Interest on costs

12th December, 2016

Simcoe v Jacuzzi Group Plc [2012] EWCA Civ 137 established interest is payable from the date of the order giving rise to detailed assessment rather than the date of the quantification of those costs.

A receiving party has 3 months from the date of such an order in which to commence detailed assessment proceedings and serve a formal bill of costs. Cynically, a receiving party can serve its bill at the last moment before those 3 months are up and potentially bank itself 90 days’ worth of interest at 8%. Depending on the size of the bill, and in the absence of the paying party making an interim payment, interest can be substantial.

Of course, without the paying party having seen the bill, and unless an interim payment has already been provided for in the order, it is perhaps unlikely an interim payment will have been made.

This apparent unfairness has been addressed in Involnert Management Inc v Aprilgrange Limited & Others [2015] EWHC 2834 where Mr Justice Leggatt implied a standard 3 month stay on the date from which Judgment Act interest should run from:

“…Postponing the date from which Judgment Acts interest begins to run by three months will therefore generally serve to ensure that the party liable for costs has received the information needed to make a realistic assessment of the amount of its liability before it begins to interest at the rate applicable to judgment debts for failing to pay that amount.”

It re-iterates the fact the court retains a discretion to order interest should run from a different date in accordance with the overriding objective and that exceptional circumstances are not required.

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