4 December 2013Print This Post

Court fees set to soar for commercial litigation

Commercial disputes: hearing costs in UK could rise substantially

Court fees for litigants in commercial money claims could rise from under £3,000 to more than £21,000 under plans by the Ministry of Justice (MoJ) for a percentage-based fee system.

Daily rates of £1,000 for hearings, trial of a preliminary issue, or substantive trial of the claim, would also be introduced, to offset the actual cost of court time.

In a consultation paper issued yesterday, the government said it was seeking a general power in the Anti-Social Behaviour, Crime and Policing Bill, currently before Parliament, to change public finance rules that say public bodies can only recover the cost of providing services but no more.

This will affect several different areas of litigation where the fee is now higher than the cost price, including divorce, and fast-track and multi-track hearings.

The MoJ argued that because of the benefit commercial litigants can obtain from litigating in the UK courts, they should pay more than in standard money claims: “We believe that it is reasonable and proportionate for those bringing these proceedings to make a greater contribution to the costs of maintaining the courts.”

It said its research showed that court fees were a secondary consideration in a decision to pursue commercial litigation. Amendments to the bill would include a duty to ensure that any enhanced fees do not damage the competitive position of the legal services market.

In relation to money claims in commercial proceedings at the Rolls Building in London, which the MoJ acknowledged was worth some £4bn a year in legal exports, it said the current regime of charging issue and hearing fees of £1,870 and £1,090 respectively in claims worth more than £300,000 was too generous.

Two proposals were made: Firstly, the fee for issuing proceedings for claims over £10,000 would be 5% of the value of the claim, subject to a maximum issue fee of £10,000.

In addition, £1,000 daily hearing fees would be payable, so to some extent costs would be based on the length of a trial. The MoJ estimated the cost of a day of court time in the Rolls Building at £1,067.

The second proposal was to apply a higher maximum fee. The ceiling on fees could be either £15,000 for a claim of £300,000, or £20,000 for a claim of £400,000.

Potentially, under option two, a one-day trial could cost £21,090 in fees, made up of an issue fee of £20,000 plus a hearing fee of £1,090. Under option one, the same trial would cost £11,000.

This compares with a combined total of fees for an equivalent trial under the current regime of £2,960.

The consultation paper stressed: “The government is keen to ensure that any steps we take to increase court fees do not discourage litigants from using our courts nor damage the competitive position of our legal services… The intention is to ensure that these cases make a fair, but not excessive, contribution to the efficient and effective system of justice in this country.

“We are confident that our proposals are unlikely to damage the international position of our legal services.”

Among the other changes proposed is an increase in the fees for cases involving money claims on a sliding scale, with a maximum fee of £1,870 – and considering moving in future to a system where the fee is calculated as a percentage of the amount under dispute in the court case. For non-money claims, the MoJ wants to introduce a standard fee of £270 instead of the current mixture of fees.

In addition to separate reforms to judicial review, the MoJ proposed more than doubling the current application fee for judicial review to £135, and more than trebling the fee for a hearing or an oral renewal to £680.

MoJ minister Shailesh Vara, who has responsibility for the courts, said: “We have the best court system in the world and we must make sure it is properly funded so we keep it that way.

“Hard-working taxpayers should not have to subsidise millionaires embroiled in long cases fighting over vast amounts of money, and we are redressing that balance.”
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The consultation will run until 21 January 2014. The government expects to make changes to the fees, depending on the outcome of the consultation, in spring and summer 2014.

By Dan Bindman

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