Abuse of process and the correct issue fee

Published on
6 min read

The recent decision in Lewis v Ward Hadaway holds that deliberately paying a lower fee than that appropriate to the sum the claimant intends to claim is an abuse of process and it also means that the claim has not been “brought” for limitation purposes. We consider the practical consequences for litigants.

Court fees are back in the news. There is to be a general ten per cent rise for civil claims but the proposal to double the £10,000 cap on issue fees introduced in March 2015 will not be implemented, for the time being at least. Fees are also in the news because of the decision in Lewis v Ward Hadaway. Deliberately paying a lower fee than that appropriate to the sum the claimant intends to claim is an abuse of process and it also means that the claim has not been “brought” for limitation purposes. We consider the practical consequences for litigants.

Limitation

A claim is “brought” for the purposes of the Limitation Act 1980 when the claimant does all that he reasonably can do to issue proceedings. As the Court of Appeal explained in Page v Hewetts, this involves delivering the claim form in due time to the court office, accompanied by a request to issue and the appropriate fee. The limitation period will stop running at that date, even if the court is closed or for some other reason does not issue the claim until a later date.

If the claimant leaves it until the end of the limitation period to deliver the claim form to the court office, he runs the risk that if he has not paid the right fee, he has left it too late to correct the error and proceedings will not be “brought” before the limitation period expires. This occurred in Page v Hewetts where, because the claim was for both damages and an account of profits, a fee of £1,340 was appropriate and not the £990 in fact paid. Hildyard J held that even though the mistake was innocent (and understandable in the circumstances), the claim had not been brought within the limitation period.

Payment of court issue fees

In many cases the claimant does not have the funds, or does not wish, to pay the issue fee and has not (yet) obtained after the event insurance or disbursement funding with the result that their solicitors pay the court fee. This practice was acknowledged by the Court of Appeal in Flatman v Germany – funding disbursements does not mean that a solicitor has stepped outside their normal role so as to make them at risk on costs. A solicitor can properly act for an impecunious client whom they know or suspect will not be able to pay their own (or the other side's costs) if unsuccessful and can agree to indemnify their client against the other side’s costs if the claim fails (Sibthorpe v London Borough of Southwark).

The facts in Lewis v Ward Hadaway

The claims against the defendant solicitors arose out of the acquisition of various buy-to-let properties in 2006 and 2007. The defendant firm was acting for both the claimant purchasers and their mortgagees. In 2008 the claimants’ solicitors Robinson Murphy sent letters of claim to the defendants, each claim seeking damages of hundreds of thousands of pounds. In 2012 they asked for a limitation standstill agreement but the defendants refused.

Claims were issued in 2012 and 2013 as the limitation periods expired or shortly afterwards in some instances. There was no disbursement funding in place to pay the court fees so these were paid by the claimants’ solicitors. Robinson Murphy put lower figures in the statements of value on the claims forms than those the claimants intended to claim so as to reduce the issue fees. Before serving the claims at the end of the four month service period, they amended the claim forms to claim the appropriate higher figures and paid the balance of the higher court issue fees (disbursement funding was still not in place).

Application to strike out

The judge (John Males QC, sitting in the Chancery Division) held that it was an abuse of process to issue a claim for a lower figure than the claimant intends to claim. This is very different from the situation in Khiaban v Beard where the parties’ insurers agreed to limit the claim to the amount of the excess, thereby obtaining the court’s decision on liability while keeping the claim in the small claims track and minimising costs. By contrast, in the present case the claimants always intended to make the increased claims, their scheme being to reduce the issue fees initially payable to the court.

The judge refused to strike out the claim. Although Robinson Murphy continued in this abusive practice despite being told it was an abuse by two district judges in previous cases, the abuse only lasted for four months, there was no deception given that the full claims were set out in the pre-action letters of claim, and there was limited prejudice to the defendants. He was particularly concerned that the defendants did not apply to strike out the claims until 2015 after significant steps in the action had been taken on the footing that the claims had been validly issued, including consolidation of the actions and a mediation.

Application for summary judgment

The judge was however prepared to give the defendants summary judgment in the eleven identified cases on the ground that the claims were time-barred. Following Page v Hewetts, proceedings were not brought in time because the appropriate fee was not paid before the limitation period expired. It would be inconsistent and wrong for the limitation defence to succeed in Page because of an innocent miscalculation by the defendant and for it to fail in this case where the failure to pay the correct fee resulted from the claimants’ deliberate abuse of process.

Practice points

  • Claimants must pay the issue fee appropriate to the value of the claim they intend to bring.
  • The level of the fee depends on the value of the claim and not vice versa.
  • The statement of truth in the claim form relates to the entire claim form including the statement of expectation under the heading “Value” and the figure in the box entitled “Amount claimed”.
  • A deliberate decision to limit the sum claimed or not to pursue one or more claims or heads of loss at all is permissible – claimants are entitled to decide what to include in their claims.
  • It is an abuse of process deliberately, and without informing the court and the defendant, to pay a lower issue fee than appropriate, with the intention of amending the claim and paying an additional fee at a later point.
  • A defendant may apply for the claim to be struck out for abuse of process in these circumstances. This should be done promptly since delay may prejudice the application.
  • Where the claim is issued at the end of the limitation period and the claimant has not done all he reasonably can to pay the correct issue fee, the proceedings will not have been “brought” so as to stop time running under the Limitation Act 1980 and the defendant may obtain summary judgment.
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