Bar Council response to the Ministry of Justice’s consultation paper

entitled “Court Fees: Proposals for reform”

1. The General Council of the Bar of England and Wales (the Bar Council) welcomes the

opportunity to comment on the Ministry of Justice’s consultation paper entitled, “Court

Fees: Proposals for reform”. 1

2. The Bar Council represents over 15,000 barristers in England and Wales. It promotes

the Bar’s high quality specialist advocacy and advisory services; fair access to justice for all;

the highest standards of ethics, equality and diversity across the profession; and the

development of business opportunities for barristers at home and abroad.

3. A strong and independent Bar exists to serve the public and is crucial to the

administration of justice. As specialist, independent advocates, barristers enable people to

uphold their legal rights and duties, often acting on behalf of the most vulnerable members

of society. The Bar makes a vital contribution to the efficient operation of criminal and civil

courts. It provides a pool of talented men and women from increasingly diverse

backgrounds from which a significant proportion of the judiciary is drawn, on whose

independence the Rule of Law and our democratic way of life depend. The Bar Council is

the Approved Regulator for the Bar of England and Wales. It discharges its regulatory

functions through the independent Bar Standards Board.

Overview

4. The Bar Council’s response is principally concerned with the proposals for enhanced

fee charging as set out in Part 3 of the Consultation Paper, especially those proposals

consulted on in Questions 16-18 and Question 24.

5. The Bar Council opposes the proposals for enhanced fee charging. These proposals are

to charge a court issue fee in money claims equivalent to 5% of the value of the claim, subject

to a cap of £10,000 or £5,000 for unspecified claims.

6. The object of these proposals is said in the Impact Assessment to be to, “raise the price

of court services, in areas where there is an untapped increased willingness to pay more”.

1 Ministry of Justice (2014) Court Fees: Proposals for reform

7. The Bar Council does not consider that these proposals target the pockets of the

willing but will restrict or deny access to the courts to those who cannot afford increased

fees. The effect of these proposals will be felt most severely by middle income individuals

and families and small to medium sized enterprises. These court users do not benefit from

fee remission and do not have the deep-pockets of those users the Impact Assessment

presumes would be willing to pay more.

8. The Bar Council has considered the qualitative evidence referred to in the Impact

Assessment to support the proposals for enhanced fee charging. It is the Bar Council’s view

that this evidence confirms its fear that the proposals for enhanced fee charging will have a

dramatic impact on access to justice and result in fewer cases being brought to the courts.

The Bar Council considers that a view to the contrary cannot be reasonably held.

9. It is the Bar Council’s view that the proposals for enhanced fee charging would deny

access to the courts and would be unlawful under section 92(3) of the Courts Act 2003.

10. The Bar Council also considers that the proposals for commercial proceedings will

cause real damage to the competiveness of the UK’s legal services. The worldwide market

for dispute resolution is highly competitive and international parties choosing the forum in

which to resolve their disputes are heavily influenced by costs and perceptions about costs.

These proposals, if implemented, would be very likely to lead to a serious loss of work from

the UK courts, its lawyers and support services (and hence also lead to a reduction in tax

income for the Government).

Cost Recovery

11. The following responses to this consultation are provided subject to the caveat that the

Bar Council does not, as stated in previous consultation responses, support the policy to set

fees on the basis of full-cost recovery.

12. The provision of a courts system is not merely a service that is provided by a public

body. The Bar Council remains of the view, expressed in previous court fee consultation

responses, that a fair, efficient and accessible civil justice system is one of the fundamental

pre-requisites of an effective democratic society. All members of society, and society as a

whole, benefit from the existence and proper administration of such a system and it is

therefore right that a significant proportion of the costs of the system should be borne by

taxpayers as a whole.

Question 1: What do you consider to be the equality impacts of the proposed fee increases

(when supported by a remissions system) on court users who have protected

characteristics? Could you provide any evidence or sources of information that will help

us to understand and assess those impacts?

13. The Bar Council considers that the Ministry of Justice’s Equality Assessment for cost

recovery at Annex B of the Impact Assessment correctly identifies the equality impacts of the

proposed fee increases. As the question recognises, a fair fee remission system is an essential

mechanism to address the equality impacts of court fees. The Bar Council considers that a

fair fee remission system is not the only necessary mitigation of these impacts but the

availability of free legal advice to those with the lowest incomes is also vital so that persons

with protected characteristics are not discouraged by court fees from bringing court cases.

Question 2: Do you agree with the premise of a single issue fee of £270 for non-money

cases? Please give reasons for your answer.

14. Yes. It is appropriate for a standard fee to be charged to reflect shared costs.

Question 3: Do you agree with the proposed fee levels for money claims? In particular, do

you agree with the proposal to charge the same fee for claims issued through the Claims

Production Centre that would be charged for applications lodged online? Please give

reasons for your answer.

15. Yes. It is appropriate to encourage court users to use methods of issuing claims that

result in lower costs to the court system.

Question 4: Do you agree with the removal of the allocation and listing fee in all cases?

Please give reasons for your answer.

16. Yes. Additional points for charging cause unnecessary complexity and can be a source

of confusion, especially to those entitled to fee remission who may not realise that an

application for remission has to be made for each fee.

Question 5: Do you agree that small claims track hearing fees should be maintained at

their current levels, which are below cost? Please give reasons for your answer.

17. Yes. The accessibility to the court system through the small claims track regime plays

an important role in upholding the rule of law. The parties to small claims track proceedings

are the court users most likely to have limited financial resources and it is right that small

claims track hearing fees should remain below cost.

Question 6: Do you agree that fast track and multi-track hearing fees should be

maintained at their current levels, which are above cost? Please give reasons for your

answer.

18. The Bar Council does not regard it as appropriate to charge at an above costs level for

these fees but it accepts that it is not realistic to expect a reduction in these fees at the present

time.

Question 7: Do you agree with proposals to abolish the refund of hearing fees when early

notice is given that a hearing is not required? Please give reasons for your answer.

19. The Bar Council does not agree with this proposal. The fee system should retain an

incentive to the parties to provide early notification that a case has settled.

20. The present lack of utility in the fee refunding arrangements may be due to the sliding

scale by which the amount of the fee that is refunded is reduced depending on how close to

the hearing the notification is given. This reduces the incentive for parties to settle in time to

recover the hearing fee. A simpler scheme by which 100% of the hearing fee is repaid if the

court is notified either 8 or 15 days before the hearing may produce better results as the

incentive to give early notification would be greater.

21. The Bar Council is also concerned that court users might consider that it is

unprincipled for HM Courts & Tribunals Service to retain, without good reason, a fee that

has been paid for a hearing that is not required.

Question 8: Do you agree with proposals to retain the current fee levels for private law

family proceedings and divorce, and the proposal to no longer charge a fee for non-

molestation and occupation orders? Please comment on all or any of these processes.

22. The Bar Council welcomes the proposal to no longer charge a fee for non-molestation

and occupation orders. These court users are vulnerable and it is right that access to the

courts should be made easier to them.

23. The Bar Council considers it is appropriate to retain the current fee levels for private

law family proceedings save for the fee for the issue of a divorce petition where the fee is

above cost price.

24. If the fee for a divorce petition is to remain at the present level the Bar Council

considers that it is appropriate that judicial resources should be directed so that divorce

petitions are considered more carefully at an earlier stage to identify any procedural defects

before the decree absolute is sought. Given the increased number of court users presenting

divorce petitions without legal assistance this may result in a saving of costs.

Question 9: Do you agree with the standardisation of the fee for Children Act cases, and

with the proposal that there should only be one up-front fee for public law family cases?

Please give reasons for your answer.

25. The Bar Council welcomes the proposal to charge a one up-front fee for public law

family cases at no more than full cost level.

26. The Bar Council considers that the proposed standardisation of the fees for Children

Act cases is reasonable.

Question 10: Do you agree with the standardisation of general application fees and fees

for applications within family proceedings? Please give reasons for your answer.

27. Yes. The effect of these proposals would be that applications in family proceedings

would cost the equivalent amount of general applications in other types of civil proceedings.

Question 11: Do you agree with the proposed fee levels for judicial review cases? Please

give reasons for your answer.

28. The important role of judicial review proceedings as a critical check on the state is

accepted in the consultation paper. The Bar Council does not support full cost recovery but

notes that the present fees on the Ministry of Justice’s financial modelling are lower than the

full costs.

29. The Bar Council is nevertheless concerned that the increased court fees for judicial

review claims are substantial and may discourage some court users from bringing judicial

review claims. The Bar Council notes with concern that there has been no research

conducted as to the likely impact of increases at these levels.

30. The Bar Council is also concerned that the proposed increases in fees for judicial

review applications should not be seen in isolation. There are a number of other proposals

presently being considered by the government which taken together with the proposed

increased fees could substantially affect the ability or willingness of court users to hold

public authorities to account by judicial review proceedings:

a. The Bar Council is concerned by the proposals in the recent consultation paper,

“Judicial Review – Proposals For Further Reform”. It is particularly concerned that it

is proposed that the Legal Aid Agency will not pay for work in judicial review

cases in which permission is refused. Parties receiving legal aid for judicial

review proceedings are not entitled to fee remission and the costs of the

application fee for judicial review proceedings must be borne by the solicitor.

The Bar Council does not consider it appropriate that the solicitor should bare

the risk of being out of pocket for the increased court fee as well as the risk of not

being paid for their work;

b. Although civil legal aid remains available for judicial review cases the Bar

Council is concerned that the proposals set out in the Ministry of Justice’s

consultation paper, “Transforming Legal Aid: Next Steps” to introduce a residence

test to the availability of civil legal aid, combined with these increased fees, will

have an adverse equality impact notwithstanding the availability of fee

remission.

Question 12: Do you agree with proposals to increase the fee for an application for grant

of probate to full-cost levels? Please give reasons for your answer.

31. The Bar Council does not support full cost recovery but does not consider that when

other fees are at a full-cost level a special case can be made that all application for grants of

probate should be below full cost.

32. The Bar Council notes however that the proposed increase is substantial in percentage

terms. An application for probate is not made by choice but due to the need to properly

administer an estate. Applications are often made for small estates. The Bar Council

considers that it would be appropriate for the lower fee to be retained for small estates.

Question 13: Do you agree with the proposed fee levels for cases taken to the Court of

Appeal? Please give reasons for your answer.

33. The Bar Council shares the government’s view that full-cost level charging for access

to the Court of Appeal is wrong in principle because of the importance of the Court of

Appeal’s role in establishing precedents applied by lower courts.

34. It is important that the Court of Appeal’s work reflects the whole range of civil

litigation and in that context the Bar Council considers that the proposed increases in fees

(more than 100%) are too high to justify without proper research into the impact that this

would have on court users.

35. The Bar Council also consider that charging a fee of just over £1,000 (£1,090) is

inappropriate for the hearing fee as this pushes the disposable capital threshold for fee

remission for this fee from £3,000 to £4,000. A fee of below £1,000 would be more

appropriate.

Question 14: Do you agree with the government’s proposed changes to the fees charged in

the Court of Protection? Please give reasons for your answer.

36. The jurisdiction of the Court of Protection is supervisory and it is important that

parties are not discouraged from making applications for the benefit of the protected party

by the need to pay an initial fee. The Bar Council considers that the present regime for the

hearing fee being due following an invoice should be retained.

Question 15: Do you have any further comments to make on the government’s cost

recovery plans?

37. No response.

Enhanced Fee Charging

38. By section 92(3) of the Courts Act 2003 the Lord Chancellor must have regard to the

principle that access to the courts must not be denied when making an order to prescribe the

court fees payable. The Bar Council does not consider that there has been proper regard to

this principle when the proposals for enhanced fee charging for money claims were

formulated.

Question 16: Do you agree that the fee for issuing a specified money claim should be 5%

of the value of the claim?

39. For money claims worth £100,000 a fee of 5% on issue represents an increase of 565%

from the present level. For claims of £200,000 the increase would be 784%. Claims of this size

are by no means exceptional and these substantial increases in fees will affect many court

users.

40. The Bar Council does not agree with the proposal to charge a fee of 5% of the value of

a money claim for two reasons:

a. The effects of this proposal will be detrimental to the interests of society. They

will exclude many of those who are not entitled to fee remission, especially

middle income individuals and families and small and medium size enterprises,

from the court system. They will have other undesirable and unintended

consequences.

b. The evidence relied upon in the Impact Assessment does not support these

proposals but demonstrates that court users will be deterred from issuing money

claims by enhanced fee charging.

Effects of enhanced fee charging

41. The Bar Council is convinced that enhanced fee charging will reduce the number of

claims issued.

42. Enhanced fee charging will particularly impact on middle income individuals and

families and small and medium sized enterprises which wish to bring medium sized claims.

These are the groups least able to bear enhanced fee charging because they do not have the

resources of larger organisations or wealthier individuals but receive only limited or no fee

remission.

43. The Bar Council is aware that many court users in these categories already find it

difficult to fund litigation from their own resources.

44. Companies receive no fee remission and individuals with assessable capital of more

£16,000 do not qualify for any fee remission if the fee is £7,001 (the proposed fee applicable

for money claims of £140,020 and above) or more than.

45. Requiring such users to pay large issue fees will create cash flow problems for court

users. The court issue fee must be paid up front when proceedings start. The commencement

of proceedings is the point in the dispute resolution process at which court users lose control

over the pace at which the dispute progresses. From then on they must comply with the

court’s directions regardless of the financial resources required to do so. Enhanced fee

charging will absorb scarce financial resources that are needed to fund litigation costs and

will mean that parties can either not afford to access the courts or will only be able to do so

without the benefit of professional legal support.

46. The Bar Council therefore believes that the enhanced fee charging system will reduce

the number of claims that are made by medium income individuals and small and medium

enterprises. In some cases these claims might be resolved by other, less expensive forms of

dispute resolution, such as mediation or religious courts, but in other cases disputes will not

be resolved at all.

47. The consequences of enhanced fee charging are not simply that fewer claims will be

issued. There will be other undesirable consequences:

a. The difficulty for small and medium enterprises bringing proceedings will

undermine commerce as there will be uncertainty that contractual terms will be

enforced,

b. Parties who do bring court proceedings are more likely to be unrepresented.

Cases where one or more party is unrepresented take up more of the court’s time

and resources,

c. The higher costs of commencing proceedings will cause a greater imbalance

where there is an inequality of arms between the parties. This will be exploited

by the richer party to the disadvantage of the weaker party in a variety of way,

for example:

i. The richer party will have a stronger bargaining position in any

settlement negotiation,

ii. The richer party may refuse to make settlement proposals at all knowing

that the weaker party cannot afford to commence proceedings, and

iii. There will be cases when the poorer party cannot afford the fee required

to bring a counterclaim in a claim brought against it by the richer party.

48. The reduction in caseload caused by enhanced fee charging may also have

unpredictable consequences for the viability and structure of the legal profession.

The qualitative evidence

49. The objective of these proposals is said in the Impact Assessment to be to “raise the

price of court services, in areas where there is an untapped increased willingness to pay

more”. The Impact Assessment assumes that user demand will not change in response to

increased fees from enhanced fee charging.

50. The Bar Council does not consider that the qualitative evidence demonstrates that

there is an untapped willingness by court users to pay greater court fees. The Bar Council

does not consider that the assumption that user demand will not change is based on a

reasonable interpretation of the evidence.

51. Four pieces of qualitative evidence are identified in the Impact Assessment.

52. The most significant piece of research on this issue is the 2007 Ministry of Justice

Research Paper, “What’s cost go to do with it? The Impact of changing court fees on users”. The

554 court users who were sampled were asked about the incremental impact that raising

issue fees by between £10 and £300 would have on their decision to go to court. In 131 cases

the court user was “claiming money back” (liquidated claims or claims for a specified sum

of money). In 26 cases the court user was “claiming compensation” (unliquidated claims or

claims for an unspecified sum of money including claims for personal injury). The effect of

an incremental increase in court fees had a significant effect on these users as shown in Table

10 from the 2007 research. This table is partially reproduced to include only the data relating

to money claims below.

Impact of incremental price increases on the decision to go to court by case type

Would

probably/definitely

not go to court

£10 £50 £100 £150 £200 £300

Claiming money

back

6% 16% 35% 47% 53% 58%

Claiming

compensation

0% 0% 15% 19% 19% 19%

Would

probably/definitely

still go to court

Claiming money

back

91% 80% 60% 48% 41% 36%

Claiming

compensation

96% 96% 81% 77% 77% 73%

53. The effect of the incremental increase was particularly dramatic for users “claiming

money back”. At a £10 increase a large majority of court users would probably/definitely

still go to court and a minority of court users would probably/definitely not go to court. A

£200 increase, however, was sufficient for this to be reversed. At this point the majority of

court users would probably/definitely not go to court and only a minority of court users

probably/definitely would still go to court. A further £100 increase in the fees saw a further

5% of court users change their minds and decide that they would probably/definitely not

still go to court.

54. The only reasonable conclusion that can be drawn from this evidence is that the

decisions of court users who are claiming specified sums of money are highly sensitive to

even incremental increases in court fees.

55. The effect of incremental increases in court fees on those claiming compensation is also

significant. The increase of court fees by £300 was sufficient for 19% of court users to decide

that they would probably/definitely not go to court whilst the number of those who would

probably/definitely still go to court fell to 73%. The Bar Council considers that if the research

were repeated in 2014, following the implementation of the Jackson reforms, the number of

court users claiming compensation which would probably/definitely not go to court, would

be much greater.

56. The Impact Assessment refers to the 2007 Ministry of Justice Research Paper but

makes no mention of this important evidence of strong price elasticity amongst the very

court users that would be subject to enhanced fee charging.

57. The second piece of qualitative evidence is the Ministry of Justice’s internal qualitative

research carried out in 2013. The Bar Council does not consider this research provides any

evidential basis for the introduction of enhanced fee charging. The research is based on a

small sample of interviews (18) and does not include the views of any court users other than

large organisations. The paper itself recognises its limitations, in particular, that it “was not

designed to produce results which are representative of all court users and the views of

other types of court users (such as individuals and small businesses pursuing money

claims…) may be quite different.” It is precisely these classes of court user that the Bar

Council believes will be put off bringing court claims if enhanced fee charging is introduced.

58. It also appears that many of the respondents to the 2013 research had limited or no

experience of specified money claims of the size where enhanced fee charging would

actually apply in the proposals as formulated (i.e. claims of £10,000 or more) as they seem to

have either worked with claims worth up to £5,000 or to have outsourced more

complex/higher value claims.

59. The Ministry of Justice researchers’ uncovered evidence that supports the Bar

Council’s concern that many small and medium enterprises do not have the resources

available to pay court fees at enhanced rates. The researchers found that debt solicitors who

relied on smaller business clients had seen volumes reduce in recent years. These solicitors

suggested that a possible reason for the decline was that small firms were cutting back on

their legal expenses.

60. The third piece of qualitative evidence produced by the Ministry of Justice is its

internal Civil Driver-Based Forecasts. These have concluded that minor fee changes at issue

that have occurred since 2000 have not had a significant impact on caseload. The changes

proposed by enhanced fee charging will not be akin to the “minor” changes that have

occurred since 2000. The Bar Council does not consider that this evidence supports the

assumption that enhanced fee charging will not change caseload volumes.

61. The fourth and final piece of qualitative evidence is a reference to Appendix 9 of the

Review of Civil Litigation Costs: Preliminary Report. This appendix relates to the costs of a

number of substantial pieces of commercial litigation which are not representative of the

types of medium sized cases that the Bar Council is most concerned about. At paragraph

7.14 of the Preliminary Report Lord Justice Jackson said of the costs in the cases in Appendix

9 (which averaged over £800,000) that, “It can be seen that in most of these cases the costs

involved were substantially less than, and were proportionate to, the sums at stake in the

litigation, and that a relatively high proportion of costs claimed were recovered”. The

Appendix 9 cases therefore represent the most substantial kinds of commercial litigation and

do not reveal anything about the costs incurred by medium income individuals or small to

medium sized enterprises bringing medium sized cases.

Question 17: Do you agree that there should be a maximum fee for issuing specified

money claims, and that it should be £10,000?

62. The Bar Council agrees that if enhanced fee charging is introduced there should be a

maximum fee. The Bar Council accepts that if there is a cap the court issue fee will be in

substance a form of regressive taxation falling most heavily on those bringing medium sized

claims. However, if there is no cap at all the sum of money required to commence

proceedings is more likely to be prohibitive.

63. The Bar Council does not agree that the maximum fee should be £10,000. The

maximum fee would be payable on a claim of £200,000. Such claims are not uncommon and

are not brought exclusively by claimants with substantial financial resources. Very often

parties bringing claims of this size are individuals with medium sized incomes or small and

medium enterprises. These court users already often struggle to fund each stage of litigation.

As the 2007 Ministry of Justice research paper shows the imposition of a court fee of £10,000

that must be paid upfront is likely to put off many court users from bringing money claims

to court.

Question 18: Do you believe that unspecified claims should be subject the same fee

regime as specified money claims? Or do you believe that they should have a lower

maximum fee of £5,000? Please give reasons for your answer.

64. As the consultation paper recognises, unspecified money claims include claims for

personal injuries. Although the Equalities Assessment for this proposal identifies that these

proposals may affect persons with a disability the assessment underestimates the impact of

this policy on disabled persons.

65. The Equalities Assessment considers that “a small proportion of people bringing

personal injury claims may have a disability”. The Bar Council considers that this starting

point fails to have proper regard to the fact that many persons bringing personal injury

claims have become disabled by reason of the injury for which they are seeking

compensation. These court users are often not working or suffer a handicap on the labour

market. Compared with non-disabled court users bringing unspecified money claims,

disabled persons bringing claims for personal injury will be disadvantaged by these

proposals because they are more likely to need to use their capital for living expenses.

66. The courts do not at present have jurisdiction to award pre-action interim payments

against potential defendants from which enhanced fees might be funded.

67. The qualitative evidence of costs in personal injury cases presented to Lord Justice

Jackson suggests that a court fee of £5,000 could represent a significant proportion of the

costs of a personal injury claim worth £100,000 or more. Appendix 10 of the Review of Civil

Litigation Costs: Preliminary Report showed average base costs incurred post-proceedings (but

not including trial) for one firm varied between £9,709 and £21,015 depending on the type of

personal injury claim (employer’s liability claims or road traffic claim). A fee of £5,000 on

issue would therefore represent a substantial proportion of the costs incurred at this point in

the proceedings.

68. The consultation identifies 4 factors that may determine whether or not enhanced fee

charging would deter these claims from being brought.

Funding through conditional fee arrangements

69. The Bar Council is aware that some solicitors fund court fees as disbursements for

clients instructing them under conditional fee arrangements. Considerable caution needs to

be given to this as a factor that would prevent claimants from being discouraged from

issuing personal injury claims:

a. The enhanced fee charging that is proposed represents a substantial increase

from the present fee level (up by 565%). It cannot be assumed that solicitors will

be able to afford to treat fees at this level as a disbursement. The Bar Council is

concerned that firms of solicitors acting on CFAs are already facing cash flow

problems and would find it difficult to pay fees at enhanced levels.

b. The model of funding claims by conditional fee arrangement is likely to undergo

substantial changes as a result of the Jackson reforms which came into force on 1

April 2013. Enhanced fee charging should not be considered for personal injury

claims until the wider effects of the Jackson reforms are known.

Fee remission

70. The Bar Council is concerned that a maximum fee of £5,000 will leave many people

with serious personal injuries outside the scope of fee remission and unable to pay the court

fee. These individuals may not be working because of their injuries and their capital may be

needed for living expenses.

71. A personal injury need not be of the most serious kind before the claim is worth

£100,000, at which point it would attract the proposed maximum enhanced court fee of

£5,000. Whilst the lower maximum fee would mean that fee remission would be more

available than if the maximum fee were £10,000, the difference of the qualification criteria is

not particularly significant. The disposable capital threshold for a fee of £5,000 is £10,000

whereas the disposable capital threshold for a fee of £7,001 or more is £16,000.

72. Unless there is significant alteration to the thresholds for fee remission individuals

with disabilities and those with medium incomes or medium amounts of disposable capital

will be disproportionately affected by these proposals.

Costs are normally recoverable from the losing party

73. Although costs are normally recoverable from the losing party this general rule does

not solve the problem for a claimant facing a substantial enhanced court fee before it can

commence proceedings. The fee still needs to be paid at the commencement of proceedings

and there is no guarantee that the litigation will succeed.

After the event insurance

74. It is unclear why or how the availability of after the event insurance would affect a

claimant’s consideration to bring a claim when faced with a substantial enhanced court fee.

After the event insurance protects the claimant from the adverse cost consequences of losing

the litigation. It would not assist with the payment of enhanced court fees.

Question 19: Is there a risk that applying a different maximum fee could have unintended

consequences? Please provide details.

75. The difference between a specified money claim and an unspecified money claim is

reasonably clear but parties may bring both specified and unspecified money claims on the

same claim form in order to pay the lower fee for an unspecified money claim.

Question 20: Do you agree that it is reasonable to charge higher court fees for high value

commercial proceedings than would apply to standard money claims?

76. The Bar Council opposes enhanced fee charging but recognises that Parliament might

contemplate that if the power conferred under the Anti-social Behaviour, Crime and

Policing Bill to prescribe court fees that exceed the cost is to be used at all it would be in

relation to high value commercial claims between well-resourced parties.

Question 21: We would welcome views on the alternative proposals for charging higher

fees for money claims in commercial proceedings. Do you think it would be preferable to

charge higher fees for hearings in commercial proceedings? Please give reasons for your

answer.

77. The Bar Council considers that Option 1 is preferable. Option 2 is more likely to

aggravate the problems of enhanced fee charging for small and medium enterprises and

individuals with a medium income.

Question 22: Could the introduction of a hearing fee have unintended consequences?

What measures might we put in place to ensure that the parties provided accurate time

estimates for hearings, rather than minimise the cost? Please provide further details.

78. The Bar Council considers that appropriate case management by the courts should

mean that the parties’ estimate of the hearing length is likely to bear a reasonable relation to

the actual time taken.

Question 23: If you prefer Option 2 (a higher maximum fee to issue proceedings), do you

think the maximum fee should be £15,000 or £20,000? Please give reasons for your answer.

79. No response.

Question 24: Do you agree that the proposals for commercial proceedings are unlikely to

damage the UK’s position as the leading centre for commercial dispute resolution? Are

there other factors we should take into account in assessing the competitiveness of the

UK’s legal services?

80. The Bar Council considers that these proposals will damage the United Kingdom’s

position as the leading centre for commercial dispute resolution and undo much of the good

work done by the Ministry of Justice through its excellent “Plan for Growth”. We consider

that these proposals, if implemented, would be very likely to lead to a serious loss of work

from the UK courts, its lawyers and support services.

81. Our competitors already argue that London is an expensive venue for dispute

resolution and these proposals would encourage them in this regard. The Foreword to the

Ministry of Justice’s “Plan for Growth” recognised the importance of cost when decisions

about dispute resolution are made. The Lord Chancellor and Secretary of State for Justice,

and the Minister for Trade & Investment wrote that:

“While the UK’s excellence and reputation is undoubted, costs and speed may affect

where companies choose to resolve their disputes. We intend to do all we can to

protect our competitiveness and build on our success.”

These proposals will undermine our competitiveness.

82. Given the likely loss of work from the UK courts, the Bar Council is unconvinced that

there will be a net gain in revenue to the government from these proposals once lost tax

revenue from substantial international commercial litigation is taken into account.

83. The United Kingdom is rightly proud of the reputation that London has as a forum for

the resolution of international commercial disputes. The benefit to the United Kingdom

economy of this work has been recognised by the government’s investment in the Rolls

Building. That investment implicitly recognises the highly competitive nature of the market

for international litigation. The intensification of worldwide competition for legal services as

more international cities compete with London and other UK jurisdictions as hubs of legal

expertise was also recognised by the Ministry of Justice in its “Plan for Growth”.

84. Much of the international work heard in the Rolls Building comes because the parties

voluntarily agree to jurisdiction clauses which select London courts. Often but not

necessarily they will also choose English law. A number of our competitors are promoting

the possibility of still using English law but choosing their courts or arbitration centre. It

would be very short sighted, at a time of fierce competition, to introduce proposals which

would substantially undermine our competitiveness and which would therefore damage the

UK’s reputation in this market. Reputation in particularly important in this market, where

decisions as to choice of jurisdiction are often made relatively quickly and based on

perceptions held by the relevant lawyers or commercial negotiators. Our competitors

already focus on cost as a reason for not litigating in London, arguing that their jurisdictions

offer more cost effective dispute resolution, whether through courts or arbitration. With

other jurisdictions currently looking to set up international commercial courts, it would be

highly damaging to introduce these charges.

85. The Bar Council is concerned that the proposals for enhanced fee charging in

commercial proceedings will substantially undermine London’s attractiveness as a centre for

international litigation. As the research conducted for the Ministry of Justice by the Centre

for Commercial Law Studies at Queen Mary shows, the proposed fees would make court

fees in London the most expensive in the world. The only jurisdiction that charges issue fees

comparable to those proposed is the Dubai International Financial Centre. The Bar Council

is particularly concerned that in the courts of New York, which is London’s closest

competitor, it costs as little as $400 to issue a claim. The Bar Council anticipates that New

York attorneys will not be slow to seize on any significant disparity in court fees to the cost

of the United Kingdom economy.

Question 25: Do you agree that the same fee structure should be applied to all money

claims in the Rolls Building and at District Registries? Please give reasons for your

answer.

86. No. To extend the same fee structure to all claims in the Rolls Building and District

Registry would capture many claims that are not in any way “commercial proceedings” and

where there is no reason to suppose that there is “an untapped increased willingness to pay

more”.

87. Claims in the Rolls Building do not necessarily involve businesses for example:

a. Claim in the Chancery Division can be between individuals in a domestic

context,

b. Claims in the Technology and Construction Court include claims by

homeowners in respect of work done to their homes, and

c. Claims in the Admiralty Court include claims for personal injuries that have

been caused by accidents at sea.

88. If the proposal were extended to all courts sitting in the Rolls Building it would

include the Intellectual Property Enterprise Court (formerly the Patents County Court). This

court was established in 1990 to provide a less costly and less complex alternative to the

High Court, Patents Court. This object would be undermined if it were treated as a court

hearing “commercial proceedings” for the purposes of the proposals in this consultation.

Question 26: What other measures should we consider (for example, using the Civil

Procedure Rules) to target fees more effectively to high-value commercial proceedings

while minimising the risk that the appropriate fee could be avoided?

89. Case management under the Civil Procedure Rules is already used to prevent parties

paying too small an amount in court fees (e.g. by under valuing a claim when it is issued)

and can be used to resolve any new issues that might arise with a new fee charging

structure.

Question 27: Should the fee regime for commercial proceedings also apply to proceedings

in the Mercantile Court? Please give reasons for your answer.

90. No. Many cases heard in the Mercantile Court are not between well-resourced

organisations but involve small and medium sized enterprises and individuals with

medium sized incomes who could not afford the larger fees proposed.

91. The implementation of enhanced fee charging for proceedings in the Mercantile Court

would leave these parties to issue their claims in the county court when by reasons of their

complexity and importance their cases required consideration by a judge with specialist

expertise. This would in effect create a tiered court system in which access to a specialist

tribunal was dependent on wealth.

Question 28: Do you agree that the fee for a divorce petition should be set at £750? Please

give reasons for your answer.

92. The Bar Council does not consider that it is appropriate for enhanced fee charging to

be applied to divorce petitions. The consultation paper does not put forward any principled

reason why these court users, who are necessarily experiencing unfortunate personal

circumstances, should be used to subsidise others.

Bar Council

January 2014

For further information please contact

Jan Bye, Head of Professional Affairs

The General Council of the Bar of England and Wales

289-293 High Holborn, London WC1V 7HZ

Direct line: 020 7242 0082

Email: JBye@BarCouncil.org.uk