The Civil Proceedings and Family Proceedings Fees (Amendment) Order 2015

The Government is pressing ahead with a major increase in court fees, which currently seems likely to come into effect on Monday 9th March.  This increase comes despite a threatened judicial review application by the Law Society, supported by The Bar Council, among other legal professional bodies, and despite concerns expressed by some of the senior judiciary.

The increase applies to claims to recover a sum of money, and affects the sums payable to the court just to commence proceedings.  Where the claim is for any sum up to £10,000 (small claims), the current fee remains unchanged, at £35 to £455.  For claims above £10,000, the fee is to go up to 5% of the amount claimed (including any claim for interest), subject to a maximum of £10,000.  A claim for an unspecified amount will incur the maximum fee.  A discount of 10% will apply where the claim is issued electronically, and fees may be remitted or reduced for claimants of limited means. 

The impact is dramatic.  The current maximum fee for claims over £300,000 is £1920, so the new fee of £10,000 is an increase of £8080, or 421%.  At some levels of claim the percentage increase is even larger.

While a proposal to charge even higher fees for claims in the Commercial Court, Chancery Division and Technology and Construction Court is not being implemented, there are proposals in the pipeline for further measures such as increasing the fee for issuing a possession claim from £280 to £355 (it was £175 at the start of 2014).

The stated aims are to ensure that the courts are adequately resourced, at reduced levels of taxpayer subsidy, and to invest in the modernisation and improvement of the court system.  There are concerns, though, over the impact of the proposals on the UK’s international reputation as a centre for commercial dispute resolution, and closer to home, about restricting access to justice.

For a small business owed £40,000, it may be a matter of survival, and taking the claim to court will now involve significant front-loading of costs.  The issue fee will rise from £610 to £2000, and as a consequence of the implementation of Lord Jackson’s reforms to civil justice procedure in 2013, just getting to the first case management conference is likely to cost more than that again in solicitors’ fees.  Given limited ability to recover legal costs of claims at that level, it seems highly likely that many will turn to alternative dispute resolution procedures.

If the court system is to be occupied largely either by unreported small claims, conducted by litigants in person, or by major commercial litigation over sophisticated international transactions, the scope for future development of the law will be restricted.

The immediate impacts are more obvious: anyone contemplating commencing proceedings for any significant sum should consider doing so this week.  It may be salutary to notify debtors that default is shortly going to become significantly more expensive as regards the costs recovered from them ultimately, and equally, where payment to a third party is being deferred it should be borne in mind that paying pre-issue is likely to be advantageous. 

Managing the issue of an impending limitation deadline by entering into a ‘standstill agreement’ is something that should receive closer attention from now on, since the alternative of issuing a ‘protective’ claim is now going to be expensive.