The House of Commons Justice Committee has announced an inquiry into the effects flowing from the introduction of the new court fees earlier this year.
Anecdotally, claimant representatives have asserted that the new fees are already having an impact in some areas. One example is lower-value marine claims.
In a recent edition of Litigation Funding, funder Augusta reported that in the marine disputes sector, the fees hike is encouraging defendants to test the resolve of claimants, rather than getting involved in active settlement discussions at an early stage.
Take, for example, a non-payment of hire claim for £150,000. The claimant shipowner’s prospects of success are 60%, but it is in some financial difficulty – and the defendant knows it. Under the old regime, the claimant’s court fee for issuing proceedings would have been £1,115, but now, it needs to find £7,500 to get access to the courts. The defendant is far less likely now to be receptive to striking a deal – it makes better tactical sense to force the claimant to issue proceedings; which in many cases, it will not be able to afford to do.
Ironically, the new, inflated court fees do offer an opportunity for the litigation funding sector. The claimant’s need for financial help, at the outset of the case, is now greater than ever. And of course the flip side of the much higher fees is that when a claimant does win, it will be the defendant who has to pay them – offering a greater incentive to settle before proceedings are issued, provided the defendant is convinced that the claimant does have the funds to litigate if they need to.
The funding market for smaller scale commercial litigation has been hotting up over the past year, with funders Augusta, Burford and Acasta Europe all now active in this section of the market. But while funding may be available, it will clearly come at a price – and claimants would prefer not to be faced with these out-of-kilter court fees in the first place.
It will be interesting see what evidence the justice committee finds on the effect of the fees. For those with experience to add, the committee is accepting written evidence on the topic until 30 September.