The cost of issuing claims in the English courts which seek a monetary remedy is going to rise to 5% of the value of the claim, subject to a cap of £10,000, possibly from as early as 1 March 2015.
The Government’s decision to raise the fees applicable to issuing money claims was announced by the Ministry of Justice on 16 January 2015 following part two of the Government consultation ‘Court Fees: proposals for reform’.
The increase will apply to all money claims (and counterclaims) with a value of £10,000 or more, but the increased fee will be capped at £10,000 (so all claims with a value of £200,000 or more, and unspecified claims, will be subject to the maximum fee of £10,000). A 10% discount will be available for those issuing claims electronically.
The Government has justified the fee increase on the basis that “those who use the services should make a greater contribution towards their running costs, where they can afford to do so.” The draft legislation to implement the increase states that it may take effect from as early as 1 March 2015.
Given the maximum fee currently payable in respect of a money claim issued in the English courts is £1,920, the increase to £10,000 represents a huge (more than five-fold) jump in costs, which will undoubtedly have a significant impact as there is no provision for the recovery of issue fees, or part of them, in the event the claim settles.
Entities bringing high volumes of claims in the English courts will incur far greater costs doing so. Of more concern, however, is the possibility that prospective claimants (particularly individuals) may be denied access to justice through being dissuaded, or prohibited, from issuing claims due to the fee increase. Although the Government’s justification referred to users of the courts’ services paying more of the costs “where they can afford to do so”, for all intents and purposes the only users who may avoid these fees are those with no, or very low, income and no assets.
The Government justifies the increase on the basis that fees are a secondary consideration in the decision to litigate, according to their research. That may be the case now, but it may not be so when the fees increase five-fold. In addition, claimants seeking to recover court fees incurred when settling a claim may find that, particularly in the context of relatively low settlement sums, defendants resist agreeing liability for hugely increased issue fees. This may make settlements more difficult to agree in smaller cases.
The Government also considers the impact to be low because of the availability of “no win no fee” agreements; but will lawyers be quite so willing to cover the issue fee on a claim for £200,000 if that fee jumps from £2,000 to £10,000? – perhaps not.
It is foreseeable that the number of claims issued by claimants to protect their position in respect of limitation will drop given that claimants still in the process of evaluating the merits of their claim may simply not be able to justify incurring the significantly increased cost of protecting their position. The especially tight deadlines within which bidders are required to issue a procurement challenge mean that potential claimants will be faced with a more difficult decision as to whether incurring the cost of the issue fee is justifiable; such claims are frequently issued on a protective basis, while all the facts relevant to the claim may not be known as the defendant party holds the key evidence.