In Dixon v Radley House Partnership and others, the Technology & Construction Court (TCC) considered the circumstances in which the calculation and payment of court fees and the drafting of claim forms can render proceedings in civil proceedings invalid, a nullity or statute-barred under the Limitation Act 1980.
The case also considers the consequences of failure to pay the appropriate court fees, and underlines the importance of:
- Careful drafting of the claim form, causes of action and remedies.
- Careful pleading of the value of the claim, and calculation and payment of the court fee.
- The potentially nuclear consequences for litigants and their legal representatives of getting it wrong.
- Not pleading misconceived amendments with no real prospects of success.
Decision of the court in Dixon
The defendants in Dixon had applied for permission to amend their defence so as to plead limitation on the basis that the claimants had failed to proffer the correct issue fee; therefore, time did not stop running for the purposes of the Limitation Act 1980.
The court dismissed the applications as being misconceived and having no real prospect of success. It held that the central tenet of the defendants’ argument was misconceived: payment of the alleged inappropriate fees did not, as the defendants argued, fail to stop time running for limitation on the claims which had been issued by the court where abuse of process was not in issue (as was the case here). The court also dismissed the defendants’ contention that the claimants had not paid the appropriate court fees (they had).
Practical guidance
A number of authorities have given rise to attempts by defendants to defeat claims on grounds of payment of a court fee which is not “appropriate”. It is an area of practical importance to all litigants, claimants and defendants, which is sometimes overlooked or misunderstood.
Following Dixon, there are a number of key practical points to bear in mind.
Cases not involving abuse of process (deliberate underpayment of court fees to avoid or defer payment of fees otherwise due)
If there is no question of an abuse of process, even if there has been an underpayment, the key is the issue of proceedings by the court. The date of issue will be the date on which the proceedings are “brought” for the purposes of the Limitation Act 1980.
When the claim form is issued, the claim has been brought. Absent abuse of process, this is so whether or not a claimant knows or ought to know that the claim it is bringing or will bring in the future is one for which the court could (and under the fees regime should) demand a higher fee.
As to the time before issue of the claim:
- If the claim form is issued on a date later than the date on which it was in fact delivered to the court office, the claimant will have to establish that it was delivered to the court office on the date alleged in the claim form, with a request to issue and the “appropriate” fee.
- Further guidance is provided in Barnes v St Helens MBC and Practice Direction (PD) 7A, paragraph 5.1.
Appropriate fee
The “appropriate” fee is the fee required by the relevant statutory order on court fees, which is to be determined by reference to the fee scale bracket in the relevant statutory order for the claim or claims articulated in the claim form (and, if issued simultaneously, the particulars of claim).
In the absence of abusive behaviour, it is not to be determined by reference to claims which are articulated later, whether or not the later claims are ones which the claimant hoped or even intended to bring later at the time of issuing proceedings.
If proceedings are issued, the court can direct and permit payment of a top-up or further fee to cure an error or underpayment of the court fee.
It is both conventional and proper for the claimant to protect itself by including general words which, it hopes, will be sufficient to be a vehicle for the further claims or quantification if they can subsequently be pleaded. If and when the further claims or quantification can be pleaded, further fees may become properly payable.
Non-payment of appropriate court fee
A claimant will bear the risk of the court refusing or failing to issue a claim form, when delivered to the court office, or at all, if the appropriate fee is not paid. Notably:
- If the court does issue the claim form, notwithstanding failure to pay the appropriate fee, that is simply good fortune for the claimant. It is not validation of the fee as being correct. It does not prevent the court from requiring payment of further fees.
- If the court refuses or fails to issue the claim form by reason of the inappropriate fee, the risk is with the claimants.
Cases involving abuse of process in payment of the court fee
A court fee, which is underpaid in abuse of process, will not be an appropriate fee to establish that proceedings were brought on a date prior to their date of issue (for example, if delivered to the court office but not issued until subsequently).
A range of responses are open to the court where a party engages in abusive behaviour, up to and including striking out a case altogether.
Calculating court fees and drafting claim forms
Particular risks arise in calculating court fees and in drafting claim forms. The potential consequences are substantial, if got wrong. The risks and pitfalls include:
- The scope, nature and extent of the claims articulated.
- Whether the claim form is wide enough to encompass the intended claims and an amended claim subsequently brought. If the amended claim were raised outside of expiry of the primary limitation period, whether it would be a new claim and arise out of the same or substantially the same facts as pleaded in the original claim form. Section 35 of the Limitation Act 1980 and, for example, Co-operative Group v Birse Developments, are authoritative.
- Further or additional court fees may be payable where there are unspecified sums claimed, and claims for monetary and non-monetary relief.
- The case law and legal classification of remedies and causes of actions are not straightforward and must be considered with care to avoid deficiencies in drafting and in issuing proceedings, within time or at all.
Defendants should consider the date and circumstances of issue of claims and the court fees paid.
Amending statements of case
Parties should bear in mind that, where contested applications for permission to amend a statement of case are concerned, judges are likely to allow such applications where they have real prospects of success (both legally and factually).
The questions of whether to agree or resist amendments, make and resist applications, and how best strategically to approach litigation, carry substantive, tactical and costs consequences. Misconceived applications and arguments should not be made.
Conclusion
It is important that the claim form and statements of case are drafted appropriately and the appropriate court fee calculated and paid. If not, the consequences for litigants and their legal representatives can be severe, particularly if the court refuses or fails to issue a claim form, at all, or on the day expected or required by the claimant for limitation purposes.
Tom Owen appeared for the claimants in successfully resisting the applications.
