Incorrect Court Fees: Proportionality Bounces Back? By Tom Rainsbury

Articles | Wed 7th Sep, 2016

Incorrect Court Fees: Proportionality Bounces Back?

Introduction

I recently commented on the decision of Warby J. in Bhatti v Asghar [2016] EWHC 1049, which concerned the consequences of failing to pay the correct court fee when issuing a claim.

The recent decision of Mr Roger ter Haar QC (sitting as a Deputy High Court Judge) in Glenluce Fishing Company Ltd v Watermota Ltd [2016] EWHC 1807 is another must-read case in this ‘evolving’ area.

Background

The Claimant issued proceedings against the Defendant for breach of contract.

The claim was issued protectively, at a stage when investigations were still ongoing. The Claim Form identified that the value of the claim was approximately £69,694.06, although it acknowledged that this was ‘likely to increase once the claimant has finally quantified their loss of use claim’. A court fee of £3,484.70 was paid.

Further investigations were carried out and proceedings were served. The Particulars of Claim sought damages of £162,132.06, and additional unquantified damages for loss of profit. The solicitors’ covering letter acknowledged that the value of the claim had increased, and sought the Defendant’s consent to an application to amend the Claim Form. The Defendant refused to consent.

The Claimant accordingly applied under CPR 17.4 to amend the Claim Form in order to increase the value in line with the Particulars of Claim. It was argued that the new heads of claim arose out of the same or substantially the same facts as formulated in the Claim Form, and that there was no prejudice to the Defendant in allowing the amendment. Reliance was placed on P & O Nedlloyd BV v Arab Metals Co, Stena Trading AB, Ireland Alloys Ltd [2006] EWCA Civ 1300.

The Defendant resisted the application on the ground that, with due diligence, the Claimant could and should have identified that the value on the Claim Form was understated, a higher court fee should have been paid, and limitation had since expired. It was argued that CPR 17.4 must be read in light of the evolving case law on incorrect court fees, including Page v Hewetts [2013] EWHC 2845, Lewis v Ward Hadaway [2015] EWHC 3503 and Bhatti v Ashgar [2016] EWHC 1049.

Decision

The application was allowed.

The Claimant had not done all that it reasonably could to bring the matter before the Court in the appropriate way, including identifying the true value of the claim on the Claim Form. However, such a test was a significant departure from the approach set out in P & O Nedlloyd BV. It would eliminate consideration of whether any prejudice would be suffered by the Defendant by allowing the amendment. It would mean that the recent decisions in Page, Lewis and Bhatti had effected a significant change to CPR 17.4 without any change having been considered by the relevant Rules Committee. Those decisions should be limited in their application to the circumstances expressly considered in those cases, namely applications to strike out on the basis that claims were not ‘brought’ within limitation. They did not justify a root and branch revision of the approach to be adopted for applications to amend.

The judge therefore approached the application along ‘traditional’ lines. To the extent that the amendment introduced a new ‘claim’, it did not introduce a new cause of action, but only significantly altered heads of claim. In the absence of any prejudice to the Defendant if the amendment was allowed, and the significant potential prejudice to the Claimant if it was disallowed, the amendment should be allowed.

Comment

The following observations can be made in light of this decision:

  1. There is a distinction between applications to amend and applications to strike out. Applications to amend should be determined in accordance with CPR 17.4 and the well-established authorities on this provision (i.e. considering issues such as the nature of the amendment, and the degree ofprejudice to the parties etc). Applications to strike out will be determined differently, and will require consideration of the decisions in Page, Lewis and Bhatti.
  2. Claimants should be transparent. If a Claimant is unsure about the value of a claim, or subsequently realises that the original valuation was incorrect, it may be sensible to be clear and open about this. Not only should this weigh against any abuse of process argument – Glenluce Fishing confirms that this might be a relevant factor when determining an application to amend – but it is likely to undermine any argument that the Defendant will be prejudiced by amendment.
  3. If a claim has been undervalued, it is important to act quickly. The Defendant should be asked to consent to an application to amend the Claim Form as soon as possible (with reference to the Glenluce Fishing case). This should this mitigate any prejudice argument. It may also pre-empt an application to strike out the claim on limitation grounds, which will be determined differently.
  4. This is not the last word. Whilst Glenluce Fishing provides some further (and welcome) guidance in this area, it leaves a number of questions unanswered. For example, if a Claimant amends the claim and pays the correct court fee, does this prevent a Defendant from arguing that the claim is nevertheless statute-barred because it was not ‘brought’ within limitation? Or are the prospects of such an argument substantially reduced? How will courts apply s.32 and s.33 of the Limitation Act 1980 in such cases? What must happen for a court to ‘assume the burden’ of calculating the correct fee? As the judge acknowledged in Glenluce Fishing, the first-instance decisions to date have created a ‘hard edged principle’. However, it may be that, as this principle is discussed and developed in future cases, those hard edges will be softened.

Article written by Tom Rainsbury

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