Hurndell v Hozier & Ors

When costs are payable, the court may order a payment on account where the proposed sum is unlikely to exceed the minimum amount likely to be recovered on detailed assessment. The court may also award interest on costs incurred and paid before the costs order, under CPR 44.3(6)(g). The absence of borrowing or a specific use for the money does not prevent an interest award, although such matters may affect the rate. Criticism already reflected in a reduction of recoverable costs should not ordinarily be relied upon again to deny interest. An interest rate exceeding 1% over base rate may be appropriate.

Following earlier judgments in the action, two costs matters remained for determination after written submissions. The defendants sought a payment on account under CPR 44.3(8), claiming £500,000; the claimant accepted that an order was appropriate but proposed £445,000. The defendants also sought interest under CPR 44.3(6)(g) on costs incurred and paid before the costs order of 21 January 2011. The central issues were the appropriate payment on account and whether, and at what rate, pre-order interest should be awarded.

1. Payment on account. The defendants’ calculations showed that £500,000 was unlikely to exceed the minimum amount they were likely to recover on detailed assessment. The court therefore ordered the claimant to pay £500,000 on account of the defendants’ costs under CPR 44.3(8).
2. Interest on pre-order costs. The court was prepared to consider an award under CPR 44.3(6)(g) producing interest of approximately £40,000. That sum was not too trivial to justify consideration. The defendants did not need to show that they had borrowed money to pay their solicitors or had a particular purpose for the funds. Those matters might affect the rate, but did not determine entitlement.
3. Criticism of Mr Barrie Hozier’s conduct had already led to the disallowance of part of the defendants’ costs. It should not be relied on a second time to refuse interest where an award was otherwise appropriate.
4. Following the guidance of Ministry of Defence v AB [2010] EWCA Civ 1405, the court held that a rate greater than 1% over base rate could be appropriate. The rate selected was 1.5% over base rate. Interest was ordered on the specified categories of costs, with all costs carrying interest at the Judgment Act rate from 21 January 2011.

Not stated in the judgment.