Council tax liability and bankruptcy petitions—Okon v London Borough of Lewisham

Council tax liability and bankruptcy petitions—Okon v London Borough of Lewisham

What does the decision in Okon v London Borough of Lewisham tell us about the approach the court will take to appeals to set aside bankruptcy orders in relation to council tax liability orders? Tania Clench, legal director at Shakespeare Martineau, offers her thoughts on this judgment.

Original news

Okon v London Borough of Lewisham [2016] EWHC 864 (Ch), [2016] All ER (D) 123 (Apr)

The Chancery Division held that, providing the claimant gave certain undertakings, it would grant permission to appeal and allow an appeal and set aside a bankruptcy order made in respect of the claimant on the petition of a local authority. The petition had been based on council tax liability orders, which the claimant disputed. The court held that the judge ought to have adjourned the bankruptcy petition in order to await the outcome of the claimant's appeal to the Valuation Tribunal in respect of the liability orders.

What was the background to the case?

The applicant in this case was adjudged bankrupt off the back of a number of liability orders which were made as a result of unpaid council tax in respect of properties she owned. Her argument was that the liability orders should not have been made on the basis that the properties were tenanted. She argued that the tenants were responsible for paying council tax. The applicant had sought to set aside the liability orders prior to her bankruptcy via the magistrates’ court. What she did not realise was that if she wanted to challenge the merits of the liability orders the correct procedure was to make an application to the Valuation Tribunal appealing against them.

The relevant provisions to have regard to are section 16 of the Local Government Finance Act 1992 (LGFA 1992) and regulation 57(1) of the Council Tax (Administration and Enforcement) Regulations 1992, SI 1992/613 (the Council Tax Regulations). LGFA 1992,

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.