Deutsche Bank AG v Sebastian Holdings Inc

Interest on costs ordered to be assessed becomes due for the purposes of section 24(2) of the Limitation Act 1980 on the date of the costs order and accrues thereafter day by day. It does not first become due when detailed assessment or quantification occurs, although it becomes payable only then.

Section 24(2) imposes a statutory cap on the interest recoverable on enforcement. It is distinct from section 24(1), which concerns the time limit for bringing an action on a judgment. The court may use interim costs certificates and its power under CPR 40.8(1) to address unfairness caused by delay.

Following substantial litigation, DBAG obtained an order requiring the Defendant to pay 85% of its costs on an indemnity basis, subject to detailed assessment. Alexander Vik was later made liable under a non-party costs order for those costs and interest.

Detailed assessment was completed several years after the original order. Vik paid the assessed principal and recent interest but disputed liability for interest accruing more than six years before enforcement. The issue was whether that interest became due when the original costs order was made or only when the costs were quantified.

1. Construction of “due”. The ordinary meaning of “due” concerns the crystallisation of liability, whereas “payable” concerns the time when payment may be demanded or enforced. Interest under an order for costs accrues from the date of the order under the incipitur rule established in Hunt v RM Douglas (Roofing) Ltd. That liability is not postponed merely because the amount of costs remains to be assessed.
2. Statutory context. Section 24(1) of the Limitation Act 1980 refers expressly to when a judgment becomes enforceable and concerns an action on the judgment. Section 24(2), by contrast, concerns recovery of arrears of interest in enforcement proceedings and uses the distinct trigger of when interest became due. The provisions therefore operate differently.
3. Effect of section 24(2). The subsection imposes a statutory cap on recoverable interest. Once enforcement occurs, interest more than six years old cannot be recovered, even where assessment has caused delay. This encourages prompt enforcement and avoids the recovery of stale interest claims.
4. Authorities. Lowsley v Forbes and WT Lamb & Sons v Rider support the separation between limitation of actions and execution. Chohan v Times Newspapers Ltd establishes that costs cannot be enforced before quantification, but does not alter when interest becomes due. Barclays Bank plc v Walters was an unreported decision concerning a different statutory provision and did not govern the present issue. Toft v Stephenson concerned a different factual and legal context and did not assist.
5. The application of section 24(2) was determined in favour of Vik’s construction. Interest under the 8 November 2013 order became due from that date, but only interest accruing within the preceding six years was recoverable on enforcement.