UNDERPAYMENT OF COURT FEES IS AN ABUSE OF PROCESS: HOWEVER DESPITE THIS AN ACTION WAS ISSUED WITHIN TIME & WOULD NOT BE STRUCK OUT

In the judgment today in  Atha & Co Solicitors v Liddle [2018] EWHC 1751 (QB) Mr Justice Turner considered the issue of whether a failure to pay the correct fee on the issue of proceedings meant that a claim was statute barred.  He held that negligently issuing without due regard to the correct fee does constitute an abuse of process. However he declined to follow the High Court decisions on this issue. Despite being an abuse of process the proceedings were issued within the limitation period, they would not be struck out.

“The ordinary and proper use of the court process when providing the statement of value on a claim form involves the recording of the unvarnished truth. Deliberately departing from this ordinary and proper use for tactical reasons, such as removing the risk that the issue fee may subsequently be challenged when costs are being assessed, is significantly different from the ordinary and proper use of the court process.”

“I repeat, and accept, that I am only able to reach this conclusion by declining to follow both Lewis and Bhatti”

THE CASE

The claimant was injured some 10 years ago when she fell off a chair.  Proceedings were issued, however a joint expert  instructed within those proceedings stated that there was no defect with the chair and the claim was discontinued.  The claimant instructed new solicitors to bring proceedings against her former solicitors.  As is so often the case the new solicitors decided that they needed the luxury of the entire six year limitation period before they issued proceedings.  The claimant had been notified that the previous proceedings had been discontinued on the 31st March 2010.  The claim form in the action against the solicitors was received by the court on the 29th March 2016 but not issued until 7 April 2016.

THE ISSUE

It was not in issue that the relevant date for limitation was the date of receipt by the court, not the date of issue. However the defendant contended that the correct fee was not paid. Therefore the issue of proceedings amounted to an abuse of process.

1. The defendant concedes that, for the purposes of limitation and subject to the satisfaction of various pre-conditions, a claim is taken to have been brought when the claim form is received by the Court. However, in this case it alleges that the claimants’ solicitor, Ms Jenkins, paid the incorrect issue fee upon presentation of the claim form. It contends that this amounted to an abuse of process the automatic consequence of which is that the claim was not brought until the claim form was issued and it is thus out of time.

THE CLAIM FORM

The claim form limited the case to £25,000. This was held not to be accurate.

1. In response to the defendant’s application to strike out the claim and/or for summary judgment, Ms Jenkins sought to justify her valuation in a witness statement dated 18 May 2017. It cannot be said that her explanation was a model of clarity.

2. In essence, she stated that at the time of drafting the claim form the claim value was unknown. However, if that were indeed the case then the claim would have fallen within CPR 6.3 (2) (c) as one in respect which “the claimant cannot say how much is likely to be recovered.” The appropriate fee for such a claim is £10,000. Ms Jenkins sought to suggest that she would have been worried that the court might not have issued the claim form where the value could not be predicted and that she might have difficulty in recovering the higher fee in costs from the defendant if the claim were subsequently to turn out to be worth less than £25,000.

3. I can readily accept that the quantification of the value of the claim was difficult but it is clear that Ms Jenkins had not come to a genuine and concluded view at the time of drafting the claim form that it was worth less than £25,000. Not only did she refuse the defendant’s Part 36 offer but she also served a costs budget estimating the claimant’s costs to trial in the sum of £192,369.40 which is hardly proportionate expenditure on a case worth no more than £25,000. The Particulars of Claim pleaded that the claimant “remains wheelchair bound, her diagnosis of CRPS continues. The quantum claim is likely to be substantial.” Even taking into account that a professional negligence claim of this kind is for the loss of a chance and not for the full value of the antecedent personal injury claim, it would be wholly unrealistic to conclude that the predicted value of the claim could have been less than £25,000.

4. I do not find, and the defendant does not allege, that Ms Jenkins was acting dishonestly when she purported to value the claim at between £10,000 and £25,000 and signed a statement of truth to this effect. At the very least, however, she had seriously misjudged the proper limits of the strategic leeway afforded to her by the rules. She had convinced herself that the tactical considerations referred to in her witness statement justified her choice of the statement of value. However, a statement of value is either a genuine reflection of the assessment of the author or it is not. A false valuation cannot be made true by the uncomfortable consequences of accuracy.

THE HEARING BEFORE THE CIRCUIT JUDGE

The Circuit Judge, HH Judge Gargan, ” concluded from all the materials before him that the statement of value did not amount to an abuse of process. He found that Ms Jenkins could and should have declared on the claim form that she was unable to say how much was likely to be recovered but, notwithstanding that, she believed that she was using the court process appropriately.”

ON APPEAL TO THE HIGH COURT JUDGE

Mr Justice Turner held that the negligent failure to properly consider the correct fee was an abuse of process. However this did not automatically lead to a case being struck out or proceedings issued, within time, being declared to be an abuse and thus issued outside the limitation period.

1. 1. I do not agree with the conclusion of the court below. On any analysis, Ms Jenkins’ motives, however well intentioned, could never justify the deliberate misstatement of the value of the claim on the form. In Attorney-General v Barker [2000] 1 FLR 759, Lord Bingham characterised 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.”

   2. The ordinary and proper use of the court process when providing the statement of value on a claim form involves the recording of the unvarnished truth. Deliberately departing from this ordinary and proper use for tactical reasons, such as removing the risk that the issue fee may subsequently be challenged when costs are being assessed, is significantly different from the ordinary and proper use of the court process.

   3. That said, I am entirely satisfied that, but for the implications arising out of the context of the operation of the limitation period in this case, the abuse would not have been such as to justify striking out the claim. The usual position is accurately summarised in the notes in The White Book 2018 at paragraph 3.4.3:

“Of course, the court has power to strike out a prima facie valid claim where there is abuse of process. However there has to be an abuse, and striking out has to be supportive of the overriding objective. It does not follow from this that in all cases of abuse the correct response is to strike out the claim. In a strike-out application the proportionality of the sanction is very much in issue…The striking out of a valid claim should be the last option. If the abuse can be addressed by a less draconian course, it should be.”

1. When the application came before the lower court, the parties were agreed that if the court were to find that there had been an abuse of process then the defendant’s application would automatically succeed and the claim would be struck out. Accordingly, when the matter first came before me it was presented in the same way. However, I was not entirely satisfied that the law was as settled as the parties had assumed it to be. In particular, while keeping an open mind on the matter, I remained to be persuaded that a finding of an abuse of process concerning the payment of the court fee was either a necessary or sufficient consideration in the determination of whether or not a claim had been brought for limitation purposes. The hearing of the appeal was therefore adjourned to give the parties the opportunity to expand their arguments to accommodate my concerns.

THE CONCLUSIONS ON APPEAL

The judgment looks in detail at the case law relating to the “start” of proceedings and the case law that has developed since the decision in Lewis v Ward Hadaway [2016] 4 WLR 6,  It is important to note that Turner J did not agree with the analysis in Ward Hadaway that an abuse of process meant that proceedings were issued outside the limitation period.

1. With all appropriate reticence and respect, I do not agree with this analysis. The risk referred to in Page No.1 is the risk that the court would fail to process the form in time. 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…

1. Accordingly, and notwithstanding the legitimate considerations of judicial comity, I decline to follow the reasoning in Lewis to the effect that a party must have done all in its power to do get the court fee correct as a prerequisite to the brining of a claim even where such discrepancy has had no impact whatsoever upon the timing of the issue of the claim form.

THE RESULT: DEFENDANT’S APPLICATION TO STRIKE OUT UNSUCCESSFUL

1. In the circumstances of the instant appeal, I conclude that, despite the claimant’s solicitor’s abuse of the process of the court, the claim was brought for limitation purposes at the time the claim form was received by the court and not when it was later issued. The relationship between the claimant and the Court ceased to be transactional at the earlier date.

2. The central feature of this case which leads me to this conclusion is that such delay as there was in the issuing of the form was entirely unconnected with the abuse. Some might argue that a party guilty of abuse should not be entitled to take advantage of the relatively indulgent approach of the Court of Appeal in Barnes to the circumstances in which a claim can be said to have been brought under the provisions of the 1980 Act. As against this, however, the court retains the power in any given case to strike out a claim in the event that the abuse is sufficiently egregious. Where, as here, the abuse falls very short of such a level and has no impact on the timing of the issue of the claim then it may be thought that it would be wrong in principle to permit the provisions of the 1980 Act to be deployed as a tool of retrospective and disproportionately draconian discipline.

3. I repeat, and accept, that I am only able to reach this conclusion by declining to follow both Lewis and Bhatti. I do not need to comment on the correctness of the decision in Page No.2 for the purposes of adjudicating on the merits of this appeal.

4. It follows that this appeal falls to be dismissed. However, I would add by way of postscript that the proliferation of irreconcilable first instance decisions over the last few years is such that the time is now ripe for authoritative guidance from the Court of Appeal.