REUTERS | Marcos Brindicci

Lewis v Ward Hadaway: paying the wrong issue fee spells disaster

The High Court decision in Lewis v Ward Hadaway makes for worrying reading for claimant litigators.

The dramatic increase in court fees last year (resulting in, for example, a £10,000 fee for a £200,000 case) has created yet another bar to access to justice, the potential impact of which is appreciated by practitioners and the courts. In his 2015 report, the Lord Chief Justice stated “…the judiciary, whilst accepting the decisions by Parliament to increase fees, remains deeply concerned about the effect on access to justice”.

The increase in court fees particularly affects personal injury claimants. Badly injured claimants with claims that are worth more than £200,000 usually find themselves out of work, reliant on benefits and without a spare £10,000. With ATE premiums no longer recoverable from defendants, there is no readily available source of funding for issue fees. The circle of despair continues if liability is in issue, or if a defendant refuses to make an interim payment pre-action and proceedings need to be issued in order to make an application for one.

The consequence is that many claims are issued with lower statements of value than the real value of the case, so that a lower fee is payable. The claims are then amended at a later date to reflect the true value and the difference between the lower fee and the correct fee is paid. Often this is done after a successful application for an interim payment.

The decision of Mr John Male QC in Lewis is a warning that this could mean the loss of the claim entirely because of the risk of strike out due to abuse of process, and/or summary judgment if limitation has passed before the correct fee is paid.

Abuse of process

In Lewis, although the judge found that there had been an abuse of process by the claimants, because they amended the claim and paid the balance of the fee prior to service, he did not strike the claims out. This was because there was little or no prejudice to the defendant and the period of abuse was limited to the few months between issue and service.

If the claimants had delayed amending the statement of value and paying the increased issue fee, the defendant may have been able to show prejudice as a result. In that situation, a strike out is more likely to follow a finding of abuse of process.

Personal injury claims bring their own particular difficulties, as the damages that are sought are not a fixed amount. Often the value is far from certain because when a claim is issued it may not be known whether the claimant will recover either fully or partially from their injuries. The true value may only become apparent some time after issue. Consequently, issuing with a lower value is less likely to be an abuse of process where the claimant can demonstrate that the claim value could not be accurately calculated at issue and the statement of value was not wildly or deliberately inaccurate.

In fact, personal injury claimants who issue with a statement of value appropriate to the top level of damages they hope to recover often face the defendant’s argument that they should not have to pay the court fee incurred, because a lower statement of value should have been pleaded.

Limitation

This case is a another reminder to claimant litigators not to leave issuing until the last moment, to avoid getting caught in the limitation trap that some of the claimants in Lewis found themselves in.

If a defendant raises a limitation defence because a claim has been issued with an artificially low issue fee and limitation has subsequently expired, there is at least some comfort to personal injury claimants in asking the court to exercise its discretion under section 33 of the Limitation Act 1980.

Practical steps

Issuing with a correct statement of value and issue fee is a challenge if the claimant is impecunious. Practical steps that claimant solicitors can take include:

  • If the claimant is on benefits or has a low income, seek a reduction of court fees or fee exemption.
  • Request an interim payment from the defendant, which can be used to pay the issue fee.
  • Investigate other means of funding the issue fee.

If a claimant has to issue with a low statement of value because they cannot afford the correct fee, the amendment and payment of the increased fee should be made as soon as possible. The judge in Lewis recommended that claimants be completely transparent with the defendant and the court if they have to issue with a low statement of value,  with the intention of amending later, due to lack of funds. This approach carries its own risks, but if the defendant is made aware of the true value of the claim, this should reduce any allegation of prejudice. If liability is not in issue, an interim payment application could be made promptly to allow the increased court fee to be paid.

Most importantly, issue of court proceedings should never be left to the last minute.

Hardwicke Jasmine Murphy

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