Powell v Herefordshire Health Authority

When awarding interest on costs, the court is not confined to the date on which judgment was given. Under rule 44.3(6)(g) of the Civil Procedure Rules 1998, it may order interest to run from or until a specified date, including a date before judgment.

The discretion enables the court to consider when the costs were incurred and to select an interest period which accords with the justice of the particular case. A decision reached on the mistaken basis that the court lacks that discretion cannot stand.

The claimant obtained judgment for damages to be assessed and costs in a clinical negligence action. Damages were quantified approximately seven years later. Master Rogers held that interest on all the costs ran from the earlier judgment, although many of those costs had not yet been incurred.

The defendant appealed from the Supreme Court Costs Office. The central issue was whether the court was compelled by sections 17 and 18 of the Judgments Act 1838 and rule 40.8(1) of the Civil Procedure Rules 1998 to adopt the earlier date, or could select a just date under rule 44.3(6)(g).

1. Disposition. The decision of Master Rogers could not stand. The appeal was disposed of on terms agreed by the parties, with no order for costs save for detailed assessment of the claimant's costs under the applicable funding order.

2. Lord Justice Kay gave the judgment of the court. Section 17 of the Judgments Act 1838 provides that every judgment debt carries interest from the time prescribed by rules of court. Section 18 treats an order for costs as a judgment debt. Rule 40.8(1) of the Civil Procedure Rules 1998 ordinarily makes interest run from the date judgment is given, unless another rule or practice direction provides differently or the court orders otherwise.

3. Rule 44.3(6)(g) expressly empowers the court to order interest on costs from or until a specified date, including a date before judgment. Master Rogers therefore had a discretion to consider when the costs had been incurred and to select an interest period which fitted the justice of the particular circumstances.

4. The parties had not drawn that discretion to the Master's attention. He consequently treated himself as legally compelled to make interest on all costs run from the earlier judgment, despite recognising that this would produce an apparently unjust result because substantial costs had not then been incurred. His decision rested on a mistaken view that he lacked the power to choose another date.

5. On appeal, counsel recognised the availability of the discretion and agreed a fair order. It was unnecessary for the Court of Appeal to determine the difficult questions that might have arisen under the former law.

• Court of Appeal (Civil Division): The decision below could not stand because the Master had not been informed of his discretion concerning the commencement of interest on costs. The appeal was disposed of on agreed terms.
• Supreme Court Costs Office: Master Rogers ruled on 31 July 2002 that interest on the whole of the claimant's costs ran from the earlier judgment for damages to be assessed rather than from the later quantification of damages.