Council procedure required ratepayers to give Council written notice if they wished a rates payment to be used to pay off newer outstanding rates before penalty date rather than older outstanding rates on which penalty had already accrued
A complainant considered it unfair that ratepayers should have to specifically advise the Council in writing if he or she wanted their payment to go towards a particular instalment. He considered that simply telephoning the Council or advising them in person should be sufficient.
The Council explained that it had a general policy that payments made were automatically credited to the oldest outstanding unpaid amount first, unless particularly specified otherwise in writing by the ratepayer. The Council’s reason for requiring written notification was because its computer software was programmed to credit payments automatically to the oldest outstanding amount first. The Council’s request for written notification was to make sure that the necessary manual adjustment the ratepayer wanted was actually made.
The Council also stated that under section 132 of the Rating Powers Act 1958, the Council is required to impose a penalty on current rates unpaid at penalty date and the written request was useful in satisfying Government Auditors that a specific request had been made by a ratepayer to apply his or her payment to the most recent outstanding levy.
Further, when reconciling a ratepayer’s rates accounts, the Council endeavoured to match, if possible, payments against specific instalments. However, where instalments are identical and if a payment is missed and subsequently paid out of order, the Council is unable to match the payment unless a note or letter is received.
The complainant made the comment that if one is behind in their rates and makes a payment it is generally more beneficial to the ratepayer to have that money pay the current instalment (to avoid further penalties) rather than pay off the older outstanding rates arrears on which a penalty has already accrued. The Council’s procedure put the responsibility of avoiding additional penalties on the ratepayer, who must request the Council to use the payment to pay the most recent instalment rather than the oldest unpaid instalment.
Having considered all of the circumstances, the Ombudsman reached the conclusion that it was not unreasonable to require ratepayers to provide the Council with a brief note stating they wished a particular payment to be used in a manner other than the normal situation of paying off the oldest unpaid instalment. However, he did suggest to the Council that it might be appropriate, when next circulating a rates information circular, to clarify for ratepayers the Council’s current procedure where a ratepayer wishes to pay off a more recent rate instalment before an older one on which penalty has already accrued.
This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.
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