Local Authority has no right to demand legal and court fees from non-paying customer

Local Government
Legislation:
Ombudsmen Act 1975
Legislation display text:
Ombudsmen Act 1975
Agency:
Local Authority
Ombudsman:
Hon Anand Satyanand
Case number(s):
A4176
Issue date:
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Language:
English

Local Authority issued legal proceedings to recover unpaid mooring charges along with an account for ‘legal and court costs’—as the case had not been heard by a Court, the complainant claimed this was wrong—Ombudsman upheld the complaint, noting that a Local Authority cannot claim costs and legal fees (this being a matter for the Court to determine) and the Local Authority cannot list these on a person’s account as owing—the Local Authority changed its procedures regarding recovery of court costs

The complainant was one of a number of people who had refused to pay what they considered to be excessive mooring charges fixed by the local authority. The local authority issued legal proceedings to recover the unpaid charges and issued an account to the complainant for legal and Court costs. The complainant considered it unreasonable, if not wrong, of the local authority to  issue such an account when the case itself had not been determined by the Court. The local authority’s response was that the reason for issuing the account was to record its view of money owed and that it intended to recover the costs.

Legal advice received by the local authority was that while there was nothing to prevent it allocating costs to a debtor’s account as a matter of accounting procedure, the costs could not be recovered without either a voluntary payment or a Court order. The costs could not be enforced in the absence of a judgment to that effect.

District Court Rules provide that unless an award of costs is made by the Court, either on the entry of judgment or a finding for the defendant, then no liability arises on either party to pay costs. While the local authority incurred a filing fee and other costs when commencing the action, there was no right to seek immediate recovery of those costs from the defendant.

Although the recording of costs against the complainant’s account was referred to as an accounting procedure, anyone receiving such an account could only believe that the amount was due and payable. The view was formed that the practice of including costs of this nature on accounts was unreasonable. As a result the local authority agreed to remove such costs from accounts, but to include the following statement on relevant invoices:

Court filing fees:  These Court costs have been incurred in pursuit of this account and we will seek recovery of these as part of any Court action.

This revised procedure was seen as a satisfactory resolution of the complaint.

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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