County Court Jurisdiction Order 2014

Lord Beecham Excerpts

Tuesday 28th January 2014 Grand Committee

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

My Lords, this statutory instrument revokes and replaces the County Courts Jurisdiction Order 1981. A draft was laid before Parliament on 18 December 2013. Subject to your Lordships’ approval, the substantive change made by this instrument concerns the county court’s jurisdiction in respect of equity proceedings. Equity proceedings, which are specified in Section 23 of the County Courts Act 1984, include the administration of the estate of a deceased person, the execution or declaration of a trust, the dissolution or winding up of a partnership and the foreclosure or redemption of mortgages.

The purpose of this instrument is to increase the relevant financial limit in the 1981 order from £30,000 to £350,000 to extend the equity jurisdiction of the county court. This will mean that the county court may hear and determine equity proceedings up to a value of £350,000. We do not intend to change the current financial limits with regard to the county court’s jurisdiction in respect of other proceedings which are also specified in the 1981 order.

There are two objectives underlying this reform. The first is to optimise the use of judicial resources by ensuring that, where appropriate, cases are determined at the most appropriate level of the court system, commensurate with value and complexity. This will contribute to rebalancing jurisdiction between the High Court and the county court, where they both have concurrent jurisdiction, enabling the High Court to focus on those complex matters that genuinely require its expertise. The second objective is to reduce the number of equity proceedings that are transferred from the High Court to the county courts, and therefore reduce waiting times so that disputes are resolved expeditiously and with proportionate costs and procedures for court users. This, in turn, will contribute to promoting public confidence in the operation of our courts.

Before setting out further details about this instrument and why the Government are taking this action, I will briefly explain some background to the reform. The Government are committed to providing an effective and efficient civil justice system with a flexible judiciary that is deployed in the most appropriate way. As part of this, we set out our policy to reform the structure of the civil courts in a series of proposals in the public consultation document, Solving Disputes in the County Courts: Creating a Simpler, Quicker and More Proportionate System, published by the Government in March 2011.

Those proposals were based on some of the recommendations made by Sir Henry Brooke, a retired Lord Justice of Appeal, in his report, Should the Civil Courts be Unified?, published in August 2008. His recommendations were aimed at improving the administration of civil justice and providing a more efficient use of judicial resources. The Brooke recommendations included the establishment of a single county court for England and Wales and the repeal of the requirement for the Lord Chief Justice to seek the Lord Chancellor’s agreement in deploying High Court judiciary to the county court. Both of these recommendations were approved by Parliament in the Crime and Courts Act 2013 and will be implemented by the Government in April 2014.

By statutory instruments shortly to be brought before Parliament, the Government also propose, subject to approval of the House, to implement three more Brooke recommendations, which are: extending the jurisdiction to grant freezing orders to the county court; bringing certain specialist proceedings under the exclusive jurisdiction of the High Court; and increasing the financial limit below which non-personal injury claims and certain Chancery proceedings may not be commenced in the High Court from £25,000 to £100,000. Finally, of course, subject to the approval of the House, we also intend to implement in April 2014 the Brooke recommendation on equity jurisdiction that is before your Lordships today.

With that background in mind, I will set out the problem with the current financial limit of the equity jurisdiction and why the Government are taking this action. Section 23 of the County Courts Act 1984 gives the county court concurrent jurisdiction with the High Court to hear and determine those equity proceedings specified in that section, subject to the “county court limit”. Proceedings may be transferred between the county court and High Court, subject to provisions in Sections 40 and 42 of the County Courts Act 1984 and criteria set out in Part 30 of the Civil Procedure Rules 1998.

The county court limit, set by the 1981 order, requires that equity proceedings above a value of £30,000 be commenced in the High Court. The rationale for the financial limit is to provide a benchmark which will ensure that only appropriate cases, mainly those with relatively high financial value and complexity, are heard in the High Court, thereby limiting the volume of cases issued there. Over time, however, the value of the £30,000 financial limit has fallen in real terms, as the rising cost of properties has rendered it far less effective than was originally envisaged.

In 1981, when the limit was set, average house prices were only around £25,000, which meant that the county courts were able to hear the majority of property disputes involving equity. However, since 1981, house prices in the UK have increased by more than 600% in nominal terms, so that, by 2013, average house prices in the UK had risen to more than £175,000, which is seven times their value in 1981, and to around £345,000 in London. The financial limit, therefore, has not kept pace with the rising cost of house prices and has become detached from contemporary property values, which have risen dramatically since the £30,000 limit was set. This has resulted in many cases of relatively low complexity being heard unnecessarily in the High Court. In some instances, cases are issued in the High Court only to be transferred to the county court because the issues are straightforward. In view of the administrative and judicial time taken to allocate these cases in the High Court and the time taken to reconsider them for transfer and the transfer itself, these transfers often result in delays in dealing not only with that particular case but with other cases.

Following the Brooke recommendations, the Judicial Executive Board, chaired by the then Lord Chief Justice, the noble and learned Lord, Lord Judge, considered the evidence and concluded that the financial limit of the equity jurisdiction of the county court should be raised from £30,000 to £350,000. The report was then presented to the Government for consideration and implementation. On the strength of the evidence and of further engagement with the judiciary, the Government consulted on the proposal in their Solving Disputes consultation paper. A majority of respondents, who included legal practitioners, members of the judiciary, judicial bodies and regulatory bodies, was in support of an increase to £350,000. In view of the overwhelming support from consultees, the Government announced their intention to increase the financial limit to £350,000.

This statutory instrument seeks to give effect to that commitment. The changes introduced by it support the Government’s commitment to an effective and efficient civil justice and courts system. We consider that the £30,000 financial limit set by the 1981 order is too low. Consequently, with your Lordships’ approval, we will increase the financial limit which divides the equity jurisdiction between the High Court and the county courts from £30,000 to £350,000. The increase would mean that more equity proceedings are issued and dealt with in the county courts and may be transferred to the High Court only if they are complex. It could potentially reduce the volume of transfers from the High Court to the county courts, thereby providing efficiency benefits for the courts as less time and fewer administrative and judicial resources will be needed to allocate and transfer these cases to the appropriate court.

Court users, on the other hand, could experience a more streamlined service and a reduction in hand-offs between jurisdictions. This is because more equity proceedings will be issued in the county courts rather than the High Court, which would lead to fewer cases being transferred from the High Court to the county court, and the time taken to consider cases for transfer—and the transfer itself—would be reduced. I therefore commend this instrument to the Committee. I beg to move.

[Lord Beecham (Lab)]

My Lords, try as I might—and I have tried—I cannot really find anything to object to in this order. However, there are one or two points to make.

I entirely agree that the consultation shows, and it is right that the Government have acted on it, that the equity jurisdiction should be increased. I have not practised much in the field of equity in my time as a solicitor, and I refer to my entry in the register of interests in that respect, although I studied equity at university with the then editor of Snell’s Equity, Mr Paul Baker, as he then was, later Judge Baker. It was therefore a subject with which I engaged at an earlier, though unpaid, stage of my legal career.

While there is nothing wrong with the order, the process by which we have received it seems inordinately long. The Minister referred to the fact that it stems from a report from 2008. The Government’s first consultation paper was issued in March 2011. It was a 12-week consultation period. The Government’s response was in February 2012, and it has taken them a year since publishing the response to produce this fairly straightforward order. This is not a political matter. It does, however, suggest either that the department is overworked and understaffed, or that it is congenitally incapable of producing fairly simple material in a reasonable time. Either way, there is a bit more to concern us about the process than there is about the change.

I was slightly amused by the notion that the real objective of this was to enhance public confidence in the system. I cannot speak for the noble Lord’s experience, which is of a different level from mine but, in my 45 years of practice, I do not recall anybody expressing their lack of confidence in the system—particularly in the procedures in the county court. That seems rather an ephemeral reason for a sensible change.

I will make two more constructive points, thereby briefly breaking the habit of a parliamentary lifetime. First, I suggest there should be some mechanism by which the level could be periodically inflated without the necessity for prolonged consultations and a ritualistic procedure such as we are going through today. Why should not the Government say that, every five years, the limit would be increased by the rate of inflation or something of that kind—there might be a simpler way of going about things—unless they concluded that it would not be sensible to do that, in which case they would at that point come back?

The second issue is of a different order, about the system as a whole and how it might be made more efficient. Here I declare a paternal interest, because my question is about the role of deputy part-time district judges who sit in the county court dealing with a wide range of matters. Have the Government looked, or are they looking, at the distribution of cases between the full-time county court judiciary and the part-time judiciary, and at whether one or the other might be augmented in order to facilitate the kind of access and quicker turnaround of cases, which the order should help in one, admittedly fairly narrow, field? I do not expect the Minister to give an answer off the cuff to that, but perhaps the department could look at it—and perhaps the Minister could look at it personally, with his obviously rich experience of the courts. It might be a way of improving the system and possibly even saving some taxpayers’ money as well. Having said that, I have no objection to the order and trust that it will prove effective in assisting litigants, containing costs and helping the system work more efficiently.