UK Supreme Court declares court fees for claims before employment tribunals unlawful

R v Lord Chancellor [2017] UKSC 51 (26 July 2017)

Summary

The issue on appeal before the United Kingdom Supreme Court (UKSC) was whether fees imposed by the Lord Chancellor in respect of proceedings in employment tribunals (ETs) and the employment appeal tribunal (EAT) (referred to as the Fees Order) are unlawful because of their effects on access to justice. Specifically, the appellants argued that the making of the Fees Order was not a lawful exercise of the Lord Chancellor’s statutory powers, because the prescribed fees interfere unjustifiably with the right of access to justice under English common law, frustrate the operation of Parliamentary legislation granting employment rights and discriminate unlawfully against women and other protected groups. The UKSC also held that the Fees Order contravened European Union law.

In short, the UKSC held that the Fees Order effectively prevents access to justice and is therefore unlawful.

Facts

In January 2011 the UK Government announced its intention to introduce fee-charging into ETs and the EAT for the following three reasons:

  1. fees would help transfer some of the cost burden from general taxpayers to those that used the system, or caused the system to be used
  2. a price mechanism could incentivise earlier settlements; and
  3. it could dis-incentivise unreasonable behaviour, such as pursuing weak or vexatious claims.

The Fees Order was made on 28 July 2013 and came into force the following day.

With regard to ETs, the Fees Order provides for two separate fees: an “issue fee” payable when a claim is presented and a “hearing fee” payable at a future date when the claim is heard.

Under the EAT, the Fees Order are also divided into two separate stages. Please refer to paragraph 19 of the judgement for a detailed discussion of the Fees Order with regards to the EAT.

The Fees Order also makes provision for the remission of fees. A claimant is entitled to remission if their disposable capital (defined as “the value of every resource of a capital nature belonging to the party on the date on which the application for remission is made, subject to certain exclusions”) is less than a specified amount, which varies according to the amount of the fee. Please refer to paragraphs 21 to 24 of the judgment for a detailed discussion on how the amount of remission granted is calculated. The entire fee may be remitted in circumstances of an exceptional nature.

A claim in the ETs or the EAT is rejected if the accompanying issue fee or hearing fee is not paid or a remission application is not presented.

Since the Fees Order came into force on 29 July 2013, it was submitted that:

  • the number of claims brought in ETs had dropped dramatically;
  • there had been a fall in lower value claims due to claimants deciding it was not economically worthwhile pursuing a lower value claim; and
  • the proportion of claimants receiving a remission was far lower than originally anticipated.

Decision

Is the Fees Order unlawful under English law?

The UKSC commenced its discussion by reiterating a fundamental principle of the rule of law at paragraph 66: “the constitutional right of access to the courts is inherent in the rule of law”.

The issue therefore before the UKSC was whether the Fees Order effectively prevents some persons from having access to justice. In deliberating on this issue, the UKSC considered the following points:

  1. The fees have to be set at a level that everyone can afford in order for the fees to be lawful. In concluding that the fees were not set at a level that everyone can afford, the UKSC held that “the fall in the number of claims has in any event been so sharp, so substantial and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought the claims have found the fees to be unaffordable."
  2. Fees must be affordable in a practical sense, rather than a theoretical sense. On this note, the UKSC held that “where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable."
  3. Fees can also prevent access to justice if they render it futile or irrational to bring a claim. The evidence submitted before the UKSC established that the Fees Order had a deterrent effect on the bringing of claims of low monetary value.

For the above reasons, the UKSC held at paragraph 98 that “the Fees Order effectively prevents access to justice, and is therefore unlawful.”

Does the Fees Order cut down statutory rights?

The lawfulness of the Fees Order was also challenged on the basis that it contravened the rule that specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different act (paragraph 103). Restrictions on the right of access to ETs and the EAT is subject to European Union law. The UKSC held that this ground of appeal did not add anything to the ground based on the common law right of access to justice.  However, it went on to hold that the Fees Order was unlawful, not least because it had the practical effect of making it unaffordable for persons to exercise rights already conferred on them by Parliament.

EU Law

Restrictions on the right of access to ETs and the EAT is subject to European Union law.

The UKSC considered Article 52(1) of the Charter of Fundamental Rights of the European Union:

Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.

The UKSC held that proportionality is not determined solely by the affordability of the fees. It also requires consideration of several factors, including:

  1. “the stage of the proceedings at which the fees must be paid”
  2. “whether non-payment may result in the claims never being examined on its merits”; and
  3. “whether the fees are proportionate in amount to the sums being claimed in the proceedings”.

In consideration of the above, the UKSC held that:

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.

Commentary

The decision of the UKSC supports the reality of such fees having a prohibitive nature and ensures that the courts must remain accessible to all persons, whether from low social economic backgrounds or otherwise.

Although this case was decided in the UKSC, it may be relevant under Australian law if Australian courts elect to consider the principles articulated in this case in the event a similar matter is brought before an Australian court.    

Access to justice is widely recognised as an essential element of a fair and effective justice system in Australia and Australian common law does recognise limitations on the right of Parliaments to restrict access to the courts.

However, Australian law does not provide quite the same protections to common law rights as English law. It does provide some protection for fundamental rights, such as the right to access the courts, for example through the operation of the presumption that Parliament does not intend to curtail fundamental rights. However, that presumption can be rebutted by the use of unmistakeable and unambiguous language. Further, the Australian courts do not apply the same concept of proportionality as the English courts. Under English common law, even a clearly worded statute will not be permitted to curtail fundamental rights except to the extent reasonably necessary to meet the ends which justify the curtailment.

The relationship between Australian domestic law and international law is different from (and in some ways more complex than) the relationship between English law and EU law. A close examination of the differences is not warranted here. However, it would be a mistake to think that the UKSC’s decision is solely or even predominantly a product of EU law, rather than a product of the application of well‑recognised and long‑established common law rights which have some parallels here in Australia.

The full text of the decision can be found here.

Grant Schulz is a Senior Associate, Marco Lagos is an Associate and Ellen Vincent is a Lawyer at Norton Rose Fulbright.