Limitation and the importance of paying the correct court fee
On 21 December 2015, the High Court gave judgment in Lewis v Ward Hadaway  EWHC 3503 (Ch), a case that will have potential consequences for claimants issuing court proceedings to protect their position when the limitation period is about to expire.
In this case, the claimants issued a Claim Form ‘protectively’, close to the expiry of the limitation period in order to stop the limitation period from expiring. On issuing the Claim Form, the claimants stated that they expected to recover no more than £15,000 and paid a court fee for a claim of that value, which was considerably below the value of the claim that had been presented to the defendant in pre-action correspondence. Prior to service of the Claim Form, the claimant amended the Claim Form and paid the balance of the fee. However, the defendant applied to strike out the claim on the grounds of abuse of process (in seeking to avoid initial payment of the fee) and, alternatively, summary judgment on the grounds that limitation had expired.
The court found that the claimants had deliberately understated the value of their claims in order to avoid or defer the payment of the full and correct fee for their claims and that this (and signing the statement of truth) was an abuse of process; it was clear from the pre-action correspondence that the claimants would have needed to amend their claims and if they had for any reason decided not to serve the Claim Forms within the four-month period to do so, the court would not have received the proper fee. No loss was caused to the defendant but extra administrative work was caused to the court staff in processing the amendments.
The court denied the defendant’s application to strike out the claims on the basis that the claims were arguable and to do so would mean considerable prejudice to the claimants, and there was no suggestion of fraud or dishonesty and the position had been rectified before service. However, the defendant’s application for summary judgment on limitation grounds succeeded on the basis that, because the fee initially paid was not the ‘appropriate’ fee (because the underpayment amounted to an abuse of process), the claims had not been ‘brought’ for the purposes of the Limitation Act 1980 (as per Page v Hewetts  EWCA Civ 805) and, as such, the claims were bound to fail.
Following the decision in this case, it is vitally important for claimants to give proper consideration to the value of their claim at the point that the Claim Form is issued and that the correct, appropriate fee is paid at that point. In cases where limitation is an issue, not doing so could result in time expiring even after the Claim Form is issued and losing the ability to bring the claim, irrespective of whether there is fraud or dishonesty, that it is remedied before service and/or that it caused no loss to the defendant. Even where limitation is not in issue, a deliberate understatement of the value of the claim can amount to an abuse of process, and it would be at the court’s discretion whether to strike out the claim.
If you have any queries in relation to the issues raised in this article please contact our Commercial Litigation team.
Posted on Feb 10th, 2016 by Lyons Davidson