Involnert Management Inc v Aprilgrange Limited & Ors

Interest under section 17 of the Judgments Act 1838 ordinarily runs on unassessed costs from the date of the costs order. Under CPR 40.8(1), however, the court may select a later date according to what justice requires. Exceptional or unusual circumstances are unnecessary.

Where an appropriate interim payment has been ordered, judgment-rate interest should not begin before the paying party could reasonably assess and pay the balance. A useful objective benchmark is the three-month period for commencing detailed assessment proceedings under CPR 47.7. The difference between the statutory judgment rate and commercial rates does not itself justify postponement.

Following judgment in a commercial action, the claimant was ordered to pay 75% of the defendants’ costs and all the litigation costs of the second third party, OAMPS Special Risks Limited. Those costs were to be assessed on the standard basis if not agreed. The court ordered interim payments of £1,030,554 and £600,000 respectively.

The remaining issue was when interest under section 17 of the Judgments Act 1838 should begin on the unpaid balance. The claimant sought a six-month postponement. The defendants and OAMPS contended that interest should run from the costs order under the default rule in CPR 40.8. The court determined the issue from written submissions.

1. Interest postponed for three months. Interest under section 17 of the Judgments Act 1838 on the costs payable to the defendants and OAMPS would run from 22 December 2015, three months after the costs order. Commercial-rate interest at Bank of England base rate plus 2% would apply from the dates the costs were incurred until then.

2. Under Hunt v RM Douglas (Roofing) Ltd, an order to pay costs subject to assessment is a judgment for section 17 purposes. The date of the costs order is therefore the default date under CPR 40.8(1), although the amount payable remains unquantified. That authority remained binding unless and until the Supreme Court departed from it.

3. CPR 40.8(1) imposes no requirement for exceptional or unusual circumstances before the court may order a different commencement date. The discretion must be exercised consistently with the overriding objective. The essential question is what justice requires. The default position need not be the usual result.

4. The difference between the statutory judgment rate and commercial interest rates does not itself justify postponement. Fixing the judgment rate is a matter for the Secretary of State. The court must identify the appropriate commencement date for interest at the prescribed rate.

5. It is generally unjust for judgment-rate interest to accrue before the paying party could reasonably pay the debt. Where a suitable interim payment has been ordered, the paying party should ordinarily receive a detailed statement of the balance claimed and a fair opportunity to assess it before judgment-rate interest begins.

6. The three-month period for commencing detailed assessment proceedings under CPR 47.7 supplies a reasonable and predictable benchmark. By then, the receiving party should have served a bill giving sufficient particulars for the paying party to assess its liability. CPR 47.8(3) permits the court to disallow interest if the receiving party commences assessment late.

7. The information already supplied about the costs was limited, and OAMPS had provided no breakdown or supporting detail. The interim payments represented reasonable broad estimates. It was therefore unjust for judgment-rate interest on any balance ultimately found due to accrue before the claimant received detailed bills.

The case was at first instance. Following the court’s substantive judgment of 10 August 2015, consequential orders were made on 22 September 2015 for costs and interim payments. The present judgment determined the outstanding question of the commencement date for interest on the remaining costs.