Background:

On 4th March 2015 the House of Lords approved the government’s increase in civil court fees affecting the fee to issue proceedings for the recovery of money claims worth £10,000 or more. Claims needed to be lodged by 6th March 2015, correctly, in order to avoid having to pay the increased fees, which commenced on 9th March 2015.

The government has expressed that it expects the fee rise to generate an additional £120m a year for the court service – though it has not been made clear what the use of the extra money will be.

The New Fees:

For court issued claims, the new fees are five percent of the value of the claim, including interest.

For claims filed electronically via Secure Data Transfer or Money Claim Online, the new fees are four and a half percent of the value of the claim, including interest – benefiting from a 10% discount. These methods for filing claims are only available for money claims up to the value of £99,999.99. Any claim for the value of £100,000 (including interest) or greater cannot be filed by these methods so cannot benefit from the lower fee rate.

The new court fees are capped at £10,000 maximum.

Counterclaims and additional claims are also affected in the same way by the fee rise – the court fees are based the value of the counterclaim or additional claims and where the original claim was issued.

To illustrate the effect of the new court fees issued at court:

Value of Claim Previous court fee New court fee Percentage increase
£20,000 £610 £1,000 64%
£50,000 £910 £2,500 175%
£100,000 £1,115 £5,000 348%
£150,000 £1,315 £7,500 470%
£200,000 £1,515 £10,000 560%
£250,000 £1,720 £10,000 481%

 

 

 

 

 

 

 

 

Further Proposals:

To increase fees on possession claims by £75.

The government is also proposing to increase the fee for a general application in civil proceedings from:

  • £50 to £100 for an application without notice or by consent; and
  • £155 to £255 for an application on notice which is contested.

subject to an exemption for:

  • applications to vary or extend an injunction for protection from harassment or violence;
  • applications for a payment to be made from funds held in court; and
  • applications made in proceedings brought under the Insolvency Act 1986.

Effect on claimants:

As court fees are payable immediately on filing a claim at the court or via the online systems, clients wishing to issue a money claim will need to ensure that they have sufficient funds to pay the full court fee before filing the claim.

Pothecary Witham Weld regularly acts for charities, religious institutions, small/medium businesses and private individuals. When faced with a money claim of a substantial sum, the new court fees will be a significant consideration as to whether proceedings are issued.

The Law Society has stated in response to the court fee increase that the increase is “wrong and will have serious consequences for access to justice” and that it is “making access to justice a privilege for those with deeper pockets”.

The Law Society has also argued that the “maximum fee of £10,000 unfairly penalises those with claims at the lower end of the scale and will lead to unjust and unfair outcomes for individuals and small businesses”.

Conclusion:

It is unlikely that any challenge to the fee increase will be successful.

Parties to a potential dispute should be mindful of the need to engage in an ADR or mediation process prior to commencement of any formal court proceedings.

The solicitors in the firm’s Dispute Resolution and Employment Department are experienced with Alternative Dispute Resolution procedures and in the conduct of formal litigation.

 

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