Schumann & Anor v Wasbrough

The court has a discretion to award interest on costs incurred before judgment, including costs paid to legal representatives before judgment. That discretion is exceptional in practice. It should be exercised with regard to the rough and ready nature of costs jurisdiction, the additional evidence and expense that pre-judgment interest calculations may generate, and the availability of other mechanisms, including interim costs assessments and payments on account. In the absence of features making an award appropriate, such as very substantial delay, pre-judgment interest should not be ordered.

The ruling followed an earlier judgment in two actions heard together, in which the claims had been dismissed and the defendants were awarded their costs, subject to detailed assessment if not agreed. The issue was whether the defendants should also receive interest at 1.5 per cent on costs paid to their legal representatives between payment and judgment. It was common ground that interest accrued on the costs after judgment.

1. The court had jurisdiction to order interest on costs paid before judgment, from the date of payment to the legal representatives, under Civil Procedure Rules 1998, CPR 44.3(6)(g), having regard to Powell v Herefordshire Health Authority [2002] EWCA Civ 1786; Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889.
2. The discretion was not exercised. Such orders were not usual, and the costs jurisdiction was deliberately rough and ready. An award could require evidence of when bills were rendered and paid, adding sophistication, expense and barriers to litigation.
3. Summary assessment of costs on interim applications and interim payments on account provided alternative means of reducing the period for which a successful party remained out of pocket. Nothing in the present case, such as a very long delay, made a pre-judgment interest order appropriate.
4. The defendants were therefore awarded their costs, subject to detailed assessment if not agreed, but without interest on costs paid before judgment. Interest accrued on the costs post-judgment.

The ruling followed an earlier judgment in the same proceedings, dated 29 November 2013, in which the claims were dismissed and the defendants’ entitlement to costs was established. The present judgment determined the consequential issue of pre-judgment interest on those costs.