Unfair Prejudice & Drag Along


My analysis on Court of Appeal decision in Re Charterhouse Capital Limited; Arbuthnott v Bonnyman [2015] EWCA Civ 536 :



Inheritance Dispute: Early Neutral Evaluation


Early Neutral Evaluation – Read my piece in the link below on:

Probate and Inheritance Disputes – Court Approves application for Early Neutral Evaluation.




Business Competition: Key points


This business development briefing just provides an overview of the law in this area. You should talk to a lawyer for a complete understanding of how it may affect your particular circumstances.

Here is an outline of the key legal issues that a business needs to consider when dealing with competitors.  

Breaching competition law 

  • Competition law is designed to ensure that companies compete fairly with each other.  
  • Failure to comply with competition law can have serious implications for a business, including large fines.  
  • Certain serious breaches of competition law may also expose an individual to the risk of criminal prosecution. 
  • Businesses can be exposed to claims that may exceed any fines imposed on them.



All forms of cartel activity are strictly prohibited. A “cartel” describes any organisation or arrangement between at least two competitors that is designed to reduce competition between them and so increase prices or profitability beyond the level that could be achieved competitively. The main examples of cartel activity are: 

  • Price fixing. Any understanding or agreement about price levels or increases can constitute price fixing. Even a statement to a competitor like “we intend to increase prices next year”, can constitute unlawful price fixing. Unlawful price fixing includes: 
    • setting minimum or target prices for particular customers or sales in general. 
    • co-ordination of the timing of price increases. 
    • agreeing any aspects of trading conditions such as discounts, margins, rebates, credit terms, advance payments, minimum prices and list prices.
  • Bid rigging. This is when businesses agree the outcome of a tender or pitch process amongst themselves, either by: 
    • deciding in advance which company will bid; 
    • who will bid the best price; or  
    • what the tender process should be.  

Bid-rigging eliminates fair competition from a tender or pitch process and so removes the customer’s free choice. It will almost certainly lead to the customer paying higher prices.  

  • Market sharing. This may involve an agreement to allocate particular customers or sales territories to individual cartel members. 
  • Information exchange. A business must not agree to share confidential or commercially sensitive information with competitors, for example: 
    • prices
    • margins
    • customers, or  
    • sales information 

This could lead to co-ordinated commercial behaviour and is therefore illegal.  

  • Other forms of information exchange may be permissible. For example, if the information provided is historical (and has no value in predicting future commercial behaviour), anonymised, aggregated, independently compiled and public. 
  • Limiting output or sales. Sales or production quotas are often used to control the market position of cartel participants and maintain artificially high prices. 

If you become aware that the business is involved in any cartel activity or you are approached by a competitor to participate, take legal advice immediately.


Other forms of co-operation 

Several other forms of co-operation with competitors may breach competition law. To be safe, always take legal advice before doing any of the following: 

  • Joint purchasing agreements. 
  • Research and development agreements. 
  • Specialisation agreements (where competitors agree to specialise in the production of certain types of goods). 
  • Standardisation agreements (for example, where companies agree basic technical standards for products). 
  • Joint advertising. 
  • Joint sales. 

Each of these can be prohibited if the objective or effect is to reduce competition. However, they may be permissible if, for example, there are customer benefits that outweigh any anti-competitive effect.



Minority Shareholder wins Quasi Partnership claim


Read my piece in the link below on

  • A succesful claim establishing unfair prejudice by a petition under s. 994 of the Companies Act 2006
  • The latest Practice Direction on unfair prejudice claims, introducing Automatic Directions




How (not) to cut red tape

disc-smashed-by-hammer-2-1418172-sfree images

Wholesale changes to UK Companies legislation

Despite its cryptic title,

The Small Business, Enterprise, and Employment Act 2015

(SBEEA 2015), impacts extensively on all Companies: large, small and everywhere in between. Directors, company secretaries, shareholders (trustees and beneficial) and all stakeholders should be aware. The Act was brought in to effect on 26 May 2015 –  the timetable for change is robust.

The intention as ever is to make the UK more efficient and hospitable to business and to cut red tape. It seeks to achieve this laudable aim by amending, and adding extensively to the Companies Act 2006, (CA 2006) which at some 1300 sections, 16 schedules and seemingly endless guidance and over 70 statutory instruments was itself already reputedly the longest ever Act of Parliament, introduced under the then Government’s ‘Think Small First’ mantra.

 SBEEA 2015 joins the Deregulation Act 2015, squeezed through in the last weeks of Parliament, in pursuit of the Government’s Red Tape Agenda, so that the further ‘simplified’ company law regime is now governed amongst other provisions by:

  • The Companies Act 1985
  • The Companies Act 1989
  • The Companies (Audit), Investigations and Community Enterprise Act 2004
  • The Companies Act 2006
  • (SBEEA 2015)

That legislation only deals with companies that are going concerns. Regarding insolvent companies, applicable legislation includes:

  • The Insolvency Act 1986
  • The Company Directors Disqualification Act 1986
  • The two Insolvency Acts of 1994
  • The Insolvency Act 2000
  • The Enterprise Act 2002
  • Deregulation Act 2015
  • Extensive delegated legislation, regulations and statutory instruments

A company registered before the CA 2006 applied is an ‘existing company’. A ‘company’ is one that is registered under that Act.   There remains therefore two parallel universes for directors, shareholders, other stakeholders and practitioners to grapple with. Describing the further legislation as ‘simplification’ is paradoxical.

SBEEA could helpfully have been named “The Companies Act (Amendment) Act 2015. It introduces a series of major changes. Here we examine some of the key changes and the implications for businesses.


  1. Business-to-Business contracts

The transparency of payment practices will be increased through a new reporting obligation on the UK’s largest companies. Notwithstanding the Act’s title, directed at “Small Business”, this provision exclusively affects “large” companies (including large LLPs) as defined by CA 2006; s.3 of SBEEA introduces a new power for the Secretary of State to require companies to publish information about their “payment practices and policies” regarding business-to-business contracts. These will apply to contracts for goods, services or intangible assets and may include information about standard and non-standard payment terms, processing and payment of invoices, applicable codes of conduct or standards, disputes relating to payment of invoices and about payments owed or paid by the company due to late payment of invoices, whether in respect of interest or otherwise.

The objective is to ameliorate the imbalance of power between large and small companies in negotiating fairer deals. Abuse of power will also be highlighted by large companies.


  1. Bearer Shares Abolished

Already effective 26 May 2015: Section 84 of SBEEA inserts a new section 779(4) of the CA 2006, prohibiting the creation of bearer shares, and irrespective of whether the company’s articles permit this. Schedule 4 of the Act sets out transitional arrangements for the mandatory cancellation or conversion of existing bearer shares.

  1. Changes to filing requirements and registers

Due to come into force in April 2016: SBEEA removes the requirement to file an Annual Return with Companies House. Instead, a company must provide Companies House with a confirmation statement that it has provided all of the information it was required to provide during the period covered by the statement. his statement must be provided every 12 months, within 14 days of expiry of the previous 12 month period. For new companies, the first statement should be provided 12 months from the date of incorporation of the company.

The Act also introduces the option for companies to elect to keep information on a central public register, rather than keeping and maintaining their own separate registers (such as the Register of Directors, Register of Members etc.) The aim of this is to reduce the administrative burden on companies by only requiring one register to be updated and maintained rather than several.

  1. New obligation to register persons with ‘significant control’ (“PSC”): This requirement is due to come into force from 1 January 2016

Details of all entities or persons with ‘significant control’ over a company must be identified and kept on a public register. It is vital to carefully consider how the rules will impact on your company, and it is important to note that PSCs may not appear on the register of members as, depending also on changing circumstances, they may include creditors, funders, commercial counterparties and investors etc.

A company will need to review various aspects when deciding its PSCs:

  • existing registers;
  • articles of association;
  • shareholders’ agreements;
  • financing agreements; and
  • other commercial agreements

Specified conditions of significant control:

a. shares – more than 25% shareholding (directly or indirectly)

b. voting rights– more than 25% of voting rights (directly or indirectly

c. board control  – to appoint or remove a majority of the board of directors (directly or indirectly)

d. significant influence or control over the company – (the meaning of this is currently unclear and is to be set out in statutory guidance)

e. trusts and partnerships – influence or control being exercised over a trust or partnership (T or P) where T or P itself satisfies any one of condition 1-4 in relation to a company

Details to be included for individuals include:

  • Name
  • Address
  • Date of birth
  • Nationality
  • Date of registration of the interest, and
  • Nature of the interest

Small Business, Enterprise and Employment Act 2015

Although details are awaited, this is likely to prevent someone holding the beneficial interest in shares ‘hiding behind’ a nominee shareholder.

  1. Ban on Corporate directors

Effective 26 May 2015; s. 87 of the Act inserts a new section 156A in CA 2006, requiring all directors to be natural persons and prohibits the appointment of corporate directors.

Any appointment made in contravention of this section will be void and it will be a criminal offence to breach this section. Until now, the rule has been that at least one Director of a Company has to be a human being, but the others or some of them can be Companies.

A new section 156B gives the Secretary of State the power to make regulations setting out the exceptions to the general requirement that directors must be individuals, but the details are yet to be revealed. If this power is exercised it must include the compliance process, including registration requirements, and must require that the company has least one individual who is a director.

The transition period for companies with corporate directors is dealt with in a new section 156C of CA 2006. This provides that after one year of section 156A coming into force, any remaining corporate directors will cease to be directors (subject to any exceptions set out in regulations made under section 156B).

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  1. Shadow directors

Effective 26 May 2015: Section 89 of the Act amends section 170(5) of CA 2006 to provide that the general duties of directors (as set out in sections 170 to 177 of the CA 2006) apply to shadow directors where and to the extent they are capable of applying. The Secretary of State also has the power to make regulations concerning the application of general duties of directors to shadow directors (section 89 (2)).

Section 90 of the Act also amends the definition of shadow director in section 251 of the CA 2006. Section 251(2) currently provides that a person is not to be regarded as a shadow director by reason only that the directors act on advice given by him in a professional capacity. Section 90 expands this provision to make it clear that directions or instructions given in exercise of a function conferred by or under legislation is not sufficient to meet the definition, nor is any advice or guidance issued by a Minister of the Crown.

Similar amendments are made in respect of the definitions of shadow directors contained in the Insolvency Act 1986 and in the Company Directors Disqualification Act 1986.

  1. Disqualification of directors

A new approach for liquidators, administrators and administrative receivers will be introduced on reporting misconduct by directors. There will also be two new grounds for disqualifying a director in the UK:

  • where they have been convicted of a company-related offence overseas; and
  • where they have instructed a disqualified director.

The range of matters a court must consider when disqualifying a director is expanded to include:

a. the nature and extent of harm the misconduct has had; and

b. the director’s track record in running failed companies.

The Secretary of State can seek compensation from a disqualified director where misconduct resulting in their disqualification has caused identifiable loss to creditors.

The time limit to apply to court for disqualification of an unfit director of an insolvent company is increased to 3 years from the date the company becomes insolvent (previously 2 years).

  1. Registration of directors

The Act removes the requirement to provide Companies House with a ‘consent to act’ from the person appointed as director (either in the form of a signature or, where the appointment is made online, the provision of certain personal identification information). This is replaced by an obligation on the company to provide a statement that the appointee has consented to act. This applies to both appointments on incorporation and further appointments after incorporation.

There is also a new application process to remove names from the register of directors where consent was not provided.


  1. Access to finance

The Act includes a range of measures that are intended to improve the ability of small and medium businesses (SMEs) to access finance and seek loans away from their banks. For example, banks will, if requested, pass on details of SMEs they turn down for a loan to online platforms to match them with alternative finance options.

10. Red tape

Regulations affecting business will be reviewed frequently to ensure they remain effective. A target for the removal of regulatory burdens will be published in each Parliament.

An independent ‘Small Business Appeals Champion’ will be appointed for non-economic regulators. This role is designed to ensure  theat business needs are taken into account through a straightforward complaints and appeals process.

11. Employment

Zero hours contracts will not have exclusivity clauses stopping individuals from working for another employer. However, it has been suggested that this is relatively cosmetic, as no machinery for dealing with offenders or penalty is introduced.

12. Conclusion

The main corporate aspects of the Act are aimed at:

  • Increasing transparency of who controls UK companies
  • Deterring and sanctioning those who hide their interests
  • Simplifying company filing requirements to reduce duplication and improve flexibility in companies’ dealings with the Registrar
  • Amending the directors’ disqualification regime to strengthen the rules that prevent an individual from acting as a director where that individual has committed misconduct

Whilst these objectives are laudable, it appears that numerous provisions do not have essential specific details of the rules or exceptions yet decided, often where there is a criminal sanction for any breach.

The cost to business of familiarisation, implementation and compliance with these provisions, including where they are incomplete or based on shifting sands, is likely to have been substantially underestimated. Estimating direct savings is notoriously difficult and the costs of familiarisation are frequently higher than anticipated.

Further analysis of the Act and its application to Directors will follow. Meantime, manufacturers of red tape are unlikely to appear on the endangered species list any time soon.


The Battle of the Forms: Part 2

  • Tips
  • 15 Practical Steps


In Part 1 “Terms Agreed – but whose terms?” http://wp.me/p4DFLr-8x we examined the perennial problem of the steps necessary to include your companies’ standard contractual terms and conditions (T&Cs) in to a contract.

This was the issue recently covered by the Technology and Construction Court in the case of Transformers & Rectifiers Ltd v Needs Ltd. In that case, neither party to the contract had done sufficient to ensure that their T&Cs were drawn to the attention of the counter party. The court applied the law deciding that in a sale of goods contract where neither the seller’s nor the buyer’s terms and conditions have been incorporated, the relationship is governed by the implied terms of the Sale of Goods Act 1979. Accordingly, the seller of the goods will not be able to exclude or limit its liability for defective goods, which a seller can normally restrict by contract subject to the reasonableness test in the Unfair Contract Terms Act 1977.

In the preliminary discussions between parties, a “battle of the forms” can arise when two businesses are negotiating the terms of a contract and each party wants to contract on the basis of its own terms. A typical example is where, e.g., a Buyer offers to buy goods from the Supplier on its (the Buyer’s) standard terms and the Supplier purports to accept the offer on the basis of its own standard terms. In this scenario, the battle is often won by the party who fired the “last shot”, i.e., the last party to put forward T&Cs that were not explicitly rejected by the recipient.

A business should ensure that its terms are incorporated into its contracts. To achieve this, terms and conditions should be provided with and/or referred to in pre contractual documentation, such as quotations and orders. A business that relies upon printing their terms on delivery notes or invoices (post contractual documentation) runs the risk that it will not be able to rely upon those terms if there’s a dispute.

Below are a series of practical steps that could be considered to gain the advantage, the key theme being that parties must be clear about the terms on which they are doing business. Although these steps won’t guarantee your company’s standard T&Cs prevail, they may give you an advantage. There is no single overriding rule that trumps all in battle of the forms cases, but the following should help:


Negotiating Tips:

“Prevail clauses”

Consider including a “prevail clause” in your T&Cs, stating e.g. that your standard T&Cs are incorporated in to the contract to the exclusion of any other parties’ T&Cs, and that your standard terms prevail. This won’t necessarily succeed alone, e.g. where the other side makes a counter-offer, your standard T&Cs including the prevail clause will be by-passed and won’t form part of the contract. This is because your T&Cs will have effectively been rejected by your counterparty and replaced by their counter-offer.

“Prevail clauses” are still used, including as a means to pressurize the other side in to taking the line of least resistance, and accepting the standard terms as a fait accompli. However, a belt and braces approach is safer. Where the other side aims to rely on such a clause it is perfectly reasonable to reply by reiterating that your T&Cs apply.

  • Written records should be kept of all contract negotiations. Ideally, minutes of meetings should be signed by all present.
  • Emphasize that no contract can be agreed until any disputed terms are ratified. Stipulate which terms are outstanding.
  • A contract can be concluded verbally. Ensure that any meetings or telephone calls are confirmed as being conducted on the basis of your company’s T&Cs, or “subject to contract”; to prevent any agreement before a written contract is signed.


Practical Steps

  1. Always send the other side a clear and legible copy of your T&Cs together with your order/acknowledgment / supply forms and state clearly on the face of your order/acknowledgment that you rely on those T&Cs.
  2. When writing to the other side to agree an order, include a copy of your T&Cs with the letter or email. Stipulate that you are offering to contract on those terms.
  3. Don’t take for granted that your T&Cs apply. Although you may have been doing business with the other side for several years, don’t assume that a court will accept it’s on notice of your standard T&Cs. Whenever you enter into a contract, ensure that your T&Cs are included.
  4. If you send a purchase order/invoice electronically, make sure you don’t omit the back page setting out your standard T&Cs. Ideally, attach a copy of your T&Cs as a separate document.
  5. Actively bring the counterparty’s attention to your standard T&Cs.
  6. Alert the other party on the front page of your pro forma documents such as purchase order/invoices, email or letter footers, to your standard T&Cs and where they are found, e.g. on your website, and / or as attached.
  7. Clarify in writing that your T&Cs are the only terms upon which you are prepared to do business.
  8. Avoid a battle of the forms. If the other side responds with their T&Cs, clarify by return firstly that you don’t accept their terms and secondly, your T&Cs represent the only contractual provisions on which you will proceed.Respond to / reject counter-offers.
  9. If the counterparty replies to your offer ambiguously or doesn’t accept your offer, the court may later treat their communication as a counter-offer, which if it is treated as the last shot, could prevail.
  10. Contracts can be concluded by performance. Avoid premature acceptance of the other side’s T&Cs by conduct. E.g., terms of a contract can be finalized by one side unintentionally accepting the terms of a draft agreement before formal approval or signature. This could be by supplying or paying for the goods or services, accepting delivery of goods, or acting otherwise in line with the terms of the counterparty’s draft contract.
  11. Be aware that if one side proceeds without a clear written agreement and performs the contract, they risk a deemed acceptance of the other party’s terms.
  12. Fire the last shot in the “battle”! The other side’s T&Cs could prevail if they were the last shot, or where they were sent to you and, they weren’t rejected, answered with a counter offer, or where the contract was performed without more.
  13. A tactic that worked in B.R.S v Arthur V. Crutchley Ltd was where the supplier delivered whisky to the buyer’s warehouse. The delivery note set out the supplier’s T&Cs. However, the buyer’s warehouseman stamped it  “Received under [the buyer’s] conditions”.      The Court’s decision was that the warehouseman’s rubber stamp constituted the last shot of the battle. The buyer’s T&Cs prevailed. The stamp represented a counter-offer which the supplier was taken to have accepted by its performance in handing over the goods.
  14. The safest policy is to identify and resolve any dispute about T&Cs directly in negotiations with the other side. However, there may be the temptation not to jeopardies a prospective deal or future custom by risking controverersy. This involves what may be a greater risk down the line of the T&Cs being unclear, with an argument as to whose apply, or whether neither applies.
  15. Specifically negotiating the terms avoids the uncertainty of putting this off. If the seller’s T&Cs are accepted, then agreed variations can be set out in a side letter. On the up-side, when agreement is reached in this way, everyone knows where they stand legally. The down-side is that negotiating the contractual terms may be costly and time consuming. 

A well drafted set of terms and conditions will take into account the manner in which a business operates, and what it hopes to achieve. Your legal adviser should take the time to understand your business to ensure that your contracts achieve what you want them to.  

Advice at the beginning can avoid pitfalls down the line, which could be expensive and involve court proceedings.


Transformers and Rectifiers Ltd v Needs Ltd [2015] EWHC 269 (TCC).

British Road Services Limited v Arthur Crutchley & Co Limited ([1968] 1 All ER 811).



Battle of the Forms: Part 1

“Terms Agreed” – But whose terms?


In a recent decision of the Technology & Construction Court, both sides lost out in a “battle of the forms” as to whose standard terms and conditions (T&Cs) applied. The case demonstrates again the dangers of assuming that your latest contract, or even a long-term business relationship is governed by your T&Cs.


In Transformers & Rectifiers Ltd v Needs Ltd, the parties had been doing business for around 20 years on a weekly basis. The buyer, Transformers & Rectifiers Ltd regularly ordered nitrile gaskets from the supplier (Needs Ltd).

The buyer complained that two lots of gaskets were not fit for purpose and in breach of contract. There was a dispute to be decided as a preliminary issue as to whose terms applied and whether the supplier could rely on their exclusion clause to limit liability? The supplier contended that its liability was limited or excluded by its terms of sale.

The buyer gave orders by different methods, including by fax, email or post. Their standard T&Cs were printed on the reverse of their standard form purchase orders when sent by post. However, there was no reference to the terms on the face of the purchase order itself. When a fax or email order was sent, the back page wasn’t included.

The supplier acknowledged purchase orders by sending an acknowledgement of order that stated “The quoted prices and deliveries are subject to our normal terms and conditions of sale (copies available upon request)”. However, the supplier hadn’t ever sent their T&Cs to the buyer.


The Judge, Edwards-Stuart J found that it was not obvious on reading the front page of the Order that the T&Cs were on the reverse. Also, because the buyer didn’t issue purchase orders in the same way each time, its standard T&Cs were frequently omitted as it usually sent only the front page of its purchase orders via fax or email.


  1. The Judge found that neither parties’ standard T&Cs were incorporated into their contracts: neither side had done enough to draw the other’s attention to its standard terms. The commercial result was that the supplier could not rely on exclusion clauses within its standard terms, and the buyer couldn’t rely on their T&Cs either. He outlined the following broad principles:
  2. Where X makes an offer on its conditions and Y accepts that offer on its conditions and, performance follows (without more correspondence), on the assumption that each party’s conditions have been reasonably drawn to the attention of the other, there is a contract on Y’s conditions;
  3. Where there is reliance on a previous course of dealing it doesn’t have to be extensive. However, the course of dealing by the party contending that its conditions are incorporated has to be consistent and unequivocal;
  4. Where trade standard terms exist, it will usually be easier to persuade the court that they should be incorporated, provided that reasonable notice of those terms has been provided;
  5. A party’s standard terms will not be incorporated unless that party has given the other side reasonable notice of them;


Frequently, whose terms apply is a question of negotiation between the parties. A “battle of the forms” arises when two businesses are negotiating the terms of a contract and each party wants to contract on the basis of its own T&Cs. This often happens where e.g. a Buyer offers to buy goods from a Supplier on the Buyer’s standard terms and the Supplier purports to accept the offer on the basis of its own standard terms.

In this situation, the Court often decides that the battle is won by the side that fired the “last shot”, i.e., the last party to put forward T&Cs that were not explicitly rejected by the recipient.

If neither side’s T&Cs apply, as in this case, the contract is governed by the implied terms of the Sale of Goods Act 1979. Therefore the seller won’t be able to exclude or limit its liability for defective goods, which a seller can normally restrict by contract subject to the reasonableness test in the Unfair Contract Terms Act 1977.

The case provides a timely reminder that general words in purchase orders and other documents are insufficient to install a party’s T&Cs, unless a copy of the T&Cs are sent. Businesses should also note that e-mailing and faxing purchase orders or acknowledgements may result in T&Cs on the reverse not being included. 


  • A business should ensure that its terms are incorporated into its contracts. To achieve this, terms and conditions should be provided with and/or referred to in pre contractual documentation, such as quotations and orders. A business that relies upon printing their terms on delivery notes or invoices (post contractual documentation) runs the risk that it will not be able to rely upon those terms should a dispute arise.
  • It is important to ensure that T&Cs are properly used in order to effectively incorporate them into the contract of sale so that the supplier is not exposed to increased liability. A well drafted set of terms and conditions will take into account the manner in which a business operates, and what it hopes to achieve.
  • Another post will explore additional steps that can be taken to gain the advantage in the Battle of the forms.

Case: Transformers and Rectifiers Ltd v Needs Ltd [2015] EWHC 269 (TCC).


What price Justice? Magna Carta invoked after 8 centuries

Court fees rocket by up to 622% (e.g. from £1,315 to £9,500)


UK Government celebrates this year’s 800th anniversary of Magna Carta by

  • increasing Court fees at a stroke by up to 622%
  • reducing access to Justice for all but a privileged few and big business
  • damaging our legal system
  • for commercial cases, making England a profoundly uncompetitive place to resolve foreign disputes, to the delight of our competitors.

The Ministry of Justice is imposing plans to raise revenue from the courts system by introducing a new structure for fees for bringing money claims over the value of £10,000. The announcement can be found here, with the fee hike starting on 9 March 2015 (subject to approval by the House of Lords this week):  


Under the new scheme a levy of 5% is charged to issue a money claim of more than £10,000.

The fee increases for money claims mean:

  1. The fee for claims from £1 to £9,999 will remain unchanged.
  2. The fee for claims from £10,000 to £199,999 will be 5% of the claim.
  3. The fee for claims £200,000 and above will be fixed at £10,000.
  4. There will be a 10% discount on fees for claims from £10,000 – £99,999 filed electronically.
  5. A fee to issue a £190,000 legal claim is currently £1,315. From 9 March 2015 this fee is now £9,500, which represents a rise of over 622%.*

The changes are opposed by a wide array of consumers groups, business, lawyers and judges who condemn the changes as unconstitutional, a threat to access to justice, and ill conceived. An application for Judicial Review to challenge the new fees is being prepared.

Statue of Justice Old Bailey

The Civil Justice Council

Representing Judges, says the effects of implementing such major increases could be dramatic in terms of:

  • acting as a barrier to entry to the justice system through pricing many court users out of the courts;
  • reducing access to justice for those litigants for whom court fees form a significant cost element of the overall process;
  • making alternatives to the civil process a far more attractive proposition, undermining the very intention behind the court fee increase and so risking significantly reduced fee income, critical to funding the courts and the justice system;   
  • having a disproportionately adverse effect on some groups e.g. small and medium enterprises, low income individuals; and
  • undermining equality before the law. 

The Law Society has collected case studies from solicitors showing what impact the increased fees would have on ordinary people seeking justice. 

  • Claimants suffering from serious personal injury or clinical negligence will be deterred from claiming compensation, with catastrophic results for them individually, society at large, and the public finances.
  • One case study found that a young girl with brain damage due to a failure by doctors to diagnose meningitis as a toddler will now require £10,000 to mount any fight for a secure financial settlement. That is even before the work involved and cost of obtaining the medical records and obtaining reports from medical expert witnesses
  • The development of case law will b e impeded.
  • Civil Justice isn’t just for those people who bring cases to court, it effects everybody in terms of the Rule of Law – where wrong doers are held to account. This is a Public Good, which is being undermined.
  • Some SMEs are forced to begin legal proceedings when buyers delay payment, as these actions can have a devastating impact on the cash flow of the business.
  • Similarly, a pensioner with limited financial means could be forced to begin legal proceedings against a financial adviser who gave them bad advice, leaving them with little to no funds in their retirement.
  • One concerned a pensioner with a claim against a financial adviser for the loss of his entire pension fund, for which the fee for applying to begin court proceedings will increase from £910 to £5,000
  • Few people can afford the extra £8,000 court fee  they would need to make a £190,000 claim, particularly if they are elderly or have been out of thoure workforce for some time due to personal injury. Such fee increases can actually be prohibitive, and this will deter people from starting claims altogether, thereby denying them access to justice.


I am also concerned about the evidence base that the MoJ used to come to its decision to increase court fees. The department claims that 90% of money claims will not be affected, but it is clear to me that the potential impact is much more serious than anticipated.

 A further debate will be held in the Lords this week, and subject to clearing that hurdle the fees will come into force on 9 March.

Law Society president Andrew Caplen said:

‘The government appears to be on a mission to turn the courts into a profit centre, amounting to a flat tax on those seeking justice. People whose lives have been turned upside down by life-changing injuries suffered through no fault of their own may no longer be able to afford to access the courts to seek compensation to fund their care. 

‘As well as affecting those who have been injured, the increases may leave small and medium-sized businesses saddled with debts they are due but unable to afford to recover.’

The fees are designed to raise £120m a year to help the government cover the cost of funding the court service in England and Wales.

freedom-503269-sfree images

Magna Carta

Objectors to the fee increase are applying for Judicial Review of the decision,  contending that it is unconstitutional. Magna Carta, or Great Charter, was an attempt by England’s Barons to limit the Crown’s power. It was signed by King John on 15 June 1215 at Runnymede. Many of the clauses dealt with specific issues and grievances raised by the Barons. However, Magna Carta described vital legal principles, including that no ‘freeman’ could be punished except by lawful judgment of his peers, or by the law of the land.

Clause 29 of Magna Carta states:

‘We will sell to no man, we will not deny or defer to any man either Justice or Right.’ 

Lord Denning described Magna Carta as

the greatest constitutional document of all times – the foundation of the freedom of the individual against the arbitrary authority of the despot.

In this anniversary year, Magna Carta is relevant in the 21st century.  In a 2009 committee debate, Tom Brake, Liberal Democrat MP for Carshalton and Wallington, raised this argument in relation to a number of statutory instruments which introduced a change from partial to full recovery of court costs in civil proceedings:

We are now proposing to sell justice to people and make a profit out of it, because the objective behind full cost recovery is to charge so much in cases where there is no fee remission that we make enough profit to pay for fee remission

The rule of law is a public good, to the extent that it affects those people who do not go to court because, hopefully, they follow the rule of law, as well as those who do go to court. If people feel that justice in this country is only available to people on benefits and those with lots of money, we are cutting out a lot of people from the rule of law.

A Tax On Justice

Making the swingeing changes proposed amounts to selling justice, contrary to Clause 29 of Magna Carta.


Furthermore, the proposals for enhanced fee charging in commercial proceedings will substantially undermine England and particularly London’s attractiveness as a centre for international litigation. Research conducted for the Ministry of Justice by the Centre for Commercial Law Studies at Queen Mary shows that the proposed fees would make court fees in London the most expensive in the world. The only jurisdiction that charges issue fees comparable to those proposed is the Dubai International Financial Centre.

For example in the courts of New York, (London’s strongest competitor), it costs as little as $400 to issue a claim. Foreign attorneys will not be slow to seize on any significant disparity in court fees to the cost of the United Kingdom economy, as the UK Government negates Magna Carta.

Whilst there are other alternatives to a state funded court system for resolving legal disputes, (such as Alternative Dispute Resolution, the pilot scheme for  adjudication of professional negligence claims, and the newly proposed online “low value” [up to £25,000] ebay type civil dispute court) these are either substantially dependent for their effectiveness  on the traditional civil court being readily accessible as a fall back, or a pale shadow of what we have assumed to be due process and natural justice providing remedies to right wrongs.