Penny Doesn't Drop, as Court Fees Rise (Again!)

Increases to court fees have been subject to near-universal criticism by commentators. In the 2015 Harbour Lecture, Lord Justice Jackson referred to “the progressive growth of court fees culminating in the massive increase in March 2015” as being a factor which drives people away from the courts and one which inhibits access to justice. He went on to suggest that court fees should be excluded from the test of proportionality, a suggestion which appears to have been accepted by the Senior Costs Judge in BNM v MGN Limited [2016] EWHC B13 (Costs).

Notwithstanding this, on 25 July 2016 court fees were increased once again.

Court fees are rising faster than inflation

Since 2008 the cost of issuing a claim valued at more than £1,500 has increased far higher than the rate of inflation. For a claim valued at £10,000, claimants will now have to pay more than twice the amount which was payable in 2008.

Chart showing a comparison between court payable fees in 2008 and those now payable; and the percentage increase in such fees.

For higher-value claims, the position is even starker. Whereas the maximum fee payable on issuing proceedings used to be £1,530, it is now £10,000.

Problems caused by high court fees

High court fees represent a significant barrier to justice for a number of reasons, including:

• Litigants who are required to self-fund their cases will need to find significant money just to get their case off the ground. A small business which is owed £100,000 by an errant client will need to spend £5,000 to issue its claim. But carrying such a debt may mean that the business does not have the resources to pay such a high court fee.

• Law firms who fund disbursements for their clients – a situation which arises most frequently in personal injury litigation – will also see their cashflow significantly impacted. Firms may need to be more selective about which cases they accept in order to mitigate the losses which could be caused by paying increased fees on unsuccessful claims.

• BTE insurance policies – the increased use of which was advocated by Lord Justice Jackson in his final report – typically offer an indemnity of £50,000. The sums available to pay for legal work will be substantially eroded by the increased fees.

Exemptions/remissions

HMCTS operates a fee exemption/remission scheme.

Prudent lawyers who fund their clients’ disbursements will ensure they are familiar with the operation of this scheme for two key reasons: Firstly, because using the scheme can ensure that demands on a firm’s cashflow can be reduced by only paying court fees where they have to be paid. Secondly, because the high level of court fees means that paying parties now frequently object to having to provide an indemnity for such costs. Where a client qualifies for a remission or exemption but no steps have been taken to obtain one, there is a risk that the court fees will not be recovered.

By Alex Bagnall - Associate, Costs Lawyer