Kerry Underwood

AUTOMATIC STRIKE-OUT, COSTS AND SMALL CLAIMS

with 4 comments


CPR 3.7A 1(7) provides that if the trial fee has not been paid on or before the trial fee payment date, then the claim will automatically be struck out without further order of the court, and unless the court orders otherwise, the Claimant will be liable for the costs which the Defendant has incurred.

That is a draconian penalty which lawyers need to be aware of and if a claim is struck out an immediate application to reinstate should be made.

However, here I want to consider the effects of the automatic liability for payment of the Defendant’s costs, unless the court orders otherwise.

Qualified One-Way Costs Shifting

CPR 44.15 allows a Defendant to enforce “to the full extent of such orders” – that is exceeding damages, without permission of the court, where the proceedings have been struck out on the ground that –

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;

(b) the proceedings are an abuse of the court’s process; or

(c) the conduct of –

(i) the Claimant; or

(ii) a person acting on the Claimant’s behalf and with the Claimant’s knowledge of such conduct,

is likely to obstruct the just disposal of the proceedings.”

Automatic strike-out for failure to pay the trial fee is not caught by this exception and thus, although the Defendant will have a costs order in its favour against a personal injury Claimant whose claim is struck out for failure to pay the fee, the Defendant will be unable to enforce that costs order.

Small Claims

CPR 27.14 sets out the limited circumstances in which costs may be ordered in the Small Claims Track, and the circumstances set out in CPR 3.7 do not come with any of the listed exceptions in CPR 27.14.

CPR 44.9 is headed “Cases where costs orders deemed to have been made” and reads:

44.9

(1) Subject to paragraph (2), where a right to costs arises under –

(a) rule 3.7 or 3.7A1 (defendant’s right to costs where claim is struck out for non-payment of fees);

(a1) rule 3.7B (sanctions for dishonouring cheque);

(b) rule 36.13(1) or (2) (claimant’s entitlement to costs where a Part 36 offer is accepted); or

(c) rule 38.6 (defendant’s right to costs where claimant discontinues),

a costs order will be deemed to have been made on the standard basis.”

The rest of the rule does not apply to this situation.

Thus CPR 44.9 deems there to have been an order in those circumstances and, as we have seen, the strike-out is automatic.

Thus the effect of the combination of CPR 3.7 and CPR 44.9(1)(a) is that upon the non-payment of a trial fee the matter is automatically struck out and there is automatically deemed to have been a costs order made.

Thus the strike-out and the costs order occur without any judicial discretion or intervention. They are automatic.

Thus there is a clear contrast and conflict between these provisions and CPR 27.14

This issue needs clarifying as it will become of much greater importance as and when the small claims limit for personal injury rises to £2,000.00 generally and £5,000.00 in relation to road traffic accident matters.

The general small claims limit is already £10,000.00 and under the Briggs Reforms is proposed to rise to £25,000.00.

I am grateful to Alex Williams of Oriel Chambers for bringing this to my attention.

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Written by kerryunderwood

October 18, 2017 at 7:50 am

Posted in Uncategorized

4 Responses

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  1. If a disposal hearing is a trial for the purpose of the fixed costs rules (Bird v Acorn), we wonder whether a trial fee is payable when Judgment is entered and the matter is listed for disposal hearing? Our local Court (Stoke) does not demand payment of trial fees when it gives disposal directions, and has recently returned a trial fee paid. So certainly our local Court believes that no trial fee is payable when the matter is listed for disposal hearing only.

    Simon Green

    October 18, 2017 at 8:56 am

    • Simon

      I do not know is the short answer.

      Clearly a disposal hearing is treated as a trial and that of course was a key finding in the case of Bird v Acorn Group Limited [2016] EWCA Civ 1096, where it was necessary to show that the matter had been listed for trial in order to attract the full costs under CPR 45.29, that is the costs up to the trial stage, rather than, for example, the fixed costs for the post-issue, but pre-allocation stage.

      Thus my instincts say that it should indeed attract a trial fee, although there is no specific statement to that effect, either in the Civil Procedure Rules, or in the relevant Practice Directions.

      My guess is that no-one thought about it, which I regret is not uncommon in relation to the Civil Procedure Rules.

      Interesting that Stoke County Court is actually returning your fee .

      Many thanks for commenting.

      Kerry

      kerryunderwood

      October 19, 2017 at 11:02 am

  2. CPR 27.14 outlines the circumstances where costs, fees and expenses are payable? 27.14(2) advises ‘The court may not order a party to pay a sum to another party in respect of that other party’s costs, fees and expenses, including those relating to an appeal, except…..’ see list of exceptions – CPR 3.7 doesn’t make an appearance. I don’t think it will fly under CPR 27.14. IMO the costs entitlement for C simply forgetting to pay the fee is nill…?

    Jonathan

    October 24, 2017 at 12:19 pm

  3. Jonathan

    But by the same token, small claims are not excluded in CPR 3.7 or 44.9- that is my point- that these provisions and CPR 27.14 are contradictory and we have no idea which the court will give precedence to.

    So the court may adopt your reasoning or may not -I am not sure how you can be so confident.

    Kerry

    kerryunderwood

    October 24, 2017 at 12:56 pm


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