Richard Lewis and Others v Ward Hadaway (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mr John Male |
| Judgment Date | 21 December 2015 |
| Neutral Citation | [2015] EWHC 3503 (Ch) |
| Docket Number | Case No: HC-2012-000149 |
| Court | Chancery Division |
[2015] EWHC 3503 (Ch)
Mr John Male QC
(sitting as a Deputy Judge)
Case No: HC-2012-000149
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Hugh Evans (instructed by Robinson Murphy) for the Claimants Mr Charles Phipps (instructed by DAC Beachcroft LLP) for the Defendant
Hearing date: 23rd October 2015
Mr John Male QC (sitting as a Deputy Judge): Introduction
This is an application by the Defendant, Ward Hadaway, that the claims by the Claimants, Mr Richard Lewis and 30 others, be struck out under CPR 3.4(2)(b) on the ground of the Claimants' alleged abuse of process in seeking improperly to avoid payment of the correct Court fees. Alternatively, the Defendant seeks summary judgment in some of those claims on the ground that they are barred by limitation.
The Defendant was represented by Mr Charles Phipps. The Claimants were represented by Mr Hugh Evans.
The claims
The claims are for damages for alleged negligence by the Defendant firm of Solicitors. The Claimants acquired various buy-to-let properties from a company or group of companies known as Morris Property Group. They obtained loan offers from mortgage lending companies. The Defendant was retained in each transaction to act for both the relevant Claimant and their mortgagee. A feature of each transaction was that the Morris Property Group apparently provided a "gifted deposit" to the relevant Claimant. The result was that the purchase price of the property was effectively reduced. The mortgage lenders were not informed of this aspect of the transaction.
The Claimants contend that the Defendant knew of the "gifted deposits" and should have warned both the Claimants and their mortgagees of the potential consequences. The Defendant denies knowing of the "gifted deposits" and says that it understood that each of the Claimants had paid substantial deposits directly to the Morris Property Group at the outset. If, on the other hand, there were "gifted deposits", the Defendant says that was something of which the Claimants themselves were obviously aware, and the Claimants themselves were responsible for any consequent deception of their mortgage lenders. The Defendant also contends that there is no connection between the Claimants' allegations of breach of duty and the heads of loss identified by the Claimants.
The relevant transactions took place in 2006 and 2007. In July 2008 the Claimants' solicitors, Robinson Murphy, sent pre-action protocol letters of claim to the Defendant. In each case, the letter of claim claimed substantial sums, running into hundreds of thousands of pounds. During the course of the oral argument, I was told that the total amount claimed in all the actions with which I am concerned is in the region of £9 million.
On 31 July 2012 Robinson Murphy wrote to the Defendant's solicitors, DAC Beachcroft ("DACB"), suggesting a limitation standstill agreement. That suggestion was rejected by DACB.
The claims were then issued by the Court at the request of Robinson Murphy on various dates between 7 August 2012 and 4 April 2013. Robinson Murphy delivered the claim forms to Newcastle-upon-Tyne County Court a few days before the date of actual issue. All the claims were issued very near to the end of the relevant limitation period, if not actually beyond it. In eleven cases the claim form was delivered to the Court before the limitation period had expired, but was not issued by the Court until after the expiry of the limitation period. In the remaining cases, the claim forms were issued by the Court before the limitation period had expired.
As mentioned earlier, in each case the letters of claim claimed substantial sums, running into hundreds of thousands of pounds. However, despite the substantial sums claimed in those letters of claim, the fees paid on the Claimants' behalf on issue of the claim forms reflected very much lower claims. The fees paid were between £35 (appropriate for a claim limited to £300 or less), through to £240 (appropriate for a claim limited to £15,000 or less), and, in just one instance, £1,475 (appropriate for a claim limited to £300,000 or less). However, it would appear that the Claimants never intended to limit their claims to these lower sums, but always intended to amend their claims to the hundreds of thousands of pounds mentioned in the letters of claim. In every case the claim forms were actually subsequently amended just before service to claim the larger sums and the balance of the appropriate larger fees was paid. This course of action was taken deliberately by the Claimants so as to reduce the fees paid initially to the Court when the claims were issued to stop time running. In the course of argument the Claimants' conduct was variously described as a "scheme" or a "dance" so as to avoid paying the correct fees at the outset of the claims. It is this conduct which gives rise to the application to strike out.
Having described in general terms the claims and what the Claimants did on issue and service of the claim forms, it is convenient next to set out the relevant provisions of the CPR and the Fees Order regarding Court fees and statements of value. I will then describe in a little more detail what the Claimants did on issue and service of the claim forms and relate what they did to those provisions.
Court fees and statements of value
At the material time, the Court fees payable by the Claimants were as set out in the Civil Proceedings Fees Order 2008 ("the CPFO 2008").
Paragraph 2 of the CPFO 2008 provided that:
"The fees set out in column 2 of Schedule 1 are payable in the Supreme Court and in county courts in respect of the items described in column 1 in accordance with and subject to the directions specified in that column."
Column 1 of Schedule 1 of the CPFO 2008 began:
"1. Starting proceedings (High Court and county court)
1.1 On starting proceedings…to recover a sum of money where the sum claimed…"
Column 1 then set out 14 categories of size of claim, ranging from "does not exceed £300" to "exceeds £300,000 or is not limited", with corresponding fees in column 2 which ranged from £35 to £1,670.
CPR 16.3 applies where a claimant is making a claim for money. At the material time, CPR 16.3(2) provided that:
"The claimant must, in the claim form, state-
(a) the amount of money claimed;
(b) that the claimant expects to recover-
(i) not more than £5,000;
(ii) more than £5,000 but not more than £25,000; or
(iii) more than £25,000; or
(c) that the claimant cannot say how much is likely to be recovered."
CPR 16.3(7) provides that:
"The statement of value in the claim form does not limit the power of the court to give judgment for the amount which it finds the claimant is entitled to."
The amounts identified in CPR 16.3 are an allocation tool. They relate to the boundaries between the small claims track, the fast track and the multi-track and not to the categories in the CPFO 2008.
At the material time, Civil Procedure Form N1A ("Notes for claimant on completing a claim form") provided the following guidance:
"Value
If you are claiming a fixed amount of money (a 'specified amount') write the amount in the box at the bottom right-hand corner of the claim form against 'amount claimed'.
If you are not claiming a fixed amount of money (an 'unspecified amount') under 'Value' write "I expect to recover" followed by whichever of the following applies to your claim:
• 'not more than £5,000' or
• 'more than £5,000 but not more than £25,000' or 'more than £25,000'
If you are not able to put a value on your claim, write 'I cannot say how much I expect to recover'."
So, in the case of a claim for more than three hundred thousand pounds, as was foreshadowed in many of the letters of claim, the appropriate Court fee under the CPFO 2008 was £1,670. In the case of such a claim, the appropriate statement of value was that under CPR 16.3(2)(b)(iii), i.e. that the claimant expected to recover more than £25,000.
What the Claimants did in the claim forms
It is convenient next to describe what the Claimants, acting by Robinson Murphy, actually did in the claim forms and to relate what they did to the above provisions. I do so by reference to the case of Mr Lewis, although it is common ground that the same thing was done in each action. In the case of Mr Lewis, "Others" are joined in the action.
Although the letters before claim on behalf of Mr Lewis and "Others" claimed many hundreds of thousands of pounds in each case, under the heading "Value" in the claim form, it was stated:
"The Claimants expect to recover damages limited to £15,000.00".
Although this was prior to any quantification of damages and although no fixed amount of money was in fact claimed by Mr Lewis, in the claim form it was stated in the box "Amount claimed":
"Limited to £15,000".
In the case of Mr Lewis, the Court fee paid on issue was £245.
When the claim forms were issued, the Claimants did not intend so to limit their claims. So, in the case of Mr Lewis, he did not intend to limit his claim to £15,000. Nor did he expect to receive damages limited to £15,000. As Mr Phipps, who appeared on behalf of the Defendant, pointed out, the statement of value with its limit to damages of £15,000 and the limitation of the amount claimed to £15,000 were all the more remarkable because Mr Lewis was not the only Claimant in his action. There were also "Others" who are identified in the Schedule annexed to...
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