Will rising court fees affect you?

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We discuss the recent rises in court fees and consider how they are likely to influence strategic approaches to litigation.

In early 2015 the Government consulted again on increasing court fees. Despite 90 per cent of respondents opposing the proposed rises, civil issuing fees were quickly increased in March 2015. However, in less than six months, more fee changes were proposed and within a year further increases had been implemented. But, will the changes affect you?

What happened in 2015?

In March 2015, increased civil court fees were introduced for issuing proceedings related to all money claims. For claims valued at £10,000+, the previous set incremental fees were all increased to 5 per cent of the claim value with a cap of £10,000 introduced for claims valued at £200,001+. The Ministry of Justice stated that the changes were necessary to address financial pressures and “make good the financial shortfall” between Her Majesty’s Court and Tribunal Service’s (HMCTS’s) received income and the cost of running the service.

However, despite the introduction of these increased fees, the Ministry of Justice was quick to highlight that more needed to be done. Therefore, shortly after in August 2015, the government confirmed that further fee increases were to be applied to general civil applications whether agreed or contested; the issuing of possession claims; and divorce proceedings.

Accordingly a second consultation was swiftly completed by the end of September. It sought views in relation to civil litigation fees including:

(i) whether the fees cap for issuing proceedings should be raised further to £20,000, or higher, or removed completely;
(ii) whether personal injury claims should be exempt from a higher cap;
(iii) potential changes to the test which permits fee remission claims; and
(iv) whether all civil fees (not specifically addressed individually) should be increased by 10 per cent.

Views on other proposed increases for certain property, immigration and asylum, regulatory and tax matters were also canvassed.

By December 2015, the government confirmed that the cap for issuing proceedings would not increase to £20,000 (although it remains under review). However it proceeded with its planned 10 per cent increase to civil court fees. These were ultimately introduced in March 2016 – along with significant increases to Court of Appeal fees too.

What are the potential consequences?

Throughout the consultations, significant concerns were raised about the potential impact on access to justice – especially when the dust had not yet settled on the preceding changes and therefore no substantive evidence of the implications had been collected between changes. In particular, it was argued that potential claimants will be dissuaded from pursuing genuine claims in order to protect what little money they have – a factor which has already been reflected by a rise in the number of litigants in person following the 2015 fee increases and some of the wider Jackson reforms. It is anticipated these numbers will undoubtedly rise further, and unfortunately is something of an “own goal” as such matters inevitably take up more court time and resources, thereby costing HMCTS more. On the other hand though, some argued that the rises will help to reduce the pursuit of unmeritorious claims earlier.

On a practical level, the recent increases are likely to influence strategic approaches to litigation. For those claimants concerned about the increased level of issue fees, a new pressure to progress pre-action negotiations is likely to materialise in an effort to avoid the fees entirely. However conversely, “richer” parties (such as large companies) may develop a stronger negotiating position, or tactically avoid early settlements and/or admissions of liability, in order to benefit from a “poorer” party’s inability to pay the issuing or counter-claim fee and therefore pursue the matter further.

Within any litigation itself, it is also questionable whether increased fees will result in a slicker service or instead develop inefficiency and delays. Parties may be reluctant to make costly applications to bring defaulting parties’ actions to the court’s attention and secure swift resolutions.

There is a potential knock-on effect for litigation funders too. If ATE insurers are being asked by claimants to fund larger court fees, inevitably premiums will rise. Likewise, for those claims which do settle or are lost at court, defendants with insurance will inevitably see their premiums rise too as insurers are required to pay higher sums to resolve costs. Notably, before the 2016 rises were announced, the Forum of Insurance Lawyers questioned whether the government’s costs saving plans will ultimately backfire, as defendants often include central or local government bodies, who will ultimately pay if claims are settled or lost.

While the aim of these increases is to generate more revenue, it is debateable whether this will ultimately be achieved. Many commentators have noted that an increase in employment tribunal fees immediately resulted in a reduction in claims. Others fear that increasing already expensive fees may damage the wider appeal and reputation of litigating in England. In the event claim numbers drop, a service will still need to run for some, but what quality of service will be offered then?

Conclusion

While the Government has temporarily “parked” increasing money claim issue fees further, it appears that rise upon rise has been introduced without full assessment of the implications of each preceding change or any credence being paid to the concerns raised. Unfortunately this will have clear repercussions for all current and prospective court users and litigation parties.

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