Small businesses are being 'priced out of court'

The government's court fee hike begins to bite with 50 per cent drop in value and number of CCJs

Lawyers fear that companies and individuals have been priced out of court as new figures show a one-fifth drop in the number of county court judgments (CCJs) against businesses in the first half of 2016.

Statistics from the Registry Trust show that there were 42,091 CCJs against businesses in England and Wales in the first six months of 2016, a 19 per cent fall year on year.

The figures also show the total value of CCJs has decreased by 12 per cent, falling to £149m. The drop in value and number of judgments is the lowest since before the financial crisis of 2008. The number of High Court judgments also fell by 50 per cent compared with the first half of 2015.

The chairman of the Bar, Chantal-Aimée Doerries QC, said that the government's introduction of enhanced court fees risked making justice 'out of bounds' for those in need.

'Small businesses seeking debt owed to them by customers, who are often other businesses they supply, can turn to CCJs as a last resort to get the money owed to them, but by increasing court fees the government has cut off those small businesses' only real and last hope of getting that money, which is vital given how important cash-flow is to SMEs. They are being priced out of court,' said Doerries.

In January 2015, the Ministry of Justice raised court fees for money claims, including those issued for late payments, debt, and compensation as part of a government plan to make the court system pay for itself.

A blanket 5 per cent fee for those bringing claims worth between £10,000 and £200,000 was introduced, with fees of up to £10,000 payable up front. At the time, lawyers highlighted how the move would result in a 660 per cent hike on the fee payable for a claim of £200,000, raising fears that the increase would hit small businesses hard.

A year after their introduction, the then Master of the Rolls, Lord Dyson, accompanied by Sir James Munby and Sir Ernest Ryder, warned of the dangers enhanced fees would have for the justice system when giving evidence to the justice select committee.

Remarking on how the legal world's predictions had appeared to come true, Doerries said the Bar Council took 'no pleasure' in seeing its warnings become a reality.

'If the new cabinet wants to show that it truly backs access to justice for all including small businesses, individuals, and families it should review and recognise the real impact which the substantial increase in court fees has apparently had in restricting access to justice,' she added.

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD