Mohammed v London Borough of Southwark

An overstated statutory demand does not justify setting it aside where the corrected debt remains above the statutory minimum. For council tax exemption purposes, full-time student status depends on enrolment on a qualifying course during the relevant statutory period. Academic appeals and gaps in study do not extend that status. Bankruptcy proceedings should not be deferred for a later tribunal appeal concerning the same legal issue, particularly where that appeal is belated and risks conflicting decisions.

Mr Ayo Mohammed appealed against a bankruptcy order made on 25 November 2005 on the petition of the London Borough of Southwark. The petition concerned council tax liability for several years. The borough reduced the debt after accepting university evidence covering two periods of enrolment.

Mr Mohammed challenged the statutory demand, disputed that the debt was liquidated, and argued that he remained a full-time student during intervening periods because of academic appeals. He had also begun proceedings before a valuation tribunal concerning the same legal issue. The central questions were whether the bankruptcy order was wrongly made and whether he qualified as a student during the disputed periods.

1. The appeal was dismissed and the bankruptcy order remained in force. Under paragraph 17.16 of the Practice Direction in Insolvency Proceedings 1999, the appeal was by way of review. The High Court could intervene where the lower court’s decision was wrong or unjust because of serious procedural or other irregularity.

2. The statutory demand was not invalid merely because the petition debt had initially been overstated. The relevant question was whether the corrected debt fell below the statutory minimum. It did not. The debt was also liquidated.

3. The bankruptcy court was right to determine the student-status issue rather than defer to the valuation tribunal. The proceedings involved the same legal arguments, and deferral risked conflicting decisions. The later appeal was also extremely belated and appeared tactical.

4. Under the Council Tax (Discount Disregards) Order 1992, a person undertaking a full-time course had to be enrolled at the relevant educational establishment, and the relevant day had to fall within the prescribed course period. Mr Mohammed was enrolled only during the periods conceded by the borough. Academic appeals did not amount to enrolment.

5. The alternative student provisions in regulation 38 of the Council Tax Benefit (General) Regulations 1992 did not produce a different result. They also depended on registration and applied only to specified periods, including periods for retaking examinations or modules and vacations. No evidence established that those provisions applied during the disputed periods.

• High Court (Chancery Division): dismissed Mr Mohammed’s appeal against the bankruptcy order made by Deputy Registrar Middleton on 25 November 2005.