This week the team has been reflecting on the difference between complying with the letter of the law and with the spirit of it. The former is of course of paramount importance; but to what extent is the latter also significant? We prefer to do both, of course, but where acting in the spirit of the law makes the difference between winning and losing, is it permissible (or desirable) to breach it? Food for thought. And the courts have been giving Kerry Nicholson food for thought this week, in the form of two decisions on procedure, both of which are of importance, and will be of interest, to all litigators.
High Court confirms that judges have a wide discretion to take a pragmatic approach in case management decisions
In refusing the appeal against the decision to strike out the claim in Brem v Clark and Rudd Solicitors [2023] EWHC 1358 (KB), the High Court confirmed that courts have broad case management powers, and in deciding whether or not to strike out a case, judges are entitled to take into account the way in which litigation has been conducted, the state of the pleaded case, the value of the claim and the costs already incurred.
The Claim
The claim related to the purchase of a property. The Claimant had been a tenant of the First Defendant at the property, and then proceeded to purchase it from him. The Second Defendant was the Claimant's solicitor for the purchase of the property. While the Claimant had been a tenant, he had enjoyed the use of the whole back garden, and stated that he understood that the entirety of the garden was to be conveyed to him when he purchased the property. However, it was the Defendants' case that the garden to be purchased and conveyed was truncated, and that there was a fence demarcating the area to be purchased. The Claimant's case was that he had paid £18,000 too much for the property.
Proceedings were issued, with the Particulars of Claim drawn in a way that the court described as "somewhat eccentrically", and the Second Defendant replied to the Claimant with a draft application for strike out or summary judgment in the alternative, inviting the Claimant to agree to a consent order to amend the Particulars of Claim, otherwise the application would be made. The Claimant's solicitors refused, the application was filed, and on 28th April 2021 the application hearing was listed for 18th June 2021.
Four days before the hearing, the Claimant filed an application to amend the Particulars of Claim, along with draft Amended Particulars of Claim. The judge considered that the application to amend could not be considered properly at the hearing, so he adjourned the matter and ordered the Claimant to pay the costs thrown away as a result of the adjourned hearing.
On 30th July 2021, the parties received a new hearing date – 4th February 2022. On 10h January 2022, the Claimant's solicitors sought an adjournment on the basis that the counsel that had been instructed to represent the Claimant at the hearing was unable to attend due to personal reasons. Both Defendants (somewhat surprisingly) agreed to the adjournment, and the hearing was relisted for 27th July 2022.
On 11th July 2022, counsel instructed by the Claimant contracted coronavirus. The Claimant's solicitors asserted that they sent various emails seeking alternative counsel without a positive response. On 25th July 2022, the Claimant's solicitors wrote to the court seeking a further adjournment, although no formal application was made. The next day, a formal application was filed, but the fee was not paid.
At the hearing, counsel for the Claimant attempted to attend court despite still being significantly unwell, as no alternative counsel had been found. However, the morning of the hearing, she fainted while getting ready, and informed the Claimant's solicitors that she was unable to attend and requested that they ask for an adjournment.
The Claimant therefore attended the hearing unrepresented. Both Defendants were represented by counsel. There was no transcript of the proceedings, only the judgment, which ran to eleven paragraphs, the first nine of which dealt with the issue of adjournment. The application to adjourn was refused, the entirety of the was Claim struck out, and the Claimant was ordered to pay the costs of the action.
In his judgment, the judge found that adjourning the matter would incur greater, "needless costs", which was unacceptable and disproportionate to the Claim, and that based on the evidence, it was difficult to see how the Claimant would be able to establish any loss. Therefore, the judge found that "on a case management basis this is a case which simply should not go further forward. And upon that basis, I strike out the claim in its entirety".
The Appeal
The Claimant appealed the decision on the basis that the judge had failed to apply the proper test, that he failed to hear submissions from the Claimant on the issue of strike out, and that he had struck out the claim against the First Defendant despite there having been no application by him. It was submitted that the judge should have at least assisted the Claimant to the extent of making it clear the test which the court was applying, and invited submissions from the Claimant on it.
The High Court found that the refusal to adjourn was a case management decision that fell "squarely within the guidance set out" in the case law, noting the important of the court's resources (at [36]).
On the issue of strike out, the High Court accepted that it may have been that greater care should have been taken to explain to the Claimant the tests for strike out and summary judgment, and that he should have been given the opportunity to make substantive submissions. However, the Court also acknowledged that, even if the Claimant had been given such an opportunity, it was "highly doubtful that this would have made any difference" (at [37]). It held that the judge had been entitled to conclude that the litigation was going nowhere, taking into account the "incompetent way the litigation had been conducted to date", the modest value of the claim, the overall merits and the costs incurred to date. Although the court agreed that there had been "some elision" between the tests for strike out and summary judgment, the court did not consider that the failure had in fact resulted in injustice to the Claimant (at [38]).
Conclusion
This case confirms the wide discretion afforded to judges in case management decisions, and that the courts are entitled to put significant weight on court resources and the proportionality of the costs compared with the value and the apparent merits of the claim.
A successful application for exemption from court fees can amount to payment of court fees at the point the application was filed
In Clewer v Higgs & Sons [2023] EWHC 1556 (Ch), Mr Justice Johnson considered an appeal against strike out, and held that:
- if there is a successful application for exemption from court fees, the court fees could be treated as paid at the moment the application was received by the court; and
- that the requirement to serve a sealed Claim Form could not be met by service of an unsealed Amended Claim Form, even if the Amended Claim Form was subsequently treated as being issued before the deadline for service.
Procedural background
The procedural background to the claim is messy. For present purposes, the following points are relevant:
- There was an unless order that required a court fee to be paid and the claim form to be served by a specific date.
- An application for exemption from paying the court fee was made before that date, but not processed until after. The application was successful.
- An unsealed Amended Claim Form was served before the deadline. The Amended Claim Form was subsequently issued after the deadline, with a date that stated it had been sealed before the deadline.
The appeal challenged an order that found that the Claim stood struck out because there had been a failure to pay the court fee or serve the Claim Form as required by the unless order.
Payment of the court fee
First, the court considered whether the proper meaning of the word "pay" was wide enough to include the situation in when a successful application for fee exemption was made. The court held the following:
- Making a successful application for fee exemption could amount to payment as required, and what the unless order required was, in substance, that the payment of the court fee be regularised. Since there was nothing further left to pay, to hold that the court fee had not been paid would be artificial (at [62]).
- The application was received before the deadline, and payment was therefore effected at that point. The confirmation that came later "was only a declaration of the state of affairs which already existed" when the application was received (at [64]).
- Therefore, there was no breach of the unless order as it related to the payment of the court fee.
Service of the Claim Form
When considering whether there had been a breach in relation to service, the court started by noting that it is "entirely plain on the basis of the recent Court of Appeal authority that what [the Claimant] was required to do [by the deadline] was to serve a sealed Claim Form. An unsealed Claim Form would not do" (at [67]).
It then considered the fact that the Amended Claim Form was subsequently received with an issue date that was before the deadline. Again, the Court referred to the recent Ideal Shopping case, and found that "issue and service are different things, and so the fact that a Claim Form is treated as having been issued on a particular date does not entitled the Claimant to say it should also be treated as having been served then" (at [83]). The Court further took the opportunity to emphasis that a claimant "faced with a looming deadline for service must take action, and has limited procedural options if concerned the deadline may not be met" (at [86]).
Conclusion
Mr Justice Johnson took a pragmatic approach in considering what could amount to payment of court fee, while confirming the strict approach courts are to take on the issue of service of the claim form.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.