We are finding that some of our clients are shocked by the recent radical changes to the system of court fees. The changes have made larger claims much more expensive to commence. As a result, landlords may lose the settlement leverage that used to be exerted through the issue of a claim and genuine claims may be stifled, due to the up-front cost.
From 6 April 2015, court fees to issue a claim have been set at 5% of the value of any claim over £10,000, up to a maximum court fee of £10,000. Any claim worth over £200,000 will cost £10,000 to issue.
At the higher end of this spectrum, this represents an increase of over 600% in court fees. Many property related claims, particularly dilapidations claims are at this higher end and the prospect of paying out a fee of £10,000 as part of a strategy to get the other side to the settlement table will not be welcomed by many of our investor clients. There is a danger that either the up-front fee will be too high to get the necessary internal approvals to proceed or the payment of the fee will make the issuing party more intransigent and less likely to settle, unless the court fee is taken into account in the settlement. Drawn out litigation could be an unintended consequence.
Either way, the cost could therefore act as a very real deterrent to settlement: the recalcitrant paying party will view threats to issue proceedings as less of a concern and one of the weapons in the litigator’s armoury could be lost. We understand the Law Society will be lobbying the new government to review the charges, but for the time being, you should factor them in to your strategy for recovery.