Simcoe v Jacuzzi UK Group Plc

Interest on an award of costs ordinarily runs from the date of the costs order, rather than the later date when the amount is agreed or assessed. In the County Court, article 2 of the County Court (Interest on Judgment Debts) Order 1991 mandates that incipitur rule.

Rule 40.8(1) of the Civil Procedure Rules 1998 was ineffective in the County Court because the Treasury had not concurred in its making as required by statute. If valid, however, it would impose the same general rule. Departure requires the justice of the case, assessed broadly. Funding under a conditional fee agreement, including a success fee, does not itself justify postponing interest until assessment or agreement.

The claimant compromised a County Court personal injury claim for £12,750, with the defendant to pay costs on the standard basis if not agreed. The claimant's solicitors acted under a conditional fee agreement. The parties subsequently agreed costs of £74,000.

District Judge Hill, relying on Gray v Toner, held that interest ran only from the date on which the costs were agreed or assessed. Permission to appeal was granted and the matter transferred directly to the Court of Appeal under rule 52.14 of the Civil Procedure Rules 1998.

The central question was whether interest on costs ran from the date of the costs order—the incipitur date—or from the later agreement or assessment of their amount—the allocatur date. The appeal also raised the validity and effect in the County Court of rule 40.8.

1. Appeal allowed unanimously. Interest on the agreed costs ran from the date of the costs order. The Master of the Rolls gave the judgment, with which Hooper and McFarlane LJJ agreed.

2. Rule 40.8(1) of the Civil Procedure Rules 1998 was ineffective in the County Court. The power to prescribe when interest runs derived from section 74(1) of the County Courts Act 1984, not from the general rule-making powers in the Civil Procedure Act 1997. Section 74(1) required Treasury concurrence. Nothing showed that the Treasury had been consulted or had concurred, and the absence of concurrence was a fundamental defect. Rule 40.8(1) nevertheless remained valid in the High Court.

3. Article 2 of the County Court (Interest on Judgment Debts) Order 1991 therefore governed the award. The express exclusion of costs from article 2(2), read with article 2(1), meant that interest on costs ran from the judgment containing the costs order. The language, policy and structure of the Order all supported the incipitur rule.

4. If rule 40.8(1) applied, it produced the same result. Its general rule was that interest began on the date judgment for costs was given, although the court could order otherwise. A departure was justified where justice required it. The inquiry should take a broad, practical approach and should avoid prolonged evidence or separate commencement dates for individual components of costs.

5. A conditional fee agreement did not justify departure. The solicitors had financed the litigation by undertaking work without payment and assuming the risk of receiving nothing if the claim failed. The success fee compensated for that risk, not for delayed receipt after the costs order. There was no evidence that the hourly rates included compensation for such delay. Any established duplication would ordinarily be addressed through the hourly rate rather than by displacing the general rule.

6. The contrary County Court conclusion in Gray v Toner could not stand. The court also endorsed the relevant analysis in Fattal v Walbrook Trustees (Jersey) Ltd, while cautioning against an overly detailed factual inquiry and questioning its suggestion concerning wholly voluntary third-party funding.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The court held in [2012] EWCA Civ 137 that interest ran from the date of the costs order.

2. Leeds County Court: District Judge Hill held on 9 June 2011 that interest ran from the date on which the costs were assessed or agreed. His Honour Judge Gosnell granted permission to appeal and transferred the appeal to the Court of Appeal.