Date on which interest should start to run – One Blackfriars, Re [2021] EWCA 1150 (Ch)

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Posted on: May 27th, 2021 by Elena Kostova

An issue arose at a hearing dealing with consequential matters as to the date on which interest under the Judgments Act 1838 should start to be payable. It was held in One Blackfriars, Re [2021] EWCA 1150 (Ch) that interest should only start running from three months from the date of the judgment.

 

Background

The substantive matter related to a claim brought by the Applicants, who are the Joint Liquidators of One Blackfriars Limited, against the Respondents, the Former Administrators, of the company. At the hearing on 23 March 2021 John Kimbell QC, sitting as a Deputy High Court Judge, found that the Applicants had not proved any of the breaches of duty alleged to have been committed by the Former Administrators.

 

At the hearing

In relation to interest accrual, the relevant provision in CPR 40.8(1) was noted, namely:

“(1) Where interest is payable on a judgment pursuant to section 17 of the Judgments Act 1838 … interest shall begin to run from the date that judgment is given unless …

“(b) the court orders otherwise.”

The starting point therefore was that the judgment rate would apply from the date of the judgment. The Joint Liquidators submitted that the decision of Leggart J in Involnert Management Inc [2015] EWHC 2834 (Comm) is to be followed. In Involnert it was held that it was not reasonable to expect the party liable for costs to pay the balance of the debt until it knows exactly what sums are being claimed and has had a fair opportunity to consider and decide whether the costs are properly payable.

 

Particular consideration was given to comments of Leggart J about unfairness arising if interest was to run prior to costs being provided noting that the paying party cannot reasonably be expected to avoid the liability.

Whilst the Respondents argued that the Applicant had been provided ample time to consider the costs, John Kimbell QC held it appropriate to follow Involnert and to order that the judgment rate interest should only start running from three months from the date of this judgment. He went on to say that:

“That has the benefit in this case of giving the FAs an opportunity to put together their full schedule on costs and to present it to the JLs , and for the JLs to take a view as to whether they are going to take cost all the way to an assessment and, if they do, to make an informed offer in the assessment proceedings which is without prejudice save as to costs in those proceedings.”

 

Comment

The three months determination appears at first glance to be consistent with the three month period for parties to commence assessment proceedings under CPR 47.7. However, it is interesting to note that the previous heavily relied upon case by practitioners of Simcoe v Jacuzzi [2012] EWCA Civ 137 was not considered or distinguished.

 

Whilst one could see a pattern towards a shift away from the strict wording of the CPR and Simcoe, the extent of reliance on this decision by practitioners and judiciary is yet to be seen.

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