A revolution is taking place in the way that litigants are charged for using the court system and it is shaping up to be a noisy one.
Historically, government’s aim has to been to charge court fees on a “cost” basis, designed to cover the cost to the Ministry of Justice of providing the court service. From today, in a radical departure from that practice, fees for starting proceedings at court to recover a sum of money will be charged on an “enhanced fee” basis. This means that fees will not just be calculated to reflect the cost to the public purse, but also the value of the proceedings to court users.
If this sounds like a rather dry distinction, the effect in practice is quite dramatic. Under the new rules, the fee for issuing claims for over £10,000 will be calculated at 5% of the value of the claim, up to a maximum fee of £10,000. This means that some fees are increasing by an incredible 600% or more as the following demonstrates:
Click here to view the table.
If the intention was to charge the highest fees for only the highest value claims then many in the property industry might feel that the right balance has not been struck. A commercial landlord, for example, might not think that a £200,000 dilapidations claim was anything out of the ordinary, but it will now be charged at the very highest rate.
Some are querying whether such “front loaded” fees really do reflect the value of the proceedings to the party bringing the case as they will not initially know how far the proceedings will progress. Only a tiny fraction of claims get as far as trial. Many will settle very quickly after they are issued.
A preferred alternative might be for fees to be charged on a “pay as you go” basis, as parties make their way through the court process. In particular, there is something to be said for the proposition that attending long hearings or trials should attract enhanced fees as the parties are getting the benefit of court facilities, court staff and judicial time. Such “back loaded” costs could take that into account: a high value claim may only require a short hearing and limited use of court time, and vice versa.
Also questionable is whether the changes are truly in tune with the government’s recent drive to reduce legal costs. The overriding objective of the Civil Procedure Rules includes “enabling the court to deal with cases justly and at proportionate cost”. Is a fee of £10,000 for a claim of £200,000 really proportionate? Unquestionably, many litigants in person who cannot afford legal representation would be deterred from bringing a £200,000 claim if they have to pay an upfront fee of £10,000.
The Ministry of Justice has just closed a consultation for extending enhanced fees to possession proceedings which will be of particular interest to the property industry. Whilst the proposed increases are small, the rationale for singling out one type of claimant above others is not clear, especially where they are unlikely to be able to recover costs from the impecunious tenant or trespasser they are trying to remove.
The Law Society is amongst those voicing their concern – it is campaigning against the increases and even threatened a judicial review of the government’s decision. Labour has promised a review if returned to power after this year’s general election. What might at first have seemed like an unremarkable review of court fees appears to have ballooned into a much wider debate about access to justice.