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Pre Judgment Interest on Costs

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In 2012 the Court of Appeal in Simcoe v Jacuzzi Group Plc [2012] EWCA Civ 137 (16 February 2012) confirmed that interest is payable from the date of the order for costs, not from the date the costs are assessed.

However interest on costs incurred prior to the date of the order for costs is often overlooked. Therefore I aim to provide a quick reminder of three key decisions in respect of interest prior to the order for costs.

Powell v Herefordshire Health Authority [2002] EWCA Civ 1786

The Court of Appeal found that the Master at first instance was wrong to find that he was compelled by the 1838 Act to only award interest from the date of judgment for damages and costs to be assessed. The Court of Appeal said that the Master had a discretion which enabled him to look at the dates when the costs had been incurred, and to come to a conclusion in relation to the payments of interest that fitted the justice of the circumstances of the particular case.

Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889 (24/06/03)

The applicable rate for pre-judgment interest awarded pursuant to CPR 44.3(6)(g) is regarded as discretionary. However a practice of allowing a discretionary rate has arisen – as a result of Court guidance from analogous cases dealing with interest on damages. The Court of Appeal concluded that there was no reason why a receiving party should not receive interest on costs prior to the date of judgment. In this matter the Defendant was ordered to pay 1% above base rate from the date of payment of the Claimant’s solicitor’s bills. If the successful party had not had to pay his lawyers – it would have utilised the money elsewhere or they would not have had to have incurred the costs of borrowing it.

Jeffrey Jones & Ors v The Secretary of State for Energy and Climate Change & Coal Products Limited [2013] EWHC 1023 (QB) (03 May 2013)

The solicitor entered into a credit agreement whereby they provided credit for disbursements at a rate of 4% above base rate. The credit charges were contingent upon success. The interest was recoverable from the Defendant.

Please refer to the article by Janina Muromceva dated 3 February 2016 if you would like more information about entitlement to interest after the order for costs is made.