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The Bar Council has warned that the sharp drop in the number of county court judgments (CCJs) against businesses is a sign those seeking money owed to them are being priced out of court by higher fees.
Statistics released in early August from the Registry Trust showed that there were 42,091 county court judgments against businesses in England and Wales in the first six months of 2016, a 19% fall year on year.
The Chairman of the bar 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 cashflow 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 paments, 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% (from £1,315 to £10,000) on the fee payable for a claim of £200,000.
The Registry Trust figures show the total value of CCJs was £149m, a decrease of 12%. Earlier this month the trust admitted that increased fees have contributed to the decline in judgments.
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.