Court fee rise will disadvantage SMEs chasing late payments from big business

The Bar Council, which is the national representative body for barristers in England & Wales, warned that the higher costs of bringing court proceedings will cause a greater imbalance where one party is wealthier than the other. The Bar Council says that the richer party will have a stronger bargaining position in any settlement negotiations, and could simply refuse to settle the case, knowing that the weaker party would be unable afford to take the case to court because of the high fees.

These problems will be faced by small businesses chasing late payments from bigger business, warns the Bar Council. It will also lead to an increase in the number of people attempting to represent themselves in court.

Alistair MacDonald QC, Chairman of the Bar, said: “It goes against every principle of justice that one party should have an unfair advantage over the other in a court case. Further court fee rises will mean that wealthy individuals or businesses immediately have an advantage if they find themselves facing a claim from someone of limited means such as a small business facing cash-flow problems, and that advantage will have nothing to do with the merits of their case. The wealthier party is in a stronger position. The poorer party is either priced out of court or makes an attempt to represent themselves, which not only slows the court process down, but leaves them in a weak position against the other party in the case.”

Following the introduction of new fees in March this year, the cost of starting a case was 5 per cent of the value of the claim. This value was capped at £200,000 making the maximum fee payable £10,000. One of the proposals is to remove this cap entirely. By way of example, a family making a legitimate claim against insurers for the value of their home, which could easily exceed £600,000, would have to find at least £30,000 just to launch court proceedings.

Alistair MacDonald QC added: “Since March, anyone bringing a money claim to court, whether that is for an injury or any other valid reason, could face a fee of up to £10,000. That is bad enough, but under these new proposals, court fees could be unlimited. Very few individuals or small businesses have tens of thousands of pounds sitting there in the petty cash box. We opposed those initial court fee increases and we oppose these too. The impact on access to justice of the original court fee rise in March has still to be assessed, and yet further rises are already being proposed. It is not even clear yet if the initial increases have raised any extra revenue. The very least that the Government should have done was to wait until the full effects of the earlier rises had been evaluated. By rushing into the proposals for even higher fees, the risk is that an even greater number of worthy claimants will be denied access to justice without any benefit to the Treasury.”

The Bar Council has responded to these and other issues in its response to the Ministry of Justice’s Consultation on Further Fees Proposals.