Lake v Hunt Kid Law Firm LLP

Under article 14 of the Solicitors’ (Non-Contentious Business) Remuneration Order 1994, a solicitor who has complied with the prescribed notice requirements may charge interest on unpaid costs. The provision does not give a Costs Judge an implied discretion to reduce or disallow interest properly charged under it. The word “may” permits the solicitor to choose whether to charge interest; it does not confer a power on the court to intervene. Nor does section 35A of the Senior Courts Act 1981 provide such a power in detailed-assessment proceedings. Interest is compensatory. Payment of money into court at a low rate of interest does not, without more, justify reducing interest due on the assessed costs.

The claimant, a former client of the defendant solicitors, appealed against a Costs Judge’s refusal to reduce or disallow interest on costs assessed as payable for non-contentious legal work. The bills totalled £223,215.42. Following detailed assessment, £74,458.52 was payable to the solicitors, with interest of £12,713.28. The claimant had previously paid £60,000 into court under a consent order.

The central questions were whether article 14 of the Solicitors’ (Non-Contentious Business) Remuneration Order 1994 conferred a discretion to reduce or disallow interest, whether section 35A of the Senior Courts Act 1981 applied, and whether interest should otherwise be adjusted because money had been paid into court.

1. Appeal dismissed. The claimant was entitled to interest calculated in accordance with article 14 of the Solicitors’ (Non-Contentious Business) Remuneration Order 1994, subject to the qualifications expressly contained in that article.
2. Article 14(1) permits a solicitor to charge interest after the required information has been given. Article 14(2) governs the period from which interest may run, article 14(3) limits the rate absent agreement, and article 14(4) requires calculation by reference to the amount ascertained on taxation. The provision does not expressly confer a discretion on the court to reduce or disallow interest.
3. The word “may” in article 14(1) concerns the solicitor’s choice whether to charge interest. It is not an indicator of an implied judicial discretion. Article 14’s recognition that the parties may agree a rate exceeding the judgment rate further indicated that the court could not intervene merely because it considered the result unjust.
4. The court declined to follow the contrary approach suggested by Coulson J in Angel Airlines v Dean & Dean [2008] EWHC 1513 (QB). The reasoning of Mustill J in Walton v Egan [1982] 3 WLR 352 supported the conclusion that the provision created an enforceable entitlement to interest where its conditions were met.
5. Section 35A of the Senior Courts Act 1981 did not apply. The proceedings sought assessment of costs, not recovery of a debt or damages, and section 35A did not authorise reduction of interest arising independently under article 14.
6. Even if a discretion existed, it would not have been exercised. Interest principally compensates the recipient for being kept out of money rightfully due, as explained in Fattal v Walbrook Trustees (Jersey) Ltd & Another [2009] EWHC 1674 (Ch). The payment of £60,000 into court did not justify reducing the interest payable on the respondent’s assessed costs.

Costs of the appeal were to be determined after written submissions, unless agreed.

• High Court (Queen’s Bench Division): appeal from the Costs Judge dismissed. The parties were permitted to make written submissions on the costs of the appeal.
• Detailed assessment: Master O’Hare assessed the respondent’s costs at £74,458.52 plus £12,713.28 interest and awarded the claimant the costs of the assessment, assessed at £64,376.29.