- Litigation Futures - https://www.litigationfutures.com -

“Disproportionate” to strike out claim for late payment of court fees

High Court: Justice better done by granting relief

Striking out a £120,000 claim for late payment of court fees was disproportionate and the claimant was entitled to relief from sanctions, the High Court has ruled.

Mr Justice Fancourt said that although a “moderately serious” breach had taken place without mitigating circumstances, “justice is better done in this case” by letting the claim go ahead.

“I do not by granting relief in this case suggest that a prompt application will always be liable to result in relief being granted.

“In any given case, there may be circumstances that make it unjust to grant relief, particularly if the applicant has previously been in serious breach of directions or rules of the court.

“Litigants and solicitors are therefore well advised to take no risk with the late payment of court fees.”

Fancourt J said refusing relief would impose a “substantial costs liability” on the claimant, since the parties’ combined costs budgets were £72,000 for a claim of £120,000.

“A consequence of refusing relief would therefore be very significant in terms of diminishing the real value of the appellant’s claim.

“Another consequence of refusing relief is that it is then likely that the court’s resources will be further stretched by the bringing of at least one and possibly two further claims by the appellant.”

These would be bringing a new claim and also a negligence claim against the solicitors. The former would require the costs of the first claim to be paid, while the latter would be harder to bring and prove, would be more expensive, “and the measure of damages recovered may well be less than the full amount of the claim against the respondent”.

The court heard in Badejo v Cranston [2019] EWHC 3343 (Ch) [1] that Earl Badejo claimed almost £120,000 from Adedeyo Cranston, pursuant to what was described as an option agreement.

The trial, at Central London County Court, was scheduled for 10 September 2018, meaning that the deadline for paying the court fee of £1,090 was 13 August 2018.

The fee was not paid and the claim automatically struck out. The claimant’s solicitor realised this had happened on 20 August, conferred with his partners and issued an application for relief of sanctions on 22 August, requesting a telephone hearing of 30 minutes.

The court did not list the hearing. However, Fancourt J said it emerged that the trial had not been removed from the list as the result of the automatic strike-out. It was only vacated the day after the claimant’s solicitor called the court.

The application for relief from sanctions was not heard until the beginning of October, at which His Honour Judge Roberts refused to grant it.

Fancourt J went on: “The appellant accepted in the lower court that non-compliance with the requirement to pay the court fee was a serious matter, but not at the top end of serious breaches, and further accepted that there was no good excuse for it.

“That meant that the question for the judge, applying the well-known approach in Denton, was whether it was just in all the circumstances.”

Fancourt J said that HHJ Roberts misdirected himself by saying that Mr Badejo could not rely on disproportionality in relation to the sanction.

Rather, the proportionality of the sanction, as compared with the effect of the breach and the consequences of refusing it, must “lie at the heart of the analysis”.

He went on: “It is inevitably harder for an applicant to say that refusing relief would be disproportionate to the breach where the breach is a serious breach and is unexplained, but the court must assess the justice, including the proportionality, of refusing or granting relief in all the circumstances of the case.”

Here, the application for relief was issued nearly three weeks before the trial.

Fancourt J said: “If the trial had not been vacated, as was the case, it ought to have been possible to list either a 30-minute telephone hearing in advance of the trial date, or alternatively to have the matter heard before the trial judge, either in the week before or at the start of the trial. In these circumstances, in my judgment, that should have happened.

“Had that been done, the trial date would not have been lost. Mr Clark for the respondent acknowledges that if the application had been heard in the week before the trial, or even at the start of the trial, he could not sensibly have opposed it.”

Fancourt J said the fact the application was heard after the trial date had passed was not the fault of the appellant, and the application should not be judged as one where the breach caused the loss of the trial date.

“Paying all the costs of the current claim, and incurring the cost of funding two new actions, would in my judgment be disproportionate to the seriousness of the breach and any harm done to the administration of justice or to the respondent that is attributable to the breach, as opposed to being attributable to the court’s failure to list the application urgently.”