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Kurian v Falzon, Senior Court Costs Office, 9 November 2011

27 January 2012
The issues

Costs – interest on costs – Motto v Trafigura

The facts

The claimant had a road traffic accident and brought a successful claim for personal injuries. The defendant was ordered to pay the claimant’s costs to be assessed by a consent order dated 14 July 2010 which settled quantum. The claimant sought interest on costs from 14 July 2010. The defendant argued that the claimant should receive interest only from the date of quantification of those costs.

The decision

In Motto v Trafigura the Senior Costs Judge had concluded that it would be a brave costs judge who decided that the decisions of the House of Lords in Hunt v Douglas and Thomas v Bunn were no longer binding. That was a conclusion with which the Master agreed. The starting point that interest ran in principle from the date of the order giving the entitlement to costs.

That being said the court now had discretion under CPR 44.3(4) to depart from the starting point. In Motto v Trafigura the Senior Costs Judge declined to award interest from the date of judgment finding that the claimant’s as receiving parties were not liable to account to their solicitors for interest on costs and declining an attempt to imply such an obligation into the condition fee agreement. Any recovery of interest on costs would be a pure windfall to the claimants therefore.

In this case the interest clearly belonged to the solicitors.

The further question arose as to whether the receipt of post-judgment pre-quantification interest by solicitors was so at odds with compensatory approach in respect of interest as to justify in the exercises of the court discretion, departure from the Incipitur rule.

In the view of the court the award of interest in such circumstances did not depart from the compensatory approach but merely reflected the commercial reality. Entitlement to a success fee did not in itself show sufficient reason to depart from the established rule. Success fees were not formulated on that basis. They primarily reflected the risk of legal representatives going unpaid as at the date the relevant agreement was signed. Compensation which ultimately passed to the legal representatives for delay did not create injustice and did not represent an additional award.

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