BEWARE THE COURT FEE HIKE

It is our understanding that the civil court service is generally self-financing without support from the tax payer. Essentially the revenue from court fees is sufficient to fund the court service with the exception of the family division.

There was a significant hike in recent years for court fees but the government has now announced further substantial and totally unmerited fee increases. If you want to start a claim for recovery of money then the new fee will be 5% of what you are seeking to recover for claims over £10,000. If you are owed £50,000 then the fee will be £2,500; if you are owed £100,000 then you must pay £5,000 and if you are seeking £500,000 then expect a fee of £25,000. Many in the legal profession, including senior  judges, have severely criticised this move and have stated that it will frustrate access to justice and play into the hands of the big corporations, banks and insurance companies; but the government will  not listen. The government is determined to proceed with this quite outrageous fee hike.

The introduction of fees in the employment tribunal reduced claims by about 75%. There was some merit in the introduction of these fees – the user of services should not get a free ride particularly claims that were little more than a “try on”. But there is no justification or indeed credible explanation for increasing civil fees. The government is either trying to frustrate access to justice or to simply generate tax through the back door.

It has been said it is the small business that will be most affected by these increases. The small business may not be prepared to fund the court fee and will prefer just to write off the debt. Rather than increasing revenue through higher court fees, we believe there will be a reduction in revenue both as a consequence of organisations choosing not to litigate and also writing off debts thereby paying less corporation tax. The government presumably is aware of this and so we are concerned that there is a hidden agenda to frustrate access to justice and to unfairly favour the “mega business” of banks and insurance companies. Indeed all of the reforms made to the civil justice sector within the last five years have favoured the larger organisation and have seemingly created barriers to justice.

What this new tax on access to justice does is raise the prospect of private dispute resolution again becoming the preferable option. Is it now better to adjudicate on small sums of money? Should we revert to arbitration rather than litigation? Should parties try harder to reach an amicable solution through mediation? I am of the view that actually this new tax has nothing to do with the recoverability of revenue – it is actually trying to discourage people from using the courts. In my view the decision makers behind this new tax either  have no idea of the consequences of what they have  done (because they are career politicians and removed from the real life) or  it is a cynical ploy to undermine the civil justice system. Also I have no doubt that this new tax on justice will remain whoever gets into power in May 2015.