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Reverend Nicholson loses court appeal and ordered to pay £50,000. Summons and liability order costs not unreasonable.

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In 2015 there was a important and high profile Judicial Review regarding the serious matter of summons costs in relation to a Liability Order for council tax arrears. The case was that of the Reverend Paul Nicholson v Tottenham Magistrates and the London Borough of Haringey.

 

In short, the court rules that Tottenham Magistrate's should not have allowed London Borough of Haringey to claim summons costs of £125 for each Liability Order given that the court did not have sufficient information before them to reach a proper judicial determination as to whether or not the costs claimed represented costs reasonably incurred by the Council in obtaining the liability order;

 


The court found that Tottenham Magistrates Court erred in law by failing to make further inquiries into how the £125 was calculated. Accordingly, J Andrews ruled that the costs claimed were unlawful.

 

Following Reverend Nicholson's court success, there have been a lot of developments.

 

Firstly, Haringey's Council's external auditors; Grant Thornton reviewed the level of costs, and, unlike the position before the Judicial Review where Haringey charged a fee of £125, the auditors instructed the council to charge separate costs of £102 for a summons and to reduce the charge for a liability order issued by Tottenham Magistrates to £110 from £125.

 

Most importantly, Haringey Council have refused to make Grant Thornton's report public.

 

The judgement made clear that it related only to London Borough of Haringey and was specific only to Reverend Nicholson's case. Accordingly, whist it may allow him to claim a refund for any earlier years, it did not assist the many thousands (approx 20,000) of Haringey residents who had been overcharged every year since 2008. It was with this in mind, that the Reverend made a further application to the High Court.

 

The basis of this new application being that he wished to challenge Grant Thornton's decision not to apply to the court for a declaration that an item of account is contrary to law under section 17(1) of the Audit Commission Act 1998. The Reverend considers that an audit is a public interest activity.

 

Secondly, the Reverend wanted everyone who has been overcharged since 2008 to be repaid. His appeal was heard in the Divisional Court last Thursday (24th February).

 

A copy of the press release and background to his dispute with Haringey Council is below. I will address the outcome of the appeal in a separate post.

 

http://www.taxpayersagainstpoverty.o...paul-nicolson/

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The Reverend's latest court application was heard at the Divisional Court on 24th February and unlike his previous cases, this appeal was against one of the largest accountancy firms; Grant Thornton. Of relevance was that the Reverend represented himself in court.

 

The appeal (amongst other points) was in relation to the Audit Commission Act 1998. Reverend Nicholson objected to Grant Thornton’s decision that Haringey had sufficient information to decide that £125 was a proper charge, and that the item of account was lawful.

 

The case was considered by Lord Justice Hamblen and Mr Justice Baker and regrettably they ruled that Grant Thornton had considered the relevant factors and had given cogent reasons for their view. They refused to rule that the auditors decision was unlawful.

 

The judges ordered that Haringey Council should pay its own costs of £12,000 and that the Reverend must pay Grant Thornton's legal costs of £50,000 !!!

 

Responding to the ruling, Reverend Nicolson said the costs order did not worry him stating that “They cannot have what I have not got.” !!!

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It is known that all local authorities have been awaiting the outcome of the Reverend's appeal in order to finalise the costs that they may charge for a summons costs and liability order costs.

 

Regrettably, this appeal may well be considered a 'green light' judgment (in other words one that permits other local authorities to increase their costs in line with the costs set by Haringey (see below).

 

But Lord Justice Hamblen said it was “factually incorrect” that Haringey Council charged everyone for court hearings in 2013/14 and that whilst Haringey Council had charged a “lump sum” to everyone when sending out a court summons, this figure did not include court hearing costs given that any further costs which came about after sending the court summons were ‘waived’ by Haringey Council.

 

Sadly, Lord Justice Hamblen stated that:

 

“There is nothing unlawful in resolving to charge the maximum [costs]”.

 

He commented that Haringey Council had not not seeking the maximum costs and the the costs claimed from residents was actually ‘slightly less' that the council incurred. He confirmed that these costs could legitimately include legal fees, admin costs and overheads.

 

Of huge significance was his comment that the costs Haringey Council charges were 'not unreasonable'.

 

The position now with Haringey Council (which could very likely be replicated by other local authorities is as follows:

 

If residents receive a court summons they now have to pay £102. (Previously this figure had been £125).

 

If the case then proceeds to a hearing, they have to pay £115 (which includes the summons cost of £102)

 

PS: After losing his appeal, Reverend Nicholson stated that he did not regret issuing these proceedings. And neither should he. He was trying to protect the many thousands of low income families who are unable to afford to pay their council tax bills each year and are summoned to court and subjected to a Liability Order.

 

This case could have been avoided if only the government had followed the example in Wales and introduced legislation capping the costs at £70.

 

The following is a link to recent comments on the case by Peter Oldham QC:

 

http://www.11kbw.com/blogs/local-government-law/unpaid-council-tax-court-costs-and-lawful-expenditure/784

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Thank you Bailiff Advice for your postings and insights.

 

There would appear to be a number of questions arising from the Hearings.

 

!] if Grant Thornton advised the council to reduce the Council costs to £102 pre summons and £110 for a Liability order why did they then appear to confirm that the £125 was a proper charge.

 

2] LJ Hamblen seems to have missed the point. It is not a question of whether the costs were "not unreasonable" but that they were reasonably incurred.

 

3] Interesting that this hearing stated that it was "factually incorrect" that Haringey Council had charged everyone with court hearings. This would appear to conflict with the earlier hearing

Nicholson v tottenham Magistrates where the Court had agreed back in 2010 that the Council charge for the court Hearing would be £125. Who were not liable fro the charge and why-and how many were not charged the full amount.

this figure did not include court hearing costs given that any further costs which came about after sending the court summons were ‘waived’ by Haringey Council. [/color] They were not waived by the Council, they are not allowable since they were not incurred in preparing the summons.

 

4] I am unsure why the £125 cost appears to be only applicable to the Reverend. Surely as all those taken to court that incurred the blanket cost would have the same claim against the Council. It would be interesting to see whether anyone in the Tottenham area would ask for their overpayment to be returned.

 

5] in hindsight might the Reverend have been better served by taking the Council to task for not producing the Auditors report since it would have paid for by the local taxpayers rather than

challenging the Auditors.

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Surely if Grant Thornton had costs of 50,000 this could be deemed wholly disproportionate to the amount of work done and that they were unjustly enriching themselves at the claimant's expense.

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Surely if Grant Thornton had costs of 50,000 this could be deemed wholly disproportionate to the amount of work done and that they were unjustly enriching themselves at the claimant's expense.

 

GT have claimed costs of £50,000

 

What we don't know from the posts is if there were any costs budgets (presumably there were, during the case).

How do you know "this could be deemed wholly disproportionate to the amount of work done" unless you know what work they did / are claiming for.

 

The claimant can always ask for "detailed assessment" of any costs.

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What costs are involved anyway, my local authority charges £95.00 added to the summons of council tax and this is added even before any hearing.

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My Council charge the same but is split

£60.00 for the summons

£35 for the liability order.

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Can anyone remind me if the court costs are stated as owning on the summons and if so, how is that possible prior to any court hearing ?

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Thank you Bailiff Advice for your postings and insights.

 

There would appear to be a number of questions arising from the Hearings.

 

!] if Grant Thornton advised the council to reduce the Council costs to £102 pre summons and £110 for a Liability order why did they then appear to confirm that the £125 was a proper charge.

 

5] in hindsight might the Reverend have been better served by taking the Council to task for not producing the Auditors report since it would have paid for by the local taxpayers rather than

challenging the Auditors.

 

I should hopefully have some answers tomorrow to the very interesting questions that you have raised.

 

In answer though to the ones above, it was not for GT to advise the council to reduce the costs. What GT did, do was to compile a report and it would be for the council to decide whether or not to accept the report. The Reverend has seen the report.

 

As I understand it (and I may be wrong) there is no actual evidence that the council had been over-charging in earlier years. For example, it could be the case that in recalculating the figures, the council may have identified certain items of expenditure where savings could be made.

 

There is also a slight difficulty in that Grant Thornton are no longer the external auditors. That position changed in the early part of last year (2015). The new auditors are BDO.

 

At the moment, we only have very brief details of the case from the Reverend's website. Further details will emerge once the Judgment has been released.

 

This evening the Reverend announced that he intends appealing the decision:

 

http://www.taxpayersagainstpoverty.org.uk

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In answer though to the ones above, it was not for GT to advise the council to reduce the costs. What GT did, do was to compile a report and it would be for the council to decide whether or not to accept the report. The Reverend has seen the report.

 

Further to the above, the Reverend has released a copy of Grant Thornton's report on his website today:

 

http://www.taxpayersagainstpoverty.org.uk

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I am pleased that the Reverend is appealing. There are a number of issues on which he can do so. Not least the thorny question of how the £125 was arrived at. Surely that was the crux of

the first Hearing and it has to be demonstrably proved to comply with the Act as far as the Magistrates Court is concerned and also for the Council Tax payers in Tottenham.

 

We do not know how the Council arrived at their figure of £125 back in 2010 but it could be interesting whether the auditors tried to get their figures to agree with the Council's using the 2010 figures or the 2014 figures.

 

To charge that amount back in 2010 appears very much out of kilter with many other Councils at the time. It seems to have gone unremarked that the costs involved should reflect the actual cost of the work involved and there should be no attempt to add in a profit element since that would certainly be unlawful. I accept that it is difficult to arrive at some figures at the start of the year when the number of L/Os to be issued is as yet unknown but they do have access to their historical records and trends so should be able to make a reasonable fist at it.

 

And to charge £125 to those whose cases did not go to Court would appear to be profiteering and therefore unlawful. Perhaps the Reverend should seriously consider using a barrister this time-not least to remove paying the auditors costs from the last Hearing if that is possible.

Edited by citizenB
formatting

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I am pleased that the Reverend is appealing. There are a number of issues on which he can do so. Not least the thorny question of how the £125 was arrived at. Surely that was the crux of

the first Hearing and it has to be demonstrably proved to comply with the Act as far as the Magistrates Court is concerned and also for the Council Tax payers in Tottenham. We do not know how the Council arrived at their figure of £125 back in 2010 but it could be interesting whether the auditors tried to get their figures to agree with the Council's using the 2010 figures or the 2014

figures

. To charge that amount back in 2010 appears very much out of kilter with many other Councils at the time. It seems to have gone unremarked that the costs involved should reflect

the actual cost of the work involved and there should be no attempt to add in a profit element since that would certainly be unlawful. I accept that it is difficult to arrive at some figures at the start of the year when the number of L/Os to be issued is as yet unknown but they do have access to their historical records and trends so should be able to make a reasonable fist at it. And to

charge £125 to those whose cases did not go to Court would appear to be profiteering and therefore unlawful. Perhaps the Reverend should seriously consider using a barrister this time-not least to remove paying the auditors costs from the last Hearing if that is possible.

 

"I am pleased that the Reverend is appealing. There are a number of issues on which he can do so"

 

 

He has appealed and the Supreme Court has ruled.

What further appeal / further issues do you think can be raised (in England & Wales)?

 

The Supreme Court has ruled. The case is concluded.

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He has appealed and the Supreme Court has ruled.

What further appeal / further issues do you think can be raised (in England & Wales)?

 

The Supreme Court has ruled. The case is concluded.

 

I understand that the last hearing was at a Divisional Court which if correct would mean that an appeal could be made to the Court of Appeal before a final attempt could be made to the Supreme Court.

Edited by citizenB
restored quote box

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I could add that it is possible to appeal the decision handed down by the Supreme Court and there is still the Court of Human Rights though the Supreme Court is not bound to comply with their decision.

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I am pleased that the Reverend is appealing. There are a number of issues on which he can do so. Not least the thorny question of how the £125 was arrived at.

 

Surely that was the crux of the first Hearing and it has to be demonstrably proved to comply with the Act as far as the Magistrates Court is concerned and also for the Council Tax payers in Tottenham.

 

We do not know how the Council arrived at their figure of £125 back in 2010 but it could be interesting whether the auditors tried to get their figures to agree with the Council's using the 2010 figures or the 2014 figures.

 

I am going to 'stick my neck out' here and as unpopular as it may be, I really struggle with the idea of an appeal.

 

In the first instance, going back to the earlier court hearing, Justice Andrews confirmed that the Reverend's case did not involve any consideration as to whether or not the sum of £125 was in fact reasonable incurred by the Council in obtaining the Liability Order. Her role was confined only to examining whether or not it was lawful for the Magistrate to conclude that the cost of £125 was reasonably incurred. It was a easy decision to make. The Court Clerk had not been provided with any supporting evidence as to how the £125 had been calculated. Accordingly, the cost in the case of the Reverend (of £125) was ruled unlawful.

 

Following the judgment, it was then left to Haringey and their district auditor; (Grant Thornton) to undertake a costing exercise. The report states that as part of this exercise, Haringay provided Grant Thornton with their own calculations on 2nd December 2014 which resulted in the cost per case of 'issuing a summons' for the 2013/4 period of £130.77.

 

Despite this figure, Haringey only sought to recover costs of £125.

 

In the Reverend's case, he did not pay his council tax before the Liability Order hearing (ie; he did not pay after receiving the summons). Accordingly, he would be liable in any event, to the higher figure (£125).

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BA you are perfectly allowed to add a different point of view.

 

From my own part there are still a number of points to be raised.

 

!] the £125 charge has been in force since 2010 so apparently not to have been able to provide a breakdown of how they arrived at that figure in 2010 by 2013 tends one to think that the

figure was plucked out of the air at the time. We do not know how many Liability orders were issued in each year which would assist in attempting to work out some part the basis of their reasoning if there was any.

 

 

2] There is still no cogent argument other than they could get away with it why they charged £125 regardless of those who paid up before the L/O Hearing.

 

3] The Court does not appear to have criticised the Magistrates for their failure to carry out the duties required by Statute to confirm how the Council costs were arrived at nor challenged

why they always charged £125.

 

4] similarly no criticism of the wilful refusal of the Council to provide a breakdown of their figures which has led to them having to pay the Reverends costs and presumably some charge by

the auditors for confirming that the Councils figures were correct [highly dubious figures to my mind] all at their taxpayers expense.

 

5] an investigation into the sharp rise in L/O costs in 2010 from the previous year

 

6] why the Rev has to pay the Auditors court costs when they were the ones refusing to provide the result. If that was at the request of the Council then the Council should have paid the

Auditors costs since the case would not have been brought to Court had the figures been provided. It is irrelevant that the figure of £125 appeared to have been undercharged, it was the fact that they had not been provided that was the casus belli.

 

7] I don't know when if at all that a full breakdown of how the figure of £130 was arrived at but it should have been possible for the Reverend to have had his own accountant check the veracity and accuracy.

 

8] as a taxpayer the Rev should be asking why, if the figure of £125 was going to be exceeded, even taking into account the front loading of the L/Os, why it was that they reduced the

charges to £105 and £115 unless either their first stab at working out the actual cost was lower than the £130 stated, or they hadn't a clue how much the charges were going to amount to

so decided to cover themselves by reducing the costs in the hope that the Rev would then give up.

 

9] was the reduction in their charges to £115 the reason why the cost per L/O ended up becoming £130 thus vindicating the Council charge of £125 in the eyes of the Court but at the expense of their taxpayers.

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1. There can be little doubt that in many cases, these costs (summons costs and liability order costs) have been at best vague and at worse, merely 'following the trend' of other local authorities. However, that being the case, I do believe that in the past 2-3 years (in particular with the many FOI requests and the high profile case of the Reverend) that many councils have been able to evidence how the 'costs' have been arrived at.

 

2. Following the trend of other local authorities is the most obvious answer.

 

3. If you read Justice Andrew's judgment from last year, she was highly critical of the Court Clerks in the Magistrates Courts.

 

4. The Reverend provided a link to Grant Thornton's report and in that, they have provided a breakdown. When the judgment is released from last weeks hearing we will hopefully know more about the report and whether the judges made any critical comments etc.

 

5. It is my understanding (and I am by no means an expert) that as the previous year's accounts are closed, the only year of account that can be disputed is the one that the Reverend is concerned about (year 2013/14).

 

6 and 7. I will deal with these two questions shortly.

 

8. I don't think that you will find that Haringey necessarily reduced the charges to £105. Instead, and in keeping with Justice Andrew's ruling, the council were required to provide two separate costings (one for the costs of issuing the summons and the second one for the costs of the Liability order). The revised figures are as follows:

 

If residents receive a court summons they now have to pay £102. (Previously this figure had been £125).

 

If the case then proceeds to a hearing, they will be required to pay additional costs of £13 (making the total costs payable of £115

 

Where there had been overcharging, was that prior to the Reverend's court case, he had been charged one fee of £125 when the summons was issued and this same fee was applied to all other residents irrespective of whether they paid on receipt of the summons or paid after the court hearing. The court considered that this was wrong, and quite rightly so. Once the case progresses to a hearing, there must surely be additional costs not least, because at this stage, the courts charge the local authorities a fee of £3.00 to cover their own costs).

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GT-report.rtf

Thank you Bailiff Advice for your postings and insights.

 

5] in hindsight might the Reverend have been better served by taking the Council to task for not producing the Auditors report since it would have paid for by the local taxpayers rather than

challenging the Auditors.

 

Yet again, another interesting question and one that is vitally important and is at the very heart of the Reverend's latest court application.

 

It may be useful, (in particular for the many people who have been viewing this thread and sending messages to me) to explain a little bit about the 'procedure' that has to be followed by a local authority elector (in this case the Reverend) if they consider that there is something not right about the local authorities accounts.

 

Stage one:

 

Each year, every local authority must issue an Accounts Inspection Notice. and make this publicly available. The notice provides set dates when any member of the public can 'inspect the accounts'. The individual is allowed to inspect certain related documents (books, deeds, contracts, bills, vouchers and receipts) . They can also make copies of the accounts and documents. The period of 'inspection' is normally one month.

 

Stage two:

 

When the period of 'inspection' ends, an elector (in this case the Reverend) or his representative may ask the auditor questions about the accounts ( Section 15 of the Audit Commission Act 1998)

 

Stage three:

 

If after raising questions with the external auditor, the elector (or their representative) is not satisfied with the auditors response, he can then raise a formal objection to the accounts and ask that the auditor issue a Public Interest Report under Section 8 of the Audit Commission Act 1998.

 

On average, a large local authority could expect to have one or maybe two 'objections' raised each year.

 

In the case of the Reverend, he took all of the above steps and, following Justice Andrews's comments at his earlier hearing, Grant Thornton undertook a lot of additional work and compiled a 12 page Internal Report ( a copy of which is provided on the Reverend's website) and below.

 

The Reverend is unhappy with this report as it is not a Public Interest Report under Section 8 of the Audit Commissions Act 1998. This is an entirely different report altogether.

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[ATTACH]61953[/ATTACH]

 

The Reverend is unhappy with this report as it is not a Public Interest Report under Section 8 of the Audit Commissions Act 1998. This is an entirely different report altogether.

 

A Public Interest Report (under Section 8 of the Audit Commission Act 1998) is a very serious matter indeed. There are over 300 local authorities in England and Wales and each year approx four Public Interest Reports will be issued. They have to be made public and must be posted on the PSAA (Public Sector Audit) website:

 

http://www.psaa.co.uk/about-us/latest-news/

 

In simple terms, a Public Interest Report will be issued by the external auditor is he feels that the local authority have done something that is so bad that it needs to be made public. Grant Thornton advised the Reverend that they did not consider that there was sufficient evidence of wrongdoing by Haringey to support a Public Interest Report being issued. The Reverend was not happy with this decision.However, at the hearing last week, the Judges agreed that the auditors decision was the right one.

 

By way of example, in 2015 the following Public Interest Reports were issued by external auditors:

 

North Dorset District Council:

 

Subject: That the council used money raised from off street parking for general services (such as using the income to pay business rates and to support discretionary service). The local elector considered that this practice was unlawful and breached Section 32 of the Raod Traffic Regulations 1984.

 

http://www.psaa.co.uk/wp-content/uploads/2015/05/NDDC-PIR-22-May-final.pdf

 

 

Brierley Town Council:

 

Subject: Significant fraud by a former employee:

 

http://www.psaa.co.uk/wp-content/uploads/2015/05/Brierley-PIR.pdf

Edited by Andyorch
Corrected

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Surely if the council have to pay their own legal costs - that money is being taken out of the tax payers council tax contribution

So by taking the matter to court he is actually making things worse for the people he claims to be trying to help.


None of the beliefs held by "Freemen on the land" have ever been supported by any judgments or verdicts in any criminal or civil court cases.

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Perhaps the council could apply for a hardship payment..

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There is a worrying workaround that some councils are using to prevent scrutiny of the composition of costs relating to summonses and liability orders. The widespread outsourcing of council tax billing and recovery (for instance to the Behemoth Capita) is being interpreted as protected from disclosure by 'commercial sensitivity' exemption.

In the face of this I have forwarded an argument based on the Ministry of Justice “Government Response to the Justice Committee’s Report: Post-legislative scrutiny of the Freedom of Information Act 2000” (2012) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/217298/gov-resp-justice-comm-foi-act.pdf (page 26) says as follows:

 

The right to access information must not be undermined by the

increased use of private providers in delivering public services. The

evidence we have received suggests that the use of contractual terms to

protect the right to access information is currently working relatively

well. We note the indication that some public bodies may be reluctant to

take action if a private provider compliant with all other contractual

terms fails to honour its obligations in this area. In a rapidly changing

commissioning landscape this has the potential fundamentally to

undermine the Act. We remind all concerned that the right to access

information is crucial to ensuring accountability and transparency for

the spending of taxpayers’ money, and that contracts for private or

voluntary sector provision of public services should always contain

clear and enforceable obligations which enable the commissioning

authority to meet FOI requirements. (Paragraph 239)

We believe that contracts provide a more practical basis for applying

FOI to outsourced services than partial designation of commercial

companies under section 5 of the Act, although it may be necessary to

use designation powers if contract provisions are not put in place and

enforced. We recommend that the Information Commissioner monitors

complaints and applications for guidance in this area to him from public

authorities.

And:

54. The Government also recognises, despite the progress and plans outlined

above, the potential challenge that the increased delivery of public

services by non-public sector providers poses to transparency. Where

public services are delivered on behalf of a public authority under contract,

the Government expects that contractors will fully assist public authorities

in meeting their current obligations under FOIA to consider for disclosure

information held on public authorities’ behalf by a contractor. We agree

with the Committee that contracts should include clear provisions in this

regard, and stress that public authorities should not be reluctant in taking

all necessary steps to ensure compliance.

 

None of this seems to be being adhered to.


Why aren't we revolting?

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Surely if the council have to pay their own legal costs - that money is being taken out of the tax payers council tax contribution

So by taking the matter to court he is actually making things worse for the people he claims to be trying to help.

 

This is probably the first time I have queried one of your pronouncements Joseph but what other alternative did the Reverend have. All the Council had to do was to release their calculations on how they arrived at their figures. It is supposed to be a statutory

requirement. That the Council failed to comply with the Regulations would lead one to suppose that perhaps their figure were not capable of standing up to scrutiny or they had just made up a figure. With the lack of any transparency and the sheer intransigence of the Council the only way to get them to produce the figures was to threaten Court action.

 

I am sure that the Reverend hoped that the threat would be sufficient to force the Council to come off their high horse and comply without the

necessity of a Court case. That they didn't should mean that the Council should be called to account over the waste of taxpayers money rather than

to lay the blame at the feet of the Reverend. After all his aim was to help the tax payers who were subject to L/Os not appearing to be

overcharged.

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