Legal Guides

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Liability orders – what are they and how to avoid

What is a liability order (“Order”)?

In the case of serious Council Tax or Business Rates arrears, and where payments have not been made or a payment plan agreed, a local authority can take legal steps to recover the arrears.

What happens before a local authority takes legal steps to recover the arrears?

  • Reminder notices are issued, including final notices.  At each stage, the local authority should be willing to discuss reasonable repayment options
  • The local authority will make an application to the court for a liability order to be granted if payment is not forthcoming and/or refused, or no communication takes place
  • A Court Summons is issued.

A liability order is a Court Order issued by the Magistrates’ Court and is usually sought by the local authority.  A local authority will be requesting a liability order to be made against the person/business who owes the arrears.

Once the complaint has been made by the local authority to the Magistrates’ Court, the individual or business who owes the arrears will receive a court summons. The summons notice will notify the person/business involved a date and time when the hearing will take place. The summons makes it clear that if the person/business does not attend, the hearing will go ahead and “it will be as you had appeared”; as the local authority will be seeking a liability order, they will most likely be granted this. Attendance is therefore key if a person/business wishes to put forward their defence for non-payment.

If, however, the person/business does not wish to attend but would like to resolve the matter amicably, at the stage of receiving the summons, a person/business can still contact their local authority to enter into negotiations before the local authority is granted the liability order and/or enforcement action is taken.

Once a liability order is granted, the council can and will instruct bailiffs to attend the property to collect the money outstanding. If the debt remains unpaid, the enforcement remedies available to them include:

  • Payment orders
  • Attachment of earnings orders
  • Seizure and sale of goods following the issue of a warrant
  • Obtaining a charging order against the debtor’s property
  • Insolvency proceedings such as bankruptcy of an individual or liquidation of a business
  • Imprisonment

The Magistrates’ Court does not have statutory powers to re-open cases, even where they have made errors and are aware of these.

Can a liability order be appealed?

There are three steps:

  1. Appeal to the High Court pursuant to section 111 of the Magistrates Court Act 1980
  2. Apply to the Court for it to be set aside
  3. Judicial Review application to the Administrative Court for Judicial Review of the Magistrates’ decision.

Setting aside the liability order

The conditions for setting aside an Order are:

  • There must be a genuine and arguable dispute as to the Defendant’s liability to the Order in question (see additional points to note below)
  • The Order must have been made as a result of a substantial procedural error, defect, or mishap, and
  • The application to the Magistrates for the Order to be set aside must be made promptly after a Defendant learns that it has been made or has notice that an order may have been made.

If an application to set aside is made, the local authority can challenge this if they feel the above has not been met. However, if they take the view that the above has been met, the Order can be quashed (or the sum due can be reduced).

Additional points to note

  • Choosing not to attend the hearing at which the Order was made when the person/business knew of the hearing is not a valid reason to set the Order aside.
  • Disputing the valuation of the property is not a valid defence.

Author: Zainab Zaeem-Sattar, Associate Solicitor, Summerfield Browne Solicitors

DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances, and is merely a general comment on the relevant topic. 

Published on 13th December 2021
(Last updated 13th December 2021)

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