IN RE: ROSS AND ROBERTS LIMITED

OPINION

1.

I am asked to advise the above-named firm of bailiffs which I have previously advised in the same matter on 10th August 2005. I was asked then (and am asked now) to advise them as to the recoverability of certain charges under the Council Tax (Administration and Enforcement) Regulations 1992 (the 1992 Regulations). My original Opinion has been returned to me together with a copy of a more recent Opinion dated 5th September 2005 by Paul Russell (presumably of Counsel). In paragraph 15 of Mr Russells Opinion he concludes: Charges under head H to the table to Schedule 5 to the (1992) Regulations are only lawful where goods have been physically removed from the debtor's premises, whether to a vehicle or to another place. Ipso facto, such charges may not lawfully be imposed where a removal has not taken place. Further as he (correctly) notes my original Opinion did not address the question as to whether head H charges can lawfully be rendered in a situation where the goods have not physically been removed from the debtors premises but rather a walking possession agreement has been entered into. This is for the simple reason that I was not asked to address such issues but was, in my first opinion, simply asked to address the wording of the Regulations on the basis that the circumstances referred to in regulation 45(4) of the 1992 Regulations had occurred.

2.

As is apparent, in his Opinion Mr Russell addresses the wider question as to whether those circumstances have occurred (such as to render charges under head H payable) where the goods have not physically been removed from the debtors premises but rather a walking possession agreement has been entered into. I am, in effect, asked to comment upon Mr Russell's Opinion and his conclusions.

3.

In my view, for the reasons set out below, whereas the matter is by no means beyond argument, I think that head H charges can be levied in circumstances where goods are left at the debtors premises following distress pursuant to a walking possession agreement. On balance I do not think that the judgment of the Court of Appeal in the case of WILSON v. SOUTH KESTEVEN DISTRICT COUNCIL [2001] 1 WLR 387 compels the opposite conclusion. As such I disagree with the conclusion of Mr Russell as set out in his Opinion. I certainly do not think that the matter is in any way as clearcut as that Opinion might suggest.

4.

The relevant parts of the 1992 Regulations (as amended) including head H are set out in both my Opinion and that of Mr Russell. I shall not therefore further set them out here.

5.

Head H charges are payable where: (i) no sale takes place; (ii) by reason of payment or tender in the circumstances referred to in regulations 45(4). When regulation 45(4) is compared to regulation 45(3) (particularly in the light of the Court of Appeal judgment in the WILSON case) it is clearly a necessary ingredient of the circumstances referred to in regulation 45(4) that the authority has "seized goods of the debtor". The question is therefore whether a walking possession agreement which leaves the goods on the debtor's premises constitutes a seizure within the terms of regulations 45(4). To this extent I agree with paragraph 7 of Mr Russell's Opinion.

6.

Were it not for the Court of Appeal judgment in the WILSON case, it is my clear view that the word seized in regulations 45(4) would have the same meaning as it has in the general law of distress for rent. As such goods could be seized whilst remaining on the debtors premises by reason of a walking possession agreement.

7.

As emphasised in the case of McLEOD v. BUTTERWICK [1998] 1 WLR 1603, so far as the law of distress for rent is concerned the process consists of three stages, namely: entry into the premises; seizure of the goods; and securing or impounding the goods. Once the goods have been impounded the distress is complete. That word "seizure" in relation to the law of distress for rent has a technical and specific meaning which does not necessarily (or commonly) encompass physical removal of the goods from the premises. Hereafter in this Opinion I will use the phrase "the technical meaning" to refer to that meaning of the word "seizure" or seize" which is adopted in the law of distress for rent and does not necessarily entail physical removal of the goods from the premises. I shall use the phrase the narrow meaning to denote that meaning of those words which requires the goods to be physical removed from the debtors premises.

8.

In the case of EVANS v. SOUTH RIBBLE BOROUGH COUNCIL [1992] 2 ALL ER 695 Simon Brown J. (as he was then) was dealing with distress for unpaid community charge under regulation 39 of the then Community Charge (Administration and Enforcement) Regulations 1989. Thus he was dealing with, in effect, the predecessor of regulation 45 to the 1992 Regulations. The important point for present purposes is that in that case the learned Judge was dealing with statutory distress for unpaid community charge and not with distress for rent.

9.

Although he heard no full argument on the point (see page 699) the learned Judge assumed that the question of what constitutes an effective levying of distress must receive the same answer irrespective of the particular statutory provision authorising the remedy that is whether it is distress for rent or distress for unpaid community charge. He emphasised that, as with distress for rent: The process of distress consists of three stages; the entry into the premises, the seizure of the goods and the subsequent securing of the goods (generally called impounding). In a later passage, he also, it seems to me, gave further credence to his view that the elements of a lawful distress for unpaid community charge were identical to those for distress for rent. He said:

...on the contrary, the language of regulation 39 tends to support the conventional view that entry is required. Paragraphs (3) and (4) each make express reference to seizure. Paragraph (4) further provides in terms that, if the debt is discharged before sale, "the sale should not be proceeded with and the goods shall be made available for collection by the debtor". All that appears to presuppose at the very least prior entry and, indeed, that no further co-operation is needed on the part of the debtor....before the sale can be proceeded with....Schedule 5 in turn defines and provides for close and walking possession agreements which again point strongly towards a direct meeting between the debtor and the person levying distress." Further he rejected an argument that the terms of Schedule 5 (which for the present purposes are similar if not identical to Schedule 5 of the 1992 Regulations) implied that the only effective impounding of goods, absent a close or walking possession agreement, is by removing them from the premises.

10.

In the SOUTH RIBBLE case the Judge also emphasised that seizure can be actual or constructive. Actual seizure involved identification of the goods distrained coupled with a declaration that they were being held for distress. What constituted constructive seizure was unclear but it was enough that the landlord or his agent interfered to prevent the removal of the article from off the premises on the grounds that sums of money were owed. He also emphasised that impounding can take a number of forms either on the premises or by removal (see pages 699 to 700).

11.

Although in that case the Judge was unclear exactly what the effect of a walking possession agreement was, he was clear that it was either a form of, or a convenient substitute for, impounding. As such from that case it is clear that once a walking possession agreement has been entered into seizure (in the technical meaning) has already taken place. See also McLEOD v. BUTTERWICK (paragraph 11).

12.

Further, in my view, the wording of the 1992 Regulations themselves (as amended) tends to indicate that the meaning of "seize" in regulation 45(4) is the technical meaning as opposed to the narrow meaning.

13.

If one looks at Schedule 5 it clearly envisages a number of different stages to the overall procedure with charges made and aggregated (see paragraph 1 of Schedule 5) for each. The stages are:

(i) (ii) (iii)

making a visit to premises with a view to levying distress (head A): levying distress (head B); attendance with a view to removal following the levy, where no goods are removed (head C);

(iv) (v)

removal and storage of the goods (head D); walking or close possession of the goods on the debtors premises (head E);

(vi) (vii)

appraisement of an item (head F); expenses of sale by auction which can be held either on the auctioneers premises or on the debtors premises (head G);

(viii) expenses following seizure where no sale takes place (head H).

14.

Thus it is clear that following the levy (and thus the completion) of the distress the goods can either be removed elsewhere or left on the debtor's premises pursuant to a walking possession agreement or closed possession. Further the sale by auction can take place either at the auctioneer's premises or at the debtor's premises. It is clear from paragraph 1 of the Schedule that the charges under head H can be recovered in addition to those levied under the other heads. There is thus no reason it seems to me why charges under head H should not be levied if the goods are left on the debtor's premises pursuant to a walking possession agreement with the intention that they should eventually be sold by auction at those premises.

15.

More importantly the draftsman of regulation 45 uses the word "seized". The draftsman must be taken to have known that this is a term of art in the context of distress having the technical meaning.

16.

Further whilst using the word "seized" in regulation 45(3) and (4), where the draftsman clearly intends to refer to removal of the goods from the premises he uses other words. In head C and D of Schedule 5 there is clear reference to "removal" of the goods. It

seems to me to be a powerful argument that, had Parliament intended in regulation 45(4) to limit that situation to that where goods had physically been removed from the premises, it would have said so and not have used the particular word seized.

17.

The only contra-indication to this argument based on the wording of the regulation itself is the use of the phrase "and the goods shall be made available for collection by the debtor" at the end of regulation 45(4). It might be argued that this impliedly limits regulation 45(4) to situations where goods have been removed and thus would be available for collection. In my opinion although there is some force in this point, I do not think that it is sufficient to counter the arguments set out above.

18.

Thus, as I have stated, in my opinion without consideration of the Court of Appeal judgment in the WILSON case, the terms of the regulation itself, the authorities and the common law context point to the word seized in regulation 45(4) having the technical as opposed to the narrow meaning. The question therefore is whether the terms of the judgment in the WILSON case drive one to the opposite conclusion.

19.

In the WILSON case (as Mr Russell in his Opinion points out) the Court of Appeal was considering the identical terms of regulation 14(3) and (4) of the Non-Domestic Rating (Collection and Enforcement) (Local List) Regulations 1989 and Schedule 3 to those Regulations. Schedule 3 contains very similar heads of charge to that now set out in Schedule 5 to the 1992 Regulations. However, it is important to point out, firstly that the Court of Appeal was not specifically considering the question as to whether the word "seized" in regulation 14(4) had the technical as opposed to the narrow meaning. Secondly the Court was not considering the incidence of charges under Schedule 3. Finally there was not then (although there is now) an equivalent to head H in Schedule 5 of the 1992 Regulations.

20.

That being said there are clearly passages in the WILSON judgment which could be read as indicating that the Court clearly thought that the seizure of goods referred to in regulation 14(4) was actual physical removal. The point at issue in that case was whether a tenant could lawfully tender a sum representing the total of the liability order and the expenses whilst the goods were physically being removed from premises such that the authority was obliged to accept it and cease removal of the goods. The Court of

Appeal held that the debtor could not make such tender whilst the goods were being removed. 21. In particular Simon Brown LJ (as he had then become) stated (at page 391): ....so far from the debtor having a continuous opportunity to end the process, that opportunity arises only (a) before any goods are seized (regulation 14(3)), and (b) after seizure and before sale (regulation 14(4)). There is, in short, no opportunity to redeem the goods afforded during the period of seizure itself....it is evident that paragraphs (3) and (4) of the regulation are directed at two distinct stages. Paragraph (3) in terms applies only to the period "before any goods are seized" whilst paragraph (4) postulates that the relevant goods have been seized and in terms applies to the next stage, "before sale". Had it been intended to provide for payment or tender to halt the actual process of seizure, there would have been no need for two separate paragraphs framed as they are...the payment or tender has to include the accrued charges. These are readily calculable before the process of seizure is begun. And after seizure and before sale comes an interval of time sufficient to consider the charges and in the event of dispute have them taxed....During seizure, however, the determination of the accrued charges will almost inevitably be difficult. They are likely to be accruing minute by minute. They may well depend upon the charges of others such as transport and removal contractors. And, depending upon the precise point at which the tender is made, they may also be affected by the debtor's own ability to undo the seizure process, for example by unloading or collecting goods already seized. From that passage taken in isolation one might well draw the conclusion that the Court was equating the "process of seizure" with the "process of physical removal".

22.

Further there is also the passage specifically quoted by Mr Russell in his Opinion which is at page 397 and is as follows: ...the memorandum should specify the sum to be paid to halt the process before seizure (in the sense of removal) begins, and should then indicate that, if the goods have to be removed for sale, further charges will accrue and have to be paid if such a sale is thereafter to be prevented.

Again similar comments could be made about this passage.

23.

However there are passages which would tend to indicate that the Court was not making such a clear distinction. At page 392 the learned Judge expressly refers to his own previous judgment in the SOUTH RIBBLE case and quotes his definition of distress as consisting of three stages entry, seizure and impounding. Thus, at least by implication, the Court of Appeal have approved this statement as applying to distress for statutory sums as well as distress for rent. Further at page 392 the Judge, in referring to a person entering premises with a view to levying distress, states that the person: Does not need actually to seize (let alone remove) any goods before he comes under this obligation". Thus the Judge would there appear to be making a distinction between seizure on the one hand and removal on the other. Indeed the whole thrust of his views at page 392-3 are to require the person entering with a view to levying distress to provide the notice stipulated in regulation 14(5) (regulation 45(4) of the 1992 Regulations) before process of distress is further completed following entry.

24.

Further at page 394 there is this passage: On 22 September 1992 the bailiffs made their second visit to the premises, intent this time on seizing (assuming seizure had not already constructively taken place on 11 September), and more particularly upon removing (and thereby impounding), the goods. There are two points here. Firstly the Judge appears to contemplate that seizure can take place constructively (i.e. without any physical removal from the premises). Secondly the Judge appears to be equating removal of the goods not with seizure but rather with impounding.

25.

There are further passages at pages 395 and 397 wherein the Judge appears to distinguish between seizure on the one hand and loading up or removal of goods on the other. Further at page 396 the Judge refers to "the removal process". This could be contrasted with the process of seizure.

26.

Overall my view is that the learned Lord Justice in his judgment in the WILSON case was not addressing his mind as to whether the word "seized" in regulation 14(4) meant actual physical removal as opposed to the technical meaning. Indeed if one looks at the

rationale for his finding that the debtor has only two opportunities to tender the sums due (as set out in the passage at pages 391-2 set out above) it could equally well be said that after seizure by way of walking possession there "comes an interval of time sufficient to consider the charges". Thus the rationale could equally apply to walking possession as it applies to physical removal. 27. In my view therefore the WILSON decision would not compel a Court to hold that the word "seized" in regulation 45(4) of the Regulations means "removed". Thus although the conclusion arrived at by Mr Russell in his aforementioned Opinion is certainly arguable, on the balance I disagree with it.

DAVID HOLLAND Landmark Chambers 180 Fleet Street London EC4A 2HG 9th September 2005