Civil Proceedings, Family Proceedings and Upper Tribunal Fees (Amendment) Order 2016

Tuesday 15th March 2016 Lords Chamber

Motion to Approve

20:06

Moved by

[Lord Faulks]

To move that the draft Order laid before the House on 17 December 2015 be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, the purpose of this draft order is to introduce enhanced fees for certain types of civil and family proceedings. Specifically, the order will increase the fee to issue a possession claim in the county court to £355 from £280 and there will be a 10% fee discount for possession claims made online. It will also increase the fees for a general application made in civil proceedings to £100 for an application made by consent or without notice and to £255 for a contested application. These changes will also apply to general applications made in judicial review proceedings heard in the Immigration and Asylum Chamber of the Upper Tribunal.

There are, however, general applications relating to certain proceedings for which, given the particular sensitivities involved, we feel that it would be inappropriate to charge a fee above cost. These are applications in insolvency proceedings, applications in relation to an injunction for protection from harassment, and applications for payment to be made out of funds held in court. The order will also make small changes to the fees charged for copy documents in immigration judicial review proceedings heard in the Immigration and Asylum Chamber of the Upper Tribunal. Finally, the order increases the fee to make an application for a divorce or dissolution of a civil partnership. This will be increased to £550.

Where users are charged a fee to access public services, it is normally the case that the fee should be set at a level to cover the full cost of delivering those services. For many years the civil and family courts have operated on that basis. Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014 provides the Lord Chancellor with a power to prescribe fees above cost on the basis that these fees are used to finance an efficient and effective system of courts and tribunals. This power was used for the first time in March last year to increase the fees for money claims.

Noble Lords will be aware of the difficult economic situation that we face. The Government were elected to continue our work to fix the economy, and that is indeed what we are doing. It is clearly right that we continue to look for opportunities to reduce public spending. That includes the courts and tribunals and those who use them. In the current financial climate, it is right that we look again at the balance between what users pay towards the overall cost of the Courts and Tribunals Service as compared with the financial burden that falls on the taxpayer. All of the increases in the draft order have been subject to consultation, and our decision to take them forward has been announced in subsequent published government responses.

Why are the Government taking this action and why is it necessary? The reason we are introducing these fee increases is to make sure that the courts and tribunals are funded in the long term. The courts and tribunals fulfil a vital function in our society. They make sure that access to justice is available to those who need it. Access to justice is critical to the maintenance of an effective and functioning democracy, helping to maintain social order, underpinning an effective economy, and upholding the rule of law. It is crucial that these principles are preserved so that people who need it have ready access to the courts and tribunals.

Equally, a strong economy is a prerequisite for effective and affordable public services. Noble Lords will be aware that the Government inherited a growing budget deficit, increasing public sector debt, and an economy in recession. We made economic recovery our first priority, and this has required some difficult decisions to be made. The action we have taken is working and the recovery is now well under way, but further reductions in spending are essential if we are to eliminate the deficit.

We have secured more than £700 million-worth of funding to invest in our courts and tribunals, and we have been working closely with the senior judiciary to develop a plan for investing this in reforming the courts and tribunals so that they can deliver swifter, fairer justice for everyone in England and Wales at a lower cost.

There is, however, only so much that can be done through cost-efficiency measures alone. If we are to secure the sustainable funding of the courts and tribunals, we must also look to those who use the system to contribute more, where they can afford to do so. We consulted on all these proposals and have carefully considered all the responses that were received. The consultations produced some very strong views, particularly on the proposed increase to the fee for a divorce or dissolution of a civil partnership. We have listened to what people had to say and have decided to limit the increase in this fee to £550—from £410—rather than £750, as originally proposed.

The measures set out in this order, we estimate, will generate around £60 million per annum in additional income, with every £1 collected spent on providing an efficient and effective system of courts and tribunals. We recognise that fee increases are not popular, but they are necessary if we want to deliver our promise to fix the economy while protecting access to justice. It is in those circumstances that I therefore commend this draft order to the House, and I beg to move.

Amendment to the Motion

Moved by

[Lord Beecham]

At the end to insert “but this House regrets that the draft Order further increases enhanced fees in certain proceedings that will be detrimental to victims of domestic violence and disproportionately discriminate against women; is concerned that the Government have acted against the advice of the Lord Chief Justice, Master of the Rolls, and the President of the Family Division, among others; and notes the Secondary Legislation Scrutiny Committee’s disappointment that despite strong concern expressed by respondents to the public consultation the Government give no policy justification other than the generation of income”.

[Lord Beecham (Lab)]

My Lords, yesterday the House spent a good deal of time on the infamous pay-to-stay provisions of the Housing and Planning Bill. Today it is pay to sue that this order makes the subject of debate.

The Government have already ratcheted up fees for court and tribunal proceedings with a devastating effect in relation to employment tribunals, where applications have fallen by 70%. Now they seek to extract significantly higher fees in the civil and divorce courts, not only for the issue of proceedings but even for filing applications and consent orders in the course of those proceedings.

The report of the Secondary Legislation Scrutiny Committee reminds us, as the noble Lord has just done, that the Anti-social Behaviour, Crime and Policing Act 2014 permits a Lord Chancellor to,

“prescribe a fee of an amount which is intended to exceed the cost of anything in respect of which the fee is charged”—

in other words, to make a profit out of the parties to litigation over and above the actual cost to the system of those proceedings. It is as if people paying for a prescription had to pay more than their treatment costs to help fund the NHS or some other element of government funding. I hope that the Secretary of State for Health does not read Hansard tomorrow; it might give him ideas.

The court system costs £1 billion a year to run. The order is estimated to realise £64 million by increasing the fees for a range of proceedings. In possession claims for goods or land the fees rise from £280 to £355—an increase of 27%, or in respect of online claims from £250 to £325. Consent applications in the course of proceedings, which by definition involve a minimum of court time, see a doubling in the fee from £50 to £100. The fee for contested applications in the course of proceedings rises from £155 to £255—a 60% increase. Uncontested applications in, of all places, immigration judicial review proceedings and the Upper Tribunal more than double from £45 to £100, while contested applications more than treble, from £175 to £550—I think that figure may not be accurate, but nevertheless they are increased substantially. Controversially, as the noble Lord has indicated, the cost of divorce proceedings rises from £410 to £550, and this is represented as a generous concession from the £750 originally proposed.

20:15

No explanation is offered for these widely different increases. As the Secondary Legislation Scrutiny Committee points out, the Ministry of Justice acknowledges that the actual cost of dealing with uncontested applications for divorce is only £270. Thus the increased fee is over 100% more costly—oddly, the committee says 200% more costly. This a particularly sensitive area, given that, in effect, the Ministry of Justice is seeking to profit from a situation where the parties are in an inherently unhappy position. Women constitute two-thirds of those initiating divorce proceedings.

Others will also suffer. It might be thought that a landlord seeking a possession order should shoulder the cost but of course ultimately, if the proceedings are successful, either by way of a consent order or a judgment, the tenant will pay. In its reply to the Ministry of Justice consultation document, Thompsons Solicitors pointed out that 90% of money claims are for less than £10,000. A case settling for £1,500 would incur issue and consent order fees of £215, and if there was a contested application en route this would be another £255, so court fees alone would be a third of the value of the claim.

It is true that there is a remission scheme, but this requires a separate application for remission, with fresh income details for each fee incurred during the course of the proceedings. The guidance is a handy 31 pages long. Dealing with these applications—especially if they are made by unrepresented parties, as many will be given the non-availability of legal aid—will place extra burdens on the Courts Service. In any case, the income threshold is very low, at £245 a week or £1,085 a month—barely more than the national minimum wage or what the living wage would be. It is particularly reprehensible in the context of divorce and immigration cases. There is a risk that divorce petitioners, especially women, will not seek to recoup the costs from respondents to avoid tensions that might impact on the conduct of proceedings, or on the relationships in the family following divorce.

The Law Society points out that it is only a year since the last increase—smuggled in, one might recall, on the eve of the general election. It rightly points to particular difficulties in immigration cases, where there are already problems with costs, an application for indefinite leave to stay having gone up from £1,093 to £1,500, and where there is an additional NHS charge of £500. There is a concern about the burden of such fees in a sensitive area involving human rights and a risk that some potential applicants will resort to overstaying illegally because they will be unable to raise the necessary money to proceed with an application.

The society cites a recent case in which a couple in their 60s, the husband British, his wife American, returned to the UK to care for the husband’s elderly mother. The wife has been refused a long-term visa and cannot afford the cost of fees for an appeal. The potential outcome is that the couple may have to return to the US and the mother will be cared for by the local authority, at public expense.

The society gives another potential example of unintended consequences. Landlords will often resort to possession proceedings where a tenant is unwilling to leave, even if in arrears, and tenants may not leave precisely because if they do so without being the subject of an order they are deemed to be voluntarily homeless and may not be rehoused. Hence, landlords may seek to insure against these risks by increasing the size of the deposit required at the time of the letting. This in turn would increase the pressure on people struggling to find the wherewithal for a deposit in the first place.

It is not surprising that, in the light of these and other difficulties, the Government’s actions have been roundly criticised by leading members of the judiciary past and present. Indeed, the noble and learned Lord, Lord Woolf, told me that he would be speaking about this issue this very morning, and that he regrets that he is unable to speak again tonight, when he would have liked to have contributed to the debate, because he is giving another speech in another place—not the House of Commons.

When the Justice Select Committee took evidence in January it heard from three of the most eminent members of the judiciary: Lord Dyson, Master of the Rolls; Sir James Munby, President of the Family Division; and Sir Ernest Ryder, Senior President of Tribunals. Lord Dyson expressed grave concerns about the principle of people using the civil courts “subsidising the family court”, and referred to previous increases in 2014 and 2015. He averred:

“I am afraid that the risk of denying access to justice to a lot of people is intense in those proposals”.

He referred to the impact on small business and described the Government’s research, on which the order was based, as “lamentable”. Sir James Munby shared Lord Dyson’s concerns and alluded to the growing problem of litigants in person. Sir Ernest Ryder touched on another problem occasioned by the fees increase. He stated that the council of employment judges says that there is,

“clear behavioural material as to the way in which respondents are behaving. They are avoiding engagement in conciliation processes and waiting for the next fee to be paid, which means that settlement opportunities are lost”,

and, of course, claimants discouraged.

Lord Dyson was especially critical about the impact of the increase in divorce fees. This is not surprising. My honourable friend Christina Rees from the Opposition Front Bench quoted the Government’s own words, that,

“‘the Lord Chief Justice, the Master of the Rolls, the President of the Queen’s Bench Division, the President of the Family Division, the Chancellor of the High Court, the Deputy Head of Civil Justice and the Civil Justice Council … They have expressed their opposition to the increased divorce fee as they think that it will be a disincentive for divorce and in particular, women that are victims of domestic violence’”.—[Official Report, Commons, Fourth Delegated Legislation Committee, 28/1/16; col. 5.]

Graham Stuart, a Conservative Member of Parliament, pressed the hapless and hopeless Minister, Shailesh Vara, for details of the expected effect of the fees increase on divorce cases. Needless to say, the Minister could not answer, but then this is the Minister who opened that debate with the usual inaccurate references to the inheritance in 2010—emulated, I am sorry to say, by the noble Lord tonight—even including the claim of an economy in recession, when it fact it had been growing through 2010 until the Chancellor threw it into reverse gear with his emergency Budget. The economy was growing at a rate of 1.5% after the general election in 2010.

The reality is that the relentless decline in access to justice has continued for the last six years. There is no sign of it abating, despite some vaguely warm words from the present Lord Chancellor, whose political future in any case now seems to be in some doubt. The order is just the latest in a series of measures that reflect a cynical disregard of a kind that makes the title of the Ministry of Justice look as credible as that of George Orwell’s Ministry of Truth. I beg to move.

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, this is the second time that the Lord Chancellor has exercised his power under Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014 to prescribe enhanced fees—court fees, that is, that exceed the cost to the Courts and Tribunals Service of doing that for which the fee is charged. This power was first used last year in relation to the fees for bringing court proceedings to recover sums of money. On 4 March last year—a year ago—the noble Lord, Lord Pannick, moved a regret Motion, on which I spoke. Frankly, much of what I said then applies with equal—indeed, even greater—force today. I pointed out that there has long been objection even to the basic principle of full cost recovery. The justice system exists for the benefit of society as a whole and really courts should no more be required to be self-financing than, say, the police service.

Of course, orders for enhanced fees go altogether further than mere cost recovery. In a real sense, as the noble Lord, Lord Beecham, explained, they amount to selling justice—on the face of it contrary to Magna Carta, although now of course regrettably sanctioned by Section 180 of that Christmas tree of an Act we passed two years ago, the Anti-social Behaviour, Crime and Policing Act. As I pointed out in last year’s debate, that Act stretches to 186 clauses and 11 schedules, occupying 232 pages of the Queen’s Printer’s copy. Small wonder that by Clause 180 we had grown a little lax or careless in our scrutiny of that Bill.

Today I want to focus briefly on the increased fees now to be exacted for a decree of divorce or nullity, an increase of about a third from £410 to £550. In the Government’s January 2015 response to part 2 of the consultation on the so-called reform of court fees, it was recorded at page 40 that the senior judiciary, who were, naturally enough, a statutory consultee in the process,

“noted that the current divorce fee was above cost”.

The recent 20th report of the Secondary Legislation Scrutiny Committee confirmed this, noting at page 4 that the Ministry of Justice’s own estimate of the average cost of dealing with an uncontested divorce application is only £270—this new enhanced fee being therefore just over double that.

Of course, that earlier consultation related specifically to the then-proposed increase of the fee to £750—a proposal later abandoned. However, the objection remains essentially as to the original proposal, summarised in the case of the higher judiciary at paragraph 8.5 of the Explanatory Memorandum to this order. The objection was that,

“it will be a disincentive for divorce and in particular, women that are victims of domestic violence”.

Essentially, that echoed earlier objections that an increased divorce fee,

“could lead to parties being trapped in unhappy or violent marriages”,

and could prevent people from marrying or remarrying and being therefore,

“without the protection the law affords to married couples”.

At the conclusion of last year’s debate, noting that the Motion was one of only regret and not a fatal Motion, I expressed the hope that at least it would persuade the Government that enough is enough and really there must be no more use of this enhanced fee power. Alas, the Government have now chosen to go still further down this sorry road. This order is to be not merely regretted; it is to be deplored.

[Lord Faulks]

My Lords, this debate has been short but not lacking in power nor indeed in criticism of the Government. It feels almost nostalgic to hear in this Session of Parliament criticisms of the Government generally in their handling of the economy and of the Ministry of Justice and the Secretary of State. We are on familiar ground. It even included, from the noble Lord, Lord Beecham, the customary disavowal of anything being wrong with the economy at the time of the election in 2010.

[Lord Beecham]

The noble Lord misrepresents me. I did not say that there was nothing wrong with the economy. I said that it was recovering—and it was.

[Lord Faulks]

I stand corrected, though the recovery seemed to be rather in the eye of the beholder. In any event, the approach of the noble Lord appears to be that these changes are not justified in economic terms and that they will or might have the tendency to cause hardship.

Of course, I readily accept—as I did in opening this debate—that fee increases are never likely to be popular. On the question of divorce, there was an acceptance, if not an enthusiastic one, by the noble Lord that we had listened to representations, concluded that the original proposal was too high and reduced the sum that needs to be paid in order to obtain a divorce. Reference was made by the noble Lord to what judges said in the course of giving evidence—distinguished judges, I fully acknowledge.

20:30

It was suggested that there were inadequate grounds for the decision that the Government had made, and that the research was lamentable. We do not accept that. There were a number of pieces of research. A study was undertaken by Ipsos MORI, a reputable organisation, and the sample size was reasonable for a piece of qualitative research of this sort. We believe that the results are valid. Most people in that study said that they would not be deterred from starting court proceedings by the higher fees presented to them. Individuals and SMEs with fewer financial resources said that the higher fee would make them think carefully about the relative costs and benefits, but most said that they would still take their case to court if they had to pay.

Of course, when somebody is deciding whether to take proceedings or to make an application, they will take all sorts of factors into account. First, are they going to succeed in the application? Secondly, if the application succeeds, what will be obtained in terms of recovery? Does the other party have resources? Will they be liable for the overall costs? Many factors are taken into consideration and the actual cost of taking proceedings or issuing applications is only one—I respectfully suggest, possibly quite small—part of the analysis undertaken by a litigant.

I accept that rather different considerations come into play when someone decides whether or not to seek a divorce. But, with great respect to the noble and learned Lord, Lord Brown, I am not sure that we should necessarily provide an incentive to divorce. He said that these costs would be a disincentive to divorce. Clearly, divorce should be obtainable with a reasonable sum and we respectfully submit that this is a reasonable sum. The argument is that this might result in people being stuck in loveless marriages or, more seriously, remaining with a partner who is in some way abusive. We do not accept that. Apart from anything else, fee remissions are available to those who qualify—I will come back to fee remission— and fee exemptions apply to non-molestation and occupation orders. So those who are in fear of violence or of being prejudiced in that very serious way will not suffer in any way in their ability to obtain a divorce.

Whatever their position in terms of physical security, I accept that they may well wish to obtain a divorce. It is true that the majority of divorce applications are made by women rather than men. But, in assessing fee remissions, it is important to stress that the applicant is assessed on his—or, more probably, her—individual rather than household means. Our analysis shows that women, particularly those in single-parent households, are more likely to feature in the lowest quintile of average household incomes, and are therefore more likely to qualify for a fee remission. So we submit that these fee remissions will be helpful to those who might in other circumstances feel that this relatively small increase acted as a deterrent to them bringing an end to their marriage.

The debate in the House of Commons took a slightly unusual form. The noble Lord, Lord Beecham, referred to contributions to the debate from, among others, Christina Rees as the Front Bench spokesman on behalf of the Labour Party and Mr Graham Stuart, the honourable Member who spoke, if not on behalf of the Conservative Party, as a Conservative in any event. However, neither of them felt sufficiently strongly to vote against this statutory instrument. Indeed, they both numbered among the ayes. There was only one no vote from the redoubtable Mr Dennis Skinner—a slightly unusual posture.

The fact that he was alone in this situation perhaps means there was some acceptance that, however superficially unattractive these changes may be, they were a sensible step taken by a Government trying to get to grips with economic difficulties and trying to make—as Parliament had said they could—the cost of proceedings more commensurate. I accept that the Anti-social Behaviour Act, to which the noble and learned Lord, Lord Brown, referred without much enthusiasm, entitled the Government to go beyond their former position. But the fees are hypothecated in the sense that they all go towards the administration of the courts and tribunals. It is not as if they are being frittered away on other aspects of government. I am sure that all noble Lords will share my acceptance of the importance of a satisfactory system of courts and tribunals, properly financed.

The matter of litigants in person was, of course, raised. I readily accept that these can cause judges difficulties, which may have been on the minds of those giving evidence to the Justice Select Committee. Much has been done to help litigants in person, by lots of initiatives from different parties. I attended an all-day session at which the many valuable contributions made by all sorts of practitioners and those who assist the courts were explained. The information available on courts, online or in person, is improving daily, so some of the difficulties which litigants in person confront are much ameliorated. That includes the application forms for remissions. There was originally some criticism of their comprehensibility but they have been much improved. Those who wish to argue that these figures are too high in terms of their own means should be able to understand what they can do to get, if not a complete exemption, a remission in part.

The purpose of these reforms is to increase fee income—we do not in any way shy away from that—and to reduce the costs of the courts to the taxpayer who would otherwise be responsible. We would not be doing this if we thought that there was any serious risk that it would reduce demand in the courts and tribunals. For all these reasons, and those I explained in my opening remarks, we are satisfied that the risks are minimal. I therefore commend this draft order to the House.

[Lord Beecham]

My Lords, I will not take up the time of the House. I do not, of course, agree with the Minister’s defence of the Government’s attitude, which seeks effectively to make a profit for the purposes of government—in whichever ministry—out of proceedings. In particular, the order imposes increases with no justification of their size, no common principle applied to the percentage increase, and in a way which, despite what the Minister says, will undoubtedly lead to people having great difficulties. The earnings level that I referred to is low. Beyond £245 a week, people will be expected to pay—and pay, potentially, several hundred pounds. That cannot be in the interests of justice. It is a continuing part of the Government’s assault on access to justice. But, having regard to the usual practice, I beg leave to withdraw the amendment while continuing to express regret at what many in the profession, and many who support people endeavouring to seek justice, maintain is a thoroughly bad decision by the Government and a thoroughly bad order.

Amendment to the Motion withdrawn.

Motion agreed.

20:39

Sitting suspended.