This is now a well-publicised judgment where the High Court found that failing to pay the correct fee on issue was an abuse of process. The pitfalls for a claimant seem apparent from the judgment. What lessons are to be learned for the defendant where it appears an incorrect issue fee has been paid?
The case involved 31 claims alleging professional negligence in the acquisition of buy to let properties. In 2008, letters of claim were sent to the defendants claiming significant sums. The total value of the claims was estimated to be around £9 million pounds with each individual claim being worth about £300,000.
In 2012 when the cases were issued, the claim forms limited the value of damages the claimants expected to recover to £15,000 rather than indicating their true value. As a result, the court fee payable was £245. Before the claims were served four months later, the claim forms were amended to reflect the true value and the appropriate fee paid.
The defendant argued that this approach was an abuse of process and sought to strike out the claims under CPR 3.4 (2)(b) which says, ‘The court may strike out a statement of case if it appears to the court that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings.’
The defendant also contended that limitation had continued to run as the claims had not been ‘brought’ within time. They argued that they were entitled to summary judgment on that basis.
The judge agreed there had been an abuse of process. He based his decision in the following:
Despite the abuse of process, the Judge refused to strike out the claims. He applied the test set out by the Court of Appeal in Mahood –v – Zahoor. Here the Court of Appeal said that ‘where a Claimant [was] guilty of misconduct in relation to proceedings which is so serious that it would be an affront to the court to permit him to continue to prosecute the claim then the claim may be struck out for that reason’. Reference was also made to LJ Vos in Alpha Rocks Solicitors –v- Alade where he said that ‘the Court is not easily affronted’.
The judge considered that there was a lack of prejudice to the defendant as a result of the claimants’ actions. The period of abuse was limited to the four month period between the claims being issued and served. There was no element of deception as the claimant had set out the full allegations of the claim, including the true value, in the letter of claim. Judge Male QC said ‘In my judgment it would not be an affront to the Court to permit the Claimant to continue…I therefore reject the application to strike out.’
He did find that 11 of the 31 cases were statute barred following the claimants’ failure to bring the claims ‘in time’ as the appropriate fee had not been paid. He relied on the Court of Appeal decision in Page –v- Hewetts and considered whether ‘in this case, the claimants did all that was in their power to do to set the wheels of justice in motion.’ The Judge considered the claimant had not done everything in their power to bring the claim saying that ‘paying the appropriate fee does not cover the payment of a fee in circumstances where the act of payment was an abuse of process (para.101).’ As a result, the limitation period continued to run after the claims had been issued.
The recent steep increase in court fees may cause additional temptation for claimants to undervalue a claim, particularly where the claim is disputed. Defendants should carefully check the claim form in light of what has previously been intimated. In group action cases claimants are more likely to bring composite claims naming multiple claimants.
This case suggests that claims are unlikely to be struck out by a court just because the wrong fee has been paid. Where this is one element of a wider failure, the chances will be greater - perhaps especially where there has been an element of deception about a case’s true value.
The limitation finding may often be relevant in industrial disease claims. A claimant’s failure to pay the correct court fee could be relevant both to expiry of the primary limitation period and as conduct for a court to consider when exercising section 33 discretion. Even where limitation is not in issue, defendants can apply for a declaration that proceedings have yet to be properly started. This may increase the pressure on a claimant. Whilst a claimant might be willing to bring a hotly contested claim on the basis of a court fee of a few hundred pounds, that position might change when the fee is a few thousand instead.
Amy Steele
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