Butters & Anor v Hayes

Does the non-payment of a court fee mean that time continues to run for limitation purposes in respect of a new claim within existing proceedings? In my view it does not. If a new claim which is not otherwise abusive is made by amendment within the limitation period, it will not later become time-barred because a requisite court fee had not been paid.

The matter turns on the interpretation of s. 35 of the Limitation Act 1980 (‘the Act’), which concerns new claims in pending actions. Part I of the Act sets the ordinary time limits for different classes of action, so that an action of a certain kind may not be brought after a specified period of time. The ordinary time limits may be extended or excluded in the circumstances provided for in Part II, while Part III, where s. 35 is to be found, concerns miscellaneous situations, including new claims.

Section 35 relevantly provides:

For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—

…

in the case of any other new claim, on the same date as the original action.

In this section a new claim means any claim by way of setoff or counterclaim, and any claim involving either— (a) the addition or substitution of a new cause of action; or

Except as provided by section 33 of this Act or by rules of court, neither the High Court nor the county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.

‘Rules of court’, as referred to in ss. (3), are defined in Schedule 1 of the Interpretation

By contrast, the power to make fees orders arises under s. 92 of the Courts Act 2003, which provides that the Lord Chancellor may by order, with the consent of the Treasury and after consultation, prescribe fees payable in respect of anything dealt with by the

CPR rules 3.7, 3.7A1, 3.7A and 3.7AA concern the consequences of non-payment of the fees payable for a hearing. If a fee is not paid when due the court sends a warning notice, and if the fee is not then paid the claim (or counterclaim) will be struck out. There is no suggestion that a failure to pay a fee invalidates an underlying claim. Nor do the CPR contain any express sanction for a failure to pay a fee due on amendment, 7. The rules of court applicable to new claims are in CPR rule 17, which states:

A party may amend his statement of case at any time before it has been served on any other party.

If his statement of case has been served, a party may amend it only –

…

If a party has amended his statement of case where permission of the court was not required, the court may disallow the amendment.

A party may apply to the court for an order under paragraph (1) within 14 days of service of a copy of the amended statement of case on him.

rule 19.1 (change of parties – general);

rule 19.4 (special provisions about adding or substituting parties after the end of a relevant limitation period); and

rule 17.4 (amendments of statement of case after the end of a relevant limitation period).

a party applies to amend his statement of case in one of the ways mentioned in this rule; and

a period of limitation has expired under –

the Limitation Act 1980;

…

…

The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.

…

…”

The structure of the statutory regime is therefore that a new claim made in the course of any action shall be deemed to have been commenced on the same date as the original

The next question is when a new claim by way of amendment is ‘made’ under s. 35 (1). As seen above, amendment after service can be made by consent or with the permission of the court. The amendment occurs on the date of the amended document, but the new claim will not in my view be made until the document is filed at court or served on the other party, whichever is the earlier: see CPR PD17 1.3 and 1.5, which provide for filing within 14 days of permission to amend or within such other period as the court may direct, and for service on other parties.

Where a claim or counterclaim is amended, and the fee paid before amendment is less than that which would have been payable if the document, as amended, had been so drawn in the first instance, the party amending the document must pay the difference: Schedule 1 to the Fees Order. However, the CPR do not provide that a new claim will not be considered to have been ‘made’ if an appropriate increment is not paid; nor, as already noted, do they provide that an original action will not have been ‘brought’ if the original court fee is not paid. The CPR might have said that, but they do not.

That, therefore is the statutory framework that leads to the conclusion that the nonpayment of a fee does not of itself prevent a new claim from being ‘made’ for the purposes of s. 35 of the Act. Does the case law lead to a different conclusion?

In Barnes v St Helens Metropolitan Borough Council [2006] EWCA Civ 1372, [2007] 1 WLR 879, a claim was lodged at court on the eve of the expiry of the limitation period but was not issued until three days after the period had expired. The claim was held to have been ‘brought’ for the purpose of the Act when the claim form as issued was received in the court office, and not on the later date when it was actually issued. Tuckey LJ said this at 883G:

The same approach was taken in Page v Hewetts Solicitors [2012] EWCA Civ 805. That case concerned the correct test for summary judgment where the appellant asserted that a claim form that had been issued after the expiry of the limitation period had been delivered to the court in time. Lewison LJ stated that when an action was brought was a question of construction of the Act. He considered Barnes and Aly v Aly [1984] 1 WLUK 936. That was a case in which an application to set aside an order had been sent to the court within the time permitted but not issued until afterwards. This court held that the application to court had been made in time. Eveleigh LJ said this:

Barnes and Page were concerned with when an action was ‘brought’ under Part I of the Act. They were not concerned with the making of a new claim under s. 35 of the Act. They establish that for limitation purposes, time will cease to run upon the delivery of the claim form to the court office. That interpretation was justified by the obvious unfairness of a claim becoming time-barred because of a delay in issuing on the part of the court where the litigant had done “all in [his/her] power to set the wheels of justice in motion”. The decisions assume that this will include payment of the appropriate court fee, but they did not expressly consider a situation where a claim form is lodged in time but with an incorrect fee, whether inadvertently or abusively. Nor did they concern the position where a claim is issued by the court within the limitation period, despite a non-payment of the correct fee.

The reference in Barnes and Page to the payment of an appropriate fee in the context of limitation has been taken up in six first instance decisions which cannot all be reconciled with each other.

Page v Hewetts Solicitors [2013] EWHC 2845 (Ch) (‘Page No. 2’) was the decision of Hildyard J following the appeal. He was called upon to consider two claims. Having heard evidence about the first claim, he did not accept the assertion that it had been delivered to the court within the limitation period. As to the second claim, which had been delivered in time, he noted that the Fees Order was not easy to construe but he held that the fee proffered (£990) had been insufficient by £400. He said that:

In Lewis and others v Ward Hadaway [2015] EWHC 3503 (Ch), claims in negligence against the defendant firm of solicitors were advanced by 31 claimants over a ninemonth period. All of the claims were issued close to the expiry of the limitation period, and in 11 cases the claim forms were issued by the court office after the period had expired. Although the judge (John Male QC) found that the claimants’ solicitors had deliberately understated the value of the claims to avoid or defer payment of the full court fees and that this was an abuse of process, in the exercise of his discretion he did not strike out the claims as a whole. However, in relation to the 11 claims issued after the limitation period, he granted the defendants’ application for summary judgment on the ground that, following Aly and Page, the claimants had (by failing to pay the appropriate fee in time in a manner amounting to an abuse of process) not done all that was in their power to do to set the wheels of justice in motion. Consequently, the claims had not been brought within the limitation period and were statute-barred.

In Bhatti v Asghar [2016] EWHC 1049 (QB), the defendants sought to strike out proceedings on the basis that the fee paid by the claimants on issue within the limitation period (£1920) was in one case £680 less than should have been paid and in another £480, and that the claims were now statute-barred. In an extempore judgment, Warby J reviewed Barnes, both Page decisions, and Lewis. He did not distinguish them on the basis that they applied to actions issued outside the limitation period, and he considered that they mandated a very strict approach to underpayment of fees. He found that the limitation period for the pleaded claims had expired because the fee had been underpaid but he did not grant summary judgment because the point had been taken at a very late stage and there were factual issues that remained to be explored. He also noted that there might need to be a deeper consideration of the authorities than had been possible at that hearing: see paragraph 39. It is therefore apparent that Warby J was seeking to follow established law, and not to change or extend it, when he said this:

In Glenluce Fishing Co. Ltd. v Watermota Ltd. [2016] EWHC 1807 (TCC), the claimant sued for losses arising from a fishing vessel repair contract. The original pleading related to the damage to an engine, and the appropriate court fee was paid. After the expiry of the limitation period, the claimant applied to amend to increase the claim to

In Dixon v Radley House Partnership [2016] EWHC 2511 (TCC), the court refused to allow defendants to amend their defence to raise limitation arguments in a situation where the claimants had failed to proffer the correct court fee when issuing proceedings. The claim had been sent to the court before the limitation period expired, but had been issued by the court after the expiry date. Stuart-Smith J expressed his conclusion in this way:

In the period between (a) when the claimant submits the claim form and proffers the inadequate fee and (b) when the court issues proceedings, the failure to proffer the correct fee will prevent the conclusion that the action has been “brought” for the purposes of the Limitation Act 1980 before the moment that the court issues the proceedings; but

Once the court issues the proceedings, the mere fact that the fee proffered by the claimant and accepted by the court (a) is less than should have been proffered and accepted for the claim identified in the claim form or (b) becomes so because of a subsequent increase in the quantum of the claim advanced in the proceedings does not prevent the action from being “brought” for the purposes of the Limitation Act 1980 when it is issued by the court.”

In his analysis at paragraphs 34 and 36 , Stuart-Smith J considered it axiomatic that in relation to claims included in proceedings as issued, time stops running for the purposes of the Act when the proceedings are issued. The test propounded in Page by Lewison LJ at paragraph 38 (above) was applicable where the claimant wanted to establish that his claim was “brought” on a date before proceedings were issued. It said nothing to establish or suggest that the issuing of proceedings itself would not stop time running if an inadequate fee had been paid on issue: that question did not arise and was not considered. Stuart-Smith J declined to follow the reasoning in Bhatti on the basis that it did not observe that distinction, and he associated himself with the reservations expressed in Glenluce. In relation to Lewis, he noted that the reason why the 11 claims failed was not because of the non-payment of a fee but because the non-payment had been abusive. He further held that “the appropriate fee” is the fee required by the relevant fees order, which is to be determined by reference to the claim or claims articulated in the claim form (and, if issued simultaneously, the particulars of claim). In the absence of abusive behaviour, it is not to be determined by reference to claims which are articulated later, whether or not the later claims are ones which the claimant hoped or even intended to bring later at the time of issuing proceedings.

The last case is Liddle v Atha & Co Solicitors [2018] EWHC 1751(QB), [2018] 1 WLR 4953. The claimant’s solicitor sent the claim form to the court two days before the limitation period expired, but it was not issued until a week after. The value of the claim had been understated. Turner J held that, though not dishonest, this had been an abuse of process. However he did not strike out the claim, and nor did he enter summary judgment for the defendants on the basis that the additional claim was timebarred due to the failure to pay the correct fee. In a review of the authorities, he noted that, despite Barnes not having been concerned with the payment of a court fee, the narrative allusion to the usual process on issuing proceedings in that case and in Page had been subsequently taken to have laid down the principle that a claim has not been brought at the time of the delivery of the claim form to the court unless the appropriate fee has also been tendered. He rejected a universal test of “doing all that is in your power to do to set the wheels of justice in motion”, as adopted in Lewis (as he read it) and in Bhatti, and he associated himself with the observations made in Glenluce and the analysis in Dixon. He held that where abuse is not egregious and has no impact on the timing of the issue of the claim it may be thought that it would be wrong in principle to permit the provisions of the Act to be deployed as what he described as “a tool of retrospective and disproportionately draconian discipline”. He ended by saying that what he described as the proliferation of irreconcilable first instance decisions was such that the time was ripe for authoritative guidance from the Court of Appeal.

This short summary of the case law does not capture the density of analysis undertaken in these decisions, but it is sufficient. From it, I reach the following conclusions:

The cases, with the possible exception of Glenluce, are concerned with the bringing of actions under Part I of the Act. They do not directly concern a new claim made by amendment within existing proceedings.

Accordingly, none of the decisions suggests that the non-payment of a fee prevents a new claim from being ‘made’ for the purposes of s. 35 of the Act.

As a matter of construction of Part I of the Act, an action will be brought within the limitation period if it is issued by the court within that period. The statement in Bhatti that an action will be statute-barred if issued in time but without the appropriate fee is not correct.

The decisions of this court in Barnes and Page establish that an action will be brought within the limitation period if it is delivered in due time to the court office, accompanied by a request to issue and the appropriate fee. They do not decide that an action will be brought in time if and only if it is accompanied by the appropriate fee.

There is a division of opinion at first instance as whether an action delivered but not issued in due time is brought at the date of delivery if the correct fee has not been proffered. There are perhaps three approaches. In Page No. 2 and Dixon it was held that an action would not be brought by reason of the non-payment alone. In Lewis, it

Against that background, I turn to the present case.

These parties have existed in a state of permanent litigation of one sort or another since Mr and Mrs Hayes divorced in 1990 after a twenty-year marriage. The episode from which this second appeal arises is a harassment claim brought 15 years ago by Mr Hayes (‘C’) against Mr Butters and Mrs Hayes (‘D’) and it is an aspect of the procedural history of that claim that now concerns us.

In November 2005, C brought an action alleging 49 acts of harassment starting in February 2003. On 15 June 2011, at a case management conference, District Judge Rhodes gave leave to C to file an amended statement of case by 9 July 2011, and C did so on 8 July in the form of amended particulars of claim (‘APOC’) in which he alleged a further 120 acts of harassment between 2005 and March 2011. In 2012, in response to a further direction of the court, C filed a schedule of loss, claiming in excess of £1m.

On issuing the claim in 2005, C had paid a fee of £900, although only £800 was due. D asserts that the value of the claim increased by reason of the APOC and the later schedule of loss so that a further fee of £770 should have been paid. C disputes this on

It took until early 2019 for a trial of liability to take place, the extraordinary delay reflecting the intensity of the interlocutory litigation and other related proceedings. The matter was heard by His Honour Judge Hellman on dates in January and March 2019. On 7 February 2019, between the two parts of the hearing, D issued an application to strike out the APOC on limitation grounds for non-payment of the court fee.

At trial, Judge Hellman found in favour of C in relation to many but not all of the alleged acts of harassment. In his judgment of 8 April 2019, he addressed D’s strike-out application argument and rejected it on the facts. He was not satisfied that, at the time the pleading was amended, there had been an intention to increase the value of the claim, the consequence being that an increased fee was not required.

D applied for permission to appeal on ten grounds, and received permission in respect of one, concerning limitation and non-payment of a fee. On 13 November 2019, Mrs Justice Falk (‘the Judge’) heard the appeal alongside an appeal in a separate matter by C. In an impressive extempore judgment, she found that Judge Hellman’s conclusion about the intention to increase the value of the claim had relied to some extent upon a misunderstanding of the sequence of events surrounding the amendment and that she would have been inclined to remit the question to him to make a finding in the light of the accurate facts. However, she did not do that because she found that the appeal failed for other reasons. In the first place the amended claim had been properly brought because it had been allowed to proceed by the court in its order of 15 June 2011, when no additional fee had been demanded. The APOC had added new causes of action under s. 35 (2) (a) in the form of each alleged continuation of a course of conduct amounting to harassment: Hayes v Butters [2015] Ch 495. It thereby made new claims under s. 35 (1) (b) that were deemed to have been commenced at the same time as the original action, and so within the limitation period. Further, having reviewed the authorities, the Judge rejected D’s argument that to stop time running the appropriate court fee had to have been paid when the amendment was made. She held that:

Permission to appeal was granted by Asplin LJ on a single reformulated ground:

By Respondent’s Notice, D seeks to uphold the Judge’s decision on additional grounds:

The filing of the schedule of loss in 2012 did not trigger any requirement to pay fees.

The amendment should be allowed in any event as the claim is based on the same or similar facts to matters already in issue.

Any error of fact by Judge Hellman was not material to his decision.

No amendment to the order is required even if the appeal succeeds in principle.”

Before us, Mr Clive Wolman firstly argues that the Judge was wrong to treat the order of 15 June 2011 as having allowed the new claims to have been made. He points out that CPR PD17 1.2 requires an application to amend a statement of case to be accompanied by a copy of the statement of case with the proposed amendments. In this case the court gave leave without this happening, so it was not in a position to vet the proposed amendments and to disallow any that would be time-barred as required by s. 35 (3) of the Act and CPR 17.4 (2). The order is therefore void or liable to be set aside for fundamental mistake: Firman v Ellis [1978] 1 QB 886. Alternatively it was to be regarded as a provisional order that could only take effect on the next occasion that the court came to consider the case and vet the amendments, which turned out to be in May 2012.

These arguments are in my view hopeless. The order, which was made at a hearing at which C was represented by a solicitor and D were in person, provided that:

The claimant is to file and serve an amended defence to the counterclaim by 4pm on 5th August 2011. Both defendants to file and serve their amended defence to the claim by 4pm on 5th August 2011.

All parties are to serve their witness statements and any other evidence on which they intend to rely by 4pm on 9th September 2011.

The case is to be heard in a trial window between 7th

Next, Mr Wolman submits that relation-back does not take effect when a new claim is “allow[ed]… to be made” under s. 35 (3) but only when it has been “made” under ss. (1). I agree that the new claim is made on the date when the amendment itself is made and not on the date of the order allowing it to be made. That much is established by Welsh Development Agency v. Redpath Dorman Long Ltd. [1994] 1 WLR 1409 at 1421C:

Mr Wolman’s central submission is of course that C should have paid the extra court fee when amending, and that the first instance decisions following Barnes and Page mean that the failure to do so have the consequence that time continued to run. D therefore has the absolute right, he says, to have the APOC struck out now, nine years later (or indeed at any time), regardless of whether the amendment was abusive. I have explained why this argument is unsound as a matter of law, and I reject it in the circumstances of this case.

In the course of making his central submission, Mr Wolman argued that there is no reason in principle why a different approach should be taken to the making of new claims under s. 35 and the bringing of actions under Part I. I do not agree. As noted

For C, Mr Guy Sims broadly argues for the conclusions I have endorsed. He submits that it would be an absurd conclusion that a new claim is invalidated by an innocent miscalculation of a court fee, allowing a defendant to wait to take the point after the limitation period has expired. He points to the range of sanctions available to the court to counter any abusive procedural conduct, as described by Stuart-Smith J in Dixon. He further notes that it is undisputed that C’s claim for an injunction is unaffected by any argument about the payment of a fee.

The Judge was right to dismiss D’s appeal and we should do likewise. Whether or not a fee was payable, the new claims contained in the APOC did not fall outside the limitation period. The attempt to strike them out was opportunistic, without merit, and unfortunately typical of the satellite litigation that characterises the feud between these parties. As long as eight years ago, on 23 November 2012, Her Honour Judge Davies gave a judgment in which she reflected:

I agree.

I entirely agree. The only points that I wish to emphasise are these. First, in Page v Hewetts Solicitors in this court the correctness or otherwise of the fee was not argued and not in issue; and the court gave it no detailed thought. Second, it is a mistake to read a judgment as though it were a statutory text, especially on a point that was not in issue.