There has been much publicity in the press about the increase in the court fees which came into effect on Monday 9 March. What impact is that likely to have on someone involved in a dispute?
What are the Increases?
In some cases the court fees have increased by as much as 600%. The most significant aspect of the new fee structure is that the fee payable by a claimant in respect of any claim for a sum between £10,000 and £200,000 will be 5% of the value of the claim.
For claims less than £10,000, the fees can be even higher as the court fee can be between 4.5% and about 18% of value of the claim. Generally speaking, claims for less than £10,000 are also claims in respect of which the parties will not be able to recover the costs of legal representation.
Impact
Many claimants will not be able to afford to incur the court fee. As a result they will be denied access to justice as a result of fact that they cannot afford to issue proceedings to recover the monies owed to them whether there is a good defence to the claim or not. It seems inevitable that this will encourage some cynical defendants to feel that they can get away with not having to pay a debt that might be owed in the hope that the claimant will not be able to afford to pursue it.
In more complex cases where there may be an arguable dispute and particularly in cases where the claim is worth more than £10,000, it would be foolish for a defendant to think that the increase in the court fee will put him into a better position. If a claimant is successful in his claim then the defendant will end up having to pay the increased court fee as well as any judgment debt. The increased course fee is an increased risk for both parties. Arguably, therefore, it is in the interests of both claimant and defendant to ensure that they take all possible steps to resolve their dispute without having to incur the court fee.
The extensive use of Pre-action Protocols, Letters of Claim and Letters of Response and the associated exchange of documents mean that the parties are now much better equipped to negotiate a commercial settlement before court proceedings are issued. Even so it appears that there are some “trigger happy” claimants who appear intent on issuing proceedings without having fully explored the possibilities of achieving a negotiated settlement. The hope is that the increase in the court fees will serve as an inducement to both parties to talk sensibly before proceedings are issued stage and, if necessary, use mediation as a means of avoiding someone having to pay the substantial fee involved.