Where a local authority (the 'Billing Authority') persuades a Magistrates Court (justices) to make a business rates liability order against a respondent/ratepayer[1], does the Magistrates Court have the jurisdiction/power to then either:
(1) stay the liability order/stay execution of the liability order; and/or
(2) grant/allow the ratepayer time to pay it/order payment by instalments?
This article will consider these two questions, taking each in turn. While there is significant overlap between the analysis, each will be addressed and discussed independently.
Staying the Liability Order/Staying Execution of the Liability Order
In the Magistrates Court Act 1980, contained in Part III of the Act, there is section 75(1) and (2). Those subsections read (so far as potentially material):
'A magistrates' court by whose ... order a sum is adjudged to be paid may, instead of requiring immediate payment, allow time for payment, or order payment by instalments.
Where a magistrates' court has allowed time for payment, the court may, on application by or on behalf of the person liable to make the payment, allow further time or order payment by instalments.'
While the words '...allow time for payment or order payment by instalments' might open up a potential basis for finding jurisdiction/power in the Magistrates Court, to stay a liability order/stay execution of a liability order , the effect of reg.13(3) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989/1058 ('1989 Regulations') is to disapply section 75(1) and (2) in respect to business rates liability orders (though conceptually a 'stay' would not easily fit into the usual meaning of 'allow time for payment', anyway). Reg.13(3) reads:
'The amount in respect of which a liability order is made is enforceable in accordance with this Part; and accordingly for the purposes of any of the provisions of Part III of the Magistrates' Courts Act 1980 (satisfaction and enforcement) it is not to be treated as a sum adjudged to be paid by order of the court.'
As stated, section 75 is contained within Part III of the Magistrates Court Act 1980, and so comes with the phrase '...any of the provisions of Part III of the Magistrates' Courts Act 1980....' within reg.13(3). Consequently, the amount in respect of which the business rates liability order was made is not to be treated as 'a sum adjudged to be paid by order of the court.' In other words, the words '...a sum is adjudged to be paid...' in section 75(1) are treated as not including the amount in respect of which the business rates liability order is made. Given that is the case, section 75(1) does not empower the Magistrates Court with a discretion (by reason of the word 'may'), to '...allow time for payment, or order payment by instalments'.
Furthermore, there is an authority that contains some persuasive authority on this point, namely in R. (on the application of Vtesse Networks Ltd) v North West Wiltshire Magistrates' Court [2009] EWHC 3283 (Admin); [2010] R.A. 1 ('Vtesse'). In Vtesse, judicial review proceedings were brought against a district judge's refusal to state a case for the opinion of the High Court. Permission was granted by the High Court and the judicial review was widened to certain substantive issues, including ground 6(c):
'Whether the Magistrates Court has power to grant a stay of execution of a liability order and the (sic) Section 75 - 77 of the Magistrates Courts Act 1980 or otherwise and whether a stay should be granted in this case.' (paragraph 3).
However, as a result of earlier determinations on proceeding grounds of appeal, it proved unnecessary for the High Court Judge, Owen J, to determine the issue. Owen J in Vtesse said, at paragraph 34:
'By ground 6(c) the claimant contends that the learned District Judge erred in concluding that he had no jurisdiction to order a stay of the liability orders. But given my conclusions as to the substantive grounds, and the consequences of success or failure in the Court of Appeal on the 6(a)(i) and (ii) issues (see paragraph 6 above) the question of a stay has become academic.'
Owen J elected not to go on to express any, albeit it obiter, comments/observations on the issue. Now while Owen J did not determine/explore the issue, and so Owen J gave no guidance on the issue at the High Court level, what Vtesse does provide is the decision of the first instance district judge ('DJ'). Though a DJ's decision is of only persuasive authority, rather than binding authority, it does at least provide some authority on the point. In Vtesse, the DJ held that the Magistrates Court does not have jurisdiction to order a stay of the liability orders. As to how the DJ came to that conclusion, the law report is silent. Owen J does not quote from the DJ's decision, nor does he set out why the DJ came to that conclusion. The conclusion is all that is provided by Owen J in his judgment and there is no transcript of the DJ's decision, publicly available (as far as the author is aware).
One point to note about the DJ's decision in Vtesse. It is not limited to whether or not section 75 of the Magistrates Courts Act 1980 empowers the Magistrates Court to stay its own business rates liability order. As indicated by the ground of appeal, and the wording of Owen J paragraph 34, the determination was seemingly universal. In other words, the DJ ruled on whether the Magistrates Court held any jurisdiction to stay its own business rates liability order, whether under section 75 of at all.
Given this is persuasive authority only, it is necessary to briefly consider: (1) the Magistrates' Courts Act 1980; and (2) the 1989 Regulations, to see whether they provide a statutory foundation for such a jurisdiction/power. Looking at:
(1) Part II of the Magistrates' Courts Act 1980 (sections 51 to 64), it does not contain a provision empowering the Magistrates Court to stay a business rates liability order[2a];
(2) the 1989 Regulations, does not contain a provision empowering the Magistrates Court to stay a business rates liability order.
Looking outside the statutory provisions, it will be recalled that the Magistrates' Court is a creature of statute[2b] - it does not have inherent powers supplementing the statutory provisions Parliament has given it. To put this another way: unless there is a statutory provision empowering the Magistrates' Court to do something, it does not have the power to do it. It cannot fall back on an inherent power to do it. However, having said that, this is only part of the picture, as the law has recognised that the Magistrates Court has 'some limited common law powers' (R (Periasamy Mathialagan) v London Borough of Southwark [2004] EWCA Civ 1689, Waller LJ at paragraph 33; see now Naris v London Borough of Tower Hamlets [2018] EWHC 2768 (Admin), paragraph 5[2c]), most notably, the jurisdiction to set aside its own orders. It is unclear whether the DJ in Vtesse heard argument that these limited common law powers extended to staying its own orders. What can be said is that the absence of statutory provision, granting the Magistrates Court a power to stay its own business rates liabilty order, is not conclusive.
The upshot from the above is that, at present:
(1) section 75 of the Magistrates Court 1980 is not applicable and does not grant the Magistrates Court jurisdiction to stay its own business rates liability orders;
(2) Neither: (i) Part II of the Magistrates Court 1980, nor (ii) the 1989 Regulations, seem to contain any relevant provision, bestowing upon the Magistrates Court, jurisdiction to stay its own business rates liability orders;
(3) the Magistrates Court holds no inherent jurisdiction/power, that the Magistrates Court can fall back upon, and rely upon, as founding a jurisdiction/power, to make an order staying such a liability order, save perhaps such a power might be found amongst the 'limited common law powers' it is recognised as possessing;
(4) there is persuasive, though not binding authority, which states that the Magistrates Court does not have any jurisdiction to stay of liability orders (whether under s.75 of the Magistrates' Courts Act 1980, or otherwise) - though it is unclear whether the DJ heard argument that such a power was contained in the 'limited common law powers' the Magistrates Court is recognised as possessing.
The legal position on this point is, in summary, open to argument.
Granting/allowing a ratepayer time to pay a business rates liability order, or ordering payment by instalments?
The first provision to consider is the potentially relevant section 75(1) and (2) of the Magistrates Court Act 1980, contained in Part III of the Act. Those subsections read (so far as potentially material):
'A magistrates' court by whose ... order a sum is adjudged to be paid may, instead of requiring immediate payment, allow time for payment, or order payment by instalments.
Where a magistrates' court has allowed time for payment, the court may, on application by or on behalf of the person liable to make the payment, allow further time or order payment by instalments.'
While the words '...allow time for payment or order payment by instalments' certainly seem promising, as with staying a liability order, these provisions are not available in respect to business rates liability orders. This is because, as with staying a liability order, reg.13(3) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989/1058, reg.13(3) requires the Court to treat the business rates liability order sum as not an order for 'a sum adjudged to be paid'. Reg.13(3) reads:
'The amount in respect of which a liability order is made is enforceable in accordance with this Part; and accordingly for the purposes of any of the provisions of Part III of the Magistrates' Courts Act 1980 (satisfaction and enforcement) it is not to be treated as a sum adjudged to be paid by order of the court.'
As stated, section 75 is contained within Part III of the Magistrates Court Act 1980, and so comes with the phrase '...any of the provisions of Part III of the Magistrates' Courts Act 1980....' within reg.13(3). Consequently, the amount in respect of which the business rates liability order was made is not to be treated as 'a sum adjudged to be paid by order of the court.' In other words, the words '...a sum is adjudged to be paid...' in section 75(1) are treated as not including the amount in respect of which the business ratess liability order is made. Given that is the case, section 75(1) does not empower the Magistrates Court with a discretion (by reason of the word 'may'), to '...allow time for payment, or order payment by instalments'.
Are there any other, potentially, relevant statutory provision. Seemingly not.
(1) Save for potentially section 59, Part II of the Magistrates' Courts Act 1980 (sections 51 to 64) does not contain a provision empowering the Magistrates Court to allow time for payment or to order payment by instalments;
(2) Section 59, entitled 'Orders for periodical payment: means of payment' relates to an order for '...money to be paid periodically'[3]. However, the business rates liability order is not an order for money to be paid periodically. It therefore does not seem to be relevant;
(3) The 1989 Regulations do not contain a relevant provision either.
As stated above in respect to staying a liability order, the Magistrates Court has no inherent jurisdiction/powers; it only has those bestowed upon it by Parliament, but it does have 'limited common law powers'.
The upshot of the above, is that, seemingly, there is: (1) no statutory provision that empowers the Magistrates Court, in respect to a business rates liability orders, to allow time for payment, or to order payment by instalments; (2) no clear recognition that the Magistrates Court's limited common law powers, extent/include granting a ratepayer, time to pay a business rates liability order, or order that it may be paid by instalments.
Billing Authority
While outside the focus of this article, it should be noted that the Billing Authority has the ability to agree to a payment plan with the ratepayer, in respect to a business rates liability order. So the Billing Authority could agree, not to enforce the business rates liability order, on the condition that the ratepayer makes regular payments towards the outstanding sum.
Conclusion
Seemingly, in relation to business rates liability orders, the Magistrates Court has no obvious jurisdiction/power to either: (1) stay the liability order/stay execution of the liability order; or (2) grant/allow the ratepayer time to pay/order payment by instalments.
SIMON HILL © 2022
BARRISTER
33 BEDFORD ROW
NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.
[1] In England and Wales, The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, paragraph 12(5) reads:
'The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid'
The Billing Authority will need to persuade the Magistrates Court that the evidence establishes some discrete elements - see (1) Ratford v Northavon District Council [1987] 1 QB 357 (Slade and Ralph Gibson LJ and Sir John Megaw); (2) Pall Mall Investments v Camden LBC [2013] EWHC 459 (Admin) (Holman J); and (3) Queen Street Properties Ltd v Cardiff City and Council Council [2022] EWHC 39 (Admin), and (4) an article, written by the same author, entitled 'Onus of Proof in Business Rates Complaints' - here.
[2a] Section 54 of the Magistrates Court Act 1980 is entitled 'Adjournment and stays' - raising the prospect that perhaps they contains something relevant. The section contains nothing of relevance.
(1) Section 54 currently reads:
'(1) A magistrates' court may at any time, whether before or after beginning to hear a complaint, adjourn the hearing, and may do so, notwithstanding anything in this Act, when composed of a single justice.
(2) The court may when adjourning either fix the time and place at which the hearing is to be resumed or, unless it remands the defendant under section 55 below, leave the time and place to be determined later by the court; but the hearing shall not be resumed at that time and place unless the court is satisfied that the parties have had adequate notice thereof.'
None of this is relevant to stays on liability orders.
Up until 21 April 2014, section 54 also contained the following subsections, which go to explain why 'stay' is in the section title:
'(3) In family proceedings a magistrates' court may stay the whole or part of any proceedings or order either generally or until a specified date or event.
(4) Subsections (1) and (2) are subject, for the purpose of family proceedings in any magistrates' court, to other provision made by Family Procedure Rules.'
There are both irrelevant to stays on liability orders.
So, not only are (3) and (4) no longer part of section 54, but even if they were, these provisions contain nothing of relevance.
[2b] In The Queen on the Application of Commissioner of Police for the City of London v City of London Magistrates' Court v T [2015] EWHC 1656 (Admin), Laws LJ, said, at paragraph 10:
'The magistrates' court is a creature of statute and cannot go outside the statute.'
In Director of Public Prosecutions v Chajed [2013] EWHC 188 (Admin); [2013] 2 Cr. App. R. 6, Hickinbottom J said, at paragraph 15:
'...the magistrates' court is a creature of statute, and its powers are consequently limited to those given to it by the statutory scheme under which it operates: it has no inherent powers as such.'
[2c] In R (Periasamy Mathialagan) v London Borough of Southwark [2004] EWCA Civ 1689 ('Mathialagan'), the Court of Appeal (Waller LJ, Carnwath LJ and Aldous J) struggled with squaring the Magistrates Court being a creature of statute, with recognised, and convenient Magistrates Court powers to set aside its own orders. Two things to note about Mathialagan: (1) The case of On the application of Brighton and Hove City Council) v (1) Brighton and Hove Justices and (2) Hamdan [2004] EWHC 1800 (Admin) ('Hamdan') decided about 6 months earlier, was not cited to them; and (2) Waller LJ expressly states that they have heard 'limited argument' (paragraph 37) on this issue.
Further, recent authority has accepted that the Magistrates Court holds these adjunctive common law powers.
To demonstate this, a few passages will be quoted:
(1) in Mathialagan, Waller LJ, under the heading 'jurisdiction to re-open', said:
'30. I now turn to what seems to me the most difficult point on the appeal, and one on which my mind has wavered. Did the Magistrates have the power to reopen and thus should they have considered doing so?...
31. In Civil proceedings in the High Court or County Court there has for many years existed under the rules a power to rehear a case where the decision has been given in a party's absence....
32. For magistrates to have such a power would at first sight seem sensible. It would be open to the magistrates to consider why a party was not present, and if that was through some mistake, to weigh up the sort of mistake with which they were concerned, and where responsibility for the mistake lay. They could consider how swiftly the application for a rehearing had been made, and they could consider the merits of the case and then decide whether fairness required a rehearing.
33. But the position so far as magistrates are concerned is that their powers are statutory, although some limited common law powers have also been recognised. Under the Magistrates Courts Act 1980 the magistrates are given jurisdiction over both criminal and civil cases. The Act is divided into parts covering those different jurisdictions and then there are parts or sections which seem to cover both jurisdictions e.g. Section 97 (Summons to Witness) and Section 111 (Statement of Case by Magistrates Court). The Act only gives an express power to rehear cases when dealing with "an offender", or "where a person is convicted". Section 142(1) and (2) are in the following terms:-
"142. Power of magistrates' court to re-open cases to rectify mistakes etc. (1) A magistrates' court may vary or rescind a sentence or other order imposed or made by it when dealing with an offender if it appears to the court to be in the interests of justice to do so; and it is hereby declared that this power extends to replacing a sentence or order which for any reason appears to be invalid by another which the court has power to impose or make. . . . (2) Where a person is convicted by a magistrates' court and it subsequently appears to the court that it would be in the interests of justice that the case should be heard again by different justices, the court may so direct."
34. There seems no doubt that those provisions are concerned with the magistrates' criminal jurisdiction and not their civil jurisdiction. That does, at first sight, seem surprising, but the starting point seems to me to be that Parliament has intentionally not given a general power to magistrates to reopen civil proceedings.
35. Certain authorities have recognized a power to rehear cases at common law and without any statutory power being invoked. Those cases have on the whole been in the criminal context but there is no reason to think that their reasoning should not be applied in the civil context.
36. .These were cases examined by Maurice Kay J in his judgment in Pleroma. Pleroma was concerned with the civil jurisdiction of magistrates, indeed their jurisdiction to make liability orders against rate payers. Having reviewed the above cases he said this:-
"10. What is the principle to be derived from the authorities? In my judgment it is that when a Magistrates Court purports to do something which is unlawful and in excess of its jurisdiction it is competent to correct its error. To convict someone on unsworn and unaffirmed evidence or to commit a person for trial for an offence in respect of which there is no power to commit or try a person summarily for an offence only viable on indictment clearly falls into that category. The present case, it seems to me, is not so clear. The Justices had the competence either to grant or to refuse an adjournment. It was a matter of discretion, to be exercised judicially. However, the reality is that on 21 December they did not purport to exercise that discretion one way or the other in respect of the current demand because they did not know that Pleroma was seeking an adjournment of it. In such a situation does it follow that they exhausted their jurisdiction upon the pronouncement of the liability order and were powerless to reopen the matter once the true position was made known to them? In my judgment it does not. Let us assume that a liability order had been made in the absence of a ratepayer and his representative because they had been involved in a traffic accident on the way to court, or that an extremely cogent written request for an adjournment had been sent to the court but had been misfiled in the court office, and in such a case the facts were only brought to the attention of the court later in the day or on the following day. It would be unfortunate and contrary to common sense and fairness if the magistrates were constrained by law to stand on their earlier decision, made in ignorance of the facts, and to have to direct the disadvantaged ratepayer to the Administrative Court and an application for judicial review. Moreover, there is no logical reason why what common sense and fairness justice require within an hour or a day should be subject to a temporal limit.
11. The Justices in the present case only became aware of the written request for an adjournment at a later date...In my judgment it does not need a statutory provision to enable them to put right such a perceived omission...."
37. I would make two comments on the above cases. First, the most that can be drawn from them is that, where there has been a clear mistake by the court itself going to the basis of its jurisdiction, or the fairness of the proceedings, where the resulting decision would clearly be quashed on judicial review, it may be open to the court to correct the mistake of its own motion. On the basis of the limited argument we have heard, I would not wish to question those cases, but equally I would not extend them, I would only observe that their legal basis is not free from doubt.
Certainly, it would be wrong for magistrates to regard themselves as having power to set aside their own decisions, merely because of the existence of grounds which might support an application for judicial review.
Secondly, it seems surprising, in view of the many thousands of cases which are dealt with each year before the magistrates by bulk procedures such as that described in this case, that this problem has reached the higher courts so rarely. This may be because, where the court or the authority has made an obvious mistake, or where the defendant has failed to attend through no fault of his own (such as in the traffic accident example given in Pleroma), all parties sensibly agree to the case being reopened. In a civil case, I can see no legal difficulty with such a course, and from the authority's point of view it avoids the expense and delay of judicial review. In any event, I am quite satisfied that those cases do not assist the defendant in this case.
38. .The difficulty for the appellant in the instant case is that Al Mehdawi holds quite clearly that a failure on the part of a party to be present due to the negligence of the party's advisor gives no ground for quashing the decision. To hold therefore that the District Judge in this case still had jurisdiction to reopen the case after learning of Miss Wong's error would be to hold there was such a power even where the first decision was valid and not susceptible of being quashed on judicial review. It would be to recognise some general power to reopen hearings which the statute has as it would seem to me deliberately not provided.
39. I would have thought, respectfully, that consideration should be given to the question whether s.142 should not be expanded so as to provide jurisdiction to magistrates in the civil context. It is difficult to justify a distinction between the power the high court or county court in civil proceedings have, as provided by CPR 39.3, and the absence of such jurisdiction so far as magistrates or district judges are concerned. However, in my view it is not open to this court to hold that some such general power exists at common law.'
(2) In R (London Borough of Newham) v Selwyn Dublin [2008] EWHC 125 (Admin), Mr Andrew Nicol QC (as he then was; sitting as a Deputy High Court Judge in the Administrative Court) heard a JR case, and after considering the decisions in Liverpool City Council v Pleroma Distribution Ltd [2002] EWHC 2467 (Admin) Hamdan and Mathialagan, he concluded, at paragraph 13, that although the Court of Appeal in Mathialagan had expressed some doubts about the matter, he should proceed on the three criteria as set out by Stanley Burnton J in Hamdan .
(3) In Naris v London Borough of Tower Hamlets [2018] EWHC 2768 (Admin), the Divisional Court (Sharp LJ and Warby J) Warby J (seemingly on behalf of the Court) said, at paragraphs 4 and 5:
'...[the ratepayer] made an application to set aside the [business rates liability orders].
In doing so, [the ratepayer] was invoking the inherent common law power of the Magistrates to set aside an order made by their own court: Liverpool City Council v Pleroma Distribution Ltd [2002] EWHC 2467 (Admin). The essential principles governing the exercise of that power are established by the decision of Stanley Burnton J in (On the application of Brighton and Hove City Council) v (1) Brighton and Hove Justices and (2) Hamdan [2004] EWHC 1800 (Admin) (" Hamdan").'
[3] Within Part II of the Magistrates' Courts Act 1980, entitled 'Civil Jurisdiction and Procedure', there is 'Orders for periodical payment', wherein there is section 59, entitled 'Orders for periodical payment: means of payment'
(1) In any case where a magistrates' court orders money to be paid periodically by one person (in this section referred to as “the debtor”) to another (in this section referred to as “the creditor” ),
(a) ...
(b) ... the court shall at the same time exercise one of its powers under paragraphs (a) and (b) of subsection (3) below.
(2) ...
(3) The powers of the court are-
(a) the power to order that payments under the order be made directly by the debtor to the creditor;
(b) the power to order that payments under the order be made to the designated officer for the court or for any other magistrates' court.
(c)-(d) ...
4) In any case where-
(a) the court proposes to exercise its power under paragraph (c) of subsection (3) above, and
(b) having given the debtor an opportunity of opening an account from which payments under the order may be made in accordance with the method of payment proposed to be ordered under that paragraph, the court is satisfied that the debtor has failed, without reasonable excuse, to open such an account, the court in exercising its power under that paragraph may order that the debtor open such an account.
(5) ...
(6) The methods of payment referred to in subsection (3)(c) above are the following, that is to say-
(a) payment by standing order; or
(b) payment by any other method which requires one person to give his authority for payments of a specific amount to be made from an account of his to an account of another's on specific dates during the period for which the authority is in force and without the need for any further authority from him.'