Abuse of process – Strike out – Limitation – Claimants bringing proceedings against defendant alleging breach of duty – Defendant applying for order striking out claims as abuse of process – Defendant making alternative application for summary judgment on ground of claims being barred by limitation – Whether claimants seeking improperly to avoid payment of correct court fees – Whether various claims barred by limitation – Application to strike out dismissed – Application for summary judgment granted
The claimants acquired various buy-to-let properties from a company. 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 company 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 that aspect of the transaction.
The claimant brought proceedings against the defendant contending that the defendant knew about the gifted deposits and should have warned both the claimants and the mortgagees of the potential consequences. The defendant denied knowing of the gifted deposits and said that it understood that each of the claimants had paid substantial deposits directly to the company at the outset. If, on the other hand, they were gifted deposits, the defendant said 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 contended that there was no connection between the claimants’ allegations of breach of duty and the heads of loss identified by the claimants.
The defendants applied for an order that the claims 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 applied for summary judgment in some of those claims on the ground that they were barred by limitation.
Held: The application to strike out was dismissed. The application for summary judgment was granted.
(1) On the evidence, the claimants, through their solicitors, had deliberately underestimated the value of their claims in order either to avoid or defer the payment of the full and correct fees for the claims which they always intended to make. It seemed clear that the claimants always intended to amend their claims at a later stage by increasing considerably the amount of the claim. Consequently, the claimants deprived the court system of the fees which should have been paid at the outset and also involved the court in additional work in considering and processing the amended form. Although the full fees were eventually paid, the consequence for the court system was a reduction in, and a disruption to, cash flow and the administrative need to process two sets of claim fees and forms rather than one set of fees and one claim, and also for the court to deal with amendments that would not otherwise have been needed.
There was a public interest in claimants not behaving in that way in that they should pay the fees due for their claim at the time of issuing their claim. What the claimants did was to use the court process for a purpose or in a way which was significantly different from the ordinary and proper use of that process, which would have been for the claimants to state at the outset the amount at which they genuinely valued their claim and what they genuinely expected to recover and pay the necessary court fees accordingly: Attorney–General v Barker [2000] 1 FLR and Johnson v Gore Wood & Co [2002] AC 1; [2000] PLSCS 292 applied; Khiaban v Beard [2003] EWCA Civ 358; [2003] 1 WLR 1626 and Summers v Fairclough Homes Ltd [2012] UKSC 26; [2012] 1 WLR 2021 considered.
(2) Where a claimant was guilty of misconduct in relation to proceedings which was so serious that it would affront the court to permit him to continue to prosecute the claim then the claim might be struck out for that reason. However, the court was not easily affronted. Taking account of all the various factors in the present case, and having regard to the overriding objective, it would be disproportionate to strike out the claims. It would not be an affront to the court to permit the claimants to continue to prosecute their claims: Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167, Masood v Zahoor [2009] EWCA Civ 650; [2010] 1 WLR 746, Adams v Ford [2012] EWCA Civ 544; [2012] 1 WLR 3211 and Alpha Rocks Solicitors v Alade [2015] EWCA Civ 685 considered.
(3) In considering the application for summary judgment, the court had to consider whether the claimants had done all in their power to set the wheels of justice in motion according to the procedure laid down for the pursuit of the relief which they were seeking. The court also had to have in mind the underlying rationale, which was whether the claimants had done all that they reasonably could have done to bring the matter before the court for its process to follow, in order for the claimants’ risk to cease. In the present case, it had been within the power of the claimants to conduct themselves in a manner which was not an abuse of process by paying at the outset the fees properly due for the claims which they always intended to make. They had not done so and the appropriate fee had not been paid in time. Accordingly, the application for summary judgment succeeded: Aly v Aly (1 January 1984) (1984) 81 LSG 283, CA and Page v Hewetts [2012] EWCA Civ 805 (CA); [2013] EWHC 2845 (Ch) applied.
Hugh Evans (instructed by Robinson Murphy Solicitors, of Newcastle upon Tyne) appeared for the claimants; Charles Phipps (instructed by DAC Beachcroft LLP) appeared for the defendant.
Eileen O’Grady, barrister
