Draft County Court Jurisdiction
Order 2014
The Committee consisted of the following Members:
† Evennett, Mr David (Lord Commissioner of Her Majesty's Treasury)
Flynn, Paul (Newport West) (Lab)
† Halfon, Robert (Harlow) (Con)
† Hames, Duncan (Chippenham) (LD)
Hepburn, Mr Stephen (Jarrow) (Lab)
† Leadsom, Andrea (South Northamptonshire) (Con)
Love, Mr Andrew (Edmonton) (Lab/Co-op)
† Mearns, Ian (Gateshead) (Lab)
† Mulholland, Greg (Leeds North West) (LD)
Paisley, Ian (North Antrim) (DUP)
† Randall, Sir John (Uxbridge and South Ruislip) (Con)
Raynsford, Mr Nick (Greenwich and Woolwich) (Lab)
† Rutley, David (Macclesfield) (Con)
† Slaughter, Mr Andy (Hammersmith) (Lab)
† Smith, Henry (Crawley) (Con)
† Stewart, Bob (Beckenham) (Con)
† Turner, Karl (Kingston upon Hull East) (Lab)
† Vara, Mr Shailesh (Parliamentary Under-Secretary of State for Justice)
David Slater, Leoni Kurt, Committee Clerks
† attended the Committee
Third Delegated Legislation Committee
Monday 10 February 2014
[Mr James Gray in the Chair]
Draft County Court Jurisdiction Order 2014
4.35 pm
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara): I beg to move,
That the Committee has considered the draft County Court Jurisdiction Order 2014.
It is a great pleasure to serve under your chairmanship, Mr Gray. The draft order will revoke and replace the County Courts Jurisdiction Order 1981. A draft was laid before Parliament on 18 December 2013 and was debated in the other place on 28 January. The substantive change that would be made by this instrument concerns the county court’s jurisdiction in respect of equity proceedings, which, as specified in section 23 of the County Courts Act 1984, include the administration of the estate of a deceased person, the execution or declaration of a trust, the dissolution or winding up of a partnership and the foreclosure or redemption of mortgages.
The instrument’s purpose is to increase the relevant financial limit in the 1981 order from £30,000 to £350,000 in order to extend the equity jurisdiction of the county court. That will mean that the county court will be able to hear and determine equity proceedings up to a value of £350,000. We do not intend to change the financial limits relating to the county court’s jurisdiction for other proceedings specified in the 1981 order.
The reform has two objectives. The first is to optimise the use of judicial resources by ensuring that, where appropriate, cases are determined at the most appropriate level of the court system, commensurate with value and complexity. That will contribute to rebalancing jurisdiction between the High Court and the county court, where they have concurrent jurisdiction, enabling the High Court to focus on those complex matters that genuinely require its expertise. The second objective is to reduce the number of equity proceedings that are transferred from the High Court to the county court and therefore reduce waiting times, so that disputes are resolved expeditiously and with proportionate costs and procedures for court users; that will contribute to public confidence in the operation of our courts.
Before setting out further details about the instrument and about why the Government are taking this action, I will briefly explain some background to the reform. The Government are committed to providing an effective and efficient civil justice system, with a flexible judiciary that is deployed in the most appropriate way. As part of that, we set out our policy to reform the structure of the civil courts in a series of proposals in the public consultation document, “Solving disputes in the County Courts: creating a simpler, quicker and more proportionate system”, published by the Government in March 2011. The proposals were based on some of the recommendations
made by Sir Henry Brooke, a retired lord justice of appeal, in his report, “Should the Civil Courts be Unified?”, published in August 2008. His recommendations were aimed at improving the administration of civil justice and providing a more efficient use of judicial resources. The instrument under consideration today, which we intend to implement in April, reflects Sir Henry’s recommendation on equity jurisdiction.I will now describe the problem with the current financial limit on equity jurisdiction and why the Government are taking action. Section 23 of the County Courts Act 1984 gives the county court concurrent jurisdiction with the High Court to hear and determine those equity proceedings specified in that section, subject to the county court limit. Proceedings may be transferred between the county court and High Court, subject to provisions in sections 40 and 42 of the 1984 Act and the criteria set out in part 30 of the Civil Procedure Rules 1998.
The county court limit set by the 1981 order requires equity proceedings above a value of £30,000 to be commenced in the High Court. The rationale for the financial limit is to provide a benchmark to ensure that only appropriate cases—mainly those of relatively high financial value and complexity—are heard in the High Court, thereby limiting the volume of cases issued there. Over time, however, the value of the £30,000 financial limit has fallen in real terms, and the rising cost of properties has rendered it far less effective than was originally envisaged.
In 1981, when the limit was set, average house prices were around £25,000, which meant that county courts were able to hear the majority of property disputes involving equity. Since then, house prices in the UK have increased by over 600% in nominal terms, so that by 2013, average house prices had risen to over £175,000—seven times their level in 1981 in nominal terms—and to around £345,000 in London. The financial limit has therefore not kept pace with rising house prices, and has become detached from contemporary property values, which have risen dramatically since the £30,000 limit was set.
That has resulted in many cases of relatively low complexity being heard, unnecessarily, in the High Court. In some instances, cases are issued in the High Court only to be transferred to the county court because the issues are straightforward. The administrative and judicial time taken to allocate the cases in the High Court, and the time taken to reconsider them for transfer and to effect that transfer, mean that transfers often result in delays in dealing promptly not only with a particular case but with all cases. Following the Brooke recommendations, the Judicial Executive Board, chaired by the then Lord Chief Justice, Lord Judge, considered the evidence and concluded that the financial limit of the equity jurisdiction of the county court should be raised from £30,000 to £350,000. The report was then presented to the Government for consideration and implementation.
On the strength of the evidence and on further engagement with the judiciary, the Government consulted on the proposal in the 2011 consultation paper, “Solving disputes in the county courts: creating a simpler, quicker and more proportionate system”. The respondents included legal practitioners, members of the judiciary, judicial bodies and regulatory bodies. A majority supported increasing the limit to £350,000. In view of the overwhelming support
from consultees, the Government announced their intention to increase the financial limit to £350,000. The instrument seeks to give effect to that commitment.The changes brought into effect by the instrument support the Government’s commitment to an effective and efficient civil justice and court system. We consider the £30,000 financial limit set by the 1981 order to be too low, so our intention is to increase the financial limit dividing the equity jurisdiction between the High Court and the county courts from £30,000 to £350,000.
The increase will mean that more equity proceedings are issued by and dealt with in the county courts, and those cases may be transferred to the High Court only if they are complex. That should contribute to a reduction in the volume of transfers from the High Court to the county court, thereby providing efficiency benefits for the courts, since less time and fewer administrative and judicial resources will be needed to allocate and transfer cases to the appropriate court. As a result, court users will experience a more streamlined service and a reduction in transfers between jurisdictions. I commend the draft order to the Committee.
4.44 pm
Mr Andy Slaughter (Hammersmith) (Lab): It is a pleasure to serve under your chairmanship this afternoon, Mr Gray. At first blush, the measure looks quite audacious, as it increases the equity jurisdiction more than tenfold. It could therefore have detained us in forensic examination for some time, but I hope that it will not.
The Minister has explained clearly that we are, on the whole, talking about often relatively straightforward legal matters involving property, but because of the astronomic increase in property values since the 1981 order, particularly in certain parts of the country, simple cases are being heard in the High Court, which is a waste of that jurisdiction’s time, or being transferred to the county court after some delay. The measure therefore seems relatively straightforward and simple. As the Government can never win at these games, perhaps the question should be: why has it taken five years or more since Sir Henry Brooke’s report in summer 2008 to implement the measure?
We have no objection to the order, but I have three brief questions. First, given that the introduction of this order has been delayed for some time, and given the rise in property prices, is there a mechanism in place for dealing with this issue? Every time we wish to make further adjustments to the jurisdiction, will we have to come back for another debate, or is there an escalator for dealing with that?
Secondly, the problem will not be solved if the work load of the county court, which is rather onerous at the moment, is such that there are delays in getting cases into court. Alternatively, because another part of the Brooke reforms that the Government are implementing will allow High Court judges to sit in the county court, the same judges will end up hearing the cases. What will
the rules be on hearing matters in the equity jurisdiction in the county court? Will cases be heard by county court judges? Indeed, can they be heard by district judges? Is it likely that, as a consequence of an increase in the county court work load, we will see more judges diverted from the High Court to the county court? The logjam appears to be in the county court, so we might not be achieving much of an advantage.Finally, are there any cost savings to Her Majesty’s Courts Service? In other words, is it cheaper to run such cases in the county court? I hope it will be. If so, what is the estimated saving? Is there a commensurate saving to litigants because of reduced fees or reduced legal costs? That would obviously be a welcome development. Can the Minister enlighten us today, or let us know the answer?
I am happy that there is secondary legislation before the Committee that the Minister can say, in all truth, has the support of the profession. I cannot remember that happening for some months, if not years.
4.48 pm
Mr Vara: I thank the hon. Gentleman for his support and for his questions. He raises a valid point on the review, and I assure him that officials will keep that on board. The order reflects the escalation of property prices over the past 30-odd years—something that needs to be considered.
On the rules for judges, the hon. Gentleman will be aware that there are to be huge changes in the county courts in the not-too-distant future. When those changes are announced, the order will fit into place. The purpose of the order is not financial savings but convenience, lessening the burden on the High Court, and ensuring that cases that ought to be heard in the county court are heard there. At the moment, cases over £30,000 go to the High Court only to be transferred to the county court, so administratively the order will make life a lot easier for all concerned. To that extent, there might be savings, but that is not the primary intention of the order.
This order is appropriate to ensure that waiting times are reduced and that judicial resources are used in the most efficient way possible. In particular, it will ensure that the county court judiciary is able to exercise its jurisdiction as widely as possible, thereby reducing pressure on the High Court and enabling it to focus on those cases that truly require its expertise.
The Chair: Before I put the question, I once again apologise to the Committee for my disgraceful lateness. I am very sorry. I hope hon. Members have not been held up too much.