Brighton and Hove City Council, R (on the application of) v Brighton And Hove Justices [2004] EWHC 1800 (Admin)

Case No CO/3654/2003[2004] EWHC 1800 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of JusticeDate Thursday 29 th July 2004
Strand,
London, WC2A 2LL
Before
THE HONOURABLE JUSTICE STANLEY BURNTON
Between
BRIGHTON AND HOVE CITY COUNCILClaimantBRIGHTON AND HOVE JUSTICESDefendantsMICHAEL HAMDANInterested Party
THE QUEEN ON THE APPLICATION OF
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Iain O’Donnell (instructed by Legal Services, Brighton and Hove City Council) for ClaimantPatrick Hamlin (instructed by Paul Gromett & Co) for Interested Party for The Defendant Magistrates’ Court did not appear and was not represented.
Judgment
[1]In these proceedings the Claimant (“the Council”) seeks judicial review of the decision of the Defendant justices made on 28 May 2003 to set aside liability orders made by that Court as long ago as 30 October 1996, 19 February 1997 and 23 July 1997 requiring the Interested Party (“Mr Hamdan”) to pay specified amounts totalling £5,734.55 alleged to be due as national non-domestic rates (“rates”) in respect of the property at 1 Palmeira Avenue Mansions, 21 Church Road, Hove (“the property”). The Claimant contends that the decision of the justices was one that no reasonable bench correctly applying the law could have made.[2]It was submitted on behalf of Mr Hamdan:(a) That the Council should have proceeded by appeal by way of case stated, and that this Court could not, or should not in the exercise of its discretion, grant relief in judicial review proceedings;(b) That the justices’ decision was one that they were entitled to make in the exercise of their discretion.

The undisputed facts

[3]Mr Hamdan has always disputed his liability for rates for the property.[4]The first relevant summons for non-payment of those rates was issued on 16 October 1993, for service on Mr Hamdan at the property. The first liability order was made, as mentioned above, on 30 October 1996. Mr Hamdan did not appear at the magistrates’ court at the hearing.[5]The second summons was issued on 4 February 1997, again for service at the property. The second liability order was made on 19 February 1997. Again, Mr Hamdan did not appear at the magistrates’ court when the order was made.[6]The third summons was issued on 13 June 1997. As before, Mr Hamdan did not appear on the return day, and a liability order was made on 23 July 1997.[7]Mr Hamdan has paid nothing on account of the sums ordered to be paid by the liability orders.[8]On 19 December 2002, the Council served a statutory demand on Mr Hamdan, based on the outstanding liability orders. He did not comply with it. The Council issued and served a bankruptcy petition, based on the sums still outstanding. Mr Hamdan obtained an adjournment of the bankruptcy proceedings to give him the opportunity to apply to set aside the liability orders.[9]By letter dated 14 April 2003, Mr Hamdan’s solicitors asked the magistrates’ court to allot a hearing date for an application on his behalf to set aside the liability orders. The letter enclosed a copy of his affidavit sworn in the bankruptcy proceedings and stated:
“… you will note that it is our client’s intention to have the question of the Liability Notice re-heard. The situation is this: It is our client’s contention that the property never was an office unit and that the Liability Order made is therefore incorrect.”
[10]The court listed Mr Hamdan’s application for hearing on 28 May 2003. The bench consisted of two lay magistrates. At the hearing, Mr Hamdan was present and represented by his solicitor, Paul Gromett; the Council was represented by Paul Jenkins, a senior court officer in the Council’s recovery team. He is not legally qualified. Mr Hamdan gave evidence, on the lines of his affidavit sworn in support of his application for the adjournment of his bankruptcy proceedings. Mr Jenkins produced documents from the Council’s file, and Mr Hamdan was asked about them. Precisely what documents were produced is not clear, but Mr Hamdan accepts that they included:(a) a copy of the second summons on which an employee of the Council (presumably Mr Walter) had noted that Mr Hamdan had telephoned on 18 February 1997 and said that he did not occupy the property, and had a property in 19 Church Road only, and would put details (presumably of his position) in the fax; and(b) a fax dated 18 February 1997 to Mr Walter referring to a telephone call earlier that day in which Mr Hamdan referred to the second summons and stated that he did not occupy the property, and gave details of the property he did occupy.[11]There appears to have been some confusion in Mr Jenkins’ mind as to what decision was made by the justices on 28 May 2003. He thought that the magistrates had simply adjourned the matter to be heard by District Judge Arnold on 8 July 2003. When the case came before her, District Judge Arnold expressed the view that the magistrates had set aside the liability orders. She expressed doubt as to the jurisdiction of the justices to set aside the liability orders, and there was discussion as to a challenge to their decision by judicial review. She adjourned the matter pending the anticipated judicial review proceedings.[12]On 9 July 2003, the Council wrote to the Magistrates’ Court informing it of the proposed judicial review and asking for a copy of the Justices’ reasons. The Magistrates’ Court sent a copy of the reasons enclosed with a letter dated 14 July 2003. The reasons are set out in the Annex to this judgment, with paragraph numbering added.[13]The Council commenced these proceedings on 31 July 2003.

The course of the judicial review proceedings

[14]Neither the Magistrates’ Court nor Mr Hamdan filed an Acknowledgment of Service. On 14 October 2003, Keith J granted the Council permission to apply for judicial review.[15]By letter dated 20 January 2004, the Magistrates’ Court informed the Council and the Administrative Court that it accepted that it had acted outside its jurisdiction by reopening the liability orders: the justices accepted that they had exceeded their limited powers to re-open the liability orders in question.[16]These proceedings came before Henriques J on 28 January 2004. He had before him a draft order to quash the Magistrates’ decision to set aside the three liability orders, signed on behalf of the Claimant and the Magistrates’ Court. It recited that Mr Hamdan’s consent had not been obtained because he was “uncontactable”. However, counsel appeared for Mr Hamdan and opposed the quashing of the order of 28 May 2003. His skeleton argument took for the first time the preliminary procedural point that judicial review proceedings were inappropriate, and that the Council should have proceeded by way of case stated. In addition, it was submitted that the Council were not in any event entitled to the order they sought: the justices had had a discretion whether to set aside the liability orders and had, it was contended, properly exercised it. Henriques J adjourned the hearing and gave directions.[17]On 17 February 2004, the Magistrates’ Court again wrote to the Administrative Court Office. It repeated that it was “of the view that the justices exceeded their limited powers to re-open the relevant liability orders.” The letter continued:
“As far as whether any appeal should be by way of case stated or judicial review, we were initially of the view that judicial review was the appropriate appeal procedure as we understood the challenge to be on the basis that the court failed to exercise its jurisdiction properly based on procedural impropriety. We would not however wish to make any representations beyond this and will of course abide by any ruling of the Court. I also understand that some reference was made to the case possibly being re-opened. Our view is that it is not now appropriate to re-open the case given the disputes that still surround the case and the fact that Brighton and Hove City Council do not, as I understand it, agree to this course of action.”
[18]These proceedings came before Lindsay J on 31 March 2004. Unfortunately, it was again adjourned, on the application of the Council, apparently for them to deal with an issue raised in Mr Hamdan’s skeleton argument.[19]The hearing before me took place on 1 July 2004.

Did the Justices make a decision to set aside the three liability orders?

[20]This issue was not raised in the Council’s claim form or in Mr O’Donnell’s skeleton argument. I address it for the sake of completeness in the light of Mr Jenkins witness statement and that of Paul Grommett, Mr Hamdan’s solicitor.[21]These judicial review proceedings are predicated on the Justices’ having made a decision on 28 May 2003 to set aside the three liability orders that had been made against Mr Hamdan. The Justices’ have given reasons for their decision. Regrettably, their formal decision is not in evidence. It is nonetheless clear that they did make that decision on that date.

Judicial review or appeal by way of case stated?

[22]In support of his submission that the proceedings by way of judicial review were ill-founded, Mr Hamlin relied on the decision of the Court of Appeal in R (Magon) v London Borough of Barking and Dagenham, an unreported judgment of 7 May 1998. In that case, Mummery LJ stated that the case stated was the appropriate procedure to question the correctness of the liability order that had been made by magistrates. In my judgment, that decision is to be distinguished. In the present case what is questioned is not the correctness of the original liability orders, but whether the justices could properly have set those liability orders aside. Whether Mr Hamdan was liable to pay the NNDR to which the liability orders related is not a question before me: I assume that he had an arguable defence to the making of those orders. In any event, the Court of Appeal did not hold that proceedings by way of judicial review were unavailable, but only that proceedings by way of case stated were appropriate.[23]I nonetheless have no doubt that the appropriate procedure to challenge the decision of the justices of 28 May 2003 was by appeal by way of case stated. This is the normal procedure for challenging errors of law by justices. It has a number of advantages, not the least of which is that the discipline of a case stated normally ensures that the High Court has before it a statement by the justices of the issues they had to decide, the evidence before them, their findings of fact and the reasons for their decision. If the case stated is defective (because, for example, the justices’ statement of their findings of fact is ambiguous), it may be remitted to them for amendment: see the Practice Direction to Part 52 at 52PD.76. The reasons of the justices in the present case are relatively informal, and do not include what I would expect to see in a case stated. Furthermore, in an appeal by way of case stated, this Court is able to make any order that the lower court might have made: see CPR Part 52.10 (1). The powers of this court on judicial review are more limited: it can quash the lower court’s order and order it to make another order only if that other order is the only one properly open to it.[24]However, this Court retains power, in the exercise of its judicial review jurisdiction, to quash a decision of justices that is unlawful. Judicial review proceedings are most appropriate where it is alleged that there has been a procedural impropriety on the part of the justices: see the classic exposition of Lord Bingham LCJ in R (Rowlands) v Hereford Magistrates Court [1998] QB 110. This is not such a case, despite the Magistrates’ Court apparent misconception. The High Court may refuse relief in judicial review proceedings on the ground that proceedings by way of case stated were appropriate, but the bar is discretionary, not mandatory.[25]Although the Council should have challenged the justices’ decision by way of case stated, I decided in the exercise of the discretion of the Court to permit it to proceed by way of judicial review. In the first place, the objection to judicial review proceedings was belated: it was not made in any acknowledgment of service, but only in the skeleton argument served some 6 months after the commencement of proceedings. Strictly, Mr Hamdan requires leave to take the point out of time. Secondly, the Defendant Magistrates’ Court does not object to the form of proceedings. Thirdly, the Court can ensure that no prejudice is caused to Mr Hamdan by the form of these proceedings. Indeed, Mr Hamlin, for Mr Hamdan, did not suggest that any prejudice had been caused by the form of these proceedings. Lastly, unless prejudice is caused to a party, or there is some other good reason to refuse to permit a party to proceed by way of judicial review (as in R (A) v Leeds Magistrates’ Court [2004] EWHC 554 (Admin)), in my judgment the Court should be reluctant to cause a good claim to be defeated by an error as to the form of the proceedings.

The power of the magistrates’ court to set aside a liability order

[26]In Liverpool City Council v Pleroma Distribution Ltd [2002] EWHC 2467 (Admin), Maurice Kay J held that magistrates have an inherent power to set aside a liability order made by their court. Before me, both Mr O’Donnell and Mr Hamlin accepted the correctness of this decision and asked me to proceed on the basis that it correctly set out the law.[27]In Pleroma the justices had made a liability order in ignorance of the fact that the Defendant’s solicitors had written to the Court requesting an adjournment. The order was made on 21 December 2001. When the defendant’s solicitors discovered what had happened, they sought to have the application relisted, and on 4 January 2002 the Principal Legal Advisor to the Justices wrote to the defendant’s solicitors informing them of a hearing date and adding that:
“the Court is using its common law powers to relist the matter as it appears that a mistake was made in that the Court was not informed of the contents of your letter of 17 December which requested an adjournment of both matters listed that day.”
[28]The same Justices made the decision to set aside the liability order. They described their decision in the Case Stated as follows:
“We ….. were of the opinion that the liability order had been issued without us having the opportunity to fully consider [Pleroma’s] application to adjourn. The fact remains we never had sight of or knew of the contents of the….letter….requesting an adjournment of all the accounts. The …. application to adjourn was never put before us and we were therefore unable to make a proper and informed decision in the circumstances. As a result of this we feel that the court on 21 December ….. made an inequitable decision ….. we feel it would be unjust for the liability order to stand. In the circumstances we used our inherent jurisdiction to set aside the liability order ….. Whilst we could find no statutory authority to allow us to reconsider the original court hearing we were satisfied that we had common law jurisdiction to do so. We were satisfied that if we did not do this then it would lead to an inequitable position.”
[29]Liverpool City Council contended that the justices had had no power to re-open their decision to make a liability order. Maurice Kay J upheld the justices’ decision. He set out the principle he applied in paragraph 10 of his judgment:
“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. … 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.”
[30]It is important to read that passage in context. In Pleroma there had been a substantial procedural defect: the defendant’s request for an adjournment had not been considered by the justices, although it was known to the court clerk: see the account of the facts at paragraph 3 of the judgment. The application to the justices for them to set aside their order was made promptly: despite the Christmas and New Year break, their Principal Legal Advisor had responded to it by 4 January 2002. Thus the reference in the last sentence of paragraph 10 of the judgment to the absence of a temporal limit cannot be read as a licence for delay.[31]It is important to take into account that the jurisdiction which Maurice Kay J held to exist cannot be exercised simply because the defendant disputes his liability to pay the NNDR in question. That there is a genuine and arguable dispute as to that liability is a necessary condition for a decision by justices to set aside a liability order, but it is not a sufficient condition. The power of a magistrates’ court to set aside a liability order it has made is an exceptional one, to be exercised cautiously. In my judgment, in general a magistrates’ court should not set aside a liability order unless it is satisfied, in addition to there being a genuine and arguable dispute as to the defendant’s liability for the rates in question, that:(a) the order was made as a result of a substantial procedural error, defect or mishap; and(b) the application to the justices for the order to be set aside is made promptly after the defendant learns that it has been made or has notice that an order may have been made.[32]The authority for condition (a) is paragraph 10 of the judgment of Maurice Kay J in Pleroma. In most cases, it must be shown that the liability order was unlawful or made in excess of jurisdiction or in ignorance of a significant fact concerning their procedure (such as an application for an adjournment) of which the justices should have been aware. However, the procedural mishap may not be the fault of the court or of the local authority: Maurice Kay J gave the example of a traffic accident that, unknown to the magistrates’ court, prevents the defendant from attending at the hearing. But a failure of the defendant to attend when he knows that there will be a hearing will not of itself satisfy this requirement. Thus a failure of the defendant to attend the hearing because he assumes, without good reason, that the local authority will not seek an order, or because he is absent abroad, will not of itself satisfy this requirement. A defendant who will be unable to attend a hearing because of his absence abroad may request an adjournment in writing, or instruct a solicitor to appear on his behalf; but if he does nothing, he is not entitled to an order of the magistrates to set aside a liability order made against him.[33]Requirement (b) follows as a matter of principle, applicable to all challenges to administrative and judicial decisions. If promptness were unnecessary, a defendant could circumvent the requirements of CPR Part 54.5 by applying to the justices for relief instead of to the Administrative Court. In this context, where the defendant is not required to do more than to write a letter stating why he seeks to re-open the decision to make a liability order, promptness normally requires action within days or at most a very few weeks, not months, and certainly not as much as a year. It is to be noted that the jurisdiction to reopen a liability order will be unavailable to a defendant who delays in circumstances in which he has notice that an order may have been made, although he has not received a copy or been informed that an order has been made. A defendant who knows of the issue of a summons, and therefore should appreciate that there may have been an order made on the return day, but makes no enquiry as to whether an order has been made against him, will not in general be entitled to set aside the order simply because some time later the local authority takes further steps to enforce the order.[34]Thus in the present case, it was necessary on 28 May 2003 for the justices to consider whether there had been any procedural defect in the proceedings that led to making of the liability orders, and whether Mr Hamdan had applied promptly for them to be set aside after learning that they had been made.[35]In my judgment, it is clear that the justices did not properly consider the first of these issues, and it is not clear that they properly considered the second issue. As to the first issue, the only procedural defect that is suggested is that the summonses had not been duly served on Mr Hamdan. It is not clear that the summonses were duly served as required by regulation 13 of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989. The only provision that could have authorised service on Mr Hamdan at the address of the property was regulation 13(2)(d), but its application depended on its being a place of business of his, which he has always disputed. However, it is clear (and must have been clear to the justices on 28 May 2003) from Mr Hamdan’s fax of 18 February 1997 that he knew of the second summons before the second liability order was made. He could not therefore complain that he had no notice of the proceedings, and it could not be right in those circumstances to set aside the second liability order by reason of the dispute as to the regularity of service of the summons. The justices made no finding that the first or the third summons had not come to Mr Hamdan’s attention before the liability orders were made so as to enable him to appear in person or by an advocate to dispute his liability. Nor did they make any other finding of a serious procedural defect that made it unjust for the liability orders to have been made. In these circumstances, their decision was one that was not open to them.[36]In this connection, I note that in his affidavit sworn in the bankruptcy proceedings, Mr Hamdan did not state that he did not receive or have notice of the Council’s summonses. In contrast, he specifically denied service of notice of the liability orders or of a statutory demand. Similarly, his solicitors’ letter to the Magistrates’ Court of 14 April 2003 did not assert that he had not known of the Council’s application s for liability orders.[37]Instead of focusing on the procedural issues raised by Mr Hamdan’s application, the justices in this case applied a general test that placed too much emphasis on the substantive issue. They considered whether “it would be reasonable and in the interests of justice” to reopen the orders. Every court hopes that every decision it makes is reasonable and in the interests of justice. That formulation is too broad and vague to give a reviewing court confidence that the necessary considerations were taken into account. It is a test that may lead to insufficient importance being given to the need for finality in proceedings for liability orders.[38]In paragraph 7 of their reasons, the justices state:
“It is only when he received the notice of bankruptcy proceedings instigated by the council that (Mr Hamdan) became aware that these matters were still outstanding.”
Precisely what the justices meant by “these matters” is unclear. Mr Hamdan certainly knew of the second summons, and I do not think that it is suggested that he had reason to believe that the Council had abandoned its claim for rates. Given, however, the conclusion I have reached, it is unnecessary to speculate further on this point, or to seek clarification of the justices’ reasons for finding, if they did, that Mr Hamdan made his application sufficiently promptly to justify their setting aside liability orders made so long ago.[39]I shall hear counsel on the order to be made in the light of my above conclusions.

Cited in 21 later judgments

and 12 more of the most senior