Neena Jakhu discusses a recent win by Howes Percival LLP defending a debtor’s application to set aside their Local Authority client’s Liability Orders following the instigation of insolvency proceedings.
Howes Percival LLP acted for a Local Authority in the recovery of unpaid council tax and business rates (for the period 2012/13 to 2015/16 inclusive) in respect of which Liability Orders were obtained during 2013 and 2014.
The debtor was served with a statutory demand on 8 November 2017 following which he instructed solicitors to dispute the debt owed and, subsequently, made an application to the Magistrates’ Court to set aside the Liability Orders claiming that he had not been served with any documentation, including the Local Authority’s demands for payment and the summons. The debtor put the Local Authority to proof that they had followed the correct procedure when applying for the Liability Orders.
The Local Authority argued, inter alia, that the debtor had not satisfied the three conditions set out in R (Brighton and Hove City Council) v. Brighton and Hove Justices  EWHC 1800 (Admin) to set aside the liability orders and, fundamentally, the application had not been made promptly. Section 111(2) of the Magistrates’ Court Act 1980 provides that an application to set aside a liability order must be made within 21 days after the day on which the decision of the Magistrates’ Court was given. Further, the Brighton and Hove case stipulates that “where the Defendant is not required to do more than 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”. The debtor did not make the application until 4 years after the first Liability Order was granted and despite instructing solicitors promptly after being served with the Statutory Demand did not make the application until 5 months after his solicitors first corresponded with Howes Percival LLP.
At the hearing the District Judge found in the Local Authority’s favour and dismissed the application finding that the criteria in the Brighton and Hove case had in no way been met and awarded the Local Authority’s costs of opposing the application.
Solicitor, Neena Jakhu acting for the Local Authority, commented:-
“This is a fantastic result for the Local Authority and emphasises the need for applications to be made promptly. It is unusual for a Debtor to make a formal application to set aside Liability Orders and this case highlights the work that we do for Local Authorities in going the extra mile to defend unmeritorious applications made against them”.