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Could Fixed Recoverable Costs be illegal?

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Employment Court Fees

UNISION’s legal challenge began shortly after fees were introduced on 29 July 2013. Since 2013, those wishing to issue proceedings in an employment tribunal have been required to pay a fee unless they qualify for remission. Fees have depended on the type of claim issued and stood at £350 for a Type A claim (simpler claims such as wages and holiday pay claims) and £1,200 for a Type B claim (more complex claims including unfair dismissal and discrimination).

UNISON’s challenge was based on the principle of access to justice. It argued that fees prevented many potential claimants from being able to issue tribunal claims. The Supreme Court agreed, ruling that the fees would result in hardship for claimants who may have to lower their standard of living to an unacceptable level in order to save the money needed to bring a claim in the employment tribunal.

The Supreme Court further held that fees also indirectly discriminated against women given that women were more likely to issue claims for discrimination which attracted higher fees of £1,200. This was not a proportionate means of achieving the Government’s stated aims of deterring spurious claims and transferring the financial burden of the tribunal system onto its end users. This is perhaps an understandable conclusion given that there is little evidence that fees have deterred only spurious claims. In particular, whilst the number of claims issued has dropped significantly, success rates have remained broadly the same indicating that fees deter, in roughly equal numbers, those with strong and weak claims.

The Government has announced that with immediate effect fees will no longer be payable for issuing claims. In line with promises previously made by the Lord Chancellor, the Government has also renewed its commitment to repay fees which claimants have paid to date.

Fixed Fees

On 31 July Lord Justice Jackson unveiled his supplementary report which proposes extending the recoverable fixed fee regime. A fixed fee regime does not govern the amount which a solicitor can charge a client, but rather what that client can recover from a losing party. In most cases the actual fees chargeable between solicitor and client are likely to be in excess of the amount recoverable from the losing party, leaving a client with a potential shortfall. That shortfall could easily be greater than the maximum single Claimant court fee in the Employment Tribunal which was £1,200.

Does this raise the same principles that the Supreme Court have considered in Employment cases? Could this result in a hardship for Claimants who may have to lower their standard of living to an acceptable level in order to pursue litigation? Does it discriminate against groups who statistically earn less and therefore may be less able to fund the irrecoverable aspects of litigation?

In order to explore this further, we need to understand the issues determined by the Supreme Court.

Was the Fees Order unlawful under English Law?

There were two principles of particular importance. The first is the constitutional right of access to justice. The other is that "specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act".

Some extracts from the Supreme Court decision.

“ Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade.”.

“Access to the courts is not, therefore, of value only to the particular individuals involved.”.

“But the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them”.

If the system is not fair and just then "...the party in the stronger bargaining position will always prevail”.

“…impediments to the right of access to the courts can constitute a serious hindrance even if they do not make access completely impossible.”.

The introduction of fixed fees does not wholly restrict access to justice, but it does create an unfairness and an impediment. A person who cannot afford to incur reasonable and necessary legal fees over and above the recoverable fixed fee, faces unfairness and an impediment. At the very least they will have to present their case in such a way where the facts or issues have not been adequately investigated. At its worse the existence of irrecoverable fees may dissuade them from bringing a legitimate claim all together.

The Right of Access to Justice

Some further quotes from the Supreme Court:

“It follows from the authorities cited that the Fees Order will be ultra vires if there is a real risk that persons will effectively be prevented from having access to justice.“

“As it was put by Lord Bingham in Daly, the degree of intrusion must not be greater than is justified by the objectives which the measure is intended to serve.”.

“…even an interference with access to the courts which is not insurmountable will be unlawful unless it can be justified as reasonably necessary to meet a legitimate objective.”.

Again fixed fees and the prospect of significant and unaffordable irrecoverable costs, create a real risk of preventing or interfering with access to justice.

The Fees Order which required payment of up to £1,200 was said to prevent access to justice and was therefore unlawful. What is the real cost of litigation compared with the proposed recoverable fixed fee? Is there a shortfall and does that prevent access to justice?

Can Fixed Fees be justified as a necessary intrusion on the right of access to justice?

LJ Jackson has stated that costs in litigation can be disproportionate. The Court has many tools at their disposal for managing disproportionate costs. They can make defined directions aimed at reducing costs, they can make a costs management order, they can make a costs capping order and/or the costs can be reduced at detailed assessment.

A paying party is only ever liable for costs which have been reasonably incurred and are reasonable in amount. The receiving party bears the brunt of costs which are unreasonably incurred, unreasonable in amount or disproportionate. That is fair and just.

The rationale for the latest reforms is:

  • To reduce the actual costs;
  • To restrict recoverable costs to that which is proportionate; and
  • To control the recoverable costs in advance.

Each of these impede access to justice. In other words it is proposed that:

  • Less work be allowed to support/defend a claim;
  • Recoverable costs may be less than that which is reasonable and proportionate; and
  • Claimants and Defendants may face financial pressure which could deter them from access to justice.

The Court should be slow to dictate how a claim can be presented and restrict the evidence in support of a claim or defence.

Costs as assessed or agreed are proportionate. The Court will not allow disproportionate costs and a paying party would not agree disproportionate costs. The present system ensures that costs, as assessed, agreed or managed, will always be reasonable and proportionate.

Receiving parties have lived with the uncertainty of not knowing precisely the amount costs that will be recoverable for many years and this has not impeded access to justice. With costs management, that certainty is in any event introduced at a much earlier stage. A fixed prohibitive regime from the outset is not fair or just.

It is said that “controlling the costs of litigation and providing clarity as to each party’s financial commitment are vital elements in achieving access to justice.”. It seems that the intention is to provide clarify for the losing party, who themselves are likely to have given rise to the litigation in the first place. So a party suffers a tort, their  evidence is restricted, they have to meet irrecoverable costs which may be reasonable and proportionate and they must decide whether the irrecoverable costs outweigh their fundamental right to justice. This does not appear to promote or achieve access to justice.

EU Law

“Given the conclusion that the fees imposed by the Fees Order are in practice unaffordable by some people, and that they are so high as in practice to prevent even people who can afford them from pursuing claims for small amounts and non-monetary claims, it follows that the Fees Order imposes limitations on the exercise of EU rights which are disproportionate, and that it is therefore unlawful under EU law.”.

Can the same not be said of the proposed fixed fee regime?


Much has been said about the gender gap in pay. Someone with greater earnings will have greater resources in which to fund irrecoverable elements of litigation. To repeat a previous quote:

"...the party in the stronger bargaining position will always prevail”.

In other words, a party that cannot afford irrecoverable costs will have to cut corners, discontinue and/or risk losing its claim. If certain protected groups have less resources, are they not discriminated against in their pursuit of justice?

What about a person whose first language is not English and may require an interpreter? The costs of an interpreter would intrude upon the legal fees and thus place that person at a disadvantage in terms of the recover of their legal fees. Does that not discriminate?

Some food for thought for the Government before they consider implementing the fixed recoverable costs regime.