Vannin Capital – The Ministry of Justice recently announced that it plans to raise revenue from the court system by introducing a new structure for fees from April 2015 for bringing money claims over the value of £10,000.
Under the new system, the court fee to issue money claims over £10,000, will be calculated as 5% of the value of the claim (subject to a cap of £10,000).
The fee increases for money claims means:
· The fee for claims from £1 – £9,999 will remain unchanged.
· The fee for claims from £10,000 – £199,999 will be five per cent of the claim.
· The fee for claims £200,000 and above will be fixed at £10,000.
The increase in the maximum fees represents a 420% increase in the court fee from £1,920 to £10,000.
Currently a case issued at a value of £100,000 will incur a court fee of £910.00 after April 2015, once these increases are implemented, that cost will rise to £5,000.
The new pricing has been met with wide spread criticism. The Lord Chief Justice commented in a letter to the Ministry of Justice that ‘increases on this scale will have a detrimental impact on a number of court users, affecting individuals and businesses alike. There is likely to have a disproportionately adverse impact on small and medium enterprises and litigants in person’. Moreover, last week The Law Society issued a pre-action protocol letter of claim for judicial review of the decision including grounds that the new Court fees would be tantamount to “selling justice” contrary to the principles of Magna Carta.
Whilst wealthy companies, individuals and third party funders are unlikely to be deterred from pursuing claims as a result of these fee increases, individual claimants or SME’s may find them prohibitive, and this will deter them from lodging claims altogether, thereby denying them access to Justice. By way of example, a small business chasing a debt of £200,000 will now need to pay an upfront fee of £10,000. Late payment is already a serious problem for small businesses and this will further impact on the cash flows which keep businesses alive. At the very least, the increase in fees is a further restriction on access to justice.
Prior to April 2015 we can therefore expect a flurry of claims being issued at the Court before the fee increase comes into force. This may force some claimants to issue proceedings sooner than anticipated, just to avoid paying the increased court fee. This in itself will put a further burden on an already overstretched Court service.
If Court fees have to be increased it would surely be more equitable to increase the cost of a Hearing or a Trial than it would for the simple logging and service of a Claim Form. As statistics show the vast majority of claims issued do not proceed to trial.
The increase in fees will bring into force the importance of Alternative Dispute Resolution and in particular mediation. While mediation does not provide a guarantee of a resolution, it does provide litigants with an opportunity to reach an early settlement in a more cost effective manner than through the Courts. Whilst this was the case prior to the proposed increase in fees, it brings it into even sharper focus how important it is to consider Alternative Dispute Resolution and explore whether settlement can be reached without the need to issue proceedings.