Turner v South Cambridgeshire District Council

The statute that makes provision for Council Tax and relief from that tax is the Local Government Finance Act 1992 (‘the 1992 Act’). Until 2013, those in need of relief from Council Tax, given their circumstances, were able to claim CTB, pursuant to regulations made under s 13 of the1992 Act. This regime was replaced with effect from 1 April 2013 by CTR schemes, locally devised, and made under s 13A of the 1992 Act. The Council’s Scheme is one of these.

The key provisions of the Scheme are contained in Rule 72. Of central importance is Rule 72.4 which provides, in its material parts, as follows:

“… a person to whom a reduction under the authority’s scheme has been awarded, must furnish such certificates, documents, information and evidence in connection with the … award, as may reasonably be required by the authority in order to determine that person’s … continuing entitlement to a reduction under its scheme …”

Mr Turner’s CTR was cancelled on the grounds of failure to comply with this mandatory requirement.

Section 16 of the 1992 Act provides for appeals such as this. The court’s jurisdiction on such appeals is governed by the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 (SI 2009/2269) (‘the Appeals Regulations’). Regulation 43 of the Appeals Regulations permits an appeal from the VTE to the High Court on a question of law. The Regulation sets time limits for such appeals. It provides, so far as material:-

43.— Appeals to the High Court

(1)

An appeal shall lie to the High Court on a question of law arising out of a decision or order which is given or made by the VTE on an appeal under section 16 of the 1992 Act …

(2)

… an appeal under paragraph (1) may be dismissed if it is not made within four weeks of the date on which notice is given of the decision or order that is the subject of the appeal or, in the case of a section 16 appeal, within two weeks of the date on which written reasons for the decision are given in accordance with regulation 37(6), if later.”

Mr Turner’s appellant’s bundle was lodged on 22 December 2015. It contained Grounds of Appeal identifying what were said to be five points of law. In summary these were (1) an erroneous conclusion that the appellants were self-employed; (2) a failure to attach weight to a decision of HMRC to reinstate WTC after an investigation; (3) a wrong conclusion that the self-employed person’s application form must be completed if a person is to be entitled to CTR; (4) elevating form over substance, and failing to address the substantive question of whether the required information had been provided; (5) misdirection as to the meaning of the Local Government Act 1992. The Council having objected that these points did not in reality raise any point of law, those five grounds have since been effectively incorporated into, and superseded by, the single issue of law formulated by Mr Stafford-Michael at this hearing, which I have set out in para [3] above.

The Council accepts, rightly in my view, that this is a point of law. It was however correct, in my judgment, to contend that the previous Grounds did not on a proper analysis, identify any issue of law. The Council was also right to point out that, this being an appeal under s 16 of the 1992 Act, the appeal papers were lodged 2 weeks and one day outside the time limit prescribed by the rules. The first issue is therefore whether the court should entertain an appeal out of time.

It is clear that Regulation 43 gives the Court a discretion to dismiss an appeal made out of time. The Regulation can be analysed as imposing a time limit which may be extended only if the court in its discretion agrees; or an automatic sanction from which relief must be sought; or as a ground on which the court may in its discretion dismiss an appeal. I do not believe it matters. The general rule is that appeal courts treat an application to extend time for appealing, when brought after the time limit has expired, as equivalent to an application for relief from sanctions under CPR 3.9; the court applies what have become known as the Mitchell/Denton principles. Sayers v Clarke Walker (A firm) [2002] EWCA Civ 645, [2002] 1 WLR 3095; R (Hysaj) v SSHD [2014] EWCA Civ 1633; [2015] 1 WLR 2472. It is common ground that in this case I should adopt that approach, and I agree that is appropriate.

CPR 3.9 provides as follows:-

“Relief from sanctions

(1)

On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.

(2)

An application for relief must be supported by evidence.”

The guidance given in Denton v T H White [2014] EWCA Civ 906, [2014] 1 WLR 3927 is now very familiar. The court said this at [24]:

“…. A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate all the circumstances of the case, so as to enable [the court] to deal justly with the application including factors (a) and (b).”

The reference to factors (a) and (b) is a reference to the factors specified in CPR 3.9(1). Here, Mr Turner accepts that the two week and one day delay represents a serious breach, though it is submitted that it is not significant as it has caused no prejudice. The explanation given is an error by Counsel, who wrongly advised that Mr Turner had four weeks to lodge his appeal papers. Counsel’s error cannot amount to a good reason for the two weeks delay. And it does not explain the extra day, of course. As Mr Hanstock points out, no explanation has been offered for that. Mr Turner’s documentation simply stated that he had been told that he needed to seek an extension.

That, however, is not the end of the matter. As the court pointed out in Denton, it is a mistake to think that a serious or significant default for which there is no good reason will inevitably lead to the refusal of relief. The court must always consider all the circumstances, including the two factors specifically identified.

In reaching the conclusion that relief should be refused I have taken account of the plea for clemency advanced on Mr Turner’s behalf. It is submitted that the Council misled the VTE by failing to put all the relevant correspondence before it; that Mr Turner is not personally at fault for the late filing of the papers; that the Council knew well before the deadline that an appeal was in the offing; and that the Council has put in no evidence and shown no prejudice. I do not attach great weight to any of these factors, however. Mr Turner had a full opportunity to present his side of things before the VTE; he must take the consequences of wrong legal advice; there was no need to wait the full four weeks that (in his mind) he was allowed; he failed even to meet that deadline; and prejudice to the opponent is no longer the talisman in this field of decision-making.

I do attach weight to the need to enforce timetabling rules, especially for appeals such as this one which may be brought as of right; to the need to keep matters such as this in proportion; to the fact that the previous history is (as explained below) one of persistent lateness; to the fact that no explanation of the delay was offered until a late stage, and no evidence to explain or excuse it provided until after my prompting at the hearing; and to the fact that this is in at least one sense a second appeal. I also take into account as a significant factor that the appeal, as originally launched, did not raise any arguable point of law. It was, as the Council submits, a thinly disguised attempt to secure a review of the substantive merits of the VTE decision.

Although the issue that has been belatedly formulated on Mr Turner’s behalf is an issue of law, it is not one that arises on the facts of this case. I reject Mr Stafford-Michael’s submission that, looking at the VTE’s decision as a whole, “it is clear that the Tribunal held that because the form was not completed the appellant had failed to comply with the Council’s requirements.” That in my judgment is a misrepresentation of the Tribunal’s decision. The substance of the VTE’s reasoning was that (1) on the information provided by the Turners their companies were still trading, (2) the Council had made clear enough that it required accounts or, in their absence, up to date information and evidence of earnings, (3) those were reasonable requirements, and (4) Mr Turner had failed to comply. This chain of reasoning is not formalistic. It addresses the particular facts of the case.

Mr Stafford-Michael has two further points based on the terms of the Scheme. Pointing to a requirement in the Scheme for those in receipt of CTR to notify any change in circumstances, he argues that this generates a rebuttable presumption of regularity, such that in the absence of such a notification or some other reason to think otherwise the Council is bound to assume that an individual’s financial circumstances remain the same as previously stated. Here, he submitted, there was no reason to doubt that things continued as before, and it was therefore unreasonable (as a matter of law) for the Council to seek further information. The submission goes beyond the pleaded Grounds of Appeal, and falls outside the ambit of the issue of law formulated at the outset of the hearing. It fails in law, and in fact. No such presumption is expressed in the Scheme, nor can one be implied. It would be an unreasonable implication. On the facts, HMRC’s decision to withdraw WTC indicated a change of status which made it plainly legitimate to enquire.

The other point advanced about the Scheme is that it contains provision permitting the Council to accept information and evidence electronically (section 70) and by telephone (section 71). These are said to be indications that a flexible and relatively informal approach is to be taken. These are, however, powers not duties and they are qualified: the Council may exercise them “where it feels that this would be acceptable given the nature of the claim”. In fact, as will be seen, the Council did accept information electronically from Mr Turner, and the facts do not give rise to any issue about accepting evidence by phone.

The VTE’s conclusion that Mr Turner failed to provide information that it was reasonable for the Council to require has been subjected to sustained criticism, by reference to the correspondence of 2013. Put shortly, I regard this as a misconceived attempt to secure a rehearing on an issue of fact, and I reject it on the evidence. But since considerable time has been spent by Counsel for Mr Turner in taking me through the correspondence I shall provide a fuller response.

The initial request for information was made in a short letter written to Mr Turner by Susan Tufnell of the Council’s benefits team, dated 21 August 2013. She identified three items of “documentary evidence … required to assess your … [CTR] entitlement”: a form “in respect of your self-employment for year ending April 2013”; P60s “for both private pensions”; and “proof of both private pensions for April and May 2013”. The form contained a declaration that the information given was correct and complete acknowledging (among other things) that if it was not “you may take action against me”. The letter stated that original documents were required, and set a deadline of 21 September 2013. It warned that if that deadline was not met “your entitlement may be affected”.

Mr Turner did not meet the deadline. There was a reminder letter on 4 September, but by 25 September he still had not responded at all. CTR was suspended. Reliance is placed on Mr Turner’s behalf on an email he sent on 7 October 2013. This was twelve days after the expiry of the deadline. The email was written to a Mr Cookson at HMRC. It was very long. It related to WTC. In it Mr Turner protested vigorously at the suspension of that benefit, complaining that there was information he could not give because of the criminal proceedings. The email did make reference to CTR. It asserted that “as a direct consequence” of the WTC suspension the council had suspended the couple’s CTR “pending information they now require – which would again require us to give details of the criminal case.” The email also said the couple’s “financial circumstances have not changed in the last year” and asserted that WTC “are our only form of regular income”. A detailed explanation was given of how this had come about, the core of which was that the couple had suffered due to the fraud, had been struggling for years to re-establish their financial position, and now, despite being victims, were being persecuted by the state.

This email was not addressed to Ms Tufnell, but it was copied to her, and to another Council officer with some responsibility in the matter of CTR. It could not be said to meet what had been sought by the Council, however. The statement that WTC was the couple’s only form of regular income was not accurate. The couple had been and were still receiving pension income. Mr Stafford-Michael points out that this was apparent, if the Council had read an earlier email from Mr Turner to HMRC which was attached to the email of 7 October. The earlier email, sent in July 2013, had said “Our only regular income is the tax credits … and a small pension of £32.00 per month” (emphasis added). That was not wholly accurate, either, as it turned out. When Mr Turner produced copy P60s and payment advices for the pensions, which he did on 4 November 2013, these did show one private pension of £32.13 per month, but they also showed an annual pension from another source of £127.92. The 7 October email did not attach those documents, or any other documentary evidence of the pension income. Nor did it provide the form sent to Mr Turner by Ms Tufnell, or any of the information requested by that form. Nor did it contain any form of declaration of accuracy and completeness.

On 9 October 2013 Ms Tuffnell wrote to Mr Turner, confirming that his claim had been suspended because documents previously requested had not been provided. That was unquestionably an accurate statement of the position at the time. On this occasion Ms Tufnell asked Mr Turner to provide “accounts for both you and your partner’s business for the last trading year”, together with the pension documents previously requested. This letter therefore appears to have taken account of what had been said in the 7 October email. The requirement was clear. The deadline set was 25 October 2013. Mr Turner was warned that if the documentation was not received by then “your claim will be cancelled”.

Mr Turner did not provide any of the documentation by the deadline. He did not write to the Council direct at all. He did persuade DI Tim Hurley of ThamesValleypolice to email HMRC on 21 October 2013, with a copy to the Council. But this email did not provide any of the requested information. It said that the Turners had been interviewed as witnesses and were considered “potential victims” of a corrupt relationship between a bank employee and another person, both of whom had been charged with criminal offences. DI Hurley frankly confessed, however, that he was confused as to why this might be relevant to HMRC’s decision-making. As Mr Turner’s Counsel has conceded, it was not in fact relevant to the Council’s decision-making. Mr Turner had failed to draw any proper distinction between what was relevant to HMRC’s enquiries, and what the Council needed for its purposes. He had failed to provide what the Council had asked for. The criminal proceedings presented no obstacle to his doing so.

Ms Tufnell did not just ignore DI Hurley’s email, however. On 23 October 2013 she emailed Mr Turner, confirming that her enquiry had never been to do with the fraud. She stated that his income apart from Tax Credits had not been reviewed since 2011, and that she needed to know that the income his claim was based on was correct. She asked again for information, seeking once again completion of the form for self-employment, and the pension information previously requested. On this occasion she made clear that even if Mrs Turner had earned nothing the form still needed completion. She asked for the date Mrs Turner ceased trading. She said “If you have not earned anything, confirm in writing and provide your company accounts. If your limited company has ceased trading, please provide proof.” The deadline set this time was 5 November 2013. In other words, the Council unilaterally granted an 11-day extension of its previous deadline. It did not need to do this.

Mr Turner did respond within the extended deadline set by the Council, but only at the last minute. He sent a six paragraph email on 5 November 2013, attaching a three-page letter dated the previous day, which in turn enclosed a PDF copy of various pension documents. It is common ground that so far as pension records are concerned the pdf contained what the Council had been asking for since 21 August, albeit the originals were not provided. There is a dispute over the adequacy of the remaining disclosure. In my judgment it was not adequate.

Mr Turner’s letter said this:

“As the cover up has been perpetrated against us, our Business and our ability to earn our livelihood for over 6 years, we have not been able to properly and fully trade our Business – although it does remain ‘operational’… we do not have the means to prepare accounts nor is there any reason given the meagre income we have been forced to survive on over the entire period. We do not have any ‘Accounts; which we can send to [the Council].”

This was not confirmation that nothing had been earned. It was not confirmation that the companies had ceased trading. As Mr Hanstock points out, this wording (and the letter as a whole) indicated that the companies were and had been still trading. The natural conclusion would be that some form of income was being earned. No accounts were produced. In answer to a question from me Mr Stafford-Michael accepted, rightly, that the preparation of accounts for these companies was not a task that required the expense of an accountant, or one that needed to take up much time, if the position was nil income nil expenses. Company law requires the provision of accounts. Apparently these companies have not filed any for years, and yet have been allowed to remain on the register.

In any event, if there were no accounts, the form that had been provided by Ms Tufnell catered for the situation. Part 3 was headed “About your business income”. It asked whether the claimant had “any prepared accounts (audited or not)”. If not, Part 4 was to be filled in. This contained a simple pro forma on which the claimant could enter sales income, VAT refunds, closing cost, cost of sales, VAT paid out and opening stock; thus producing a profit before tax figure. Provision was made for details of expenses to be provided. The whole exercise could be completed by filling in two double-spaced pages. Any competent business person could complete such a form, in fairly short order, given their records. The less complex the business, and the less activity it undertook, the simpler the exercise would be. The document also asked for “your business bank account statements for this period”. None of this was done by Mr Turner.

The riposte on behalf of Mr Turner has been a robust assertion that this form was absurdly inappropriate, because it asked for information about “earnings if you are self-employed” and the fact was, as the Council knew, that the Turners’ income came from a company or companies which employed them. This is a bad and unfair point, for several reasons. One is that, as it made clear in its written submissions for the VTE appeal, the Council had been proceeding since 2006 on the basis that Mr Turner was self-employed. He now says that was not his fault, but that is not an argument that is fairly open to him at this stage. It was clear from the Council’s written statement of facts to the VTE that it had been acting on this basis, and Mr Turner did not take the point then, or not clearly. Nor (perhaps more importantly) is it a point he made at the time, in November 2013.

The evidence is that he had no such point in mind at that time. That is clear enough from the words I have quoted at [40] above. Moreover, the letter of 4 November 2013 went on to give a further and entirely different excuse for not completing the form. It was this: “we are unable to fill in the form as it involves disclosing information that is both contested by us, and is also sub judice”. No explanation has been offered of what this meant, or why it might have been justified. Mr Stafford-Michael has not sought to support this as an excuse for failing to provide accounting information. As I have said, the criminal proceedings posed no obstacle to compliance with the Council’s requests.

On 6 November 2013 Ms Tufnell wrote to Mr Turner stating that his claim had been cancelled “because you have not provided the additional information requested”. That, in my judgment, was an entirely unobjectionable conclusion. It was true. Later the same day Ms Tufnell wrote again, reconfirming that the claim had been cancelled with effect from 30 September 2013, the date of its original suspension. By this time, Ms Tufnell had evidently taken account of the 5 November email and its attachments. She confirmed that her decision had been made “based on the fact that you are unwilling to provide a formal written declaration of you and your wife’s income from your limited company and from her self-employment. As such I can no longer accept that your claim is valid.” These are the decision letters, setting out the conclusions against which Mr Turner appealed to the VTE.

The conclusion that Mr Turner was “unwilling” to provide the specified information has been attacked by Mr Stafford-Michael, but it seems to me to be a reasonable inference from Mr Turner’s behaviour over a period of months which could properly have been interpreted as deliberately obstructive. Counsel has also invited me to conclude that later correspondence between Mr Turner and the Council serves to show that its cancellation of his CTR was unreasonable, with the consequence that the VTE’s dismissal of the appeal was unlawful. I cannot accept those submissions. The challenge launched by Mr Turner related to the decision to cancel CTR. That decision was made on 6 November 2013. Later decisions might in principle have been the target of a further appeal, or a judicial review challenge, as appropriate. But the ambit of the appeal to the VTE, and of this further appeal, must be confined.

What is material about the later correspondence is that it tends to undermine Mr Turner’s case on this appeal. It has been submitted that it was or should have been obvious to the Council that the companies were without any income, and that the Turners were consequently earning nothing from their employment by the companies. But in a letter about WTC which Mrs Turner wrote to HMRC on 6 February 2014, to which Mr Stafford-Michael drew my attention, she disclosed that during the year to 5 April 2013 Zenith Publishing and Zenith Café – music businesses - were in receipt of PRS, PPL and MCPS payments (which included “my personal royalty payments”), and that Zenith Publishing also received occasional royalty payments from an online company. The sums referred to were modest, but that is not the point, or at least not the entire point. Discrepancies such as these are at odds with the central argument for Mr Turner, that the Council had been given accurate and complete information and evidence to the full extent that it could reasonably have required.

Mr Stafford-Michael has acknowledged that some might regard some of his client’s correspondence as “ranting”. But he submits that Mr Turner was a man under pressure, through no fault of his own. His behaviour in his dealings with the Council was at times that of a “square peg in a round hole” but, said Mr Stafford-Michael, he needed talking to sensibly, rather than being peppered with computer-generated letters such as those deployed in this case. These were attractively presented submissions, with which I have some degree of sympathy. The Council’s correspondence on the matter is not flawless. It is possible that a different way of dealing with the issue might have yielded better results.

But that is a long way from a conclusion that the Council behaved irrationally, or unreasonably, let alone so unreasonably that no other conclusion was open to the VTE. Mr Turner has not come close to demonstrating that. The form/substance dichotomy relied on is misleading. The form used here and the correspondence both asked for information of substance, and supporting evidence, which was not provided by Mr Turner. It is perfectly legitimate for the Council to take a fairly strict position on tax matters. Not everyone is wholly honest all the time about all tax matters. Clarity and precision are of high importance, if the law is to be properly enforced. It is reasonable to say in this context, as in others, that there is an important difference between assertion and evidence; and that due verification of information provided is of critical importance.

In the end, the position is this. The Council made some relatively straightforward requests for information, evidence, and verification. They were clear enough, and could without any real difficulty have been complied with in full and on time. The VTE was fully entitled to conclude that they were reasonable requests, and it had an ample basis for finding that they were not met.

The outcome is that the extension of time is refused and the appeal is dismissed. If I had granted relief against sanctions and an extension of time I would have affirmed the Tribunal’s decision.