Jan 21, 2015

Cost of Bringing a Claim to Increase

The government has announced that it will go ahead with its proposal to introduce percentage issue fees for money claims over £10,000, calculated as 5% of the value of the claim subject to a cap of £10,000. Issue fees currently range up to £1,920 for claims of more than £300,000, so the new fees will mean a fivefold increase for claims at that level. However, setting the value of claims subject to fees at this level means that 90% of cases will not be affected by the introduction of this fee. A 10% discount will continue to be available for those issuing claims electronically. The government has decided against implementing its proposal to introduce even higher fees for claims in the Commercial Court, Chancery Division and Technology and Construction Court. These would have involved either a higher cap to the issue fee (either £15,000 or £20,000) or a new daily hearing fee (£1,000 per day or £500 for hearings of half a day or less). In addition, the government is consulting on further proposals to raise fee income, including a significant increase in application fees in civil proceedings, from £155 to £255 for a contested application and from £50 to £100 for an application without notice or by consent. That consultation will be open until 27 February 2015. Justice Minister, Shailesh Vara said, "I have already announced that we will be investing £375m in the courts over the next five years to modernise services so that we can realise long-term financial savings worth over £100m per annum by 2019/20." Various bodies have expressed concerns, including the senior judiciary and the Civil Justice Council, as to the potential impact on access to justice as well as London's competitive position as a centre for international dispute resolution. The judges warned of a disproportionately adverse effect on small and medium enterprises and litigants in person bringing claims, especially those who fund cases after the event. The judges also warned the number of litigants in person is likely to increase, as litigants forgo legal representation to pay the fees. The Bar Council said the latest proposals are deliberately designed to raise significantly more money from claimants than the cost incurred by the courts in handling money claims.  It noted the maximum fee is to be increased by 420%, from £1,920 to £10,000.  The fee payable for a claim of £200,000 is to be increased by 660%, from £1,315 to £10,000. Bar Council Chairman, Alistair MacDonald QC, commented that, "Cash-flow is the life blood of small businesses and many end up having to pursue late payments and other debts through the court system. Imposing a 5% fee may well make many small businesses think twice before making that claim, and will certainly strengthen the hand of late payers.' As the new 5% issue fee is an "enhanced fee", meaning that it is aimed at recovering more than the cost of the services to which it relates, it must be introduced by statutory instrument. The government has said it will prepare and bring forward the necessary legislation so that the new fee can take effect before the start of the 2015/16 court term, subject to Parliamentary time being made available.

Posted by: in: Civil Procedure, Companies, Legal News, News

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