Court fee rises hitting small businesses – Law Society

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Court fee increases introduced six months ago failed to deliver any tangible improvements in the courts service or help protect access to justice, the Law Society said today.

Responding to a government consultation on the impact of the new fees, it said they would price small businesses out of exercising their legal rights, such as recovering debts.

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Law Society president Jonathan Smithers said: ‘There has been no assessment of the impact of increases, just six months ago, of more than 600%. Raising the fees further may render ordinary people’s legal rights meaningless because they simply would not be able to afford to enforce them.

‘It is wrong in principle for the courts to make a profit for government. Our members have told us that the government’s fee increases will stop people being able to bring legitimate cases, particularly people on lower incomes.’

In addition, the Society reiterated its concerns for higher fees for divorce claims. The estimated cost of such proceedings to the courts, according to the Ministry of Justice’s own figures is £270, but the government proposes to charge £550.

Smithers said: ‘It is disappointing that the government is seeking to gain from the misfortune of people who are going through the difficult circumstances of divorce.’

In its response, the Law Society said the impact would be felt by:

  • Homeowners trying to resolve disputes: for example, in construction disputes the value of the claims involved can be significant and the claim affecting the only valuable asset that homeowners have;
  • Taxpayers: taxpayers have a statutory right of appeal against demands for tax. By introducing fees, the government is effectively attempting to implement a financial penalty for exercising a statutory right of appeal against its own tax demand;
  • People harmed by the NHS: many complex clinical negligence claims, particularly birth accidents, are high value. Further increases will limit the ability of those harmed to seek compensation for the harm they have suffered;
  • Immigration and asylum claims: high fees will mean families cannot afford to challenge refusal of leave to remain and other proceedings, which could lead to their being separated.

Smithers added: ‘Small and medium-sized businesses are also likely to be disproportionately affected by the government’s proposals. Doubling some fees to £20,000 would price small businesses out of exercising their legal rights, forcing some into insolvency as they have no way of recovering debts they are rightly owed.

‘Higher fees for intellectual property claims directly oppose the aims of the Intellectual Property Enterprise Court, namely to offer a less costly and less complex alternative to the High Court and Patents Court.’

Readers' comments (12)

  • Will this lead to a reduction in PII premiums? Of course not!

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  • We are now being asked to pay the trial fee at the very start of the case instead of at listing stage. Given that the substantial majority of cases will settle, what is the point of this, storing up thousands of future applications for refund to process, unless it is just to get a swift large cash injection? Will these trial fees be held in a ringfenced account and will they earn interest to be paid if and when refunded?

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  • It always used to be the case that the County Court covered its costs with the fees that were charged. The fees were not excessive back then, and I doubt the cost of running the County Courts has risen disproportionately. That leaves one to suppose the cost of running the High Court was the problem,. If that is so one wonders why it would not have been possible to address the issue by looking at why the High Court ran at a loss rather than up the fees across the board.

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  • @Ian Newbury. No it isn't the High Court that is the problem. The Government have adopted a policy that the court fees should make a profit. After all it makes perfect sense, does it not, that a person who has nowhere else to turn to resolve their problem, whose last resort is call on a court of law, should have to pay an extra tax to be wasted by the Government.

    Those dead people with estates worth over £1,000,000 certainly need our help, after all, and I for one am glad that my client, Mr X who wants a divorce is having to pay to help that happen.

    It would be nice if Mr X actually got a good service in return, but he doesn't - we told him he was divorced last week, and he celebrated the good news. We had to call him today to advise him he wasn't divorced, after all. Liverpool County Court (or family court or whatever today's title is) has actually divorced the wrong person by mistake and has revoked his decree absolute! Without even so much as an apology, or an explanation of what they are going to do to put it right (or when)...

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  • Mediate!

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  • I have never understood the argument that the court should pay for themselves? Why should they? They are a state service not a private business in a market economy. Potential "consumers" of courts services do not have a choice to take their dispute elsewhere if the prices are too high or the service is too low.

    Curiously, I always thought that the banks were private businesses in a market economy, but the government appears to take a different view on that as well!

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  • Dominic Copper is right. Court fees hikes are openly designed to increase Treasury revenue, not improve service. It will be interesting to see the annual revenue figures when they are available next year. It may be that the revenue plan backfires with fewer cases issued, increased ADR and an incentive to consider fee remission in every case. That said, fewer cases issued means less court staff and overheads, leading to costs savings. Perhaps that's the real plan.

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  • The government uses the argument that higher taxes on the rich results in less overall tax paid to the government coffers. Why is the argument not used in respect of court fees. Surely the higher the court fees the less will come in? Is the economics principle correct? But, if it is, it cannot be correct for both, i.e. higher fees/taxes for courts, lower fees/taxes for the rich. I'm confused.

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  • The courts pay for themselves, not just in the fees taken, but in the VAT and other taxes which parties' legal advisers have to pay.

    These should be taken into account, but aren't. Why not?

    Robert Morfee

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  • Seems to me this is the one thing in which the Tories are brutally, consistently honest - that everything needs to pay for itself.

    I and others believe that some services shouldn't be as open to the push and pull of market economics / affordability (the police and courts seem fairly high on that list), but the Tories don't. And they're in charge. And the Court know that they can't really interfere with primary legislation, as every challenge to the changes has found...

    I switch from centre - left, to centre right, in certain views, but the modern day tories seem quite solidly businesspeople of the yorkshire pig breeding variety - size, value for money, what will it get at market. Seems popular with the electorate...

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