Lonergan v Gedling Borough Council

For a second appeal, permission requires a real prospect of success and, if that threshold is met, an important point of principle or practice or another compelling reason for the appeal to be heard. A liability order for unpaid council tax is a liability under an enactment and therefore a bankruptcy debt. Regulation 49 of the Council Tax (Administration and Enforcement) Regulations 1992 deems the amount due to be a debt for the purposes of section 267 of the Insolvency Act 1986. That enables the local authority to present a bankruptcy petition. The court also rejected permission on arguments concerning delegation, vulnerable debtors, the exercise of discretion and Convention rights.

The appellant sought permission for a second appeal from Lewison J’s judgment dated 27 November 2007 concerning bankruptcy proceedings presented by Gedling Borough Council to recover unpaid council tax. The proposed appeal challenged the council’s power to present the petition, the delegation of that power, the absence of safeguards for a vulnerable debtor, the exercise of discretion and compatibility with Article 8 and Article 1 of the First Protocol to the Convention.

The application had previously been refused on paper and adjourned on renewed applications. The Court of Appeal considered only whether permission should be granted under CPR 52.13. The central issue was whether the proposed grounds had a real prospect of success and raised an important point of principle or practice or another compelling reason for a second appeal.

1. Application refused. This was a renewed application for permission to bring a second appeal. Under CPR 52.13, the court had first to consider whether the proposed appeal had a real prospect of success and, if so, whether it raised an important point of principle or practice or another compelling reason for the Court of Appeal to hear it.
2. The council had power to present a bankruptcy petition for unpaid council tax. A liability under a liability order was a liability under an enactment and therefore fell within the definition of bankruptcy debt in section 382 of the Insolvency Act 1986. Sections 264 and 383 identified the persons who could present a petition and the meaning of creditor, while section 267 required the relevant debt to be owed to the petitioning creditor. Regulation 49 converted the liability into a debt for that purpose. Its effect was to enable the local authority itself to present the petition, rather than merely to join a petition brought by another creditor. There was no real prospect of success on ground 1.
3. The court treated the decision in Griffin v Wakefield Borough Council as persuasive and correct on the statutory interpretation point, although a permission decision was not binding. Section 222 of the Local Government Act 1972 was unnecessary to the result and could not itself cure any deficiency in regulation 49, consistently with Birmingham City Council v Shafi [2008] EWCA Civ 1186.
4. The argument that the power had been improperly delegated did not satisfy the second-appeal test. Section 13 of the Local Government Act 2000, on the material provided, did not affect the authority of the head of finance under section 151 of the Local Government Act 1972. Section 100G of the 1972 Act promoted transparency, but no provision had been identified making a decision invalid because an officer’s details were absent from the relevant register. The point was technical, had not been raised below and was unsupported by factual findings.
5. The challenges concerning safeguards for a vulnerable debtor and the council’s exercise of discretion raised no important point of principle or practice. The judge had accepted that the District Judge was entitled to find that the relevant warning signs did not require the council to refrain from presenting the petition and that the decision was reasonable.
6. The proposed Convention arguments had no real prospect of success. The presentation of a petition was not an application for possession of the home. Article 8, if engaged, was qualified and could be satisfied where interference was lawful, necessary and proportionate. The court rejected the Article 1 of the First Protocol argument, relying on the state’s power to secure payment of taxes. The council retained discretion as to the remedy and bankruptcy was not shown to be more draconian than a charging order.

• Court of Appeal (Civil Division): Renewed application for permission to bring a second appeal refused.
• High Court, Chancery Division: Lewison J’s judgment dated 27 November 2007 was the decision from which the proposed second appeal arose. No citation was stated.
• Earlier procedural history: Permission had been refused on paper by Rimer LJ. Mummery LJ adjourned a renewed application for hearing with an appeal if permission were granted. A later hearing before the Chancellor was adjourned after the court declined to permit the appellant’s solicitor to conduct the proposed appeal.