20 January 2015Print This Post

Senior judiciary’s “deep concern” at court fee hikes of up to 622%

Thomas: disproportionately adverse impact on SMEs

Thomas: disproportionately adverse impact on SMEs

The senior judiciary and Civil Justice Council (CJC) have outlined their “deep concerns” about the new 5% court fee for all money claims worth £10,000 or more – which will mean an increase on the current levels of up to 622%.

The fee is capped at £10,000 – which will be the fee for any claim worth £200,000 or more – but calculations by the CJC showed how extreme the increase will be on claims.

It peaks at claims for £190,000, where the current fee is £1,315 but under the new regime will be £8,185, an increase of 622%.

For claims worth £15,000, the fee will increase from £610 to £750, a 23% uplift. For £100,000 claims, it goes from £1,115 to £5,000 (348%); for £200,000, from £1,515 to £10,000 (576%); and for £500,000, from £1,920 to £10,000 (421%).

Both were writing last month as statutory consultees of the Ministry of Justice as it decided to press ahead with the proposal first made a year ago. They were only published once the government issued its paper on the way forward last Friday.

Writing on behalf of the senior judiciary, the Lord Chief Justice, Lord Thomas, said there was likely to be a “disproportionately adverse impact” on SMEs and litigants in person.

He said: “It needs to be borne in mind that while the court fee normally represents a relatively small proportion of total litigation costs, it has to be paid up front and in full; whereas for individuals and smaller businesses the funding of litigation is often after the event, post-judgment. And these are significant sums.”

Lord Thomas also highlighted the difficulties of applying the new fee to unspecified money claims, either because the valuation of the claim has not been completed at the start of the case, especially in personal injury cases, or because the primary purpose of the claim is a non-monetary outcome, such as an injunction or other remedy.

The CJC said the new approach could act “as an effective barrier to entry to the justice system through pricing many court users out of the courts”, as well as making alternative to the civil process far more attractive – “thus undermining the very intention behind the court fee increase and thereby risking significantly reduced fee income”.

Both were also highly critical of what they saw as insufficient evidence underpinning the reform.

However, they welcomed the decision not to introduce a higher limit for commercial claims and not to introduce daily hearing fees.

The Association of Personal Injury Lawyers said the increases “could have a profound impact on access to justice”.

“The government’s claim that fees are not a major factor in a person’s decision about whether or not to go to court is completely disingenuous,” said president John Spencer. “This move is bound to discourage people from making valid claims – people who have every right to make them. And the idea that seriously injured people making higher-value claims are more likely to be able to afford the new fees is outrageous.

“The severity of an injury has nothing to do with the injured person’s capacity to pay. This new regime will dictate that some seriously injured people will be expected to pay £10,000 up front to bring their cases to court, and many simply won’t be able to afford it.”

In its consultation response, the Ministry of Justice concluded that the increase would not make it harder to access the courts.

It said: “The research we have undertaken indicates consistently that fees are a secondary consideration in the decision to litigate, with the prospects of success and the likelihood of recovering the debt being primary considerations. Fees represent a small proportion of the overall costs of litigation and can, in successful civil proceedings, be recovered from the losing party.

“In addition, the fee to commence the large majority of money claims will remain unchanged under these plans [as] 90% of money claims are for sums of £10,000 or less; the fee is proportionate to the sums in dispute and is capped at £10,000; fee remissions are available for those who qualify; money claims can be brought under a ‘no win, no fee’ conditional fee agreement; and in limited circumstances legal aid remains available.”

By Neil Rose

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