The government has announced a consultation on the planned introduction of application fees and hearing fees in the First Tier Tribunal (‘FTT’) which would include enfranchisement cases and service charge applications. For further details of this consultation which ends today see:
https://consult.justice.gov.uk/digital-communications/further-fees-proposal-consultation/
Fees have already been introduced in the employment tribunal with quite a lot of outcry see: http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Employment_and_labour_law/employment-tribunal-fees-judicial-review
and in fact there may be plans to seek judicial review of this decision in so far as it relates to FTT matters.
Similarly, the radical increase in court fees has almost killed off litigation in some quarters. See http://www.access-legal.co.uk/legal-news/court-fees-set-to-increase-from-april-2015-7379.htm#.Vff2dWdRHcs
Now, the attention has turned to the property tribunals. So, what will all this mean in practice?
Well, firstly, there are fees to make an application to the FTT on service charges – currently around £150, but there are no fees for enfranchisement applications (freehold purchase or lease extension). Why is this? Possibly because of an oversight when the legislation was first enacted, or more probably because in enfranchisement cases because of the strict provisions relating to time limits under which the tenant must apply to the tribunal within six months of the counter notice in response if terms have not been agreed or faces losing their claim altogether.
This point appears to have been overlooked by the government entirely in its recent consultation paper which seems to work on the proposition that because these cases involve private property rights they must involve matters of ‘value’ and should be ‘taxed.’
I am just as in favour as the next person of government services ‘paying their way’ where possible – this seems a laudable policy objective, but in this particular case, the proposed changes (a flat hearing fee of £2000 and an application fee of £400 in all cases) simply cannot be fair. There are many cases where freeholders particularly (but it could be the tenant) deliberately drag their heels to see if the tenant will apply to tribunal. This means that the tenant /other party has no choice but almost ‘has’ to apply to tribunal as this is part of keeping their claim alive. Indeed the vast majority of applications are ‘protective’ in nature and do not progress to a final hearing.
Politically, I do wonder how well his has been thought out, indeed as with the changes in court fees for litigation. The impact being negative on the business community more widely as reducing access to the court system effectively ‘prices out justice’ as far as the consumer is concerned and also damages the business of those who provide litigation services with the attendant impact that this has on the wider economy.
In relation to these current proposals – if a steep hearing fee is introduced all that will happen is that the ‘pinch point’ at which cases settle will come earlier – for most when the hearing fee becomes payable. Therefore, there will very probably be a lot less hearings (of only the highest value cases) and if the hearing fee is supposed to generate revenue then this will be vastly reduced as the number of ‘effective’ cases (those that fight) will fall dramatically.
This seems to go completely against the grain of trying to recover the cost of the services actually provided and is likely to have a much wider detrimental economic impact. If the government wanted to take steps to discourage business, enterprise and employment they could of course price access to justice so highly that the courts and tribunals were very clean, tidy and empty – but one has to ask if this were done what the quality of rights for the average homeowner would be if they have a recalcitrant landlord and need to take steps to protect the value of their home.
If the government wants to go down this route then perhaps they should consider amending the primary legislation to allow a voluntary extension of time to apply to the tribunal to be made (as with the provisions of the Landlord and Tenant Act 1954), or by scrapping or vastly reducing the planned application fee and introducing a tiered fee scale for tribunal hearings (as my ALEP colleagues have suggested) so that hearing fees are paid only in the highest value cases (say where the premium in question is over £500,000) and then on a sliding scale.
The views expressed here are my own, but I am sure that many will share them and I welcome all and any discussion that may follow on this topic.
Mark Chick
15.9.2015
Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area. It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.
If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk