Dramatic increase in court issue fees

There is real concern that access to justice for individuals and small to medium sized businesses will be impeded, following a Ministry of Justice consultation dramatically increasing the court fees for claims worth over £10,000.

While the increase was mooted for April 2015, Parliament approved an immediate increase in fees from Monday 9 March 2015.

The key changes are:

• Claims between £10,000 and £200,000 will now incur an issue fee of 5% of the amount claimed;
• Claimants issuing through Secure Data Transfer (SDT) or Money Claims Online (MCOL) are eligible for a small discount on the court fee incurred (usually 10% of the fee); and
• Claims over £200,000 and claims which cannot be quantified will attract a fixed court fee of £10,000.

These amendments will have significant implications for claimants across all types of civil court claims, whether debt claims, personal injury claims or more complex commercial disputes.

We include a table below which demonstrates the impact on fees for claims above £10,000.  For example, if a claim was worth £150,000 under the old system (bearing in mind claim value is inclusive of damages and interest), the court fee would have been £1,315. However, that fee will now be calculated based on 5% of the value of the claim, giving an increase to £7,500.

The new rules are significant for claims which cannot be quantified.  These will incur an issue fee of £10,000, regardless of whether the ultimate claim will be worth far less than £200,000.

Claims worth below £10,000 remain unaffected by the changes.

Commentary

The fee hike has been criticised by senior lawyers who argue that it will act as a significant barrier to justice, particularly for individuals and smaller to medium-sized businesses.  The changes may be subject to judicial review in the near future, although a similar challenge was not successful in the context of increased fees for employment tribunal claims.  It remains to be seen whether volumes of court business will be subject to the same dramatic falls as employment tribunal work.

The House of Lords remains confident that the changes are a "sensible and proportionate way of recovering some of the costs of access to justice".  Lord Faulks, who proposed the motion, states that "those who use the courts should make a significant contribution to the cost" and that it is important to bear in mind that the court fees generated "would be recoverable from any defendant in the event of a successful claim."

It is more important than ever for individuals and businesses to avoid becoming involved in litigation.  Those regularly involved in enforcement of debts or other disputes with a value of over £10,000 may want to consider whether the dispute resolution clauses in their standard agreements or terms and conditions offer an appropriate route to resolve difficulties.  The changes will no doubt focus minds on mediation and other forms Alternative Dispute Resolution (ADR) with a view to avoiding the costs of full court claims.  Parties should also consider the availability of before the event insurance cover to meet the costs of unexpected litigation.

If you would like to discuss any of the issues raised above, please ask to speak to a member of our Dispute Resolution team on 0191 211 7777 or at [email protected].