Costs of Proceedings Commenced in High Court Which Could Have Been Commenced in County Court

Part of Clause 4 – in the House of Commons am 12:00 am ar 20 Hydref 1969.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill 12:00, 20 Hydref 1969

The effect of this Amendment would be to omit the repeal of subsection (4) of Section 47 of the County Courts Act, 1959, and to substitute £75 for the figure of £40 specified in that subsection. A similar Amendment was defeated in Committee after an equally divided vote among the members. The Chairman gave his casting vote in favour of the original form of the Clause.

The costs sanctions in subsection (1) of Section 47 are subject to a number of qualifications. Among them is the provision in subsection (4) that in what is commonly called a debt-collecting action the plaintiff shall be entitled, unless otherwise ordered, to costs on such scale as may be prescribed by the Rules of the Supreme Court.

It might be helpful to the House if I were to state what is comprised in the expression "debt-collecting action" which one hears from time to time in this connection. It is, I understand, an action for a debt or liquidated demand for a sum of £40 or more where the defendant pays not less than £40 within eight days after service of the writ or the plaintiff within 28 days obtains judgment for £40 or more in default of appearance or defence or under Order 14.

The fixed costs prescribed by Appendix 3 to the Rules of the Supreme Court Order 62 for this purpose are divided into three bands: the first, applying where the amount recovered is between £40 and £75, prescribes sums equivalent to costs on county court scale 3; the second, applying where the amount recovered is between £75 and £300, prescribes sums equivalent to costs on county scale 4; and the third, applying where the amount recovered is £300 or more, prescribes sums equivalent to High Court costs.

Originally, Section 116 of the County Courts Act, 1888, enabled the plaintiff in an action founded on contract to recover costs on the High Court scale where he obtained judgment under the Rules of the Supreme Court Order 14 for £20 or more. By Section 20 of the Administration of Justice Act, 1925, this provision was extended to the other cases mentioned in Section 47(4) of the County Courts Act, 1959. The figure of £20 remains the same until the County Court Act, 1955, substituted the present figure of £40.

It is of interest and of some importance to Members considering this matter to see it in that historical setting. The object of the last change which I mentioned was to give effect to the recommendations of the Evershed Committee on Supreme Court Practice and Procedure. In its first interim report, Cmnd. 7764, it thought and recorded in paragraph 33 that. Section 47(4) should be retained because the procedure in the High Court is much used and in practice provides a more expeditious remedy, both in obtaining judgment and enforcing such judgment by execution, than the procedure in the county court". It recommended only that £40 should be substituted for £20 and that further consideration should be given to reducing the fixed costs prescribed for claims above £40. It is true that it was a few months earlier than this recommendation of the Evershed Committee, in fact in April, 1959, that the Austin Jones Committee on County Court Procedure had reached the almost opposite conclusion in its final Report, Cmnd. 7668.

It said, in paragraph 105: Where the High Court and county court possess concurrent jurisdiction there would seem to be no justification for permiting the plaintiff to involve the defendant in liability for High Court costs unless the remedy by the county court is substantially less efficient than that provided by the High Court. In our opinion this cannot be shown". The Payne Committee on the Enforcement of Judgment Debts agreed with the Austin Jones Committee.

The special provision made by Section 47(4) for the costs of debts collecting actions is, in our view, unjustifiable. We think that it affords a positive inducement to plaintiffs to bring in the High Court actions for which the county court is the natural and economical forum. I have statistics of judgments entered in the Central Office in 1968 which I regard as substantiating the assessment which I have just offered.

I want to consider, first, default judgments and, secondly, Order 14 judgments. Default judgments not exceeding £40 totalled 652; between £40 and £100, 7,576; between £100 and £200, 8,423; between £200 and £300, 3,821; between £300 and £400, 2,362; and exceeding £400, 9,183. Order 14 judgments not exceeding £40 numbered 28; between £40 and £100, 211; between £100 and £200, 399; between £200 and £300, 282; between £300 and £400, 196; and exceeding £400, 1,313.

Since these judgments constitute about 80 per cent. of all judgments entered in the Central Office, it is clear that subsection (4) of Section 14 largely removes the efficacy of subsection (1) as a sanction against bringing in the High Court actions which could be brought in the county court. It is only in cases to which subsection (4) does not apply—that it, actions in which less than £40 is recovered—that subsection (1) has any real deterrent effect.

The Payne Committee pointed out that the raising of the sum of £20 to £40 in 1955 had an immediate and spectacular result. That appears in paragraph 100 of Command 3909. Claims in the High Court for sums not exceeding £40 gradually disappeared and the number of district registries was drastically reduced.

In 1967, however, 56,678 actions leading to default and summary judgment were started in the High Court which could have been started in the county court. The inference was, therefore, I suggest, irresistible that a sanction which provides that no costs should be recovered on a judgment which does not exceed £X is immediately and dramatically effective, whereas a sanction limiting the amount or scale of cost recoverable is largely futile.

Plainly, therefore, if subsection (4) is retained with the substitution of £75 for £40, debt-collecting actions will continue to be brought in the High Court for sums of £75 and upwards. To that extent, the provision in Section 47(1) depriving a plaintiff of costs if he recovers less than £100 would be rendered nugatory.

The exact number of debt-collecting actions brought in the High Court for sums between £75 and £100 is not known, but as the figures which I have given show, in 1968 7,576 default judgments and 211 judgments under Order 14 were entered in the Central Office for sums between £40 and £100. Those between £75 and £100 must have formed a substantial proportion—possibly between one-half and two-thirds—of this number.

Apart from the number of cases involved, it is wrong, we think, in principle that a plaintiff with an undefended claim should be specially privileged in costs if he sues in the High Court. If a claim is defended, there may well be justification for proceeding in the High Court, but if the claim is undefended it would be more logical to restrict, instead of enlarge, the plaintiff's entitlement to costs.

The object of the provision in the 1888 Act was, apparently, to give the plaintiff in an action of contract a special right to High Court costs when he recovered £20 or more under a procedure—the Rules of the Supreme Court, Order 14—which was not available in the county court. It is difficult to see any justification for its subsequent extension to cases in which judgment is obtained in default of appearance or defence, because exactly the same procedure is available by way of default summons in the county court.

However that may be, the Payne Committee found that the present procedure for obtaining judgment in the county court in uncontested cases is at least as expeditious as that in the High Court and, indeed, is often quicker, as the Committee said in paragraph 107 of its Report.

5.15 p.m.

The Payne Committee also found that even the current system of enforcement of summary judgments is as expeditious in the county court as in the High Court, for the reasons given by the Austin Jones Committee. Possibly, in individual cases, solicitors may take a different view, but the Payne Committee received a substantial body of evidence and produced in Appendix 4 to its Report detailed statistics to support its conclusions. There can be little doubt that it represents the best overall assessment which has been made to date of the relative cost and efficacy of High Court and county court execution.

Since 1888 the value of money has fallen to about 16 per cent. On this basis alone, the figure of £75, which the Amendment proposes to substitute for £40 in subsection (4), is too low. It should be nearer £120. If this figure were inserted in subsection (4), there would be no point in retaining the subsection as it simply provides an exception to the general provision in subsection (1) which, as amended by the Bill, fixes £100 as the amount which a plaintiff in the High Court must recover in order to be entitled to costs.

I am, therefore, obliged to advise the House to reject the Amendment. I have tried to put the case for rejection as fairly as I can. It seems to me that there can be no practical need or logical reason for retaining subsection (4). It is with some satisfaction that I offer this crumb of comfort to the hon. and learned Member, if what I am about to say deserves that description. I am prepared to confirm to the House and to the hon. and learned Member that if Section 47(4) is repealed, which is the course I recommend, the Rule Committee will be invited to prescribe under its rule-making powers fixed costs for debt-collecting cases in the different bands mentioned in Section 47(1).