PAYING THE INCORRECT COURT FEE: ANOTHER IMPORTANT DEVELOPMENT

There have been several cases this year relating to  the consequences that flow when a claimant pays the incorrect court fee. Several issues remain unresolved In a judgment this morning His Honour Judge Godsmark QC considered the position where the wrong fee was paid given the value of the claim that was put on the claim form. The judgment contains a detailed review of the case law relating to court fees, issue and limitation.

“For my part, I would start from the position that a claim form issued by a court and sealed is effective for limitation purposes regardless of the fee paid. Issue of the claim form marks the commencement of proceedings. Such an approach provides certainty as to the date of bringing of proceedings (subject to paragraph 5 of Practice Direction 7A). It also avoids what I regard to be the undesirable potential for satellite litigation surrounding what the appropriate fee would have been in particular circumstances around the time of issue.”

KEY POINTS

  • A failure to pay the correct fee upon issue does not render proceedings ineffective.
  • The action is still issued for the purposes of limitation.

THE CASE

In Wells -v- Wood & Nottinghamshire Council (Lincoln County Court 09/12/2016)*the claimant was bringing an action for personal injury.  Proceedings were issued within the limitation period.

( A copy of the judgment is available here  b78ym721-wells-v-wood-notts-cc-judgment-final)

The claim was limited to £15,000. However a fee of £455 was paid rather than the £675 that was due.

The claimant subsequently applied to amend the value certificate on the claim form to a sum exceeding £25,000. That was allowed.  However the permission to amend was from the 24th April 2016 (to avoid any suggestion of relating back to date of issue).  This was so that the defendants could argue the point of limitation.

(I have to declare an in interest in that I appeared on behalf of the claimant).

THE ISSUE

The defendants argued that the claim was statute barred. It was argued that if the correct fee was not paid then there is no bringing of the claim sufficient to stop the limitation clock from running. It made no difference whether the mistake was accidental or deliberate.  A failure to pay the correct fee was akin to being an abuse of process.

THE JUDGE’S RESPONSE ON THE DEFENDANT’S ARGUMENTS ON ISSUE

18. That I regard as a far-reaching submission. The court has issued a claim form, properly sealed and dated. However the suggestion is that the claim form is ineffective, at least for limitation purposes, because of payment of the wrong fee. A number of issues occur to me, there may well be others. I take them in no particular order.
19. In argument counsel could not satisfy me as to the status of proceedings issued by the court against an incorrect fee. Are such proceedings void from the outset? Or are they only invalid if challenged? In this particular case an application to amend the value of the claim (with topping up of the court fee) was allowed. There was no suggestion that the claim was invalid for all purposes, only for the purposes of limitation. Thus the suggestion seems to be that proceedings issued with the wrong court fee are valid unless limitation is pleaded – in effect, voidable at the Defendant’s option. But what then of a case where there are multiple Defendants some of whom plead limitation and others do not? Alternatively of course it might be said that proceedings issued with the wrong court fee are defective for all purposes.
20. What is the position of the Claimant who deliberately decides to limit his or her claim? This can and does happen with a party who has a claim which just creeps into a higher costs band. That Claimant may decide that it is not worth paying a higher fee for limited potential gain. The Court of Appeal has already recognised that such a tactical decision is perfectly permissible (see Dyson LJ in Khiaban v Beard [2003] EWCA Civ 358 @ para. 13). But what if something then happens (e.g the issue of a counterclaim) which alters the economics? Is the Claimant barred from seeking to amend the claim value and pay the higher fee or vulnerable to an application that the original claim is invalid because the wrong fee was paid for a claim the true value of which was known?
21.Are claims to become subject to scrutiny, perhaps with litigation well advanced, if a Defendant detects that a fee error was made at point of issue? For my part I lean towards the view that the payment of the appropriate court fee is a matter between the paying party and HMCTS.
22.  What is the position in a Help with Fees case? A Claimant submits financial details along with an application for Help with Fees and as a result obtains full or partial fee remission. Is the Defendant to be entitled to obtain details of the financial details submitted in support of the application and challenge the fees remission with a view to showing that a Claimant has paid the wrong fee thus rendering the claim defective in some respect?
23. What of the party who goes to seek legal advice from a solicitor as to making a claim right on the cusp of limitation? The solicitor may need a lot more information before being able to quantify the claim but be aware that the primary limitation period expires the next day. Proceedings must be issued but are those proceedings invalid because the solicitor was not in a position to assess the correct fee?
24. The suggestion that payment of the wrong fee renders a claim in some way defective does not sit comfortably with the provisions in the Civil Procedure Rules. CPR 7 deals with the commencement of proceedings. Of note is CPR 7.2 headed “How to Start Proceedings”.
(1) Proceedings are started when the court issues a claim form at the request   of the claimant.
(2)        A claim form is issued on the date entered on the form by the court.
25. CPR 7.2 is subject to a gloss applied by Practice Direction 7A, paragraph 5 which is headed “Start of Proceedings”.
  1. 1       Proceedings are started when the court issues a claim form at the request
    of the claimant (see
    rule 7.2) but where the claim form as issued was
    received in the court office on a date earlier than the date on which it was
    issued by the court, the claim is “brought” for the purposes of the
    Limitation Act 1980 and any other relevant statute on that earlier date.
5.2       The date on which the claim form was received by the court will be
recorded by a date stamp either on the claim form held on the court file or
on the letter that accompanied the claim form when it was received by the
court.
5.3       An enquiry as to the date on which the claim form was received by the
court should be directed to a court officer.
5.4       Parties proposing to start a claim which is approaching the expiry of the
limitation period should recognise the potential importance of
establishing the date the claim form
was received by the court and should
themselves make arrangements to record the date.

(Paragraph 5.5 which follows is not relevant) 

26. Neither CPR 7.2 nor paragraph 5 of Practice Direction 7A make any reference to payment of fees.
27. There is also express provision within the Civil Procedure Rules dealing with sanctions for non-payment of fees. CPR 3.7 makes provision for the consequences of non-payment by a Claimant of certain (not all) fees. The rule provides for a notice to be sent to a Claimant requiring payment of the proper fee in default of which the claim is struck out. CPR 3.7 does not apply to failure to pay the correct fee on issue.
28. However of particular note are the terms of CPR 3.7A. So far as relevant this provides as follows:-
(1) This rule applies where
  1. (a)        a defendant files a counterclaim without –
    (i)         payment of the fee specified by the relevant Fees Order; or
    (ii)        making an application for full or part remission of the fee: or
    ………………….
    (2)        The court will serve a notice on the defendant requiring payment of the fee specified in the relevant Fees Order if, at the time the fee is due, the defendant has not paid it or made an application for full or part remission.

    (3)        The notice will specify the date by which the defendant must pay the fee.

    (4)        If the defendant does not –
    (a) pay the fee; or
    (b)        make an application for full or part remission of the fee,
    by the date specified in the notice, the counterclaim will automatically be
    struck out without further order of the court. 

    29. Thus CPR 3.7A provides in detail what happens if a counterclaim is filed without the appropriate fee. The filing remains effective but the counterclaim is vulnerable to being struck out if the notice requiring payment is not complied with. If the Defendant in the current case is correct, a claim issued with the wrong fee is ineffective to stop the limitation clock from running, but a claim introduced by counterclaim without the correct fee is effective to stop the limitation clock from running but is vulnerable to being struck out in default of compliance with a payment notice. That is a peculiar distinction.
  2. For my part, I would start from the position that a claim form issued by a court and sealed is effective for limitation purposes regardless of the fee paid. Issue of the claim form marks the commencement of proceedings. Such an approach provides certainty as to the date of bringing of proceedings (subject to paragraph 5 of Practice Direction 7A). It also avoids what I regard to be the undesirable potential for satellite litigation surrounding what the appropriate fee would have been in particular circumstances around the time of issue.

THE JUDGE’S CONSIDERATION OF THE AUTHORITIES

The judge carried out a detailed review of the case law relating to limitation, issue and the failure to pay the correct court fee.
54. On my analysis of the authorities above a number of matters emerge:-
a) In none of the cases has it been concluded that a claim form issued and sealed by the court (regardless of fee paid) is not effective to stop the limitation clock.
b)         The authorities do point to what is necessary to bring a claim before the claim form is issued. What is required is that the Claimant do all in his  power to set the wheels of justice in motion (including payment of the appropriate fee).
c)         A claim may be struck out as an abuse of process if there is a deliberate             decision to avoid paying the appropriate issue fee. However the finding of such an abuse of process and the courts discretionary reaction to it are  quite separate from the limitation status of a claim.
55. Accordingly I do not consider that I am constrained by any authority to hold that a claim form issued and sealed by the court within the limitation period is ineffective to stop the limitation clock, whether or not the correct fee for issue has been paid.
56. In my judgment the Defendants’ submission before me are effectively based on the proposition that “bringing ” a claim is quite separate to “starting” a claim. Whilst they are not the same, that does mean that they are mutually exclusive. To me the starting of a claim will incorporate the bringing of a claim. I do not accept that a claim form can be issued and thus the claim started without that claim also being brought (within the meaning of the Limitation Act 1980).
57. However that does not mean that a claim cannot be brought before the claim form is issued. As the authorities cited above indicate (and as is specifically provided for in CPR PDA para 5) a claim may indeed be brought before the claim form is issued. What needs to be done is all within the power of the Claimant to set the wheels of justice in motion. That begs the question of when the wheels of justice start to move. In my judgment that is certainly no later than the issue of the Claim Form. With that event the Claimant has in fact set the wheels of justice in motion and the claim is both “brought” and “started”.
57. Thus, whilst there may be questions yet to be answered on how payment of the incorrect court fee affects the bringing of a claim for limitation purposes where the Claim Form is issued outside the limitation period, that is not what I am dealing with here. In the application before me the Claim Form was issued within the limitation period and in my judgment with that step the claim was both brought and started.

THE EFFECT OF PAYMENT OF THE WRONG FEE

59. That leaves the question of payment of the wrong fee. It is not said that the current claim is an abuse of process for that reason. Even if it were that would fall to be considered quite separately to questions of the limitation effect of issue of the claim.
60. In my judgment questions of payment of court fees are primarily between the paying party and HMCTS. Such matters may become of interest to other parties where it is alleged that there is abuse of process or in the particular circumstances of investigating whether a party has done all in its power to set the wheels of justice in motion so as to have brought the claim before issue. It may be that on having a shortfall in payment brought to his or her attention a Judge will stay a claim pending payment of the correct sum but that will be a judicial decision. Otherwise non-payment of the correct fee may well attract the operation of CPR 3.7 and 3.7A with notices being sent giving an opportunity to pay before being struck out.
61. In the current case, the payment of the wrong fee at issue had no effect on the validity of the Claim Form or its stopping of the limitation clock. It was a matter which required correcting and that has now happened.

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