Memorandum by the Lord
1. The Lord Chancellor's Department
submits this memorandum in response to the request dated 19 April
2000 on the following points:
Explain the reasons
for the increases -
(a) in relation to each instrument,
in the fees payable on filing a request for a detailed assessment
(b) in the fees for commencing
proceedings to recover a sum of money (fee 1.1 (a) and (b) [ S.I.
2000/937] and fee 1.1 and 1.2 [S.I. 2000/939]).
Fee payable on filing a request
for a detailed assessment hearing
2. As part of the new civil
litigation framework introduced by the Civil Procedure Rules on
26 April 1999, simpler, unified procedures for the assessment
of costs were introduced in the Supreme Court and the county courts,
replacing procedures for the 'taxation' of costs.
3. A detailed assessment hearing
is held where one party has been ordered to pay another's costs,
but disputes specific items in the bill. In accordance with the
principles adopted by the Lord Chancellor for the new fee structure
introduced to support the new civil litigation framework, a flat
rate fee was introduced in both the Supreme Court and the county
courts to cover the average costs of the work involved. It replaced
a very different charging system based on the value of the bill
4. Prior to 26 April 1999 two
percentage-based fees were payable in the 'taxation' process.
A fee was payable on lodging the bill of costs and another fee
was payable on completion of the taxing or detailed assessment
hearing. The combined fee was effectively 7.5% of the amount allowed.
A survey of fees taken prior to 26 April 1999 showed that the
average fees taken (lodging + taxing) were £720 (Supreme
Court), £300 (county court), and £286 (family proceedings).
5. Historical data could not
provide clear guidance on, for example, the average length of
a hearing, and the amount of judicial and administrative work
that might be involved in dealing with assessment of costs under
the new simpler procedure. The fees were therefore set at a 'best
estimate' from 26 April 1999: £160 (Supreme Court) and £120
(county court). A single composite fee of £80 was set for
all family detailed assessments, whether at hearings or not because
at the time that the 1999 Fees Orders were laid it was not certain
that the new procedure for detailed assessment hearings would
apply to family cases. The procedure for dealing with family detailed
assessments was only brought into line with assessments of costs
in non-civil family cases after the fees had been set and the
1999 Orders laid.
6. Since 26 April 1999, surveys
have been conducted on the length of detailed assessment hearings.
As a consequence the fees have been revised upwards to reflect
more fairly the average cost of the procedure. In addition the
opportunity has been taken to bring the charging points in Family
Proceedings in line with those in Supreme Court and County Court
proceedings by defining a separate fee for a detailed assessment
hearing. The new fees are therefore £180 (Supreme Court),
£150 (county court), and £130 (Family Proceedings).
Fees payable on issue of proceedings
7. As a general principle, fees
are set to recover the costs of the civil justice system in full
from litigants. Exemption and remission provisions, funded from
the public purse, protect the position of less well-off litigants.
Fees for allocation and listing for trial recover only a proportion
of the cost of defended hearings and the work leading up to them.
The balance is recovered through the fees payable on issue of
proceedings. Issue fees for money claims (fees 1.1(a) and (b)
[S.I. 2000/937] and fee 1.1 and 1.2 [S.I. 2000/939])are set in
a graduated scale based on the value of the claim but also taking
account in some measure of the statistical risk of a defended
hearing and the length of that hearing in relation to claim size.
8. Fee increases have been necessary
because projections have indicated that the Court Service is likely
to fall some £18m short of its recovery target in 2000-2001.
This is due to a greater than anticipated reduction in the volume
of claims issued. This may be the result of the successful achievement
of one of the main objectives of the reforms to reduce delay in
resolving the disputes by encouraging early settlement of claims.
9. Overall issue fees have increased
by an average of 12%, although this has been tailored so that
fees are increased slightly less at the lower end of the scale
and more at the top end, reflecting the fact that higher value
claims usually involve the court in more work than lower value
claims. While it was already known that claims over £50,000
were more expensive for the Court Service to deal with than smaller
claims, data collected after the implementation of the Civil Justice
Reforms showed that claims over £50,000 were more expensive
for the Court Service than previously thought. The percentage
increases are therefore lower for fees 1.1(a)-(e) and 1.2(a)-(e)
[S.I. 2000/939] and higher for fees 1.1(f)-(i) and 1.2(f)-(i)
[S.I. 2000/939] and 1.1(a) and (b) [ S.I. 2000/937].
10. A second element of increase
applies to claims of £1,000 or less (fee 1.1(a)-(e) and 1.2(a)-(e)
[S.I. 2000/939]). The Lord Chancellor decided to abolish the flat
rate £80 allocation fee for defended claims up to £1,000.
He was concerned that litigants might be deterred from seeking
access to justice. To ensure that litigants issuing higher value
claims did not have to subsidise lower value claims unfairly,
an extra £5 has been added to the issue fees for claims under
£1,000, making the abolition of the allocation fee for claims
of this value cost neutral.
11. Finally, fee 1.2 [S.I. 2000/939]
applies to users of the Court Service's centralised computerised
claims production centre, a facility it has offered since 1990
to businesses which issue a high volume of claims, to reduce costs
and improve service. To encourage bulk issuers to take advantage
of this service, a discount of £5 was offered. This has been
increased this year to £7 to reflect better the savings resulting
from the automated production of claims.
26th April 2000