Pay the correct court fee – or else!

On 9 March 2015 there was a substantial increase in the fees to issue civil proceedings. As a result, the court fee is now £10,000 to issue a claim worth in excess of £200,000 (or the damages are unquantified).

Approximately 2 years earlier, the Jackson costs reforms were introduced which provided that, if successful, a claimant could no longer recover from his/her opponent the success fee and ATE premium.  This has seen a marked decline in the number of claims brought on CFAs particularly in the personal injury and clinical negligence fields and that decline has increased since 9 March 2015.   A private paying claimant simply cannot afford to pay the £10,000 court fee.

To overcome this problem, there is an increasing practice for a claimant to understate the potential value of his/her claim in order to pay a smaller court fee on issuing proceedings.  When the claimant can afford it, or is compelled to do so by the court/the opponent, the claim form is amended and the additional fee is paid.

This practice has been condemned by John Male QC sitting as a Deputy High Court Judge in Lewis and Others v Ward Hadaway (a firm) [2015] EWHC 3503 (Ch).  The defendant applied for an order striking out 31 negligence claims. The claimants' solicitors had indicated, in the pre-action correspondence, that each claim was for hundreds of thousands of pounds. However, in the claim forms that were issued just before the expiry of the relevant limitation period, the stated value of each claim was considerably lower, and the court fees were paid by reference to those lower sums.  Before serving the claim forms, the claimants amended their claims to the higher, actual amounts and paid the balance of the larger court fees.  These were the correct fees that should have been paid at the outset.

The judge was scathing of this conduct and said that it constituted an abuse of process because:

1. It was always the claimants’ intention to amend the claims at a later stage for no good reason other than to pay a reduced fee;
2. Although the proper fee was later paid, this caused disruption to cash flow for the court system and the increased administration caused by the need to process two sets of fees and claim forms;
3. There was a public interest in claimants not behaving in this way;
4. There was a possible advantage gained over the defendant by the claimants being able to stop time running by paying a lower issue fee to issue the claims.

The judge though decided that it would be disproportionate to strike out all the claims (although the possibility of costs sanctions was left open).  He was concerned not to deprive the claimants of genuine claims.  The prejudice to the claimants would be substantial because claims totalling about £9 million would be statute-barred, while the prejudice to the defendant was limited.  Applying the approach in Zahoor v Masood [2009] EWCA Civ 650, the judge concluded that the misconduct was not so serious that it would be an affront to the court to permit the claims to continue.

However, the court granted summary judgment against 11 of the claimants on limitation grounds.  For limitation purposes, claims are regarded as brought when the claim form is delivered to the court with the appropriate court fee (see Page v Hewetts Solicitors [2012] EWCA Civ 805).  The judge held that those 11 claimants could not be regarded as having paid the appropriate fee in circumstances where the act of payment was an abuse of process.

WATCH OUT:

• All solicitors dealing with claims in which this situation already exists should immediately review what action should be taken. 
• Any solicitors who are about to issue proceedings should think very carefully before taking the course of action that was taken by the claimants' solicitors in this case, and obtain full instructions from clients if similar action is taken.  Assistance can be obtained from third party funders and ATE insurers. 
• Insurers of solicitors may see an increase in the notification of claims and potential claims.