Factual and Procedural Background
The Defendants applied to amend their Defences to plead limitation based on the Claimants' alleged failure to pay the correct court fees when issuing proceedings. The dispute centers on whether the failure to proffer the correct fee prevents the action from being "brought" for the purposes of the Limitation Act 1980.
The Claimants owned and lived in a house in Hambledon, Hampshire, and engaged two defendants: the First Defendant ("RHP") as architect and the Second Defendant ("CRA") as mechanical and electrical consultants. Their appointments ended in 2009 and 2010 respectively, with causes of action accruing at the latest on those dates.
Regarding RHP, the Claimants sent a Pre-Action Letter of Claim in December 2010 alleging negligent advice and breach of contract, claiming damages of £35,894.78 for misrepresentation and further unquantified losses. Proceedings were prepared and sent to the court with a fee of £395 on 25 October 2013 but were issued by the court on 7 November 2013. The Claim Form indicated damages capped at £35,894.78, but the accompanying Particulars of Claim later alleged damages exceeding £500,000. RHP did not plead limitation initially but later sought to amend their Defence to include a limitation defence based on alleged underpayment of fees.
Regarding CRA, two sets of proceedings were issued. The first ("Design Claim") was issued on 14 March 2014 with a claim value estimated not to exceed £50,000 and a fee of £395 paid. The Particulars of Claim alleged losses exceeding £100,000. The second ("Inspection Claim") was issued on 18 March 2015, initially valued at no more than £50,000 with a fee of £2,500 paid, but later amended to claim losses exceeding £586,000, with the court permitting an increased fee of £10,000. CRA pleaded a limitation defence only for the Inspection Claim, alleging breaches before June 2009 were statute barred.
Both sets of proceedings against RHP and CRA were consolidated and transferred to the Technology and Construction Court ("TCC") in London in late 2015. Defences were served in March 2016 without limitation pleas by RHP and with a limitation plea by CRA only for the Inspection Claim. Subsequently, both Defendants sought to amend their Defences to plead limitation based on the Claimants' alleged failure to pay the appropriate court fees commensurate with the value of their claims.
Legal Issues Presented
- Whether the failure by the Claimants to pay the correct court fee at the time of issuing proceedings prevents the proceedings from being "brought" for the purposes of sections 2 and 5 of the Limitation Act 1980, thereby allowing the Defendants to plead limitation.
- Whether the issuing of proceedings by the Court, despite the acceptance of an allegedly insufficient fee, stops the limitation period from running.
- The legal effect of non-abusive underpayment of court fees on limitation periods and the validity of proceedings.
- The applicability of case law, including Page v Hewetts and Lewis v Ward Hadaway, to the question of when a claim is "brought" for limitation purposes in the context of fee payment.
Arguments of the Parties
Defendants' Arguments
- The Defendants contended that because the Claimants paid insufficient court fees relative to the value of their claims when issuing proceedings, the claims were not properly "brought" for the purposes of the Limitation Act 1980.
- They relied on the principle that a claim is only brought when the claim form is delivered to the court accompanied by the appropriate fee, as established in Page v Hewetts.
- RHP submitted that the Claimants understated the value of their claim in the Claim Form and paid a fee appropriate only for claims up to £50,000, whereas the actual claim value exceeded £500,000, rendering the claim statute barred.
- CRA advanced similar arguments for both the Design and Inspection Claims, asserting that the Claimants failed to pay the correct fees for claims exceeding £50,000 and £200,000 respectively, and thus failed to bring the claims within the limitation period.
- Both Defendants relied on the decision in Lewis v Ward Hadaway to support their position that failure to pay the appropriate fee means the claim was not brought for limitation purposes.
Claimants' Arguments
- The Claimants argued that once the Court issued the proceedings and accepted the fee paid, the claim was effectively "brought" for limitation purposes regardless of whether the fee was subsequently said to be insufficient.
- They contended that the Defendants' submission failed to distinguish between the period before the Court issued proceedings and the period after issue, with the latter being decisive for limitation purposes.
- The Claimants denied any abusive conduct in underpaying the fees, distinguishing their case from Lewis v Ward Hadaway, where abusive conduct was a key factor.
- The Claimants submitted that the fee paid at the time of sending the claim form to the court was appropriate for the claims then articulated and that the Court's acceptance of the fee and issuance of proceedings stopped time running for limitation purposes.
- They also argued that the Defendants failed to demonstrate any substantial prejudice caused by the alleged underpayment of fees.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Page v Hewetts [2012] EWCA Civ 805 |
Established that a claim is "brought" for limitation purposes when the claim form is delivered to the court office accompanied by a request to issue and the appropriate fee. |
The Court applied the principle distinguishing the period before issue (requiring correct fee payment) from the effect of the Court issuing proceedings, concluding that payment of an insufficient fee before issue prevents time stopping but issuing by the Court stops time running. |
| Lewis v Ward Hadaway [2016] 4 WLR 6 |
Addressed abusive conduct in underpayment of fees and its effect on limitation, holding that abusive underpayment prevents claims from being "brought" before issue. |
The Court found Lewis did not support Defendants' applications in the absence of abusive conduct and did not address the effect of issuing proceedings on limitation. |
| Bhatti v Ashgar [2016] EWHC 1049 (QB) |
Considered underpayment of fees and abuse of process in the context of limitation and summary judgment. |
The Court rejected the Defendants' reliance on Bhatti to support the proposition that underpayment of fees after issue invalidates limitation stopping, emphasizing the absence of abusive conduct in the present case. |
| Steamship Mutual Underwriting Association v Trollope & Colls (City) Ltd (1986) 33 BLR 7 |
Principle that claims added by amendment after the limitation period may be statute barred unless covered by the original claim. |
Referenced to explain the importance of claims being covered by the original claim form for limitation purposes. |
| Attorney-General v Barker [2000] 1 FLR |
Definition of abuse of process as use of court process in a significantly improper way. |
Used to distinguish cases involving abusive conduct from the present non-abusive underpayment of fees. |
| Barnes v St Helens MBC [2006] EWCA Civ 1372 |
Discussed limitation principles related to claims and amendments. |
Referenced in analysis of limitation and claim issue principles. |
| Glenluce Fishing Company Ltd v Watermota Ltd [2016] EWHC 1807 (TCC) |
Expressed concerns about extending principles relating to fee payment and limitation. |
Supported the Court's cautious approach to expanding the principle that underpayment invalidates limitation stopping. |
Court's Reasoning and Analysis
The Court began by distinguishing two relevant periods: (i) the period before the Court issues proceedings, when failure to pay the correct fee prevents the claim from being "brought" for limitation purposes, and (ii) the period after the Court issues proceedings, when the claim is considered "brought" even if the fee paid was less than that which should have been paid based on the claim value.
The Court emphasized that the statutory and procedural framework does not provide that proceedings issued by the Court on payment of an insufficient fee are invalid or ineffective to stop time running. The payment of fees is primarily an administrative matter for the Court, and the Court's acceptance of a fee and issuance of proceedings generally stops time running under the Limitation Act 1980.
Authorities such as Page v Hewetts establish that a claim is only "brought" before issue if the claim form is delivered with the appropriate fee. However, these cases do not address or support the proposition that underpayment of fees after issue invalidates the limitation stopping effect of issuing proceedings.
The Court found that the Defendants' reliance on Lewis v Ward Hadaway and Bhatti v Ashgar was misplaced because those cases involved abusive conduct or claims issued after the limitation period had expired. The present case involves no allegation of abusive conduct by the Claimants.
The Court rejected the Defendants' contention that the Claimants' failure to pay the correct fee prevented the claims from being "brought" at the time of issue. It held that once proceedings are issued by the Court, even if the fee paid is insufficient, time stops running for limitation purposes.
The Court acknowledged that the Claimants paid the correct fee at the time they submitted the Claim Form for RHP and that the Claim Form was received by the Court on 25 October 2013, which is the relevant date for limitation purposes. The subsequent increase in claimed damages did not affect the limitation stopping effect of the issued proceedings.
Regarding CRA, the Court similarly rejected the limitation defence based on underpayment of fees, holding that the failure to pay the correct fee did not prevent the claims from being "brought" when the Court issued the proceedings.
The Court noted the potential procedural remedies available to the Court if an insufficient fee is paid, including refusal to issue proceedings, directions to pay the shortfall, stays, or ultimately striking out claims for non-compliance, but held that these do not amount to the claim not being "brought" for limitation purposes.
In summary, the Court concluded that the Defendants' proposed amendments to plead limitation based on underpayment of court fees had no real prospects of success.
Holding and Implications
The Court refused permission to amend the Defences to plead limitation based on the Claimants' alleged failure to pay the correct court fees.
The Court held that, absent abusive conduct, the issuing of proceedings by the Court stops time running for limitation purposes even if the fee paid is subsequently shown to be insufficient. The failure to pay the correct fee at the time of issue does not prevent the claim from being "brought" within the meaning of the Limitation Act 1980.
This decision means that the Defendants cannot rely on underpayment of court fees as a basis to plead limitation in this case. The ruling does not establish new precedent beyond reaffirming the distinction between the period before issue and after issue of proceedings in relation to fee payment and limitation. The direct effect is that the Claimants' claims are not statute barred on the basis of alleged underpayment of fees.