In the first appellate court decision on the issue, the Court of Appeal has confirmed that the Valuation Tribunal ("VT") has exclusive jurisdiction to determine disputes relating to the calculation of Council Tax and that this jurisdiction excludes a freestanding common law claim in restitution.
Mr Lone issued a claim in the County Court for recovery of sums described as 'overpayments' of Council Tax. He claimed that he was entitled to a single person discount ("SPD") for a historic period between 2006 to 2008, and from 2013 to date (see section 11 Local Government Finance Act 1992 ("LGFA 1992")).
The Council failed to file a directions questionnaire in the proceedings, as a result of which its Defence was struck out. The Council then instructed solicitors, who immediately sought relief from sanctions under CPR 3.9. That application was refused by DDJ Jacobs, who consequently entered judgment against the Council.
The Council appealed this decision. The crux of its appeal was that the County Court had no jurisdiction to entertain the claim, nor by extension to grant judgment in the Claimant's favour. HHJ Hellman determined the appeal in the Council's favour, set the judgment aside and dismissed the claim.
Mr Lone appealed to the Court of Appeal. He argued that:
- The County Court had jurisdiction to hear his claim by virtue of section 16 County Courts Act 1984 ("CCA 1984") as being for a sum recoverable by statute, as his claim was for sums repayable under either regulation 31 or 55 of the Council Tax (Administration and Enforcement) Regulations 1992 ("the 1992 Regulations"); or alternatively
- That the County Court had jurisdiction to entertain a claim for unjust enrichment, which was an action 'founded upon a contract' for the purposes of section 15 CCA 1984.
The Council argued that:
- Mr Lone's case conflated two discrete issues: the determination of any entitlement to the SPD (and thereby of any putative overpayment), and the enforcement of that entitlement;
- The former was, by a self-contained legislative scheme, a matter for the billing authority, and then subject to the exclusive jurisdiction of the VT upon appeal;
- That self-contained legislative scheme impliedly excluded the existence of any common law remedy in unjust enrichment.
The Court of Appeal unanimously agreed with the Council's submissions.
It considered the relevant statutory provisions in detail, including noting that:
- Regulations 14 and 15 of the 1992 Regulations provided for the billing authority to ascertain and thereafter determine any entitlement to SPD;
- That Regulations 24 and 31 provided for adjustments to such determinations, as a result of which the taxpayer might make a request for repayment if an overpayment arose;
- That regulation 55 provided that a sum which had become repayable was recoverable in a court of competent jurisdiction;
- Section 16 of the LGFA 1992 provided a statutory route of appeal to the VT if a person was (inter alia) aggrieved by "any calculation" of the amount of tax he was liable to pay;
- Section 16 LGFA 1992, and regulation 21 of the VT for England (Council Tax and Ratings Appeals) (Procedure) Regulations 2009 ("the 2009 Regulations") provided procedural requirements for such an appeal, including notice and time limits;
- Regulation 38 of the 2009 Regulations provided that the VT could quash the authority's decision and direct a recalculation;
- Paragraph 10A of Part 3 of Schedule 11 Local Government Finance Act 1988 provided that if any order was made in the terms outlined above, that the VT might direct the authority to attend to 'ancillary matters...such as the repayment of an amount';
- Regulation 43 of the 2009 Regulations provided a statutory route of appeal from the VT to the High Court on a point of law.
In giving the main judgment of the Court, Arnold LJ held:
"In my judgment the Council's analysis of the statutory scheme is correct, and it is implicit that the jurisdiction of the Valuation Tribunal to determine the correct amount of council tax payable under section 16(1)(b) of the 1992 Act is exclusive. It follows that the County Court has no jurisdiction over such issues under section 16 of the 1984 Act."
"Counsel for the Council submitted that the restricted right of recovery conferred by section 16(1)(b) of the 1992 Act was indeed inconsistent with there being an unrestricted common law right for the same reasons that he relied upon in relation to section 16 of the 1984 Act... In my judgment the Council is correct on this question. Accordingly, Mr Lone has no common law claim for unjust enrichment. The only remedy available to a taxpayer who wishes to complain about allegedly overpaid council tax is to appeal to the Valuation Tribunal."
The Court left open the more vexed question as to whether an action in restitution was an action 'founded on contract' for the purposes of section 15 CCA 1984, though Underhill LJ expressed the "strong provisional view" that it was.
The decision provides welcome clarity for both billing authorities and taxpayers. As Arnold LJ pointed out, "this should not be a hardship for aggrieved taxpayers. As discussed above, the Valuation Tribunal is a specialist tribunal. Unlike the County Court, it does not charge fees in this kind of case. Its procedures are informal, and well adapted to litigants in person. And the fact that it has no power to make an order for costs protects taxpayers from the risk of an adverse order if they are unsuccessful."
A copy of the judgment can be found here.
Shomik Datta represented the Council, instructed by Brian McKenna of Brian McKenna & Co. Solicitors.