Lewis & Ors v Ward Hadaway (a firm)

Deliberately understating a claim’s value on issue, paying a lower court fee to stop limitation running, and intending from the outset to amend to the true value is an abuse of process. Later amendment and payment of the balance do not cure the abuse. Whether strike-out follows requires a broad, merits-based and proportionate assessment of all the circumstances. An arguable claim should not be struck out where the abuse is limited, corrected before service, does not affect the merits, and causes greater prejudice to the claimant than to the defendant. For limitation purposes, a technically correct lower fee paid as part of the abusive device is not the appropriate fee.

The defendant applied to strike out 31 negligence claims under Civil Procedure Rules 1998, rule 3.4(2)(b), alleging that the claimants deliberately stated artificially low values and paid reduced fees to issue proceedings before limitation expired. The claim forms were later amended before service to claim substantially larger sums and the balance of the fees was paid.

Alternatively, the defendant sought summary judgment in claims said to be statute-barred. The central issues were whether the fee-payment scheme was an abuse of process, whether strike-out was proportionate, and whether the claims had been brought in time for the purposes of the Limitation Act 1980.

Abuse of process

1. The application to strike out the 31 claims was refused. The claimants had deliberately understated the value of claims which they always intended to pursue at substantially higher amounts. The object was to defer, and potentially avoid, payment of the full court fees while securing the limitation benefit of issuing proceedings. That conduct used the court process in a way significantly different from its ordinary and proper use and was an abuse of process.
2. The fee categories under the Civil Proceedings Fees Order 2008 depended on the value of the claim. The categories in rule 16.3 of the Civil Procedure Rules 1998 were allocation tools and did not justify the artificial reduction of the fee. The statement of truth applied to the claim form, including the stated value and amount claimed.
3. The decision in Khiaban v Beard [2003] EWCA Civ 358; [2003] 1 WLR 1626 was distinguishable. There, the claim was genuinely limited under an agreement between insurers and there was no intention to amend it to recover a larger sum.
4. Strike-out for abuse is a draconian remedy and a last resort. Applying a broad, merits-based assessment under the overriding objective, the court considered the arguability and value of the claims, the limited duration of the abuse, correction before service, absence of fraud or dishonesty, lack of impact on the merits, the limited prejudice to the defendant, the substantial limitation prejudice to the claimants, and the availability of other sanctions. It would be disproportionate and would not be an affront to the court to permit the claims to continue.

Limitation

1. Whether an action is brought in time is determined by construing the Limitation Act 1980. The CPR and Practice Direction 7A may inform that construction but cannot alter it. The claimant must deliver in time the claim form, a request for issue and the appropriate fee.
2. The claimants paid the fee technically corresponding to their artificially limited claims, but that payment formed part of an abuse of process. It was therefore not the appropriate fee for the claims genuinely intended, and the limitation risk had not ceased. Summary judgment was consequently granted in eleven claims. The Burns claim was agreed to be statute-barred.

Counsel were invited to agree an order giving effect to the conclusions.