In what circumstances is it an abuse of process for a claimant to pay a lower issue fee than the claim merits? And how should the court respond?
The decision of Mr John Male QC in Lewis & Ors v Ward Hadaway (a firm)  EWHC 3503 (Ch) has sent ripples through the world of litigation. This is a particularly salient issue for claimant personal injury practitioners: it is often difficult to value a personal injury claim at the point of issue; smaller firms may feel constrained by the limits of their office accounts; and defendants can be expected to pounce on any “overvaluation” when costs are assessed.
The facts of Lewis are, one imagines, unique. The claimants were pursuing professional negligence claims, each of which had been valued at in excess of £100,000, as was set out in letters of claim sent by their solicitors, Robinson Murphy. Attempting to protect the claimants’ position with regard to limitation, Robinson Murphy limited the sums sought in the claim forms to much smaller amounts, thereby allowing the claims to be issued for relatively modest court fees. Robinson Murphy then amended the pleaded value upwards immediately prior to service and paid the balance of the court fee. In effect, the claimants sought to secure themselves an extra four months in which to raise the full issue fee. By the time Ward Hadaway’s application was heard, Robinson Murphy’s tactics had been condemned as an abuse of process by four different district judges.
Ward Hadaway sought to have the claims struck out as an abuse of process under CPR 3.4(2)(b); in the alternative, the court was asked to grant summary judgment on the grounds that the claims were statute-barred. Mr Male QC accepted that it was an abuse of process for Robinson Murphy to deliberately undervalue the claims with the object of deferring payment of the appropriate court fee (or avoiding it altogether, in claims which were discontinued before service). Robinson Murphy’s tactics caused the court to suffer a disruption to its cashflow and the administrative inconvenience of having to process two claim forms and two sets of fees rather than one. However, the court declined to take the draconian step of striking out the claim: there was no prejudice to the defendant, no attempt to conceal the conduct, and no suggestion of fraud or dishonesty.
The court then went on to consider the effect of the underpaid issue fees on limitation. Each of the claims was subject to a limitation period of six years; each claim form had been delivered to the court office in time together with payment of the inappropriately low issue fee. Was that enough to stop the clock?
7A PD 5.1 of the CPR states that “where the claim form as issued was received in the court office on a date earlier than the date on which it was issued by the court, the claim is ‘brought’ for the purposes of the Limitation Act 1980 and any other relevant statute on that earlier date”, but has nothing to say about payment of the court fee. In any event, the Court of Appeal ruled in Page v Hewetts  EWCA Civ 805 that whether a claim has been “brought” is a question of construction of the 1980 Act rather than the CPR.
In Barnes v St Helens MBC  EWCA 1372, Tuckey LJ said that “The 1980 Act can perfectly properly be construed so that in the context of the CPR a claim is brought when the claimant’s request for the issue of a claim form (together with the court fee) is delivered to the court office.” Expanding on this in Page, Lewison LJ explained that it is a matter of risk allocation: “The claimant’s risk stops once he has delivered his request (accompanied by the claim form and fee) to the court office … If, therefore, the claimants establish that the claim form was delivered in due time to the court office, accompanied by a request to issue and the appropriate fee, the action would not, in my judgment, be statute barred.”
Page was remitted to the High Court, where it was established that the claim form was received by the court in time but accompanied by a cheque for £990 when the correct fee was £1,390. The court did not issue the claim, instead calling the claimant’s solicitors to advise them of the problem. The correct fee was paid about two weeks later and the claim was then issued. Hildyard J found that the proceedings were not brought until the correct fee was offered, and hence that the claim was statute-barred.
The court in Lewis adopted this analysis to find that the claims were statute-barred: although the claim forms had been delivered to the court on time, the fee that had been paid was not “the appropriate fee”.
Defendants were understandably excited by the decision in Lewis, and there followed a flurry of applications correctly characterised by Gordon Exall, author of Civil Litigation Brief, as a “cottage industry”. In Bhatti & Anor v Ashgar & Anor  EWHC 1049 (QB), the defendant invited the court to find that the claims were statute-barred because the claimants had not, on a strict analysis, paid the correct issue fees (the issues fees paid were £3,035; the shortfall was between £680 and £1,160). Despite Warby J’s obvious unhappiness about finding, a month before trial, that these six-figure claims were statute-barred, he considered that the approach mandated by the authorities “is and should be a very strict one”. The claimants were saved only by the defendant’s failure to plead the limitation point or give proper notice of it prior to the exchange of skeleton arguments.
In Glenluce Fishing Company Ltd v Watermota Ltd  EWHC 1807 (TCC), the defendant sought to resist the claimant’s proposed amendment to add a new head of loss. The defendant argued, somewhat ambitiously, that the issue fee paid was inappropriately low because the claimant could and should have included the new head of loss in the original proceedings, and hence that permission for the amendment should be refused. In his judgment, Mr Roger ter Haar QC commented that “From [the] appellate cases has developed a somewhat hard edged principle as those cases have been applied at first instance whereby a claimant whose lawyers miscalculate the fee due, or absentmindedly pay the wrong amount, may cause a claimant to lose his or her right to bring an otherwise meritorious claim to court. At present it seems that the fact that the defendant has suffered no prejudice and indeed may receive an unexpected benefit finds no place in the principle, and there appears to be no relief from sanction available from the court. It may be that as this principle is discussed and developed in future cases, those hard edges will be softened.” In light of those remarks, it was unsurprising that the court declined to extend the “hard-edged principle” still further, and the claimant’s amendment was allowed. Stuart-Smith J expressed similar reservations about the Bhatti approach in Dixon & Anor v Radley House Partnership (a firm) & Ors  EWHC 2511 (TCC).
Two cases which will be of some comfort to personal injury practitioners are Wells v Wood (The County Court at Lincoln, 9 December 2016) and Cross v Black Bull (Doncaster) Limited (The County Court at Sheffield, 20 December 2017). In Wells, the pleaded value in the claim form was limited to £15,000, but the particulars of claim drafted three months later indicated a claim worth more than £25,000. For reasons unknown, the claimant’s solicitors initially paid an issue fee that was lower even than that appropriate to the original claim, but the court nonetheless issued proceedings some three weeks before the expiry of the limitation period. HHJ Gosnell held that, absent an abuse of process, it could not be said that a claim which was issued within the limitation period had not been brought, even if the incorrect issue fee had been paid. In Cross, HHJ Robinson reversed the district judge’s decision to strike out the claim as an abuse of process, noting in the process that defendants are not slow to criticise when a claim is overvalued at the point of issue. The judgment is that most heart-warming of things – an acknowledgment by the court of the difficulties that beset practitioners on a daily basis.
The final judgment of importance thus far, in this still-evolving area, is that of Turner J in Atha & Co Solicitors v Liddle  EWHC 1751 (QB). This was a claim arising from the allegedly negligent prosecution of Ms Liddle’s personal injury claim by her former solicitors, Atha & Co. The pleaded value of the claim form was limited to £25,000 and the appropriate court fee was paid for a claim of that value. However, given that the claimant was said to be wheelchair-bound and suffering CRPS as a result of the accident, the court did not accept that the original valuation was accurate. Ms Liddle’s solicitor, Ms Jenkins, said that the difficulties in quantifying the claim were such that she could not say how much the claim was worth when the claim form was sent to court. The judge held that in such circumstances the fee tendered should have been the maximum fee of £10,000, and the payment of the lower fee was an abuse of process. Although Ms Jenkins had not acted dishonestly, the claim form was accompanied by a statement of truth and she had “seriously misjudged the proper limits of the strategic leeway afforded to her by the rules”.
The judge declined to strike out the claim under CPR 3.4(2)(b) on proportionality grounds, but of greater interest is his judgment on the limitation argument. The court began by reviewing the Court of Appeal authorities and noting that the consequences of tendering the wrong fee were simply never in issue in those cases. The reference to the court fee in Barnes “was no more than a passing narrative allusion to the usual process which, as it happened, had been followed uncontroversially in that case”. Turner J pointed out that the risk which the claimant transferred to the court when delivering the papers was the risk that the court will fail to process the claim timeously – if the claimant has pleaded a particular value and paid the appropriate fee for that value of claim, she has not contributed to any risk of delay. This reasoning was not inconsistent with that of Hildyard J in Page: in that case, the fee tendered was inaccurate on the face of the claim form, and that did lead to delay because the court refused to issue the claim until the correct fee was paid. Turner J declined to follow Lewis v Ward Hadaway, concluding that “Where there is no delay in the issuing of the claim form attributable to any default on the part of the claimant then there can be no consequences in respect of which the claimant must bear the risk.”
It is submitted that Turner J’s analysis of the authorities is persuasive and to be preferred to that of Mr Male QC in Lewis. It provides a principled answer to the discomfiture expressed by the court in Bhatti, Glenluce and Dixon. Furthermore, there are good policy reasons for departing from Lewis: opportunistic satellite litigation should be discouraged, and it is not desirable for judges to have to peer into the minds of claimant solicitors, particularly given that these applications are frequently dealt with without oral evidence from the solicitor in question. However, as Turner J has commented, the conflict between the High Court authorities is such that the time is now ripe for clarification from the Court of Appeal.
What are the practical points that claimant practitioners should take from these cases?
- All litigators should have a copy of and refer to the Civil Proceedings Fees Order 2008 (as amended). It is the only definitive statement of the appropriate court fees and the fee remission scheme.
- Where there is doubt about the amount that a claimant may recover, it may be acceptable to issue for the “legitimate minimum” (Cross). But “legitimate” is the key word – if one pays an issue fee of £35 for a claim that is obviously multi-track, one should expect a finding of abuse of process.
- If one genuinely cannot value the claim at the point of bringing proceedings, the correct issue fee is £10,000, but remember that the vast majority of individuals (particularly those who have suffered substantial losses) will be entitled to a fee remission. Not only does this help with cashflow, it also helps to defeat any “overvaluation” argument from the defendant on assessment.
- Underpayment of court fees amounting to an abuse of process will rarely justify the striking out of a claim. The facts of Lewis could hardly be more extreme but were not considered to justify strike-out.
- Issue in good time before the expiry of the limitation period. The court can be expected to be markedly less sympathetic to the defendant’s limitation argument if it is required to look behind the date on the sealed claim form.
17 October 2018