Scottish Court of Session Decisions

Petitioner: Dewar, Q.C., Bartos; Lindsays

Respondents: Dean of Faculty; Lake; Simpson & Marwick

7 August 2007

[1] This case raises important issues in relation to liability to pay council tax under and in terms of the Local Government Finance Act 1992 ("the Act"). It raises inter alia the question of whether certain demand notices for council tax issued by the respondents are valid.

[2] According to the Petition the matter arises in this way. The petitioner owns a house in Cumbernauld ("the dwelling"). He has not lived there since 1991 and his main residence is with his parents in Lenzie. The dwelling has been rented to a number of named individuals and the rent due has been paid to the petitioner by the respondents. The respondents have issued to the petitioner a series of Demand Notices to pay council tax, water and sewerage charges for a period covering 2001 to date. These have been produced and lodged in process. In respect of each it is averred that they are defective since they do not mention how to dispute a liability to pay or how to appeal any adverse decision. No. 6/1 of Process was used in the debate before me as the test style of notice. The petitioner did not pay any of these and the respondents then invoked further procedures in the Sheriff Court for summary warrants, diligence and sequestration at which point matters were sisted. The matters argued before me only concern the validity of the Notice and there may be duplicated issues of fact as to what was sent and received. A number of authorities were referred to which I will mention later.

[3] Mr Dewar invited me to sustain the first plea in law for the petitioner and to grant declarator in terms of Article 10(a) of the Petition. Under reference to No. 6/1 of Process he said that the demand for £901.46 made no reference to any right of appeal. It did not refer to a coloured pamphlet (No. 7/1) which may have accompanied that demand. That document did refer to a Code of Practice and to appeals and rights of appeal. Counsel said that there was no written connection between these two documents.

[4] The folded document (No 7/1) (referred to in the debate as "the Glossy") should be examined more closely. The front fold is yellow and the back is blue. The other folds are numbered on pages one to ten. Page 2 onto page 3 mention rights of appeal. Appeal is also mentioned at the foot of page 3. There was, however, no mention of the Petitioner having any right to challenge a liability to be assessed.

[5] Counsel then took me to the Council Tax (Administration and Enforcement) (Scotland) Regulation, 1992 ("the Regulations"). Reg. 17 placed a Statutory duty on a levying authority (here the respondents) to serve a demand notice (like No 6/1 of Process) on a chargeable dwelling (here "the dwelling"). Reg. 28(2) made it mandatory for the demand notice to contain certain matters. It was not necessary for the demand notice to be one sheet of paper but if more than one sheet was used they had to be "issued together" so as to comprise one notice. They did not need to be attached. Mr Dewar said that here No 6/1 and 7/1 did not comprise one notice. Regulation 29 dealt with invalid notices.

[6] He took me next to Schedule 2 which dealt with the contents of Demand Notices. Paragraph 8 was important. That showed that certain matters had to be included, namely an indication of when a dwelling may be exempt (8(a)(i)) and a statement of how to dispute a liability to pay (8(e)(iii)). The "Glossy" did not deal with this.

[7] Mr Dewar posed the question of what was meant by the words "issued together". Here there was not one notice. It was not just additional sheets. There was no written connection. To make reference to a Code of Practice would not satisfy the Regulations. All of these features rendered the demand notice invalid.

[8] The Demand Notice itself did not comply with the Schedule. Returning to the "Glossy" he said that what was contained on pages 2 and 3 did not meet the Schedule. It dealt with "banding" and mentioned a right to discuss matters with the Director of Finance. In fact the appeal procedure was complex involving a grievance notice, a valuation appeal committee and time limits. There had been no compliance and the demand notice was illegal within the meaning discussed in the CCSU case (p 410) and the Aberdeen case (p 30). As there was total non compliance there was no room for any purposive construction. Counsel concluded with a reference to Miller v Dickson. I should make it clear that I was not asked to express any view on the validity of No 6/1 alone.

[9] The Dean of Faculty invited me to refuse the declaration asked and to reserve all other matters. The Act created duties and liabilities. By Section 70 the respondents had a duty to impose the tax, calculated on a daily basis (sec 71). Chargeable dwellings were set out in Section 72, and those liable were specified in Section 75; the present petitioner being said to be a "resident owner" (75(2)(a)). The basic amounts payable were calculated according to a formula laid out in section 78. All of this was primary legislation. The Regulations were only subordinate legislation and designed to deal with collection of the tax. Appeals on matters of whether a dwelling was chargeable, a person was liable to pay, and how much, were dealt with in Section 81. A notice had to be served and the decision was left to a valuation appeal committee. Regulations made under Section 82 governed procedure. Schedule 8 was important since errors in documents relating to collection of the tax were in effect excused (8(3)).

[10] The Regulations made under the Act referred inter alia to Schedule 8. It was enough to make a person liable that the respondents held an opinion that he was so liable. Regulation 17 related to Billing. Although it was necessary to serve a demand notice (17(1)) that was merely a procedural requirement. The liability to pay was in the primary legislation (sec 75 supra). Regulation 28 said what the Notice had to contain and it anticipated that there could be more than one piece of paper in the envelope. Physical compliance was what was meant - and provided the two documents were actually together that ". . . comprised one notice . . .". Schedule 2(8) was not intended to be formulaic and there was no need to refer to any appeal procedures or how to describe them. In any event even if the Demand Notice was technically invoked, Regulation 29 deemed it to be nonetheless valid and the liability to pay remained. The practical world had to be acknowledged and any local authority had to issue many documents. Even if errors happened local Government still had to be financed.

[11] Counsel next looked at what he said in his Answers the Petitioner got (No 6/1 and 7/1) in the year under discussion. It was the same in every other year. The recipient of an envelope would get his demand notice and the leaflet (the Glossy). They are received together. On a reading he would see the year, the Council, its address, his name and address and the property address; all correctly described. There were explicit instructions to anyone who failed to understand the contents of the notice as to what they should do. The Glossy expressly referred to the respondents, council tax and the year. It could not be plainer that it related to the demand notice. Both documents mentioned rebates. Both documents mentioned the Council Offices as a place to obtain information and assistance. Taken together there was compliance with Regulation 28.

[12] The Dean finally addressed me on whether or not the demand was valid. Both documents were received together and were linked. The word "shall" in Schedule 2 meant that something must be included but not in any formulaic way. It could not be said there was no mention of a right to appeal. The word was used several times on pages 2 and 3 of the Glossy in the widest terms (Counsel referred to later dated documents 7/17 and 7/18). There was no need for a recitation of the Statute and the Glossy did provide a statement of the procedures to be followed. It could not be said that the documents fell below the standard of what would reasonably be needed to let the reader know what to do.

[13] If not, however, what was the consequence? The public interest lay in not frustrating the financing of local Government. He referred me to the Aberdeen case and to Soneji at various passages. In any event Parliament had provided for the occurrence of errors and their correction by Regulation 29. Since the Petitioner plainly knew now what his rights were that would be an empty step. The question had to be asked why the Petitioner had never sought to appeal. He had never been deprived of his right to. The liability was in the primary legislation and the tax was in the public interest. The secondary legislation was procedural only. Counsel looked briefly at the CCSU and said that Miller was not in point.

[14] In a brief reply Mr Dewar added the comments that Schedule 8(3) did not excuse a total failure to advise of a right of appeal and a statement of procedure. No 7/18, years later, was not in compliance in 2002 and even that document was inadequate. Soneji could be distinguished on its facts which showed a total invalidity.

[15] What then is to be done? In my opinion it has to be accepted as correct for the purposes of the argument before me only that the Petitioner received 6/1 and 7/1 at the same time. I accept that ultimately there may be an issue of fact about this. Looking at these documents it is quite clear that they are part of "one notice" within the meaning of Regulation 28. They emanate from the same source, and in the same tax year and relate to the same subject. The Petitioner is properly designed. Clear instructions are given as to what to do and where if anything is not understood. No 7/1 mentions appeals and the right to appeal in several places and for several purposes. Importantly it advises a right of appeal if someone is aggrieved at the actions of the respondents ". . . in calculating or collecting . . ." the tax. In my view these words are wide enough to comprise clear advice is someone wishes to dispute a liability. Without a liability there can be no calculation or collection. The advice is to discuss with the Director of Finance. That in my opinion fulfils the obligations of Schedule 2 para 8. No doubt the Notice (6/1) and the Glossy (7/1) could have been written differently and said more, but I have to decide only on those documents and not hypothetical replacements. In my view it is not necessary to recite the Statute with the precision of a conveyancing document. It is essentially a practical matter and anyone reading that document has been given sufficient information about how to appeal if so advised.

[16] Further, I hold that it would be astonishing if Parliament having laid out a careful scheme for taxation then legislated in subordinate rules for the frustration of the scheme if the collection documents were not a model of clarity. For that reason alone I think that the 1992 Regulations are no more than rules of procedure and any defect in the notice does not render that a nullity. In a busy local authority errors can occur yet it remains in the public interest that taxes are set and collected. If a taxpayer could avoid liability for such an alleged minor mistake the burden would fall on others to make up the shortfall or else local services would be reduced. In any event the fallacy of the argument is seen by reference to Regulation 29 which in effect states that an invalid demand is to be treated as valid. Certainly the levying authority has to issue another document but that is not a matter argued before me.

[17] I was referred by counsel to a number of authorities but in my opinion only one of these truly assists and it was the only one canvassed in detail by the Dean. Council of Civil Service Unions v Minister for the Civil Service [1985] 1 A.C. 374 was looked at only for the remarks of Lord Diplock at 410/11 as to what was meant by "illegality" in the context of judicial review. The facts of the case dealt with trade union rights and an alleged duty to consult before removing these rights. Mr Dewar remarking on the case said that here the demand was illegal in the Diplock sense. For the reason I have already given I think this is not correct and takes too restrictive a view of the Regulation. The Dean, on the other hand, argued that all that might be wrong with the demand, if anything, was a minor procedural impropriety which has caused no prejudice to the Petitioner (Lord Diplock page 411). Miller v Dickson 2002 SC (PC) 30 was mentioned in response to a question by me. The case concerned waiver and is not a point for present purposes.

[18] Next London and Clydeside Estates Ltd v Aberdeen District Council 1980 S.C. (H.L.) 1 a case involving compulsory purchase and certain omissions in a certificate which were held to render it invalid. I was only asked to look at the case for certain remarks made by the Lord Chancellor at page 30 showing the range of possible considerations of obedience to Parliamentary requirements, and the spectrum of reaction to it. He pointed to the problems of fitting the facts with categories defined by the conventional adjectives such as "mandatory" and others. In my opinion Mr Dewar's argument falls into the rigid Procrustean field of "mandatory". I do not think it is necessary to resort to the extreme response of a Theseus to this. It is enough to answer it with the compelling logic of the recent authority of Regina v Soneji [2006] 1 AC 340. The facts of the case concerned whether an over lengthy postponement of a confiscation order without certifying "exceptional circumstances" rendered the confiscation orders invalid. The House of Lords had no difficulty in concluding that it did not. There was a public interest in not allowing convicted offenders to escape confiscation due to bona fide errors in the judicial system. Between paragraphs 16 and 22 Lord Steyn (with whom the others agreed) analysed a number of cases where the old rigid categories were rejected for a more flexible approach. At para 23 he said this ". . . the rigid mandatory and directory distinction, and its many artificial refinements, have outlived their usefulness. Instead . . . the emphasis ought to be on the consequences of non-compliance, and posing the question whether Parliament can fairly be taken to have intended total invalidity . . .".

[19] I ask myself this question in relation to 6/1 and 7/1. I have held on the documents themselves that they comply with the Regulations but if they do not I cannot think that Parliament intended that they amount to a nullity meaning that the tax cannot be collected. The very Regulations provide against that result and in my opinion Soneji is authority for the same proposition. Any alternative construction would in my view lead to absurdity and unfairness.

[20] Accordingly I will refuse the declaration sought under Article 10(a) of the Petition, repel the first plea in law for the Petitioner pro tanto and pro tanto sustain the fourth plea in law for the respondents.