mohammed's contentions as summarised in his skeleton argument and oral submissions. If it decides those in his favour the Petition will be dismissed and the Respondent will be bound to give effect to that determination and adjust his council tax liability accordingly. There will be no appeal.
15. Conversely if he fails in the argument he will be made bankrupt. However he will be precluded (assuming he has the ability subsequent to bankruptcy) in prosecuting the Appeal to Valuation at Tribunal from relying on the self same arguments which were decided against him in this Bankruptcy Appeal. There is no difference of approach in either Tribunal and Mr Mohammed was unable to identify any difference in approach. It is a question of law to be decided and it would be quite wrong for the Bankruptcy Court in an appeal to the level of the High Court Chancery Division should defer a decision which affects its processes to that of a Valuation Tribunal. The converse would be the case. Finally in this context the appeal was extremely belated and after the bankruptcy proceedings had long been in process. It seemed to me that the purpose of lodging the appeal was tactical so as to secure an adjournment of the bankruptcy proceedings. For all of those reasons the Deputy Registrar was correct in that decision.

OTHER GROUNDS

16. It is suggested (ground 9) that the debt was not of the right kind to found a petition and that the Registrar's decision was unjust and that the petition is disputed on substantial grounds (grounds 5, 6, 7 10 & 11) these relate to the status of Mr Mohammed as he contends. If he is correct in law his appeal succeeds. If he is incorrect in law his appeal fails and I do not see why the Respondent should not be able to petition for these sums which would then be determined to be lawfully due.

NATURE OF HEARING

17. Under Practice Direction in Insolvency Proceedings 1999 (paragraph 17.16(3)(1)) any appeal against a decision of a lower court is limited to a review and under sub paragraph (3) the appeal court will allow an appeal where the decision of the lower court was wrong or unjust because of serious procedural or other irregularity in the proceedings in the lower court. Under sub paragraph (4) the court may draw an inference of fact which it considers justified on the evidence.
18. Mr Mohammed's main argument is his status for the disputed period involves two questions. This involves the question what in fact was his status and what in law (according to the regulations for the recovery of Council Tax) was his status.

THE STATUS OF MR MOHAMMED IN FACT

19. The learned Deputy Registrar analysed this in paragraphs 13 – 14 of his judgment. He relied upon the certificates issued by Greenwich University. He referred to a printout statement produced by Mr Mohammed dated 11^th August 2005 which shows the credits that were given against his course. I do not see that this document advances Mr Mohammed's arguments because the credits cover courses taken in the period for which he has already obtained the concession by the Respondent. I do not see that there is anything wrong in his analysis of the effect of these documents. In addition in the appeal Mr Mohammed produced a document dated 4^th February 2003 recording him taking an industrial robotics course in the year 2002/2003. Once again this does not advance his case because he has a certificate for that academic year 2002/2003 and Council Tax for that period has been conceded.
20. Mr Mohammed's evidence otherwise is confused. He originally signed up for a one year course which he failed to complete. Thereafter in the period between 1999 and 2003 he does not appear to be attending any courses or doing any work at the university. He may have been appealing some decisions but I do not understand him to have been attending any course for that period. The same position appertains after 2002/2003. He is appealing a decision (see the correspondence attached to Ms Kilroy's witness statement referred to above) but he is not studying during that period.
21. There is nothing to suggest that the Deputy Registrar could not have come to the conclusion that he did on the facts as summarised in paragraph 14 of his judgment. It cannot be said that his judgment was wrong and no reasonable Deputy Registrar could have come to that conclusion. Nor was it unjust. For my part had I been hearing the matter again I would have come entirely to the same conclusion.

MR MOHAMMEDS STATUS IN LAW

22. Given the factual background above namely that he attended courses only in 1999/2000 and 2002/2003 is he still nevertheless a student for the purposes of the other periods?
23. This turns on the Council Tax (Discount Disregards) Order 1992 (SI 1992/548).
24. This statutory instrument gives definitions (amongst others) of the meaning of student to Schedule 1 paragraph 4 Local Government Act 1992. That provides that Council Tax is payable in respect of any dwelling which is not an exempt dwelling.
25. Under the Council Tax (Exempt Dwellings) order 1992 paragraph 3 class N a dwelling is an exempt dwelling if it is either occupied by one or more residents all of whom are students or occupied only by one or more students as term time accommodation.
26. Under the Disregard order referred to above a student is defined as follows:-

""student means a person, other than a student nurse…. who is to be regarded as ….

(b) a person undertaking fulltime course of education by paragraphs 3 and 4 of that schedule"

27. The schedule in question is the one attached to the statutory instrument and under paragraph 3 it is provided:-

"3 A person is to be regarded as undertaking fulltime course of education on a particular day if

(a) if on the day he is enrolled for the purpose of attending such a course with a prescribed educational establishment within Part 1 of schedule 2 to this order… and

(b) the day falls within the relevant period for that course."

28. Mr Mohammed was only enrolled for the periods for which concessions have been made. He was not enrolled for the other periods. Mr Mohammed submits that he was effectively enrolled by reason of appealing the failures in the relevant gap periods. I do not agree. In my view he was enrolled solely for the period of the courses. That is covered by the certificate from the university. Students have to enrol each year for which they are studying. Mr Mohammed self evidently only enrolled for the periods when he was actually studying he did not enrol for the periods when he was not studying that was at best merely appealing.
29. On the construction of these regulations the Deputy Registrar concluded that he was not a full time student for the purposes of establishing that the dwelling he occupied was an exempt dwelling.
30. That decision in my view was correct in law.

MR MOHAMMED'S ARGUMENTS

31. Mr Mohammed bases his arguments upon the Council Tax Benefit (General) regulations 1992 (SI 1992/1814).
32. In part (v) headed "Students" in regulation 38 (2) it is provided as follows:-

"(2) For the purposes of the definition of "full-time student" in paragraph (1), a person shall be regarded as attending or, as the case may be, undertaking a full-time course of study or as being on a sandwich course-"

(a) subject to paragraph (3), in the case of a person attending or undertaking a part of a modular course which would be a full-time course of study for the purposes of this Part, for the period beginning on the day on which that part of the course starts and ending-

(i) on the last day on which he is registered with the educational establishment as attending or undertaking that part as a full-time course of study; or

(ii) on such earlier date (if any) as he finally abandons the course or is dismissed from it;

(b) in any other case, throughout the period beginning on the date on which he starts attending or undertaking the course and ending on the last day of the course or on such earlier date (if any) as he finally abandons it or is dismissed from it.

(3) For the purpose of sub-paragraph (a) of paragraph (2), the period referred to in that sub-paragraph shall include-

(a) where a person has failed examinations or has failed to successfully complete a module relating to a period when he was attending or undertaking a part of the course as a full-time course of study, any period in respect of which he attends or undertakes the course for the purpose of retaking those examinations or that module;"

(b) any period of vacation within the period specified in that paragraph or immediately following that period except where the person has registered with the educational establishment to attend or undertake the final module in the course and the vacation immediately follows the last day on which he is required to attend or undertake the course."

33. He submits that this has a different test and does not have a registrationary requirement.
34. This is a regulation dealing with Council Tax Benefit available to persons who are liable to pay Council Tax who are not of a prescribed class. There are two different kinds of Council Tax Benefit that can be paid. First is the maximum Council Tax Benefit where the claimant is liable to pay Council Tax and his income satisfies certain criteria. The second arises where the claimant shares a dwelling with someone who does not pay him rent and there is an alternative maximum Council Tax Benefit payable by virtue of the aggregation of the income.
35. Special rules for student eligibility are provided by part 5 and makes full time students persons of a prescribed class (regulation 40 section 131 (3) of the 1992 Act). Students falling within that definition are not liable to Council Tax at all.
36. Council Tax Benefit needs to be claimed however and no one is entitled to it unless it is applied for (regulation 56 (1)). There is a limited exception to the rule that retrospective exceptions should be made. Under regulation 62 (16) a claim can be treated has having been made on an earlier date if during the whole of the period made in the claim the claimant can show a good cause for his failure to make a claim. Backdated claims are limited to 12 months before the claim was made.
37. Mr Mohammed has never made any claim on this basis. He has received single occupant discount for the only year for which this would be relevant to his claim (2004/2005). There is no other alternative maximum benefit to be claimed within the rules.
38. In any event I do not see a difference between these regulations and the regulations relied upon by the Respondent. Paragraph 38 (2) provides for identifying periods when a student is attending or undertaking a course. It commences on the first day that the course starts and ends on the last day which is registered. Alternatively it ends on an earlier date if he finally abandons the course or is dismissed from it.
39. All of those require a registration. No registration occurred in the period in the years in question in this appeal.
40. Under paragraph 38 (3) the periods include a period when a person has failed an exam or failed to complete, any further period in respect to which he attends or undertakes the course for the purposes of retaking those examinations or that module and any period of vacation.
41. There was no evidence to show that Mr Mohammed was doing any of those things in the intervening periods either. If he had he would have been registered.
42. All of this demonstrates in my view that there is nothing in Mr Mohammed's point that the different regulations apply as the conclusion in my view will be exactly the same.
43. I should add in the context of these regulations when it became clear that there was an issue over the differing impact I required further submissions. The Respondents provided further submissions and provided them to Mr Mohammed. He was given an opportunity to reply if he wished but he chose not to reply.
44. Accordingly for all of the above decisions I can see no basis for setting aside the Bankruptcy Order which the Deputy Registrar made.
SUPPLEMENTAL JUDGMENT

MR JUSTICE PETER SMITH

I have read the further submissions of Mr Mohammed and his comments on my draft judgment. They do not seem to me to advance his case and do not affect the views I expressed in my draft judgment.

The purpose of circulating the draft judgment is to invite corrections to typographical errors not to re-argue the case.