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Massive Increase in court fees could mean the end to mid-sized litigation claims

The government has announced that it will raise the fees again for starting a claim in the County Court to bring in an estimated £120m per year in additional income to the treasury. The new fee structure is due to come to effect before October 2015, subject to parliamentary approval.

In its response to a consultation on “enhanced” court fees the government has decided that the fee to issue a claim of more than £10,000 will rise to 5% of the value of the claim, up to a limit of £10,000. The current fees to issue claims ranges from £455 to a maximum £1,920, meaning that in higher value cases the fees will increase by over 500%.

What this means

This massive increase in the costs just to start a claim is likely to discourage small to medium businesses and individuals from litigating.  It could also mean that it is more likely that claimants will represent themselves in order to attempt to cut down legal costs. This will no doubt lead to more delays in the court system. Defendants will also be more wary of claims as the increased costs will be a factor to consider when deciding whether to dispute a claim in the first instance. Court fees have risen massively and some say that charging claimants a percentage of the debt, just like a debt collector, but unlike a debt collector it has to be paid regardless of whether they recover their money or not. Some also ask: Doesn't this appear extremely unfair?. Especially as obtaining a judgement does not mean the claimant actually receives any of their money back. But because of the massive increase in the fees to start a claim this will make litigation a much less attractive prospect. Knowing this may also encourage debtors, especially dishonest debtors, to hold on to force creditors to either fork out large sums of money to start a claim or simply write off the debt. In many cases the debtor will be laughing all the way to the bank. And if the debtor has no assets, absconds etc, the poor creditor will end up paying the government thousands for the privilege of receiving a worthless judgement by default on a business that was set up overnight and disappeared overnight, and only for the rouge directors to pull the same scam again, and again.

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