Fees hike bites business

Recently released official statistics show that small businesses seeking money owed to them have been priced out of court by fee increases of more than 600%, says the Bar Council.

In March 2015, the Ministry of Justice increased court fees for money claims. It imposed a 5% fee on organisations and individuals bringing claims worth between £10,000 and £200,000. Claimants were obliged to pay fees of £10,000 upfront for a claim of £200,000, a 660% increase on the previous fee of £1,315.

Now, the full impact of the fee increases has started to “bite” and the courts risk “becoming out of bounds” for many small businesses pursuing debtors, the Bar Council says. Figures from the Registry Trust reveal that there were only 42,091 county court judgments (CCJs) against businesses in England and Wales in the first half of 2016—a 19% drop on the previous year. The total value of CCJs fell 12% to £149m. In the High Court, the total number of judgments fell 50% compared with the first half of 2015 to 33.

Chantal-Aimée Doerries QC, Chairman of the Bar, says: “Small businesses seeking debt owed to them by customers, who are often other businesses they supply, can turn to CCJs as a last resort to get the money owed to them, but by increasing court fees the government has cut off those small businesses’ only real and last hope of getting that money, which is vital given how important cash-flow is to SMEs.” Doerries called on the new government to back access to justice for small businesses by reviewing the impact of the fee hike.

The fee rise was fiercely opposed last year by senior members of the judiciary, Law Society, Bar Council, CILEx, and representative groups for both claimant and defendant lawyers.