Incorrect Court Fees, Limitation Periods and a Reminder about What Constitutes an Abuse of Process: Wiseman v Marston’s Plc (2016)

We have previously discussed the impact that paying the incorrect court fee has on limitation periods in editions 161 (here) and 169 (here) of BC Disease News when we looked at the decisions of Dixon v Radley House Partnership [2016] EWHC 2511 (TCC) and Wells v Wood & Nottinghamshire County Council (Lincoln County Court, 9 December 2016). This week, with the full judgment in Wiseman v Marston’s Plc now being available, we consider whether failure to pay the correct fee constitutes an abuse of process for the purposes of a strike out and whether a claimant’s application to amend the claim form should be allowed.

FACTS

The original claim in these proceedings was one for damages for personal injuries, and other losses, arising from a workplace accident on 15 January 2013. In May 2013, the defendant admitted liability leaving only the issue of quantum to be resolved. Proceedings were issued on 22 December 2016, protectively, as the limitation period was due to expire on 15 January 2017. The amount claimed in the claim form, as issued, was limited to £50,000 and the court fee appropriate to that claim of £2,500 was paid. Following the issue of the claim form, Particulars of Claim were served on or about 27 January 2016 and the prayer for relief claimed damages ‘exceeding £500,000’, which would have attracted a flat rate court fee of £10,000. The claimant then made an application on 18 February 2016 to amend the claim form by increasing the amount of damages. On the same day, the defendant made two applications, firstly for summary judgment on the basis that the claim was statute barred by reference to the Limitation Act 1980. Secondly and alternatively, the defendant sought an order striking out the claimant’s claim as an abuse of the process of the court, pursuant to CPR rule 3.4.

At first instance, the District Judge categorised the claimant’s behaviour as an abuse of the process of the court and refused the claimant’s application. She made no order on the defendant’s applications, but ordered the claimant to pay the defendant’s costs of both applications. Both parties were granted permission to appeal.

LIMITATION

Interestingly, on hearing, the appeal HHJ Robinson pointed out that limitation is a defence which must be pleaded, and, as the defence had not been filed in this case, it had not been, and so was not in issue. However, he did go on to indicate his agreeance with the decision in Dixon, when Stuart-Smith J said, at paragraph 70:

In the absence of an allegation of abusive conduct, intention to claim further amounts or even knowledge that their claims would be greater than claimed in the claim form does not prevent the proceedings as issued from being effective to stop time running for matters that can subsequently be advanced given the terms of the Claim Form. The risk for a claimant adopting this approach is that a failure to identify the claim with sufficient clarity in the proceedings as initially issued may lead the Court to hold that a later amendment involves a new claim which may engage s.35 of the Limitation Act. This is axiomatic; and it is reasonable. I would regard a principle that left the validity of proceedings to be determined by satellite litigation that investigates the (non-abusive) state of a claimant’s mind and intentions on issue as detrimental to the efficient and fair conduct of litigation. To my mind, the undesirability of the principle for which the defendants contend is brought into sharp focus when it is remembered that the payment of fees is a matter for the benefit of the Court and is very largely irrelevant to the opposing parties. When asked what actual prejudice their clients had suffered as a result of the asserted underpayment of issue fees in this case, Counsel for [for the defendants] were unable to identify any substantial prejudice at all. The best that could be suggested was that the underpayment of issue fees left the Claimants more money with which to fight the defendants. In the context of the overall costs of this action, that suggestion pales into insignificance’.

The judge then turned to consider the allegation of abuse of process in this case.

ABUSE OF PROCESS

Before addressing the circumstances in the case before him, HHJ Robinson first considered the authorities on abuse of process. He firstly drew attention to the comments of Lord Bingham in Attorney-General v Barker [2000] 1 FLR 759, in which he described an abuse of process as ‘a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process’.  

Lord Bingham also made it clear, in the later decision of Johnson v Gore Wood & Co [2002] 2 AC, that there is no room for discretion when determining whether conduct is or is not abusive. He stated, at para 22:

…a broad merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial decision whether, in all the circumstances, a party is misusing or abusing the process of the court…’.

HHJ Robinson then turned to the decision in Lewis and Others v Hadaway [2015] EWHC 3503 (Ch), in which a deliberate decision had been taken to issue proceedings and to save money by paying a fee that was derisory in the context of the issues at stake. As a result, it was found that such conduct amounted to an abuse of the process of the court. He distinguished this from the present case, in which the application to amend was made well within the four months allowed to serve the particulars and the claim form. He stated, at para 28:

‘There is to my mind a world of difference between these two scenarios. A solicitor seeking to play the system deliberately states the value of a claim to be very low to save money. Perhaps it is a Lewis type claim. Perhaps liability is far from clear and the solicitor wants to see how far things go. His intention is always to seek to amend to claim a higher amount and pay the increased fee if things look up. That may well be abusive behaviour. In this case, a competent, well respected solicitor bang up against the limitation period knows he must issue. He knows the value of the claim is substantial. Counsel’s advice is awaited, but will not be received until after the limitation period has expired. He knows he has an open admission of liability. It appears that he does not engage his mind as to the value of the claim, but he knows it is substantial. He fixes on £50,000 as the appropriate sum to state on the claim form, resulting in an obligation to pay the substantial fee of £2,500, being 5% of the sum claimed. Once counsel’s advice is obtained and he has the Particulars of Claim he takes immediate steps to serve what he has. Rather than delay until mid-April, which is four months after issue, he also applies promptly for permission to amend the claim form, so the proper value is shown and the proper fee paid’.

He concluded that this could not be any further from abusive conduct, following the decision in Wells v Wood, discussed previously in edition 169 of BC Disease News.

He went further and held that:

For the avoidance of doubt, even if the original act of issue was abusive – and I am firmly of the view it was not – the actions of the claimant by her solicitor thereafter cured the abuse’.

As such, he held that the District Judge had been wrong to conclude that the claimant’s behaviour had been an abuse of the process of the court.

APPLICATION TO AMEND CLAIM FORM

In relation to the claimant’s application to amend the claim form, HHJ Robinson stated that as he had concluded that the claim had been ‘brought’ for the purposes of the Limitation Act, the limitation period expired on 15 January 2016. However, the application to amend was made on 18 February 2016, after the end of the relevant limitation period. In deciding whether to allow the application, he relied upon the decision in Genluce Fishing Co. Ltd v Watermota Ltd, and held that:

So at first blush it does not seem to me that Rule 17.4 has any application but, even if it did, it would clearly be appropriate to permit the amendment for the same reasons as under 17.3, which deals with amendments to statements of the case with the permission of the court. The amendment was sought promptly. There is no prejudice to the defendant other than that the defendant must now compensate the claimant in full rather than only partially and will probably have to pay by way of costs, subject to any relevant and valid Part 36 offer, an additional £7,500, being the extra fee that the claimant has to pay in order to bring the claim before the court. On the other hand, the injustice to the claimant would be immense and, in any event – and whether this is relevant or not it is nevertheless a fact – would further occupy the time of the court with the inevitable claim by the claimant against her own solicitor, thus litigation would be multiplied. I am not saying that is a relevant consideration, but it is nevertheless a fact’.

As such, he concluded that the claimant’s application to amend the value on the claim form should have been allowed.

In conclusion then, it seems that this judgment has made it clear that, where there is no abuse of process, the payment of the incorrect court fee will not affect the limitation period. Further, an abuse of process for the purposes of striking out the claim will not be found, unless it is clear from the facts of the case that the claimant had intentionally and deliberately stated the incorrect court fee, in order to save money. Finally, where there is no abuse of process, the claimant’s application for amendment of the claim form should be allowed, as long, as the prejudice does not bear too heavily on the defendant.

The full judgment can be accessed here.

This week the Court of Appeal have refused the defendant permission to appeal. The full note on this can be found here.