Fiona Trust & Holding Corporation & Ors v Privalov & Ors

Judgments Act interest should ordinarily run from the date of the costs judgment. Deferral requires particular circumstances making application of the general rule so unfair that justice requires departure from it. High interest rates, unusually large costs, complexity, overlap of evidence and uncertainty about detailed assessment are insufficient by themselves.

A payment on account of costs remains discretionary even where an appeal or permission application is pending. The court may withhold payment where recovery after a successful appeal appears unlikely and the judgment creditor has no pressing need for immediate payment.

The court determined outstanding issues between parties who had obtained costs awards in related Fiona Trust and Intrigue litigation. The claimants sought to defer the commencement of Judgments Act interest on those costs. Mr Skarga sought a substantial payment on account of his costs.

The issues were whether the statutory interest rule should be displaced because of the anticipated complexity and uncertainty of detailed assessment, and whether a payment on account should be made while the claimants pursued permission to appeal.

1. Judgments Act interest. Section 17 of the Judgments Act 1838 and CPR 40.8 establish the usual position that interest runs at 8% per annum from the date of the costs judgment. The court has jurisdiction to defer interest, but the applicant must identify particular circumstances justifying departure from the general rule.
2. The relevant threshold is substantial unfairness: the application of the general rule must be so unfair that justice requires departure. A large amount of costs, a high statutory rate, complexity, overlapping evidence, funding arrangements, and anticipated questions of reasonableness or proportionality did not satisfy that threshold on these facts. The applications to defer interest were dismissed.
3. An appeal does not operate as a stay under CPR 52.7, and an application for permission to appeal does not do so a fortiori. Nevertheless, the court retains a discretion whether to order payment on account of costs.
4. In exercising that discretion, the court could take account of the realistic prospect that sums paid would be used to discharge loans and could not be recovered if the appeal succeeded. The absence of evidence that Mr Skarga urgently needed payment or would suffer significant prejudice supported withholding immediate payment.
5. The judgment nevertheless directed that the costs order should be in the proposed form and stated that, had payment on account been ordered, the appropriate sum would have been £4,000,000, approximately 50% of the claimed costs, interest and VAT. The parties were given liberty to apply if circumstances changed significantly. The court’s wording on whether payment was ordered is internally inconsistent.

First-instance rulings on outstanding costs issues in related proceedings. The judgment records that permission to appeal had been refused and that an application for permission was being pursued, but no lower appellate decision is stated.