England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/02/2011

Mr Justice Morgan:

1. On 17 December 2010, I handed down judgment in this action. On 21 January 2011, I heard oral submissions and gave a further judgment, following which I made an order dealing with a number of matters which arose out of the judgment of 17 December 2010. On 21 January 2011, it was agreed that the parties would make written submissions to me on two matters which were left outstanding and I would then determine those matters. I duly received written submissions from the parties on the two outstanding matters and this judgment sets out my determination of those two matters together with the reasons for that determination.
2. The first outstanding matter is the Defendants' application for an order pursuant to CPR 44.3(8) that the Claimant do pay a sum on account of the costs, which on 21 January 2011 I ordered the Claimant to pay to the Defendants. The Claimant accepts that it is appropriate for the court to make such an order. The parties disagree about the amount to be so ordered. The Defendants contend for the sum of £500,000 and the Claimant contends for the sum of £445,000. The Defendants have supported their figure of £500,000 with detailed calculations. The Claimant has made two points in particular in relation to those calculations. The Claimant contends that the Defendants have not allowed a sufficient deduction in relation to one matter where costs were disallowed. The Claimant further contends that, in relation to those parts of the costs which are to be assessed on the indemnity basis, the payment on account should not be 60% of those costs (as claimed by the Defendants) but only 50%.
3. In my judgment, the Defendants' calculations persuade me that a payment on account in the sum of £500,000 is unlikely to exceed the minimum amount which the Defendants are likely to be awarded on a detailed assessment of their costs. I will therefore order a payment of £500,000 on account of the Defendants' costs.
4. The second outstanding matter is the Defendants' application for an order pursuant to CPR 44.3(6)(g) that the Claimant do pay interest, in respect of the period before I made an order for costs on 21 January 2011, in relation to costs which had been incurred and paid by the Defendants before 21 January 2011.
5. The Claimant opposes the making of an order for interest on costs in respect of the period before 21 January 2011. The Claimant submits that it is only appropriate to make such an order where the sums which have been paid are very substantial and the Claimant gave examples of some cases where the sums involved were very large and where interest was awarded. The interest which is claimed under this head in the present case is said by the Defendants to be about £40,000. I see no reason why the court should not be prepared to consider making an order under CPR 44.3(6)(g) which would result in the recovery of a sum for interest in that approximate sum. That sum cannot be said to be too trivial to bother about.
6. The Claimant also submits that the Defendants have not shown that they have borrowed money to pay their solicitors' costs nor have they shown that they had any other particular purpose in mind for the use of the monies in question. These points do not seem to me to affect the decision to award interest although they may bear upon the rate of interest chosen by the court.
7. The Claimant further submits that the criticisms which the court has made of Mr Barrie Hozier's conduct mean that it is not just and equitable to award the interest which is claimed. In my judgment, those criticisms have already resulted in the Defendants being denied recovery of a part of their costs and should not be relied upon for a second time to refuse their application for an award of interest, if (as I find) that award is otherwise appropriate.
8. I am therefore prepared to make an award of interest under CPR 44.3(6)(g). Following the guidance given by the Court of Appeal in Ministry of Defence v AB [2010] EWCA Civ 1405 (although I recognise that was not a case which specifically considered CPR 44.3(6)(g)) the appropriate rate of interest can be greater than 1% over base rate. In this case, the appropriate rate is 1.5% over base rate.
9. Accordingly, the order which I will make is that:

i) Interest should be paid on all assessed or agreed costs paid on or before 19 March 2008 at the rate of 1.5% over base rate from 19 March 2008 until 21 January 2011;

ii) Interest should be paid on all assessed or agreed costs paid after 19 March 2008 but on or before 12 February 2009 at the rate of 1.5% over base rate from 12 February 2009 until 21 January 2011;

iii) Interest should be paid on all assessed or agreed costs paid after 12 February 2009 but on or before 21 January 2011 at the rate of 1.5% over base rate from the date of payment until 21 January 2011;

iv) All costs bear interest at the Judgment Act rate from 21 January 2011.