Fee Remission: Is it reasonable for the public purse to fund the judiciary?
Posted on 20th April 2021 at 12:21
By Sean Linley, Costs Draftsman
Fee Remissions, and the argument about whether someone should have to pay court fees, is a much talked about topic in Costs Law at present.
The issue has become so important, with wildly different judgements, that it is going to be looked into by the Civil Procedure Rules Committee (CPRC).
The reason why it’s so vital is because Court Fees have increased dramatically and are up to the sum of £10,000. Recent reports have also highlighted that further rises of up to 8% could be on the way, the first rise to Court fees in five years.
If a solicitor fails to investigate a Fee Remission (which could be full or partial) then there is a risk that this failure could be seized upon by a Paying Party, leaving a potentially significant short-fall.
It’s worth pointing out that Fee Remission applications are not simple and are quite onerous to complete. The current set-up is that remission applications are on a per fee basis rather than a per case. This creates some interesting nuances. For example, it may be proportionate to pursue a Fee Remission for an issue fee but not for a consent order fee (£100).
Because of the per fee basis, solicitors should keep their client’s financial situation under review and could feasibly require multiple numbers of applications to be made on each matter. This can be time consuming and the per fee basis means there are plenty of opportunities for Paying Parties to raise issues about mitigating costs.
It can get even more time consuming in multiple Claimant cases. So, whilst it is on a per fee basis, Fee Remission applications are per Claimant. If one Claimant does not qualify for help with the fee then they’ll have to pay it.
The Court has come down on both sides, and the arguments for and against continue to remain as interesting as ever.
Ivanov landmark
There’s no doubt that the best form of defence is to investigate a Fee Remission and prepare a file note showing that one was considered – even where it was not available.
Why?
Well, the CPRC are looking into issues where a party has chosen NOT to seek a Fee Remission, following the ruling of HHJ Lethem in Ivanov v Lubble (Central London County Court 17th January 2020).
This case relates to the issue of whether a claimant, who is eligible for Fee Remission but failed to obtain remission, can recover the costs of those fees from the defendant.
According to the judgement from HHJ Lethem, there were “strong public policy grounds” for allowing fee-exempt claimants to claim fees from defendants rather than the taxpayer.
HHJ Lethem said: “…. I am satisfied that it is not unreasonable for the Claimant to pass on the hearing fee to the Defendant”
The claimant brought a damages case for personal injury, issued under Part 7, which settled for £6,500. But there was an issue over costs and the claimant issued a Part 23 application seeking an order for, and assessment, of costs.
One of the issues the court had to decide was whether the court fee for the hearing should be recovered, with the defendant arguing that the claimant could have obtained a Fee Remission.
HHJ Lethem considered whether it was reasonable for the claimant, who had not claimed the remission, to recover the court fee from the defendant – and held that the claimant could recover the fee.
Contrasting views
There are several contrasting views about who should pick up a court fee where a Fee Remission is NOT obtained. This is the point that’s going to be looked at by the judiciary in the near future.
There are clearly strong public policy grounds for arguing that it is not unreasonable for a Claimant to direct the cost of wrongdoing on the tortfeasor, therefore preserving the public purse. These considerations are relevant to an assessment of reasonableness under CPR r. 44.3 and 44.4.
The argument has been borne out in litigation before and many practitioners will be familiar with the arguments in Peters v East Midlands Strategic Health Authority [2010] QB 48. Essentially, the Court held that there was no reason “in policy or principle” which prevented a Claimant seeking the costs of private health care where treatment was available from the local authority and the NHS. In short, why should the tax payer pick up the tab?
There are previous contrasting rulings which contradict Ivanov v Lubble.
If a claimant who could have applied for a Fee Remission does NOT and wins their case, is the losing defendant liable for that court fee?
Or should the fee be deemed to be incurred unreasonably and/or unnecessarily?
At the moment it is possible to get a 'Yes' or 'No' verdict and there is no binding authority.
For the case of Stoney v Allianz Insurance Plc (Liverpool County Court 7 November 2019), the court said "no" and ruled the fee was judged to be unreasonably incurred.
But in Cook v Malcolm Nicholls Limited (Coventry County Court 11 April 2019), the court gave a 'yes' ruling.
If an eligible party doesn't seek out a Fee Remission, the main question at the moment is: Should the paying or receiving party pay? And more fundamentally should it fall to the tax-payer?
Proceed cautiously
It is widely accepted that the Fee Remission scheme is tricky to master and not very user friendly.
On the plus side, obtaining a Fee Remission is a great way to assist the cash flow within a law firm. If the client does not qualify, then it’s a case of getting the client to pay, fronting the fee or exploring disbursement funding (which has seen a rapid increase in uptake in recent years).
Only the person who has to pay the fees can make a remission application, which must be made on Form EX160 – Apply for Help with Fees. And as already stated it has to be made on a per fee basis and not a per case basis.
If you’re a practitioner with a case where you’ve been challenged about a Fee Remission, myself and the team at Carter Burnett are happy to assist with this procedure and provide Fee Remission advice.
Until the Civil Procedure Rules specifically say otherwise, I would not recommend relying on the Ivanov ruling as a precedent. The contrasting case law shows that there is still no definitive answer.
In reality, failing to advise a client about Fee Remission amounts to a degree of professional negligence. If you could not recover the fee, even in the event of a win, you’re likely to have to fund it instead of the client.
At present, our ‘best practice’ guidance remains to investigate if the client qualifies for a Fee Remission in advance. Whether or not it transpires the client is, then a file note should be placed on file showing that it was considered. Not investigating carries significant financial risk, especially given the fact court fees can amount to £10,000 and are set to rise further.
If in doubt, proceed with caution or get in touch with us for professional assistance.
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