Payment of Incorrect Court Fee and Abuse of Process: Cross v Black Bull (Doncaster) Limited (Sheffield County Court 21st December 2017)

On 6 October, Sheffield County Court heard the case of Cross v Black Bull (Doncaster) Limited (Sheffield County Court 21st December 2017), in which the claimant appealed the decision to strike out a personal injury claim, on the grounds that proceedings were issued with an incorrect court fee. Judgment was handed down at the end of December.

It is relevant, firstly, to consider the facts leading up to the defendant’s initial strikeout application. In a letter, dated 4 November 2015, the claimant notified the defendant that it would be issuing proceedings for personal injuries which occurred on 16 November 2012. The final paragraph of the letter stated:

Finally, on the basis of information presently available and in order to keep court fees to a minimum, we propose to provisionally assess quantum so as not to exceed £10,000. This is on the strict understanding that we reserve the right to claim such sums as may be appropriate in due course. Unless we hear from you to the contrary we shall assume this is agreed. If, however, you do formally object we shall be required to pay a higher court fee and will produce this letter to the court on assessment, if necessary, in support of a claim to recover court fees at that higher level’.

When proceedings were subsequently issued, on 12 November 2015, just 4 days before limitation expired, the claim value was limited to £10,000, yielding a court fee of £455, which the claimant paid. However, three months later, in the claimant’s schedule of loss, the total damages for personal injury totalled £41,678.40. Naturally, the rise in damages sought since issue warranted a higher court fee.

The defendant filed an application, contending that the claim was an abuse of the process of the court ‘in seeking improperly to avoid payment of court fees’.

The question for Deputy District Judge Walters was whether the claimant solicitor had intentionally issued at an undervalue to avoid paying the court fee commensurate to the personal injury action pursued?

The defendant’s application was successful and, as such, the claim was struck out, at first instance, on 14 October 2016. The judge reasoned:

On the balance of probabilities I find that the statement of case is an abuse of the court process in seeking improperly to avoid payment of the court fee which would attract (sic) to a claim which would at best be in excess of £45,000.  The claim is struck out’.

Previous case authorities referred to in the Cross appeal, in respect of incorrect court fees, included Lewis v Ward Hadaway [2015] EWHC 3503 (Ch), Wiseman v Marston’s PLC (21 December 2016, County Court at Sheffield, unreported) and Dixon v Radley House Partnership [2016] EWHC 2411 (TCC). We examined each of these decisions in editions 125 (here), 190 (here) and 161 (here) of BC Disease News, respectively.

As a brief reminder, these cases are summarised below:

Lewis v Ward Hadaway [2015] EWHC 3503 (Ch)

This case ruled that the key rationale for distinguishing abuse of process in cases where the incorrect court fee has been paid, includes the ‘Relationship between the amount of the claim as valued on the Claim Form, the appropriate court fee applicable to that value, and the true value of the claim as it ought to have been known to the relevant solicitor’.

Unlike in Cross, the facts of Lewis were such that the additional court fee had, by the time of the hearing, already been paid.

Wiseman v Marston’s PLC (21 December 2016, County Court at Sheffield, unreported)

Judgment, in Wiseman, was delivered by His Honour Judge Robinson, who also presided over the claimant’s appeal in Cross. Distinguishing Wiseman from Lewis, at paragraph 13 of the Cross appeal, he described Lewis as ‘a case where a deliberate decision had been taken by the relevant solicitor to issue proceedings and to save money by paying a fee that was derisory in the context of the issues at stake. It was held that such conduct amounted to an abuse of the process of the court’.

Wiseman, on the other hand, was not indicative of abuse. Counsel’s advice was expected to arrive after the limitation period had expired and immediate steps were taken to apply for permission to amend the claim form and pay the appropriate fee. HHJ Robinson noted that, ‘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’.

Dixon v Radley House Partnership [2016] EWHC 2411 (TCC)

In this case, Stuart-Smith J was critical of genuine prejudice suffered by parties following payment of an incorrect court fee. Held:

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 [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’.

In Cross, HHJ Robinson, in reaching his decision, considered the claimant’s aforementioned pre-action letter, in order to examine any evidence suggestive of an abuse of process of the court. At paragraph 23, the judge stated:

In my judgment, it is a very sensible letter, seeking to tease out a settlement prior to issue of proceedings’.

He went on, at paragraph 26, to say:

In the final paragraph, there was what I interpret as a very sensible observation about costs and disbursements which it seems to me has been misinterpreted by the DDJ.  My interpretation of the final paragraph is this: we are about to take a step which will result in costs starting to escalate.  Costs can be an impediment to settlement – any offer accepted will have to be accompanied by costs which includes disbursements.  So, in order to put at ease the minds of the fund managers at the insurers, here is an assurance that the issue fee will not be an impediment to speedy settlement.  Provisional assessment of the value of the claim is £10,000.  This will “keep court fees to a minimum”.  However, the clear meaning of that phrase, taking the letter as a whole, is “legitimate minimum”.  I do not read into the letter an intention to evade court fees.  I read it as meaning quite the opposite.  There had been an assertion that quantum had been provisionally assessed.  It is recognised this may not prove to be accurate.  It may be that the claim turns out to be higher.  The Claimant’s solicitors can do one of two things.  First, issue at the legitimate minimum on the basis of information known, with a view to amendment if that proves necessary.  Alternatively, issue at the speculative maximum.  The problems with option two are that there is never any refund of court fees if the speculative maximum proves too high, and defendants object at assessment to paying the court fee if it has proved to have been appropriate to a much higher value claim’.

Moreover, HHJ Robinson said that the period of 3 months between issue of the Claim Form and preparation of the schedule of loss was not, in his experience, ‘anything unusual’.

The judge allowed the claimant’s appeal, overturning the first instance decision and concluded, at paragraphs 32 and 33:

‘... even if there had been any element of abusive behaviour on the part of the Claimant’s solicitor, strike out was simply a far too draconian response.  On any view the Claimant had paid to the Court a fee applicable to pursuing a claim valued at the not insignificant figure of £10,000.  Why should he be deprived of the opportunity to prove his claim to that value?  The DDJ gave no thought to that possibility.  It is true, no submissions to that effect appear to have been made.  But the DDJ, as the person guarding the dignity of the court against the abuse he had found to have been perpetrated against its process, is nevertheless obliged to consider what proportionate response is appropriate.  Strike out as a response was so disproportionate that it can properly be said to fall outside the range of reasonable responses open to a Judge, even on the facts as found by the Judge.  I would have set aside the strike out order in any event.

It follows that the appeal is allowed, the order for strike out is set aside.  Any application to amend the claim form to increase the statement of value will be considered on the merits if and when any such application is made’.

Although it was not mentioned in the Cross judgment, as point of additional interest, on the subject of costs, ‘the judge held that the claimant had made an effective Part 36 offer and had obtained a more advantageous result on appeal. The defendant was ordered to pay the costs incurred 21 days after the Part 36 offer on an indemnity basis’.[i]

Full text judgment of Cross can be found here.

 

 

[i] Gordon Exall, ‘COURT FEES AND STRIKING OUT: APPEAL AGAINST STRIKING OUT ALLOWED: CROSS -V- BLACK BULL – THE FULL JUDGMENT’ (7 January 2018 Civil Litigation Brief) <http://www.civillitigationbrief.com/2018/01/07/court-fees-and-striking-out-cross-v-black-bull-the-full-judgment/> accessed 10 January 2018.