In Gibbs, a party who did not consider whether they were entitled to a remission of court fees and instead paid the fee risked being unable to recover that fee from their opponent in a costs assessment undertaken on the standard basis. If the Defendant could demonstrate that the receiving party fell within the remission scheme, it was beholden on the receiving party to justify why the fee had been incurred, should no justification occur; the fee should be disallowed.
The parties came before Judge Rowley for a detailed assessment of the Claimant’s bill of costs. The costs claimed included the issue fee of £10,000, together with associated costs incurred by the paralegal considering the file in relation to the issue fee. The costs arose from a Clinical Negligence claim brought by the Claimant in respect of the Defendant’s treatment of his mother.
The Defendant’s point of dispute to the Claimant’s bill of costs raised the point that the Claimant was self-employed and receiving benefits (ESA, PIPL and PIPM). Considering this information, the Defendant contended the Claimant was eligible for an issue fee remission. Further, if the Claimant had made an application but the Claimant had elected to pay the court fee anyway, then this was not a reasonably incurred cost (para 5).
The Claimant relied upon the decisions of the Court of Appeal decision in Peters v East Midlands Strategic Health Authority [2010] QB 48 and Deputy District Judge Jones in Cook v Malcolm Nicholls Ltd (11.4.19, Coventry County Court) and contended that “there is no requirement for a Claimant to mitigate their loss by reliance on the public purse” (para 4). The Claimant’s advocate confirmed that a fee remission had not been applied for and stated that the fact that fee earners had “been thinking” about fee remission carried no weight with respect to the election to pay the fee at the time.
In response, the Defendant asserted that consideration after the event could still matter as there was a three-month period in which a claim could be made for a refund where a party was properly entitled. The Defendant further asserted that “if an application would have been made but for it being out of time, then that would put a different complexion on the reasonableness of incurring the fee” (para 7).
Both parties drew upon the decision of HHJ Lethem in Ivanov v Lubbe (17.1.20, Central London County Court) to advance their respective contentions.
Judge Rowley began his judgment by reiterating under CPR 44.3(2) that the burden of proof falls upon the Claimant to demonstrate that costs, including the court fee, were reasonably incurred and proportionate and that any doubt must be resolved in the Defendant’s favour.
On the facts, Judge Rowley was satisfied that the Claimant had not provided evidence to demonstrate that this item of costs had been reasonably incurred (para 17), with no evidence regarding the “incurring of a court fee of £10,000 in circumstances where the claimant was [very ill] and might have been eligible for fee remission” (para 17).
Finding doubt as to whether the fee had been reasonably and proportionately incurred, Judge Rowley proceeded on the basis that a fee remission was available (para 18) finding that “if, as appears to be the case here, (fee remission) was simply overlooked should the court allow the fee as being reasonably incurred in any event? In my judgment the answer is no” (para 20).
As the Claimant was unable to provide justification as to why the court fees were incurred, the fee was disallowed under CPR 44.3, with permission to appeal provided. The judge went on to consider the difference between mitigation of loss and the reasonable incurring of fees and expenses.
Eliot Woolf QC, a barrister in our Clinical Negligence team commented on the case as follows:
Although there have been conflicting decisions in the County Court (see too Stoney v Allianz Insurance PLC, Liverpool CC, DDJ Jenkinson 7.11.19), this is the first reported SCCO case which has considered the test to be applied in determining whether or not an issue fee has been reasonably incurred when the receiving party could have claimed remission. In circumstances where the issue fee can now be as much as £10,000, it is clearly a matter of practical significance and Judge Rowley’s decision may not be the final word, as he indicated that he would be inclined to grant permission to appeal if sought.
Understandably, the Claimant relied by analogy with the decision in Peters to argue that there is no duty on a party to look to the public purse to meet the issue fee and accordingly if the Claimant elects to look to the tortfeasor to meet that cost, then it has not acted unreasonably. This argument had found favour with HHJ Lethem in Ivanov. Whilst acknowledging that CPR 44.3 places the burden on the Claimant to establish that the cost it has incurred was reasonable and proportionate, HHJ Lethem considered that there were strong public policy grounds for saying it is not unreasonable for a Claimant to preserve the public purse and direct the cost of wrongdoing on the tortfeasor, and that the same were relevant considerations to an assessment of reasonableness under CPR 44.3 and 44.4 (para 38).
Judge Rowley took the contrary view. He considered that by bringing in a fee remission scheme, Parliament would expect all those who qualify for that remission to use it; and that it would equally have been open for Parliament to require paying parties to reimburse the State for fees forgone where the Claimant had been entitled to a fee remission in the first place (similar to CRU). Further, that the principle in Peters refers to recovery of a loss that has been incurred, not to the incurring of an expense after the damages have been settled. In short, he did not consider that the receiving party is in a position to elect whether or not to require the opponent to pay court fees where that party is entitled to a fee remission (para 32).
Happily, the number of cases where this point arises in relation to the issue fee will be comparatively narrow, as any opportunity to avoid paying the issue fee and ease cash flow will ordinarily happily be taken. For my part, HHJ Lethem’s reasoning in Ivanov was forceful and insofar as it was contended that a party who may be eligible for a fee remission can never look to the tortfeasor rather than the state to pay the issue fee may be importing mandatory words into the rules which do not exist. However, Paragraphs 20 and 38 of the decision suggests that Judge Rowley was not going that far, but instead was focusing on the absence of evidence demonstrating that a conscious and reasonable decision was taken. As he stated (para 38), “…a party who does not consider whether they are entitled to a fee remission …, risks being unable to recover that fee from their opponent ….[and] the onus will be on the receiving party to justify why the court fees were incurred. If as here, there is no such justification put forward, the fee should be disallowed”. Whilst the door is not shut, it will be a brave litigant who runs the risk of not applying for remission where there is any doubt as to eligibility.
