Judge says scheme to under-pay court fees was abuse of process

Topics: Costs, fees and funding,Litigation

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The High Court has told a firm it was an abuse of process to run a scheme to avoid paying the correct fees at the outset of the claim against another law firm. 

Newcastle firm Robinson Murphy issued claim forms for small claims - and therefore invoking smaller fees - only to submit letters of claim four months later claiming much larger amounts. Only then were the full fees paid.

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The 31 claims were against law firm Ward Hadaway over its knowledge of deposits paid in buy-to-let property deals. The total amount claimed was for £9m.

Sitting in the High Court (Chancery Division), Mr John Male QC (pictured) said the claimants’ solicitors ‘deliberately underestimated’ claims at the outset knowing they intended to amend the claim by hundreds of thousands of pounds.

Male said the claimants had deprived the court system of fees which should have been paid at the outset and also involved the court in additional work in considering and processing amended forms. He explained this ‘dance’ constituted an abuse of process.

‘There is a public interest in claimants not behaving in this way in that they should pay the fees due for their claim at the time of issuing their claim,’ said Male in Lewis & Ors v Ward Hadaway.

‘If I was to condone Robinson Murphy’s conduct then their system would very likely be adopted by other claimants and their solicitors to the detriment of the flow of court fees.’

The claimants had argued that a party is permitted to limit his claim to less than he considers its full worth – for example if there was no disbursement funding in place to pay a larger fee.

They said their behaviour was at the ‘acceptable conduct end’ of the spectrum, but Male said the opposite, noting that Robinson Murphy informed neither the defendant’s representative DAC Beachcroft nor the court what they were intending to do.

‘The claimants did not do all that was in their power to set the wheels of justice in motion,’ added Male.

‘It was within the power of the claimants to conduct themselves in a manner which was not an abuse of process.’

The judge opted not to strike out the claims but gave summary judgment for Ward Hadaway because the correct fees were not paid and the actions were statute barred.

Readers' comments (16)

  • Should Claimant's and Defendants not agree to issue all claim forms at the lowest value to save the paying party extortionate court costs? Could this work in practice?

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  • The court fees are not prescribed by the claimant, defendant or both of them, they are set by HMG.

    Thing here is, 31 claimants with an average claim of £290k. Potentially therefore issue fees totalling at least £310,000. Not bad earnings for just entering some details on a computer system and sending out some stamped forms with issue stickers on.

    What a nice earner!

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  • Anonymous8 January 2016 10:40 am, there is no suggestion it is. Moving forward, the Claimant and Defendant can agree that the lesser amount applied save for if a case progresses to quantum determination then both parties consent to amend the Statement of Value before that Quantum determination.

    Prior to this, its in both parties interest not to pay £10,000 to the court to stamp a form. Either the Claimant/Defendant/Insurer will pay for the benefit of the MOJ. Therefore, if all agree with the lesser fee...what is the MOJ/Court going to do? Yes, in this current case the Court lost a few grand, the Claimant manages to get 11 cases struck out but also the Defendant defended cases...seems all sides paid for something.

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  • Some time ago (2001 - 2003) I regularly defended claims brought by a union firm against a client. At the point of issue they would limit the value of the claim so that it would always initially fall in the fast track. In turn, this would preclude me from being able to adduce medical evidence on behalf of the Defendant.

    In almost every case, when the updated Schedule of loss fell due as per the Directions, they would serve a far larger schedule, updated medical evidence and seek to re-allocate the claim to the multi-track and its true value of £50k - £100k would then be revealed. Any submission that the Defendant should then be allowed its own medical evidence then fell on deaf ears to the Court as it could be argued doing so would effect the timetable/trial date etc at that stage and thus it was not in the interests to allow defendant evidence.

    It was a frustrating tactic.

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  • Anom 01:14 sounds like a great tactic!!!!!!

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  • Sounds like an extremely shabby and dishonest tactic.

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  • 12:59 the suggestion is that the parties agree the issue fee to save themselves some cash.

    The point is that the issue fee reflects the true value of the claim. If a claim is worth £200k it costs £10k for the claim to be issued. There is no getting around this at all as it is the amount you HAVE to pay.

    It is of course open to defendant's to waive any right to bring a limitation defence that they may have, but in essence if you have to issue you have to pay the right amount.

    Personally I'd much rather that the fee reflected the task. If it takes an hour to issue a single claim (unlikely in the vast majority of cases) then that justifies £150 at most.

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  • The problem with court fees is that the staff employed in the front of place positions are , almost without exception ,badly trained and badly equipped to execute their executive(as opposed to judicial ) tasks I have despatched several copies of "No one else has complained" by the late Clement Freud to various members of the judiciary but service remains at a dreadfully low efficiency level

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  • I am surprised that no one has set up a National Arbitration Service to deal with claims at fees that undercut HMCTS. I have not got the time, or inclination, to carry out a financial analysis to see how well the scheme would work, but it is not that long ago the County Courts ran at a surplus, so there does appear to be something in it.
    Of course it might all prove to be a financial disaster, but that should not stop a venture capitalist from jumping in.

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  • The new court fees are an abomination and I'm not in the least bit surprised if people do whatever they can legally to try and get round their clients having to pay them.

    The court system should be a service. We shouldn't have to pay court fees at all let alone £10,000 on a medium-sized clinical negligence claim.

    This government seems to think that the case worth £250,000 is relatively small beer so presumably they think that £10,000 as a drop in the ocean.

    But to all normal people it isn't. You can't condone abuse of process but personally I can understand people being fed up with the rate of fees that have to be paid and I'm not at all surprised when they try and tweak the system to get round paying them.

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