Turvill & Anor v Legal Services Commission

Interest on a statutory charge may be awarded under County Courts Act 1984, section 69, but the award remains discretionary. A charge-holder’s errors may justify refusing interest for the pre-action period. However, where the debtor denies liability and will pay only if ordered, enforcement proceedings may be inevitable. In the absence of misconduct after service, interest should ordinarily be awarded from service until payment. An appellate court may re-exercise a discretion where the first-instance judge failed to give proper weight to a material factor. Costs remain discretionary and may be awarded to the charge-holder despite payment of principal before trial and recovery of only a small amount of interest.

The Legal Services Commission sought to enforce a statutory charge under section 16(6) of the Legal Aid Act 1988 over the Turvills’ matrimonial home. The charge secured legal aid costs incurred in defending mortgage possession proceedings.

The principal balance was paid before trial, leaving interest and costs in issue. On 7 July 2003, the Lincoln County Court refused interest but ordered the Turvills to pay the Commission’s costs. The Turvills appealed against the costs order, and the Commission cross-appealed against the refusal of interest. The central questions were whether the first-instance discretion on interest had been properly exercised and whether the costs order should stand.

Disposition. Lord Justice Jonathan Parker delivered the leading judgment, with Lord Justices Kay and Brooke agreeing. The appeal against costs was dismissed. The cross-appeal was allowed in part.

1. Interest and appellate intervention. It was common ground that interest could be awarded under section 69 of the County Courts Act 1984 from the date when the cause of action arose, subject to discretion. The first-instance discretion was undermined because insufficient weight was given to the fact that the Turvills would make no further payment unless ordered by the court. The Court of Appeal therefore re-exercised the discretion.
2. Pre-action period. The Commission’s repeated errors, including incorrect redemption figures, justified refusing interest before commencement of the enforcement proceedings.
3. Post-service period. Once the Turvills denied any further liability, proceedings were inevitable. There was no misconduct by the Commission after commencement capable of justifying a refusal of interest. Interest was therefore awarded from service until payment of the outstanding principal on 19 May 2003, amounting to slightly less than £90 at 5 per cent.
4. Costs. The judge was entitled to award the Commission its costs up to and including the hearing. The payment before trial, the disproportion between costs and interest, and the Commission’s partial success on interest did not provide proper grounds for interference. The Turvills were also ordered to pay £5,000 for the appeal and cross-appeal.

• Court of Appeal (Civil Division): In [2004] EWCA Civ 457, dismissed the Turvills’ appeal against costs and allowed the Commission’s cross-appeal in part by awarding post-service interest.
• Lincoln County Court: On 7 July 2003, His Honour Judge O’Rorke refused the Commission’s claim for interest but ordered the Turvills to pay its costs.