Master Rowley has handed down a judgment on the issue of whether a claimant receiving party, who would otherwise be entitled to a remission of court fees but who fails to apply for the same, can then recover the court fee from the defendant paying party. The judge found that “on the ordinary principles of a standard basis assessment” there was no evidence to demonstrate that the court fee had been reasonably incurred and was accordingly not recoverable from the paying party.
Since court fees can amount to as much as £10,000, as in this case, court fee remission is often a significant issue between the parties in costs assessments. Receiving parties rely on the assertion that there is no requirement for a party in litigation to mitigate their loss by reliance on the public purse (as per Peters v East Midlands Strategic Health Authority [2010] QB 48) while paying parties contend that it is purely a question of whether the fee has been reasonably incurred with reference to CPR 44.3.
In the present case, the claimant was in receipt of state benefits and too ill to work, indicating he may be eligible for a remission of court fees. Time entries in the claimant’s bill of costs revealed that consideration had been given to a potential application for fee remission. The defendant NHS Trust submitted that if an application had been made and granted but the claimant had elected to pay the fee, then it was not reasonably incurred. Further, the claimant had confirmed that although no application for fee remission was made, it was briefly considered after the fee had been paid. The defendant said this was relevant since a claim for a remission of court fees could still be made within three months of payment.
The nub of the matter for the claimant was who bears the loss of the court fee – the public purse or the tortfeasor. Relying on Ivanov v Lubbe, a decision of HHJ Lethem sitting in the County Court – where it was found legitimate for the claimant to elect to make the claim against the tortfeasor rather than relying on the public purse – the claimant here considered it reasonable to pass on the cost of the court fee to the defendant.
However, Master Rowley did not agree with the tenet that said where fee remission was used there was a loss to the public purse. There was no evidence before him, or in Ivanov, to suggest an unexpected shortfall to the court service. It seemed to the judge that Parliament would expect all those who qualify for a fee remission to use it and therefore be alive to the extent of the likely cost.
Comparing the fee remission scheme to the CRU scheme, where the wrongdoer is required to reimburse the state for benefits received by an injured claimant, the judge pointed out that it had been open to Parliament to require paying parties to reimburse the state for fees where the claimant had been entitled to a fee remission.
With reference to CPR rule 44.3(2) – the court will only allow costs which are proportionate to the matters in issue and resolve any doubt as to whether costs were reasonably and proportionately in favour of the paying party – Master Rowley concluded there was clearly doubt as to whether or not a court fee had been reasonably incurred here. He questioned whether, if the application was simply overlooked, the court fee should be allowed as being reasonably incurred in any event. He concluded not.
In any event, comparison between mitigation of loss and damage and the reasonable incurrence of fees and expenses was not borne out in the judge’s view:
The essence of damages is a remedy to fill a hole caused by the wrongdoer. The essence of costs is, by comparison, the building of a structure which will enable the damages claim to be brought forward. Any reduction in damages fails to fill the hole: any reduction in costs simply reduces the size of the structure required.”
Rather, in his view, litigating parties are meant to “mitigate” legal spend in the manner propounded by Mr Justice Leggatt in Kazakhstan Kagazy Plc and Others v Zhunus and Others [2015] EWHC 404 (Comm) that being the “lowest amount” which could reasonably be spent in order to conduct a claim proficiently with any expenditure over this level not recoverable from the other party.
Put succinctly, “Costs are being incurred rather than that they are a loss which is being reduced by mitigation.” Incurring a court fee which did not need to be incurred resulted in escalating costs which would not be recoverable between the parties.
This is a sensible judgment highlighting the basic principles relative to a standard basis assessment of costs: those of reasonableness and the burden of proof resting firmly with the receiving party. As a result of this decision, parties who do not apply their minds to the availability of fee remission and who do not make an application risk being unable to recover the court fee from the other side.
For more information, please contact Yvonne Booth – Costs Lawyer and Associate.
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