2016 saw a significant hike in the court fees payable for commercial litigation particularly with regards to claims issued for the recovery of monetary sums. The one point of note from that update, however, was that Claimants and Applicants were offered a discount for issuing claims and applications electronically via HMCTS’ money claims online and bulk processing centres.
Fast forward to 2021, and the government has decided that the court fees need to be reviewed again. This time, the increases are twofold; firstly to bring the online/electronic fees to be in line with the paper fees, thereby removing the discount given previously, and secondly to generally increase the fees “in line with inflation”.
Though a full and finalised list of the new fees has not been released, the consultation paper issued by the Ministry of Justice does provide a list of the proposed increases and the rationale for the move to increase fees now. For those wanting to read the news directly from source, the consultation papers can be found at the following link:
Government Response to Consultation on Alignment of Fees (consultation completed)
Proposal for Inflationary Increases (Consultation ending on 17 May 2021- the table of civil fees is at pages 28 to 32)
In summary of the key changes applicable to our clients, I would note the following:
CCBC fees will be brought to be in line with issuing paper claims.
- The issue fee for non-monetary claims (for example for part 8 order for sale proceedings) will be increased from £308 to £332.
- Hearing fees for small claims cases will be increased by between £2 and £17, based on staggered bands of claim values.
- Multi-track hearing fees will be increased from £1,090 to £1,174, a rise of £84. However, no mention is made of any increase to the fast track hearing fee.
- Bankruptcy petition fee will increase from £280 to £302, but no mention has been made of a similar increase for the creditor’s winding up petition.
- The fee for converting a voluntary arrangement to a winding up will be increased from £160 to £172, but again no mention is made as to whether this rise will also apply for converting an IVA to bankruptcy.
- In general, enforcement costs will be increased by between £2 and £9, though the paper warrant of control fee will be reduced, with both online and paper applications costing £83 going forward.
It must of course be accepted that the court system requires funding in order to provide any service to those in need of it and, currently, the courts are in desperate need of investment to improve those services provides. The reinvestment of this increased revenue, assuming that is how the funds will be utilised, will hopefully be of benefit in the long-term.
That said, these increases undoubtedly come at an extremely difficult time, when many SME businesses have already been left reeling by the impact of COVID19. At a time when it has become more important than ever for companies to ensure they are collecting their debts and raising cashflow into their businesses this increase makes it exponentially more difficult, particularly for those businesses who might not necessarily have the cash reserves available to pay the upfront costs of court proceedings.
Even for those larger companies who may have withstood the difficulties of the COVID19 lockdown, credit control is only one of many different business functions and as such, those businesses may not have an infinite budget to expend on debt recovery or other litigation work.
The government has, in its response to the feedback on the alignment of fees, stated that it does not accept that the alignment of fees will inhibit access to justice. Interestingly this assertion is made with reliance on a qualitative study conducted in 2014, when the highest fee payable for issuing a claim was £1,920. One could question whether the same results might be found now if the study were to be conducted again, when the highest fee payable is £10,000. Indeed, those of us acting for clients in litigation now, know full well that the disbursement costs of legal proceedings, coupled with the downward assessment of legal time costs at trial make issuing claims less and less appealing, especially for SME businesses any other organisations and entities such as local authorities who might be faced with budgetary constraints.
Despite the above, however, it is important that clients are not deterred from taking legal action where it is appropriate and necessary to do so. The court disbursements are, of course, recoverable on all court claims irrespective of track. More importantly, however, from a purely business perspective, it also cannot be that debts should simply be written off because of the court fees which may be incurred in recovering said debts.
Rather, businesses should be aware that litigation is only on part of the debt recovery process and only one of the services that Judge & Priestley provide. As such, businesses should continue to view these court fees as being an investment cost in increasing cashflow; especially when that investment forms part of a wider, targeted strategy.
Judge & Priestley Assurance
As a firm we remain invested in ensuring that we achieve the best results for our clients, and that will continue to be the case. As much as we can do, we continue to implement and offer unique and flexible pricing models to suit our client’s own needs and to share the risk and burden of litigation. Beyond this, we remain focused on providing our clients within real life, sensible and commercial advice within the context of their individual circumstances in order to achieve economically and financially beneficial outcomes.
While litigation is, and remains, a crucial part of that process, the commercially aware offering from this firm means that we can create a tailored debt recovery approach for our clients to suit their specific commercial needs and budgetary requirements. Our expert debt collection team and claims and enforcement teams work efficiently to deal with high volume recoveries. Our litigation team, involved from the outset on specific, complex cases work extensively to resolve disputes and agree settlements before legal proceedings need to be issued, so that issuing legal proceedings should be the client’s last resort. Even where a claim must be issued, our experienced legal team work closely with clients to understand their commercial requirements and conclude those claims as quickly and commercially as possibly.
If you have any debt issues which you wish to discuss further, please do not hesitate to call us to discuss in further detail what services Judge & Priestley can provide to you.
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