A TAX ON BUSINESS?
THE DOUBLE WHAMMY OF THE CIVIL COURTS

Equivo

Legal News | 14/10/21

Those using the civil courts to recover debt have faced a double whammy during 2021.

ALIGNMENT
Firstly, the government’s response, in March 2021, to its consultation on aligning fees for paper based and online claims, was that online discounts had fulfilled their role in persuading major users to move online and it was now unfair to distinguish between those who continued to issue on paper and those who issued online.

Whilst understandable in principle, the solution is not. Despite universal opposition to the proposal, rather than bringing the fees for paper claims down, the government chose to increase online fees.

Government’s argument is that income received from fees covers less than half the cost of running courts and tribunals. Whilst correct, it is also disingenuous as those figures relate to the court service as a whole whereas fee alignment relates to the civil courts alone. The reality is fees generated in the civil courts exceed the costs of running civil courts and the excess is used to cross subsidise other elements of the court service (criminal and family proceedings).

Government’s second argument is “those court users who can afford to, should contribute more towards the operations of HM Courts & Tribunals Service (HMCTS)”. Effectively, the government is saying that, to recover outstanding debt, you will pay more than the costs of doing so.

The excess is, effectively, a tax on those using the civil courts. Even that argument is flawed – court fees in question (where judgment is granted) become part of the debt due from the judgment debtor (often a consumer) and, therefore, the burden of these increased fees is, ultimately, placed on them.

FEE INCREASES
Now government has responded to a second consultation, this time about inflationary increases to court fees. Again, despite vocal opposition considering the continued poor service levels faced by users of the court service, these increases which cover some 129 fees backdated to cover inflation since August 2016 came into force on 30 September 2021.

The same arguments are being propagated by government – that the income generated by fees falls far short of the costs of running the court service. The government points to section 180 of the
Anti-social Behaviour, Crime and Policing Act 2014 which allows the Lord Chancellor to set court fees at a level above the costs of the underlying service.

Again, it is recognised that other elements of the court service, including family and criminal, need to be properly funded. It is right that society looks to ensure that those who need access to the courts (for example, vulnerable users seeking non-molestation orders because of domestic abuse) can obtain such access and that fees should not be a barrier.

The question, however, remains whether users of the civil courts should, effectively, be taxed to pay for this or should broader taxation policy be used to ensure sufficient funding. This is particularly the case where there remains continued disgruntlement from those who use the civil courts as to the service levels which are provided. Is the service as efficient as it could be? Has funding which was provided to modernise the courts following the Briggs report been wasted? If court users saw a more efficient and effective service which made using the civil court simple, then additional fees may be more palatable.

CONCLUSION
It does seem that civil court users are ignored and that consultations are little more than window dressing with a pre-determined outcome. For now, even with the fees in question, the argument for litigation, in the right cases, stacks up – it remains a legitimate and effective means of recovering debt where other forms of engagement have not been successful. However, government and the court service must be careful –push those who use the civil courts too far and claims will reduce, fee income will dry up and those excess fees to cross subsidise the broader services delivered by the courts will not be there at all.