Two years ago the Government introduced significant increases in court issue fees, where the issue fee is determined by the damages claimed. Between £10,000 and £199,999 the fee is set at 5% of the sum claimed. Claims worth £200,000 or more have a fixed Court issue fee of £10,000.
Court issue fees are claimed from Defendants as part of the costs and disbursements of a successful Claimant. Our costs team have sought to challenge the recovered recoverability of the Court issue fees.
The fee remission/ refund scheme has been operated by the Courts for some years, however the steep increases in 2015 were coupled with new rules for reducing fees for those who met certain financial criteria. This provides paying parties with a real opportunity to reduce the fees significantly or not to pay them at all.
The rules for the scheme are set out in HM Courts & Tribunals Service document EX160A, ‘Guide – How to apply for help with fees’. This can be accessed via the following link:
www.gov.uk/government/publications/apply-for-help-with-court-and-tribunal-fees
It's important to note that the scheme applies to each and every Court fee, from issuing proceedings through to the assessment of costs at the conclusion of the damages. A separate written application must be made for each fee.
The Scheme
To qualify the Claimant must pass 2 financial tests, one for savings and one for income, as both stand as at the dates the fees were paid. For both, the savings and income of the claimant’s partner are also taken into account. Whilst here the term claimant is used the fee reductions apply equally to defendants. "Married" can also include unmarried partners who live together.
- Savings test
The test as to savings operates on a sliding scale according to the size of the court fee in question. Asa result, a claimant may pass this test for one court fee but not another.
At the lowest end the Claimant and his partner cannot have savings of more than £3,000 if the court fee is £1,000 or less in order to be able to obtain a reduction. At the opposite end of the scale the savings cap is £16,000 for court fees in excess of £7,000 – above that level of savings no reduction is available.
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Income test
The income test is based on gross monthly income. Unlike the savings test the income test does not vary with the size of court fee.
What savings are available?
Given the size of court fees there is scope for significant fee reductions, and savings for defendant insurers.
For example, a high value Multi Track claim which proceeds to Trial on the damages and an assessment for the costs would cost £13,610 in fees. If, for example, the claimant was on benefits, with no savings, then he/she wouldn’t be required to pay any fees. Fewer saving would be available if the Claimant was employed, but savings of £10,000 wouldn't be uncommon.
Timing of application for fee reduction
The fee remission can be applied for prior to the fees being paid, however, the Claimant has up to 3 months after paying the fees to apply for a reduction/ remission on each fee.
Strategy
We have encouraged our insurer clients to alert Claimant's solicitors to the scheme when they receive advanced notice that proceedings will be issued. We repeat this when are instructed to formally go on record. If such alerts are ignored, we carry out financial profiles on Claimants, when the Defendant has a liability to pay the Claimant's costs. The information in the profiles is extracted from the pleadings and some assumptions are made in relation to income and savings, if neither can be ascertained.
Success
We have saved our clients £200,000 in our full first year.
The Future
The major Claimant firms of solicitors are aware of the scheme and in fairness to them, do routinely apply for refunds. However, until such time that all Claimant firms follow suit, we will continue to object to the payment of the fees which fall within the scheme. This really is about changing Claimant behaviour. Providing that the Government continue with the scheme, whether voluntary or by challenge, we should see a significant reduction in Court fees payable by insurers, which is in keeping with the Jackson reforms of providing access to justice for the most needy of our communities at a fair price.
Finally
Click here to view are some Questions & Answers we've produced.
