Significant costs, and much valuable court time, is taken up re-arguing identical points of principle in costs litigation due to the absence of a binding authority. So it is with the issue of the recoverability of court fees.
An example is where a claimant pays court fees and subsequently seeks to recover those from the defendant in circumstances where the claimant was of limited means and would have been entitled to a fee exemption as part of the fees remission scheme. Is it reasonable for a claimant who is or may be entitled to court fee remission to forego that benefit and pass the costs of the court fees onto a defendant as part of a claim for costs?
There was recently an interesting blog post from costs barrister Andrew Hogan setting out the argument from a claimant’s perspective. The key arguments included:
- As a matter of legal principle, a claimant is entitled to require a defendant wrongdoer to pay for the damages caused by their wrongdoing and to refuse other forms of support or provision which would have the practical effect of reducing the defendant’s liabilities.
- In the context of mitigating damages, the case law is against the argument that a claimant is obliged to claim state support to mitigate a wrongdoer’s liability as the claimant had a right to claim damages from the wrongdoer without any requirement to mitigate her loss by reliance on the public purse.
- It is reasonable for a claimant to prefer self-funding and damages rather than provision at public expense, on the simple ground that he or she believes that the wrongdoer should pay rather than the taxpayer and/or council tax payer. In other words, it is not open to a defendant to say that a claimant who does not wish to rely on the State cannot recover damages because he or she has acted unreasonably.
- The reason why there is a fee remission scheme contained in the Civil Proceedings Fees Order is to increase access to justice for indigent litigants. It is not there to provide a windfall for the insurance industry, nor to deprive the courts of their proper fees, where there is an insured defendant well able to pay those fees.
The recent decision of costs judge Master Rowley in Gibbs v King’s College NHS Foundation Trust  EWHC B24 (Costs) reached an opposite conclusion.
The Claimant has relied on the decision of HHJ Letham in Ivanov v Lubbe where it was held:
“The core argument is whether it is reasonable to expect a Claimant to use the scheme or alternatively whether this places a burden on the taxpayer that is unreasonable. In this respect I agree with [claimant’s counsel] that there is a loss where fee remission is utilised. The public purse is depleted by the amount that would otherwise have been paid. On this basis there is less in the public purse to devote to the justice system as a whole. Thus, any suggestion that there is not a loss where fee remission is utilised is misconceived. I am satisfied that [claimant’s counsel] is right to characterise the dispute as over who bears the loss, the public purse or the tortfeasor. … [There is] a formidable body of case law that allows the Claimant to legitimately elect to make their claim against the tortfeasor as opposed to relying on alternative sources of funding.”
In that case, it was therefore found to be reasonable for a claimant to pass the cost of the court fee to a defendant.
Master Rowley approached the issue differently:
“In Ivanov, the claimant put the argument in respect of mitigation of loss as being a question of whether the loss should be borne by the wrongdoer or the State.
The claimant’s counsel in Ivanov is said to have described the idea that there was in fact no cost if the fee remission scheme applied as being ‘misconceived’ because there was still a cost to the State where parties litigate. HHJ Lethem agreed with the claimant’s counsel that there was a loss where fee remission is utilised because ‘the public purse is depleted by the amount that would otherwise have been paid.’
As far as I can see, there was no evidence put forward by the claimant’s counsel as to this loss to the State and it was submitted as essentially a matter of common sense. In other words, where court proceedings are commenced, the court will expect to receive a fee in accordance with the Civil Procedure Fees Order 2008 (as amended). If it does not receive that fee, then there is reduced income to the Court Service and that affects the administration of justice overall.
I regret to say that I do not think that is necessarily correct. It seems to me to be equally plausible that, by bringing in a fee remission scheme, Parliament would expect all those who qualify for that remission to use it. After all, the fees often represent a significant sum: here it was £10,000. As such, any calculation made of the number of people being exempt from using court fees by Parliament would be considered prior to the bringing in of the scheme and, where appropriate, when it was adjusted thereafter. To the extent that a person entitled to use the scheme did not do so, that would then be an unexpected lessening of the cost in Parliament’s calculations.
It does not seem to me to be appropriate to conclude that a claimant who uses the fee remission scheme, even though they might have been entitled to oblige the wrongdoer to pay the fee, has caused the State to lose money it was expecting to receive. It is just as likely that such claimants are precisely following a model designed by the State. A Claimant who pays a court fee they did not have to pay, which they may not recover and which involves some cash flow impact on them or their lawyers seems to me to be a less likely prospect on any Government model and is at least as likely to upset the State’s calculations.”
As to the correct approach:
“If it is assumed that mitigation in respect of damages is akin to mitigating the extent of the costs incurred, has the claimant acted reasonably in this case by not completing a fee remission form but simply paying the court? In the absence of any explanation or evidence in this context, it seems to me that inevitably the question has to be answered in the negative. The assessment of costs must then proceed as if he had acted reasonably … which would mean there being no issue fee paid because a fee remission could have been claimed.
On the facts of the case:
“In my judgment, a party who does not consider whether they are entitled to a fee remission and, thereafter make an application if there is any doubt, risks being unable to recover that fee from their opponent. If the opponent can demonstrate that the receiving party appeared to fall within the remission scheme, 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 under CPR 44.3. Such a party has not incurred the lowest amount it could reasonably be expected to spend. At the very least there has to be a doubt which is to be exercised in favour of the paying party.”
Interesting though this is, we are still left without a binding decision on the issue.
There was a crumb of comfort for the Claimant:
“It clearly would not have been too difficult for the claimant and her solicitors to make an application for fee remission. … In my view, the costs of making an application where the claimant may potentially be entitled to fee remission are recoverable between the parties. The paying party may well take the point when it comes to a detailed assessment and time spent to establish the position, in my view, generates costs which are reasonably incurred in principle.”
However, this element of the decision must be questionable. Time incurred making an application for fee remission is work incurred in relation to the funding of part of the claim (here, the court fees). Has this not been dealt with definitively by the Court of Appeal in Motto & Ors v Trafigura Ltd & Anor (Rev 3)  EWCA Civ 1150:
“Cost of funding: Contrary to the Judge’s conclusion, I do not consider that the claimants can recover the costs of preparing and advising on the CFAs, nor do I consider that they can, recover any costs incurred in discussing the litigation with, or taking instructions from, with the ATE insurers”
Equally, where work is undertaken in relation to arranging legal aid, the associated costs are not recoverable on an inter partes basis. It is not obvious how work undertaken in relation to funding court fees is distinguishable.