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Session 1999-2000
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Delegated Legislation Committee Debates

County Court Fees (Amendment No.2) Order 2000

Second Standing Committee on Delegated Legislation

Wednesday 10 May 2000

[Mr. Andrew Welsh in the Chair]

County Court Fees (Amendment No. 2) Order 2000

4.30 pm

Mr. Nick Hawkins (Surrey Heath): I beg to move,

    That the Committee has considered the County Court Fees (Amendment No. 2) Order 2000 (S.I., 2000, No. 939).

I welcome you to the Chair, Mr. Welsh. Our proceedings this afternoon may be reasonably brief, but I am sure that the Minister and the hon. Member for Torridge and West Devon (Mr. Burnett) will agree that matters relating to the proper remuneration of those in our constituencies dedicated to providing legal services to their clients, our constituents, are important. The Law Society has expressed grave concern on behalf of solicitors in England and Wales about the levels of county court fees.

I shall begin not with the Law Society's specific parliamentary brief but with the individual concerns raised by a firm of solicitors in the constituency of my hon. Friend the Member for Maidenhead (Mrs. May), the shadow Secretary of State for Education and Employment. The firm wrote to her expressing grave concern because the solicitors' charge-out rate on a county court hearing in 1999 had remained the same as it had been in 1992—£63 an hour. The legal aid rates have just been increased by only £2.28.

That is just one example that my hon. Friend asked me to mention, but I have had many similar letters from solicitors in my constituency and elsewhere. Perhaps the hon. Member for Torridge and West Devon and other members of the Committee have received similar letters. There is a widely shared concern that is not restricted to any one area of the country. It seems to affect solicitors equally in the north, south, east and west.

I shall now refer to the specific concerns raised by the Law Society on behalf of all solicitors. It is concerned that court fees are being raised substantially once again. The Law Society points out that, although the charge-out rates have been more or less frozen, court fees have risen substantially over the past few years as a direct result of the Government's decision to adopt a policy of full cost recovery. The Law Society firmly believes that court fees should be kept reasonably low in the interest of access to justice and the rule of law.

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): Has not the hon. Gentleman made a mistake? The principle of full cost recovery was introduced by the Macnaghten report of 1923. Judicial salaries were excluded until 1992. They were included in full cost recovery in 1994 by the previous Government, who adopted a policy in early 1997 of taking away all exemptions. Does the hon. Gentleman agree that that is the history of full cost recovery, and that it was not, therefore, a principle introduced by this Government?

Mr. Hawkins: I accept entirely that there has been a general move in the direction of full cost recovery, as the Minister rightly says, going back to 1923. Surely neither he nor I would wish to score party political points going back that far. The Law Society's point is that the present Government have had the responsibility for such matters since May 1997. Its main complaint is that, since the Government came to power, they have provided no opportunity for a proper debate on the implications of what they have done to the legal system.

The Law Society refers specifically to the Government's January 2000 consultation paper on civil court fees, which said that the Court Service's policy was to

    strike a fair balance between the need to set fees to recover costs and the need to protect access to justice.

In the past we have criticised many of the actions of the Government under the name of access to justice as being, in fact, a denial of access to justice. Undoubtedly, however, all members of the Committee would agree that people must have proper access to the courts. The Law Society's point is that the balance is being skewed in a way that will deny people such access.

The Law Society's opinion of the Government's January 2000 consultation paper is that, although at first sight the words that I quoted a few moments ago might seem laudable, it is impossible to reconcile competing interests. We agree with that view. The Law Society also believes that the current proposals will drive up fees and make it even more difficult, if not impossible, for some members of the public to bring actions in the civil courts. As the number of claims has fallen over the years, court fees have risen. The result is a damaging downward spiral, whereby members of the public are increasingly deterred from starting civil actions and civil court fees continue to rise.

In the final year of the previous Government, the Public Accounts Committee pointed out in a report that the reduction in court proceedings over the previous few years was due partly to the increase in fees. Since coming to power three years ago, the present Government have not taken account of that PAC report, the importance of which we all recognise. As the Law Society points out, recent years have seen a substantial rise in existing fees and the introduction of new fees. Court service annual reports show that over the past three or four years the policy of full cost recovery has resulted in an increase in income from fees of more than £100 million—a huge increase.

Despite some extension of fee exemption, which the Law Society welcomes, those increases have created an obstruction for many people whose incomes are just above the already low level that would entitle them to automatic fee exemption. The issue is similar to that raised in debates about legal aid, in which the Minister and I have both taken part, where the same problem of MINELAs—middle income and not eligible for legal aid—arises. The problems are most severe for those just above the level of fee exemption.

A recently published report entitled ``Paths to Justice'' showed that more than half of those who failed to take action in the civil courts over a non-trivial justiciable matter had an annual income of less than £10,000 a year. Those people decided not to take civil proceedings because of the potential cost.

The Law Society points out that legal aid as a means-tested benefit is widely acknowledged to be limited to the poorest people. It excludes many in the population who cannot reasonably afford the cost of litigation, including the court fees that we are debating this afternoon. The Government's policy of extending the use of conditional fees to replace legal aid in personal injury claims, for example, will mean that many more litigants will have to find the money to cover the cost of court fees. That is where the problems arise.

In 1977 there was the case of the Queen v. Lord Chancellor ex parte Witham. The judgment in that case was sent by Mr. Justice Laws:

    The right to a fair trial, which of necessity imports the right of access to the court is as near to an absolute right as any which I can envisage.

He concluded:

    Access to the courts is a constitutional right: it can only be denied by the Government if it persuades Parliament to pass legislation which specifically—in effect by express provision— permits the executive to turn people away from the court door.

The Law Society believes that the Government are denying the public functions that civil law and civil litigation are intended to perform while litigants, in effect, enjoy private benefit, if they succeed, from the judicial process.

The general public interest must be taken into account. Litigation affords advantages to the community at large in the form of social order and the rule of law, and also creates judicial precedent. Once a precedent has been set in one civil case, for example, others may not need to go to law because the law will have been clarified. Parties are often able to resolve disputes, as the Minister and I know from our past practice at the Bar, without recourse to the courts by reference to decided cases. Having referred to the fact that the Minister and I both practised at the Bar, I should say that I do not need formally to declare an interest because I am not currently in practice. However, I shall refer to the fact that I practised in the courts for a number of years and also sat on the Bar Council; I left the inner cabinet of the Bar Council on my appointment to my first junior Government post in 1995.

As the Committee is aware, most civil litigation settles before the hearing in anticipation of the ruling of the court. Most members of the Committee, whether or not they are lawyers, know that the parties involved settle when they are confronted by the doors of the court and the imminence of the hearing, and once they have been properly advised by their lawyers. Settlements are frequently based on how previous cases have been decided. In a recent decision of the Court of Appeal referring to Law Commission report No. 257 on test cases, Lord Woolf said:

    The assessment [of damages] requires the judge to make a value judgement. That value judgement has been increasingly constrained by the desire to achieve consistency between the decisions of different judges. Consistency is important, because it assists m achieving justice between one claimant and another and one defendant and another. It also assists to achieve justice by facilitating settlements.

That is my point. Lord Woolf concluded:

    The courts have become increasingly aware that this is in the interests of litigants and society as a whole, especially in the personal injury field.

The Law Society, rightly, concludes that requiring litigants to pay the full cost of hearings with those increases in court fees in such cases is implicitly to recategorise them as private cases of interest only to the parties themselves. The Law Society points out that its arguments are particularly strong given the emphasis of the civil procedure rules on alternative dispute resolution and pre-action protocol. The Minister and his colleagues have regularly welcomed the increase in the use of alternative dispute resolution, so have Conservatives and Liberal Democrats. It is clearly an advantageous development, and in my time as an in-house corporate barrister I was heavily involved in some of the excellent work on alternative dispute resolution carried out by people associated with Trent university. I am sure that the Minister will join me in congratulating them on their work in developing alternative dispute resolution, which is an alternative to going to court.

Nevertheless, some cases are not suitable for alternative dispute resolution, and it is in those cases that there will be anxiety about court fees. If parties can resolve disputes without formal adjudication, it is essential that they have recourse to a clear and comprehensive set of laws that reflect modern values and attitudes. The Law Society believes that the Government's policy in respect of court fees and full cost recovery undermines that objective by deterring parties from bringing actions that contribute to our body of common law.

In the Law Society's experience, the court service has shown that its accounting and information systems do not allow it accurately to forecast levels of litigation and thereby to set court fees on a full recovery basis. The Law Society, which represents solicitors at the sharp end, also points out that what the Government believe to be possible does not happen in practice. The Law Society states that both the Lord Chancellor's Department and the court service have had difficulty quantifying precisely the costs of certain courts and proceedings, I have no personal expertise in the matter, but I ask the Minister to refer to what seems to be a serious criticism of his own Department by the Law Society.

In the evidence leading to the report to which I referred, officials of the Lord Chancellor's Department stated that

    it would be difficult to arrange for each segment of business to recover its own costs because family law work at the County Court almost certainly cannot do so.

The previous Government were coming to the end of their period of office, but matters have not improved since then. The Law Society states that the problem is aggravated by the current uncertainties, and that brings the matter back to the current Minister. It states that court service forecasts are apparently made on

    assumptions based on historical information on workload trends.

That comes directly from the Court Service's report. In the light of recent changes to the civil justice system, the Law Society point out that such assumptions are no longer possible. The Court Service itself admitted in its annual report for 1998–99 that there is

    considerable uncertainty over forecast fee income owing to the effect of the Civil Justice Reforms and significant changes in fees, both introduced on 26 April 1999

by the current Government.

    It will be necessary to allow time for workload to stabilise before an accurate forecast of fee income can be made.

According to the consultation paper that the Government issued on civil court fees,

    statistics show that there has been a downturn in the issue of non family claims of 23 per cent. since the reforms were introduced.

Law Society said that it is not clear whether the downturn is responsible for the shortfall and, as the Court Service's paper acknowledges, the long-term trend is uncertain. Liaison with Law Society members suggests that a bulge of unissued claims has been created—the hon. Member for Torridge and West Devon may have personal experience of that bulge. It suggested that that may be due to various matters, including uncertainty about the impact of the Woolf reforms—the civil justice reforms—changes to funding, particularly for personal injury claims, and imminent increases in the level of damages in personal injury cases. The Law Society wants to hear from the Government the extent to which the issues can and have been factored into the Court Service's forecast of litigation levels for 2000–01, and I hope that the Minister will be able to answer that question at least. Furthermore, the Law Society wants to know, as do I, whether the Court Service will be able to recoup and redistribute any finds exceeding its full cost recovery target.

In 1997–98, the first year of the present Government, the surplus was not carried forward to the following year but was surrendered to the Treasury. The Opposition are worried, on behalf of constituents throughout the country, that the Treasury is using the increase in court fees as part of its cash cow. Although the Law Society concedes that some of its evidence is anecdotal, there is clear evidence to suggest that, while the civil justice reforms are working satisfactorily, lack of resources in the Court Service is a major problem.

Uncertainty in relation to workload may mean that the current downturn will fall or disappear during the next 12 months, so the latest increase in fees may lead to the Court Service not only meeting its income target, but making a surplus. Will that also be surrendered to the Treasury? We should be told.

The Law Society made the valid point that the Court Service should resist the temptation to raise fees again in the order, and should wait and see what happens to the pattern of litigation in the light of the civil justice reforms during the next 12 months. We are not suggesting that there should never be am increase, but the Law Society made a good point in suggesting a moratorium on further fee increases and a full and public debate on the funding of the civil courts. That is what we want from the Minister.

The Law Society referred to other countries. I shall not detain the Committee with many international comparisons, but it points out that in the United States and Australia the policy of attempting to obtain full cost recovery through court fees has been rejected. Apparently, a judicial conference in the United States recommended that litigants should pay only reasonable filing fees and, for certain services, fees above the basic level, but certainly not the full costs. A similar recommendation was made in an advisory committee in Australia.

The Law Society has made one or two specific points with which we agree. First, with respect to fees payable on commencement of proceedings, it is concerned that measures might be introduced to satisfy the shortfall after the abolition of the allocation fee for defended claims of £1,000 or less. The Government's current proposal is that, to recover the fee revenue lost by removal of the allocation fee for claims up to £1,000, £5 should be added to the issue fee for claims of £1,000 or less. The Law Society comment that that is an example of the Government giving with one hand and taking away with the other. Not only does the proposed 12 per cent. across-the-board increase in the issue fee—which follows hard on other recent fee rises—far exceed current rates of inflation, but, combined with the £5 supplement, it represents an increase of between 18.5 per cent. and 35 per cent. for the issue of claims of £1,000 or less. It would be difficult for the Minister to argue that an 18.5 per cent. increase was justified by recent inflation, still less a 35 per cent. increase.

As to the request for the certificate of satisfaction, we agree with the Law Society in opposing the introduction of any more fees, particularly as it believes that the Government's motivation may be to ensure full cost recovery rather than to charge for work done.

The Law Society notes, in relation to copy documents, that even the proposed new fee is significantly higher than those charged by most commercial copying services. It is likely to be litigants in person who use the facility, and therefore the Law Society argues that it is unreasonable for the fee to exceed the cost. The Law Society can be acquitted of any allegation of self interest in this context, because it is arguing on behalf of litigants in person—people who do not use solicitors. It is expressing a genuine public interest concern that litigants—even when they are not using the services of Law Society members—should not be overcharged. It is suggested that the fees should not exceed commercial photocopying charges and, in the case of documents supplied by the litigant, should certainly not exceed 4p per page. Plenty of photocopying services charge lp or 2p a page, so the Law Society's suggestion does not seem unreasonable.

The Law Society points out that determinations of costs are far fewer now, because of the introduction of summary assessment. I am sure that it is right to expect that trend to continue. However, it suggests that the planned increases show a perverse Government logic. The fewer the cases, the more the cost will rise per case. The more successful people are at settling issues without the court, the more the cost will rise. To take the reductio ad absurdum argument, if only one case fights next year on determination, will the Court Service demand a fee of £1 million the following year for the one that fails to settle? I know that that takes things to extremes, but it demonstrates the ludicrous nature of the Government's logic.

The Law Society is concerned about the size of increase being employed to bring family court costs into line with non-family court costs. That was the point raised by the firm in the constituency of my hon. Friend the Member for Maidenhead. There has been a history of lower fees in family cases, and the Law Society believes that that is because the costs in those proceedings were never thought of as being recoverable against another party: costs orders are rarely made. From my experience of dealing with many family cases, I am sure that that is right. Once again, the Law Society considers the size of the increases particularly inappropriate, because at present the costs of costs draftsmen are not recoverable in family proceedings as they are for non-family proceedings. The Government's consultation paper does not make it clear whether the proposed fee for a detailed assessment hearing is intended to apply only to those cases in which there is an actual hearing or to the many cases in which there is no hearing and the court makes a provisional assessment which does not reduce the bill or is unchallenged.

The Law Society says, and we agree, that there is a case for having one fee on lodging and an additional fee only if the assessment is challenged and a greater amount of judicial time is occupied. Such a fee structure might encourage practitioners to take care in submitting clear and reasonable bills, which would save court time and expense. The Minister should respond to that because the Law Society's logic is unimpeachable.

Finally, the Law Society opposes increasing the fee that is to be paid on an application or notice for ancillary relief before the impact of nationwide implementation of the ancillary relief pilot scheme in June 2000 is known. The Government introduced the scheme. It is eminently sensible to wait for its results before new fees are introduced. It would be difficult for the Minister to argue against that.

I am sure that the hon. Member for Torridge and West Devon will have some interesting points to make. I look forward to hearing the Minister's response to our serious concerns.

4.56 pm

 
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