Further written evidence from the Ministry of Justice

1.                Further information about Acas’s early conciliation service (Questions 395 – 399)

Acas publishes information on the early conciliation scheme in its annual report and in a series of quarterly update bulletins.  The fourth bulletin[1] which covers the first year of the scheme (April 2014 - March 2015) indicates that over 80,000 disputes were notified to Acas during that period.  Although these include cases which did not proceed to conciliation, the data show that most people are willing to try conciliation.  For example, only around 8,500 employees (10.5%), and just over 9,000 employers (around 11.5%) rejected it outright.

The evidence of the levels of satisfaction with Acas's conciliation service is contained in the Acas's Research paper, Evaluation of Acas Early Conciliation.[2]  This confirms that satisfaction with the overall level of service received in the first year of the scheme was 79% among claimants, and 86% for employers. 

2.                The evidence MoJ has that conditional fee agreements and after-the-event insurance can help to provide access to justice (Questions 422 – 243)

We do not routinely collect information about the arrangements under which litigants fund litigation before the courts.  We believe that conditional fee agreements (CFA) are a popular arrangement for funding litigation where the claim includes a claim for damages, and that they are particularly used to bring personal injury claims.  This is supported by the results of the most recent MoJ Civil Court User Survey (2015),[3] which found that around three quarters (78%) of unspecified money claims in which a solicitor or other lawyer was instructed were brought under a CFA (see Chapter 7 of the Survey for further details). 

3.                The evidence base for fee increases (Questions 423 – 425)

The Senior Judiciary have been critical generally of the evidence we have used in support of the fee increases introduced in March 2015 to money claims (for example, in the letter of the Lord Chief Justice of 19 December 2014).  In evidence to the Committee on 26 January, the Master of the Rolls was particularly critical of the work Ipsos MORI undertook on court fees in the report: The role of court fees in affecting users’ decisions to bring cases to the civil and family courts: a qualitative study of claimants and applicants.[4]

The Ministry of Justice does not accept that these criticisms are fair.  The Ipsos MORI study was one of five pieces of research which underpinned the proposals for enhanced fees for money claims.  Three studies were undertaken to support the proposals for fee increases contained in the consultation paper, Court fees: proposals for reform[5] published in December 2013.

1. Potential impact of changes to court fees on volumes of cases brought to the civil and family courts [6] was a qualitative study undertaken by the Ministry of Justice’s Analytical Services team.  Although a small scale study, it provided a valuable insight of the view of those involved in routine litigation.  Participants were purposively sampled from lists of high volume issuers (i.e. claimants who issued a large volume of claims at court).  The study found that court fees were not a primary factor influencing decisions on whether to litigate, and other factors, such as prospects of success, and the likelihood of recovery were more important. Participants were also asked for their views on two new potential fee structures: the first setting the fee at 5% of the claim value; the second simplifying the existing fee bands into three broader bands.  Of the two options presented, solicitors favoured the simplicity of the 3-band option for issue fees linked to claim value. Organisations favoured the 5% issue fee option because it would have minimal impact on their high-volume low-value claim profile. However, solicitors felt that the 5% issue fee option would need to be capped in order to prevent issue fees escalating for the higher value claims they often dealt with.
2. Public Attitudes to Civil and Family Fees, by the Ministry of Justice’s Analytical Services team on a survey of a random selection of the general population on public views towards court fees.[7]  It found that most respondents, when presented with hypothetical situations, felt that it was reasonable for users of the civil and family courts to pay a fee, where they could afford to do so.
3. Competitiveness of fees charged for Commercial Court Services: An overview of selected jurisdictions, a study undertaken by the Centre for Commercial Law Studies at Queen Mary, University of London.[8]  The study compared services and court fees charged in Singapore, New York, Delaware, Australia and Dubai, based on a typical scenario of a business dispute with a value of more than £500,000 heard over four days.  The study concluded that the London courts enjoyed a competitive advantage over most of the jurisdictions in the study, including Singapore, Australia and Dubai, but did not enjoy a similar advantage over courts in New York. 

Two further studies, including the Ipsos MORI report, were commissioned during the consultation period.

In December 2013, the British Institute for International Comparative Law (“BIICL”) were commissioned to undertake a study to explore litigants’ and legal professionals’ experience of litigating commercial disputes through the English justice system, and further understanding of perspectives and concerns regarding proposed court fee increases.  Their report,[9] which was published alongside the Government response to the consultation in January 2015, confirmed that London was a popular centre for resolving commercial disputes:

a)      English law is the prevalent choice of law in commercial transactions because of its quality, certainty and efficiency;

b)      the popularity of English courts is mainly based on the reputation and experience of the judiciary.

The report also expressed concerns that the fee proposals, if implemented, would damage London’s position, but no firm evidence could be produced to support those concerns. 

The Ipsos MORI research was a robust study undertaken to the normal professional standards for research of this type.  It was carried out in 2014 to explore the role of court fees in court users’ decisions to start proceedings. The study interviewed 31 people who had issued proceedings in the civil courts, of which nine were Small and Medium sized Enterprises (SMEs). Participants were recruited in order to ensure a diverse sample, which was a reasonable size for a qualitative study of this type.  We are satisfied that the results of this research are reliable. 

The study found that:

a)      court fees were not a key factor most participants considered when deciding to take their case to court.  Participants tended to feel that they had no alternative but to go to court to achieve their goals;

b)     business users tended to approach the decision analytically, typically weighing up the potential costs, benefits and risks, whereas individuals were primarily motivated by emotional factors;

c)      litigants who were represented by lawyers tended to have the lowest awareness of court fees.  Those who paid for their own legal representation perceived court fees to be a low proportion of their overall costs, and court fees were a less important factor in their decision making.

The study also asked participants if they would have issued their claims if the court fee had been set at 5% of the claim value (the current fee levels for money claims).  Most participants said that the higher fee amount presented to them would not have deterred them from starting court proceedings.  Individuals and SMEs with fewer financial resources did report that the higher fee amount would potentially have made them consider the costs and benefits of starting court proceedings, but most said that they would still have taken their case to court if they had had to pay it. 

Overall, the evidence we collected provided a relatively clear and consistent view that court fees are generally a secondary factor in decisions on whether (and if so where) to litigate compared to other factors such as the prospects of success and likelihood of recovery; and at the levels under consideration, the proposed fees were unlikely to have a material impact on those decisions.  For these reasons, we believe that the assumption, set out in the Impact Assessments, that the increase in fees was unlikely to have a significant impact on the volumes of claims brought before the courts, was a reasonable one to make based on what we knew at the time.

4.                Information on number of litigants in person who apply for, and receive, fee remission in that Immigration and Asylum chamber (Question 446)

HMCTS’s standard fee remission scheme does not apply to fees for appeals to the First-tier Tribunal Immigration and Asylum Chamber.  Instead, we have a separate fee waiver and exemptions policy under which:

1. Fees are waived for certain types of appeal, specifically:
1. an appeal against a decision made under section 40 of the British Nationality Act 1981 (deprivation of citizenship);
2. an appeal against a decision made under regulation 19(3) of the Immigration (European Economic Area) Regulations 2006 (a decision to remove an EEA national or the family member of such a national); and
3. legacy appeals under legislation before the provisions of the Immigration Act 2014 came into effect (for example, appeals against deportation);

We also announced in the Government response to the consultation published in December 2015 that we would add a new exemption for appeals against the revocation of refugee or humanitarian protection status.

2. Fees may be remitted where the applicant meets certain financial criteria:
1. Where they are in receipt of asylum support (where the Home Office has already assessed a person as requiring financial assistance);
2. Where they are in receipt of legal aid (where income has already been assessed as part of the legal aid award); and
3. Where they are in receipt of support under section 17 of the Children Act 1989 (where a Local Authority has already assessed that the household requires additional funding to make sure the child within that household is not put at risk).

We also announced in December 2015 that we would extend the scope of the exemption under 2c to parents of, and those with parental responsibility for, children receiving financial support from local authorities under section 17 of the Children Act 1989 and that we would also provide an exemption for children who are being housed by a Local Authority under section 20 of the Children Act 1989.

3. Fees may also be remitted under the Lord Chancellor’s power to remit fees in exceptional circumstances, where the applicant can demonstrate that the requirement to pay the fee would cause undue financial or other hardship.

There is no separate application process to apply for an exemption under category 1 or a fee remission under category 2. 

Information on whether an appeal is exempt (under category 1) from fees is taken from the Home Office’s decision notice, which must be attached to the appellant’s notice of appeal.  These proceedings are exempt from fees regardless of the applicant’s means. 

The information on whether an appellant is entitled to a remission under the category 2 is invited in the notice of appeal, and applications for fee remissions under the Lord Chancellor’s exceptional power (category 3) are made in writing to the Tribunal.  HMCTS’s management information indicates that, for the period from April to September 2015 (which is the most recent period for which information is available) there were 452 appellants who were recorded as being unrepresented and who potentially qualified for a remission under category 2, or applied for a fee remission under category 3.  Of these, 445 were granted a fee remission and seven were refused.  Over the same period, there were 41,000 appeals lodged with the tribunal, and 5,600 fee remissions granted. 

You should note that appellants in First-tier Tribunal Immigration and Asylum chamber are recorded as represented if they are represented not only by an accredited immigration practitioner, but also by other third parties including, for example, friends, family or charities. 

9 March 2016