The Ministry of Justice is to scrap the refund of court fees in the County Court and High Court from March 2017 for cases that have been settled or discontinued.

The Government says refunds were costly to administer and that the courts would have incurred costs several weeks before a hearing.  It also said that the 14 day notice period, which was the latest point at which a case could be withdrawn and a partial refund made, did not give enough notice to reallocate court time.

The change has received a hostile reception.  Gordon Exall, blogging in Civil Litigation Brief, described the move as a hidden “tax”.  Solicitor Kerry Underwood told the Law Society Gazette that the government was removing an incentive for people to settle.  “‘Parties may feel that they may as well have their day in court – nothing is lost,” he said.

Dispute mediation business, Promediate, said that parties need to settle claims before issuing proceedings.  “Ideally you should engage in ADR and settle before issuing or you will end up paying the hearing fee,” it said.

Parties can currently have court fees refunded on a sliding scale if they settle or discontinue a claim,” said James Burgoyne, Director – Claims & Technical, Brunel Professions.  “If they withdraw a case more than 28 days before the trial date they get a full refund, with a 50{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} refund if they withdraw at least 14 days in advance.  The new rules, which come into force in March, mean that parties will have to pay court fees come what may after proceedings have been issued.  This could add yet another layer of attritional cost for insurers in professional indemnity claims.”

Reports on the review have been published by the Law Society Gazette, Civil Litigation Brief, Promediate and law firm Harold Stock and Co.  The statutory instrument and explanatory note have been published on the government’s legislation website.