NO INTEREST AWARDED ON PRE-JUDGMENT COSTS FOR SUCCESSFUL DEFENDANT

Mediatelegal

Should a successful party have an award of interest on costs paid to their solicitors. In the case of Schuman -v- Veale Wasborough  [2013] EWHC 4070 (QB) Dingemans J considered an application by successful defendants that they be awarded interest on their costs from the date they paid such costs to their solicitors.  That application was rejected.

The judge stated:

  1. The issue which has arisen is whether the Defendants, who it is common ground should have their costs, to be the subject of a detailed assessment if not agreed, should also have interest, claimed at the rate of 1.5 per cent, on sums paid by the Defendants to their legal representatives from the date of payment of those costs until judgment. It was common ground that interest accrues on the costs post-judgment. I am grateful to the parties who have put in written submissions on this issue.
  1. I have a discretion to make an order providing for interest to be paid on the costs before judgment and from the date that they were paid to the legal representatives, see CPR 44.3(6)(g) and the judgment of the Court of Appeal in Powell v Herefordshire Health Authority [2002] EWCA Civ 1786[2003] CP 26 and Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889[2004] Costs LR 201.
  1. In this case I have decided not to order interest to be paid on the costs paid to legal representatives before judgment. This is for a number of reasons. First the making of such orders is not usual. This is not necessarily a reason for not making such an order, but it suggests that there might be proper reasons for not making such an order. I consider that there are good reasons for not making such an order, as appears below. Secondly the exercise of the costs jurisdiction has always been rough and ready. For example it is well known that an order for payment of costs on the standard basis rarely provides a complete indemnity to the winning party. The parties have always had to accept that there is a cost of being involved in litigation. Thirdly the making of such an order will introduce an unnecessary level of sophistication into the process for assessing costs, with parties being required to show not only when bills were rendered, but how and when they were paid. This is likely to generate further costs for both parties in preparing such schedules of information, and in checking them. The generation of further costs creates barriers for parties litigating in the Courts.
  1. Fourthly provisions relating to the summary assessment of costs on interim applications, and interim payments on account of costs, are other routes providing a system which ensures that such parties who have paid costs to their legal representatives are not kept out of pocket for long periods. These other methods avoid the need for careful calculations and evidence about payment dates. Fifthly there is nothing in this case which renders the making of such an order appropriate, such as a very long delay in the action.

FINDING THE CASE

The case can be found at http://www.bailii.org/ew/cases/EWHC/QB/2013/4070.html