Allianz Global Corporate & Specialty SE & Ors v Lotus Holdings LLC

On an interim payment of costs, the court should estimate likely recovery while allowing an appropriate margin for error. Interest on costs may be awarded at 2% above base rate where that is the established commercial approach. The default date for statutory interest is the date of judgment, but the court may postpone interest under the Civil Procedure Rules 1998 where the overriding objective supports doing so. A three-month period, corresponding to the time for commencing detailed assessment, may provide a reasonable benchmark. Permission to appeal should be refused where the proposed grounds have no real prospect of success.

Following judgment handed down on 11 May 2020, the court determined three outstanding matters concerning costs and permission to appeal. The claimants sought an interim payment on account of costs, and the first to third defendants disputed the amount. The parties also disputed the rate and commencement date for interest on costs. The defendants further sought permission to appeal the rejection of three contractual defences concerning the meaning of “return”, the interaction between contractual documents, and the penalty doctrine.

The central issues were the appropriate interim payment, the discretionary rate and commencement date for interest, and whether any proposed appeal had a real prospect of success.

1. Interim payment. The claimants were entitled to an interim payment. The proper approach was to estimate the likely level of costs recovery, subject to an appropriate margin for error, applying Excalibur Ventures LLP v Texas Keystone Inc [2015] EWHC 566 (Comm). Having regard to the parties’ schedules and submissions, the appropriate payment was £175,000, payable by 5 June 2020.
2. Rate of interest. Under CPR 44.2(6)(g), the court had a wide discretion to award interest on costs before judgment. The established Commercial Court approach of 2% above base rate, identified in Involnert Management Inc v Aprilgrange Ltd [2015] EWHC 2834 and applied in Hollyoake v Candey [2018] EWHC 502 (Ch), was adopted. Interest was therefore ordered at 2% above base rate.
3. Commencement of statutory interest. Although the default date under the Judgments Act 1838 was the date judgment was given, CPR 40.8(1)(b) permitted a different order. Following the approach in Involnert Management Inc v Aprilgrange Ltd and Hollyoake v Candey, the court postponed the Judgments Act rate for three months after the costs order. The period was a reasonable benchmark because the paying party should by then have received a detailed bill and be able to assess its liability. Pre-judgment interest ran to that date.
4. Permission to appeal. Permission was refused because none of the three proposed grounds had a real prospect of success. The court maintained its conclusions that the defendants’ construction of “return” would require two implied terms, that the alleged conflict between Exhibit 1 and Schedule 2 had no merit, and that clause 9.2 was not penal even if the penalty doctrine applied.
5. Time to renew the application for permission to appeal to the Court of Appeal was extended until 4 pm on 5 June 2020.