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Money For Nothing (Again)

While there will no doubt be lots of speculation in the days leading up to George Osborne's pre-election Budget on 18 March, we doubt that anyone will be anticipating a rise in any single tax of more than 600 per cent. It's hardly an election winner, is it?

Yet next Monday (9 March)  – barring a parliamentary upset – the Government will bring in changes to Court fees that in some cases will see fees increase by more than 600 per cent.

The figures make for depressing reading for anyone involved in the Court process.  Court fees have regularly risen by more than inflation but the latest revision has gone several steps further than that. In a nutshell, for claims over £10,000, the Court fee from Monday will be set at 5 per cent of the value of the claim up to a maximum of £10,000. In the lower value cases this means an increase that could be described as merely eye-watering – the fee for a £20,000 goes from £610 to £1,000 (a rise of 64%). It is difficult to find a word to describe the increase in the fee in the case of a £190,000 claim - £1,315 to £9,500 (so a rise of 622%). The examples given come from an email circulated by the Law Society to solicitors, so might be expected to be extremes, but this isn't a situation where any real spin is required; if you issue a claim for more than £10,000 from next week it'll cost you a lot more.

The Law Society isn't happy about the change and has sent pre-action correspondence as a precursor to seeking judicial review. It has the support of the Bar Council and various other representative bodies. The judiciary has also expressed concerns. Quite whether this will get anyone anywhere remains to be seen (the views had been strongly expressed before this announcement). We have no doubt that the government is underestimating the impact of these changes (surprisingly, given the obvious parallel to be drawn with the imposition of fees for Employment Tribunal claims), but no doubt it is seen as easy money. 

For the moment the safe course of action is to assume that the Court fee sale ends this week. If you have reached the point where you think that you will need the Court's help at some point to resolve a dispute, it may well be worth issuing proceedings this week.

As for the impact of the changes (if they go through), we doubt that it will have the (presumably) desired effect of increasing revenue while reducing the strain on court staff. Undoubtedly these rises will deter litigants from issuing proceedings, so more disputes will end pre-action, whether through settlement or simply not being pursued. Russian billionaires will continue to regard our system as good value for money. For those of more modest means court proceedings will be even more an option of last resort so expect to see a higher proportion of those claims ending up at trial and an increased use of alternative forms of dispute resolution. 

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