In March 2015, the government significantly increased the fees for commencing a court claim. Now, for a claim over £10,000, the court fees will be 5% of the value of the claim, up to a maximum of £10,000. For some claims, the fees have increased nearly six-fold. For example, in order to start a claim for £100,000 the court fee will be £5,000 - compared to £910 previously.
Representatives from across the legal profession challenged the hike in fees. The Law Society (joined by the Bar Council, Chartered Institute of Legal Executives, Association of Personal Injury Lawyers, Forum of Insurance Lawyers, Motor Accident Solicitors Society, Action Against Medical Accidents, Chancery Bar Association and Commercial Bar Association) led a campaign voicing concerns over the impact of the new fees on ordinary people. The government was asked to explain how much it proposed to make from the enhanced fees and how this revenue would be spent. The higher fees appeared to be a flat tax in excess of the costs of administering claims through the civil justice system.
Impact on SMEs
The concern is that the higher fees will impede access to justice for small businesses and individuals. People may be deterred from commencing genuine claims and a large court fee payable at the outset will have a significant impact on a small business’ cash flow.
The new fees also appear to be inconsistent with the government’s aim of facilitating IP litigation for SMEs. For example, since 2010, companies have had access to a streamlined procedure in the Intellectual Property Enterprise Court (IPEC) which “aims to provide cheaper, speedier and more informal procedures to ensure that small and medium-sized enterprises and private individuals are not deterred from innovation by the potential cost of litigation to safeguard their rights.”
The streamlined procedure is designed for lower value IP cases, as the IPEC may award damages up to a maximum of £500,000. In England, a successful party typically recovers its costs from the losing party. The IPEC reduces the uncertainty associated with litigation, by ensuring that the losing party does not have to pay more than £50,000 for the successful party’s legal costs. For example, a tech company may enforce its IP rights against a competitor, secure a court order restraining the infringement and ordering the competitor to publicise the outcome of the litigation, as well as damages of up to £500,000, and only pay a maximum of £50,000 in the event that it loses.
However, can a court fee of up to £10,000 be reconciled with recoverable costs of £50,000? Although a successful party may recover the court fee from the losing party (in addition to £50,000), a potential claimant will still need to find funds to pay the court fee upfront. Some may think twice about enforcing their rights or will have to think critically about their likely damages, to avoid paying a higher fee.
Only the Liberal Democrats have suggested, in their manifesto, that they will review and potentially reverse the increased fees to ensure that “court and tribunal fees will not put justice beyond the reach of those who seek it.” In a closely fought election, it remains to be seen whether the new government will revisit the current fees.
Priya Nagpal is a legal director at Olswang
This advertisement feature is provided by Olswang, sponsors of the Guardian Media Network’s Changing business hub
