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Simcoe v Jacuzzi UK group PLC, Court of Appeal, 16 February 2012

27 February 2012
The issues

Costs – interests of costs

The facts

There was no evidence that the Treasury had been consulted or involved in the promulgation of the CPR generally or in 40.8 in particular

The claimant bought a claim for personal injuries. He entered into a CFA with his solicitors. The CFA allowed for a success fee of 100% of the basic charges, payable if the claimant won. Proceedings were issued and the claim was compromised whereby the claimant agreed to accept £12,750. The bill of costs was £74,000 (including a reduction in the success fee to just over 60%). The claimant solicitors sought interests on costs. The defendant relied on Gray v Toner (allocatur rule) and argued that no interest was payable until such time as the amount of costs was assessed. The claimant argued that interest ran from the date of the order for costs (the incipitur rule). The position as to interest in the County Court prior to the CPR was governed by s.74(1) of the County Courts Act 1984 which provided “the Lord Chancellor may by order with the concurrence of the treasury provide that any sums to which this sub-section applies shall carry interest at such a rate and between such times as may be prescribed by the order”. In 1991 the Lord Chancellor made the County Court (Interest on Judgment Debts) Order 1991 which was promulgated with the agreement of the Treasury. It provided that every judgment debt should carry interest from the date on which the relevant judgment was given; that a relevant judgment meant a judgment or order of the County Court for the payment of a sum of money if not less than £5,000 and in April 1999 the CPR were introduced. It provided at CPR 40.8(1) that where interest was payable on a judgment pursuant to s.74 of the County Courts Act 1984, that interest should run from the date judgment was given unless a rule in another part of a practice direction made a different provision or the court ordered otherwise.

The decision

There was no evidence that the Treasury had been consulted or involved in the promulgation of the CPR generally or in 40.8 in particular. In R v Secretary of State for Social Service ex parte Association of Metropolitan Authorities, the High Court had found in the context of a statute requiring a government department making regulations to consult with certain local authorities that a failure to consult could invalidate the regulations. On the assumption that that case was rightly decided, the Court of Appeal took the view that CPR 40.8 was of no effect in the County Court owing to the absence of any concurrence by the treasury. That did not mean that the entirety of the rule let alone the CPR as a whole had no effect. CPR 40.8(1) had always been valid in the High Court and CPR 40.8(2) was arguably valid in the County Court as well as the High Court. If the Treasury was in fact content with CPR 40.8 this could be formally recorded and the rule would then be valid.

In respect of the 1991 Order, Article 2.1 makes it clear that interest was to run from the date of judgment. The only ‘judgment’ is that reflected in the order for costs to be assessed or agreed. The subsequent quantification if either an agreement or a certification. The effect of the 1991 Order is therefore, that interest on costs runs from the incipitur date.

If this was not right there was no reason to depart from the rule that interest should run from the incipitur date merely because of the existence of a CFA. The uplift was not in any way fixed at a rate intended to compensate the claimant or solicitors for delay in receiving money from the defendant. Nor were the hourly rates calculated at a rate which took into account the delay in receiving costs from the defendant. There was no evidence to support this view. Moreover, if this point was a good one it would be a reason for reducing the hourly rate claimed rather than from departing from the general Rule in 40.8.

Finally, the fact that the claimants costs were nearly six times the amount of the agreed damages suggested that something was out of kilter in at least some part of the civil justice system and it was therefore to be hoped that the changes that were in the process of being enacted in relation to civil costs would help ensure that costs become more proportionate.

Appeal Allowed; interest to run from the incipitur date.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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