Can I Claim Costs Within Magistrates’ Court Proceedings?
Where a liability order is granted, it is accepted that the magistrates’ court may make a costs order against the debtor if appropriate. The court’s power to do so stems from section 64 of the Magistrates’ Court Act 1980, which provides as follows:
On the hearing of a complaint, a magistrates’ court shall have power in its discretion to make such order as to costs –
- on making the order for which the complaint is made, to be paid by the defendant to the complainant;
- on dismissing the complaint, to be paid by the complainant to the defendant; as it thinks just and reasonable….
The rather rigid wording of section 64, while clearly applicable to the grant of a liability order, can be a cause for confusion in other scenarios. What happens for example when a debtor pays the principal debt during disputed liability order proceedings? There is no longer any need for the magistrates’ court to make the order, but the complaint was valid and the complainant may have incurred significant costs to reach that point. Likewise, what happens where a debtor makes a failed application to set aside a liability order?
From a standpoint of fairness, it certainly seems logical that if a party makes a spurious application (or defence), the other party should be capable of receiving recompense for their costs incurred. Otherwise, such applications could be made as a cynical delaying tactic with little fear of repercussion, and the costs risk could apply unevenly between the parties. As a reflection of this logic, case law and statutory instruments have developed to address the deficiencies in section 64.
Regulation 12 (7) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, which was inserted by amendment, expressly deals with the first scenario within the English courts:
‘Where the sum payable is paid after a liability order has been applied for….but before it is made, the court shall nonetheless (if so requested by the billing authority) make the order in respect of a sum of an amount equal to the costs reasonably incurred by the authority in making the application’.
In Wales only, the Regulation is subject to a rather troubling caveat to the effect that ‘costs, including those of instituting the application….are not to exceed the prescribed amount of £70’. No such limitation applies within the English courts.
In respect of the second scenario, the recent case of R. (on the application of Khan) v Feltham Magistrates’ Court  EWHC 3042 (Admin) provides valuable clarity in respect of set aside applications. The Administrative Court confirmed therein that, where a set aside application is unsuccessful, the magistrates’ have jurisdiction to make a costs order in favour of the respondent local authority. This was justified on the basis that either the application to set aside is itself a complaint, or the application is effectively part of the complaint which led to the original liability order (or both), for the purpose of section 64.
Should you require any further information, please contact Michelle Summers on 0333 200 5200.