Businesses and individuals are being priced out of court, warns the Bar Council, as figures from the Registry Trust show a 19 per cent drop in county court judgments against businesses in the first half of 2016.
Chairman of the Bar, Chantal-Aimée Doerries QC, said: “The courts risk becoming out of bounds for many as the full impact of increased court fees bites. 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.
“In January 2015, when the plan to raise the fee for using the courts was first mooted, we warned that a court fee increase would hit small businesses. We take no pleasure in seeing that warning become a reality.”
The Ministry of Justice increased court fees in 2015 for money claims, which include late payments, debt and compensation. This was a blanket 5% fee on small businesses and individuals bringing claims worth between £10,000 and £200,000, with fees of up to £10,000 payable up-front. The Bar Council pointed out that it represented increases of up to 660 per cent (from £1,315 to £10,000) on the fee payable for a claim of £200,000.
The latest Registry Trust figures show the total value of CCJs was £149m, a decrease of 12%. The drop in value and number of CCJs is the lowest since before the financial crisis of 2008. The number of High Court judgments fell by 50% compared with the first half of 2015 to 33.
Chantal-Aimée Doerries QC added: “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.”
At Sterling we see this as one of many reasons why more and more businesses are taking action in approaching debtors through no win / no fee / no upfront payment, debt recovery instead of legal action at the first payment hurdle. Debt recovery is a stage before taking legal action which many companies are unaware of, over looking, and simply passing by. Using the late payment act in the UK, debt recovery companies commission fees can be added to the debt value and covered by the debtor. No cost to the creditor to recover the debt through debt recovery,