New Higher Court Fees: How can you minimise the sting?

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Dramatic increases in the fees payable to the court when issuing a claim came into force on Monday 9 March 2015.

The increases affect the fee to commence court proceedings for the recovery of money on claims worth £10,000 or more. The new fee is 5% of the value of the claim capped at a maximum fee of £10,000. For example, a party wishing to commence a claim with a value of £190,000 will now be required to pay a fee of £9,500, an increase of a massive 622% from the previous fee of £1,315.

There is concern amongst legal professionals that the fees will deter parties from commencing court proceedings, which could lead to smaller businesses in particular being forced to write off debts, endangering their own financial position.

Parties wishing to minimise the sting of paying such a large fee may wish to consider one of the options below.

1. Don’t inflate your claim
The lower the amount of money being claimed, the lower the fee. Parties should be honest when assessing the likely value of their claim and should ensure that they are not claiming for additional sums that will never be recoverable.

2. Is Court the only option?
Before issuing a claim, parties should consider whether there could be an alternative method of resolving the dispute such as adjudication or mediation.

3. Standstill
Claims can only be commenced within a certain time period, (for example 6 years from the date of the breach in a claim for breach of contract). A common reason for issuing proceedings is that the limitation period on the claim is about to expire. In such circumstances, parties should consider attempting to agree a standstill agreement with the proposed Defendant, which will stop time running on the claim, and will allow additional time for the parties to attempt to settle the dispute before proceedings are issued.

4. Winding up
In proceedings to recover undisputed debts, if the amount claimed is £750 or more, winding up or bankruptcy proceedings might be more appropriate as they attract a significantly lower court fee.

The Government hopes that the changes will generate £120m in additional income per year. It remains to be seen whether the new fees will in fact deter parties from bringing their disputes to Court at all.