Priced out of the Market – the effect of court fee increases
The government’s major increase in civil court issue fees went live back in April 2015. Prior to that date fees were relatively modest, scaling with the amount of money claimed and reaching a maximum of around £2,000.
After it, the fee structure changed entirely for those cases over £10,000 (meaning cases too large to be dealt with in the ‘Small Claims track’. The new regime calculated the court fee at 5% of the sum claimed, meaning a small increase for cases around the £10,000 mark, but a very dramatic increase for higher value cases – initially capped at £10,000 but with plans to increase this to £20,000. Small Claims fees remain unchanged – although in many cases these already stand at over 5% of the claimed sum, and so would have to be reduced to be brought in line with the fees for higher value cases.
These changes have since been followed in March and April 2016 by wider-ranging increases, including Court of Appeal costs, possession claim costs and a sharp increase to the cost of making applications to court. More recent changes have added 10% to the cost of all enforcement actions.
The Registry of County Court judgments has recently published a report that makes for sobering reading. The number of County Court judgments made in the first half of 2016 is 19% down on the same period of the previous year. The number of High Court judgments, claims of higher value, is down by a huge 50%.
Possession claims are also down by 9%, and County Court bailiff possessions are down by 14% - although in the latter case the slack may be taken up by High Court Enforcement Officers who offer an eviction service that is more expensive but usually swifter than the court’s own bailiffs.
On the face of it, a reduction in litigation might seem like good news for everyone except the lawyers. However, this change is unlikely to reflect a drop in the number of actual disputes, unpaid invoices and recalcitrant tenants. The Bar Council, which opposed the rises along with a number of other legal organisations, has stated that smaller businesses are the sector worst hit by the increases, and that “by increasing court fees the government has cut off those small businesses’ only real and last hope of getting that money”.
The result of the increase in court fees means it is likely that, for individuals and small-to-medium companies, justice through the courts is increasingly out of reach. Similarly, where a claim is made, a struggling debtor now faces a vastly increased court fee to be added to the pre-existing debt. Given these trends (and a further increase to fees has not been ruled out), smaller businesses will likely be far more wary about offering credit to customers, which in itself will make them less competitive against larger rivals, and is unlikely to help speed up economic recovery and growth.
If you are involved in any dispute and require assistance please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.