Dramatic Increase in Court Fees to Hit SMEs Hardest

Concerns That Seemingly Arbitrary Increase Will Limit Access To Justice And Drive Commercial Court Work Elsewhere

11.02.2015

David Shirt, Press Officer | 0161 838 3094

Proposed changes to court fees, which are expected to be introduced from April this year, could have a disproportionate effect on small and medium enterprises according to national law firm Irwin Mitchell.

In a written statement dated 16 January 2015, issued in response to its recent consultation: Court Fees: Proposals for Reform, the Government has confirmed that the fee for issuing a claim for monetary loss will be increased to 5% of the sum claimed, subject to a maximum fee of £10,000.

This differs from the existing banded system, by which the fee to be paid is referable to the band in which the value of the claim falls. Although it remains unconfirmed, it is presumed that the maximum fee of £10,000 will also apply in circumstances where the monetary amount being claimed is unknown as at the time of issue (unspecified claims attract the highest level of fees under the current fee regime).

The changes are likely to come into effect in April 2015 with the latest revisions to the Civil Procedure Rules.

Since the announcement, the Civil Justice Council has noted that “the size of the monetary price and percentage increase for all fast track and multi-track cases is immense”. By way of example, under the proposed new regime, the fee for issuing a claim for £100,000 will be £5,000, an increase of 348%; the fee for issuing a claim of £150,000 will be £7,500, an increase of 470%; and the fee for issuing a claim for £200,000 will be £10,000, an increase of 576%.

Fears have also been raised that the increase in fees will cause commercial court work to move to other jurisdictions. Research conducted for the Ministry of Justice by the Centre for Commercial Law Studies at Queen Mary suggest that the proposed fees would make court fees in London the most expensive in the world. For example, the fees proposed are between 25 to 100 times greater than those payable in the courts of New York, London’s closest competitor, creating a risk that litigation will move elsewhere. The fees involved in issuing a claim will be also be brought close to the already high costs of commencing arbitration proceedings. This decreasing differential gives rise to a risk that large scale disputes, already attracted by the confidentiality attaching to arbitral proceedings, will move in that direction, potentially causing a further gap in the court’s financial resources.