I am grateful to barrister James Miller for sending me a copy of the decision of District Judge Corkhill in the case of Gill -v- Barnsley Canister Company Ltd, a copy of which is available here Gill v Barnsley Canister & Others – APPROVED Judgment – 15th November 2021 v1 (1). The judge decided that the court had a discretion to order that the receiving party on assessment can recover disbursement loan interest that was paid in order to fund disbursements in the case. However evidence needed to be placed before the court that the steps taken had been reasonable and necessary. In the absence of evidence the interest was not recoverable.
” I am not saying I would need to do a trawl of the claimant’s financial circumstances, but I think the court is entitled to be provided with some evidence from the claimant to say that they had no way of funding the litigation or funding the disbursements without such a loan, that the loan he took out was the only available loan to him and that, as a consequence, the interest rate charged was the only rate of interest he could take out in the loan market. I do not think it is asking too much to expect to see a witness statement with some additional information as opposed to the court being asked to make an assumption that the claimant fell within a class of litigant of modest means.”
THE CASE
The claimant had brought an action for personal injuries against several defendants, for loss of hearing arising from exposure to noise. The case settled for £2,032.40. The judge was assessing costs and, in particular a claim for interest of £707.08 arising from a funding loan.
THE COURT’S ABILITY TO AWARD INTEREST IN THESE CIRCUMSTANCES
The judge found that the court had power to order interest on costs from a date before judgment. The question the judge addressed was whether the court should exercise that discretion in the claimant’s favour.
THE JUDGE’S DECISION: INSUFFICIENT EVIDENCE TO AWARD INTEREST
The judge held that evidence was needed to justify both the taking out of the loan and the unusually high interest rate. In the absence of evidence the interest was not recoverable.
14. The claimant though, as the defendant pointed out, has, we are told, taken this loan out because it was reasonable to do so, but no evidence has been adduced by the claimant as regards the claimant’s reasons for taking out the interest. Effectively, the court is being asked to make an assumption as regards the claimant’s need and reasonableness. We have no copy of the agreement. We have no details of comparable rates.
15. The court should also bear in mind that recoverability of costs and the amount recovered should not guarantee the claimant a complete indemnity in respect of what has been incurred and there is always an element of the costs of litigation.
16. Of all the authorities I have considered this morning, the most useful authority is that of my fellow Regional Costs Judge, District Judge Baldwin, who sits in Liverpool. Whilst this is not binding upon myself because, of course, we are both District Judges, Judge Baldwin considered the exact same point as I am being asked to consider – that is, the interest payable under a funding loan which charged a commercial rate of interest of 15.3%.
17. The amount of interest Judge Baldwin was concerned with was about half of the sum that I am concerned with but, intriguingly, his assessment of costs was around about a thousand pounds less than mine and the value of the claim was almost identical. The claimant in that case, which was Godfrey v Automotive Products Limited, recovered £2,000 by way of a Part 36 compared with the £2,032.40 recovered by the claimant in this case.
18. I, like Judge Baldwin, am satisfied that I can make an award of interest under 44.2(c). However, in order to be able to make that award, I think it would be wrong for this court to simply say, well, an award of interest can be made, therefore this claimant entered into this agreement and incurred interest of 15.3% and that he fell within a class of litigant of modest means without there being some evidence to support that contention.
19. This is an issue that clearly concerned Judge Baldwin. Like myself, he was being asked to make an assumption, namely that the claimant is a private individual of modest means and that, as a consequence, it was reasonable and proportionate for the claimant to have funded the litigation by way of taking out a loan.
20. I am not saying I would need to do a trawl of the claimant’s financial circumstances, but I think the court is entitled to be provided with some evidence from the claimant to say that they had no way of funding the litigation or funding the disbursements without such a loan, that the loan he took out was the only available loan to him and that, as a consequence, the interest rate charged was the only rate of interest he could take out in the loan market. I do not think it is asking too much to expect to see a witness statement with some additional information as opposed to the court being asked to make an assumption that the claimant fell within a class of litigant of modest
21. One of the reasons why I would be much more comfortable to have seen some form of witness evidence is I consider the interest rate of 15.3% to be very much on the high side, as did Judge Baldwin, and I would particularly have liked to have known whether the claimant would have been able to take out a personal loan which would have had a far lower rate of interest and why it was this particular agreement that was attractive to the claimant. Because we are looking at potentially rates of around 4% to 5% above base rate which is far more favourable than the 15.3% sought by the claimant and which is also 7.3% higher than judgment debt rate of 8%.
22. Whilst like Judge Baldwin I do feel the court has power to award interest on a disbursement funding agreement, on the evidence before myself I am not persuaded that it is appropriate for this court to exercise the discretion it has in favour of the claimant and to award the interest sought.
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