A solicitors’ firm facing 31 negligence claims worth a total of £9m over buy-to-let mortgage advice has failed in a bid to strike them all out on the basis of incorrect court fees.
Though deputy judge John Male QC found that there had been an “abuse of process” in relation to the initial court fees paid by 31 claimants, he ruled that it would be disproportionate to strike out the claims.
However, he did grant Ward Hadaway summary judgment on 11 of the claims against it, on the basis of a limitation defence. In a 12th, the claimants agreed that a limitation defence applied, and the firm may yet raise a similar defence in relation to some or all of the remaining 19 claims.
The judge said that the claims are for damages for alleged negligence by the firm, which acted for the claimants and their mortgagees in relation to the acquisition of various buy-to-let properties in 2006 and 2007 from a company or group of companies known as Morris Property Group.
He said: “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.”
He said that each claim involves substantial sums, running into hundreds of thousands of pounds, with the total in the region of £9m.
But he said that the fees initially paid on the claimants’ behalf on issue of the claim forms reflected very much lower claims, with the intention to amend the sums sought – and thus the fees payable – later.
He continued: “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.”
He found that the claimants, through solicitors Robinson Murphy, deliberately underestimated the value of their claims in order either to avoid, or to defer, the payment of the full and correct fees for the claims which they always intended to make, creating additional work for the court service.
Finding that this constituted an abuse of process, he said: “There is a public interest in claimants not behaving in this way in that they should pay the fees due for their claim at the time of issuing their claim.”
However, he concluded that it would be “disproportionate” to strike out the “arguable” claims on this basis, and that it would not be an affront to the court to allow them to proceed.
In relation to 11 of the claims, however, he said that the claimants “did not do all that was in their power to do to set the wheels of justice in motion according to the process laid down”. He said that they left it too late to correct the error, which was a risk they unilaterally undertook.
As the appropriate fee in those cases was not paid in time, he granted Ward Hadaway summary judgment in those cases.
A number of the claims have been stayed in order to allow certain test cases to proceed to trial.
Lewis and others v Ward Hadaway (a firm) Chancery (Deputy judge John Male QC) 21 December 2015
Hugh Evans (instructed by Robinson Murphy) for the claimants
Charles Phipps (instructed by DAC Beachcroft LLP) for the defendant
