The defendant costs specialists

Posts made in January, 2016

When should interest run on costs?

By on Jan 4, 2016 | 6 comments

Interest on costs usually runs from the date of the order for costs. CPR 47.7 provides that detailed assessment proceedings should be commenced within 3 months of the final order/judgment. CPR 47.8 provides that where a receiving party fails to commence detailed assessment proceedings within the period specified, the paying party may apply for an order requiring the receiving party to commence detailed assessment proceedings within such time as the court may specify. By virtue of CPR 47.8 (3), if the paying party has not made such an application and the receiving party commences detailed assessment proceedings late, the court may disallow all or part of the interest otherwise payable to the receiving party but will not impose any other sanction. I would suggest it has therefore been generally accepted that a receiving party will have a three month period to commence detailed assessment proceedings and will recover interest for that three month period in any event. If they commence detailed assessment proceedings after three months, the court may will disallow interest for the period of any subsequent delay. Given interest currently runs at 8%, for firms with a good cash-flow there is a positive incentive to delay commencement until the end of the three month period and it is certainly common to see some firms delay until very close to the three month period before providing details of their costs. The decision of Mr Justice Leggatt in Involnert Management Inc v Aprilgrange Limited & Ors [2015] EWHC 2834 (Comm) is therefore a potentially important development. As with all such decisions, the full judgment should be read to properly appreciate the reasoning and specific facts of the case but, in essence, he held that it would be unreasonable to order interest to run until the paying party knows what costs are being claimed and has had a reasonable opportunity to consider what sums are properly payable. He therefore ruled that interest should start to run from three months after the order for costs. In summary: “it seems to me that a reasonable objective benchmark to take is the period prescribed by the rules of court for commencing detailed assessment proceedings. Pursuant to CPR 47.7, where an order is made...

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