Health & safety litigation partner Susan Dearden examines the implication of the overhaul of court fees.
From 9 March 2015, changes in court fees mean that for cases where the value of a claim is £10,000 or more, the issue fee will be 5% of the claim value, up to a maximum of £10,000 for claims of £200,000 and over, or where the amount being claimed is not specified. Court fees for claims below £10,000 remain unchanged, at between £35 and £455. There will also be a discount of 10% for claims issued electronically. The changes apply equally where counterclaims are brought.
The new enhanced court fees are intended to cost more than the service to which they relate, and the intention behind this is that the additional income is retained by the courts to help them deliver a better service.
Many, not least the Law Society and other legal and professional organisations, do not accept that the government's proposals provide any concrete evidence as to how this will be done. There is widespread concern that the enhanced fees will primarily serve to reduce access to justice. Although it is a cost initially borne by claimants my concern, as someone who often represents defendants in injury claims, is that this increase will ultimately hit defendants already suffering from qualified one way cost shifting.
It may also give claimant injury lawyers pause for thought - previously a claim with a value of £200,000 would have cost £1,515 to issue. Now it will be £10,000. Just a handful of such cases will have a material impact on claimant practices, which typically carry this cost for their client until costs are recovered at the end of a successful claim, or write off the cost if the claim is unsuccessful.
This level of fee is unlikely to be something that claimants' lawyers will want to bear. It may therefore lead to an increased willingness by claimants' lawyers to consider the value of claims at an earlier stage, rather than focusing entirely on liability. Their current strategy is usually to push for an admission because once they have that, they know costs recovery is almost certain to follow. If they can't get an early admission, they may be less willing to take the risk of having to bear this level of fee should the claim be unsuccessful.
If their lawyers are unwilling to bear this initial fee, potential claimants will need to be asked for the court fee and, although they may be assured that if successful this will be reimbursed by the paying defendant, a £10,000 fee may well deter many from litigation.
It is not unusual for a personal injury claim to be issued with a 'statement of value' that says, for example, the claimant expects to recover 'in excess of £50,000'. Caps on value may now be given which will help defendants determine what the claimant is really seeking in damages - even though the cap may now in truth be motivated by keeping the court fee down. Leaving the value of the claim as unlimited will result in a court fee of £10,000.
Getting personal injury claimants to quantify their claims as early as possible to avoid the highest fees can only be good news for paying defendants. It is often the claimants' lawyers' lack of engagement in discussions regarding the claims' values that thwarts attempts at settlement. Likewise defendants should consider whether they have grounds to challenge court fees incurred for overinflated or unquantified claims.
Arguments were raised in the government consultation documents that if enhanced fees were introduced, the fee that should be recovered from a losing opponent should be limited to the fee that would have been payable on the amount of the successful claim - rather than the actual fee paid (if there is a difference). The government accepted there was merit in the proposal but wanted to take time to "consider all of the potential impacts and consequences before deciding what action to take". A challenge to the court issue fee as part of a challenge on costs should be considered if appropriate in the meantime.
The Law Society has issued a pre action protocol letter seeking judicial review to challenge the government's decision to increase the court fees so significantly. We will keep you updated, but for now the enhanced court fees are in place and, despite the hostility that accompanied their introduction, they appear to be here to stay.