Deutsche Bank AG v Sebastian Holdings Inc.
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Dias |
| Judgment Date | 28 June 2023 |
| Neutral Citation | [2023] EWHC 1527 (Comm) |
| Docket Number | Case No: SC-2019-BTP-000531 Previously 2009-Folio-No.83 |
| Court | King's Bench Division (Commercial Court) |
and
[2023] EWHC 1527 (Comm)
THE HONOURABLE Mrs Justice Dias DBE
Case No: SC-2019-BTP-000531
CL-2009-000709
Previously 2009-Folio-No.83
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Andrew McLeod (instructed by Freshfields Bruckhaus Deringer) for the Claimant
Mr Tom Morris (instructed by Brecher LLP) for Mr Vik
The Defendant did not appear and was not represented
Hearing date: 16 June 2023
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 09:00 on Wednesday 28 th June 2023.
This application raises a short but interesting point of statutory construction on which there is surprisingly no direct authority. It concerns the recovery of arrears of interest under a non-party costs order and, specifically, the application of section 24(2) of the Limitation Act 1980 (the “ Act”) which provides that:
“No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.”
The question is whether section 24(2) operates to limit recovery of interest where the period between the date of the costs order and the date of assessment is greater than six years. It arises for determination in the following circumstances. Following long-running and hard-fought litigation between the Claimant (“ DBAG”) and the Defendant (the details of which are irrelevant to the present issue), judgment in favour of DBAG was given by Mr Justice Cooke on 8 November 2013 for a sum in excess of US$243 million. By his order of that date, Cooke J also ordered the Defendant (amongst other things):
i) to pay 85% of DBAG's costs on an indemnity basis, such costs to be subject to detailed assessment if not agreed;
ii) to make an interim payment on account of costs in the sum of £34,517,115.30 by 22 November 2013.
No payment was made by the Defendant either then or since, and on 5 December 2013, DBAG applied for a non-party costs order against Mr Vik. The application came before Cooke J who, on 2 July 2014, ordered that Mr Vik should pay £36,204,891 (i.e., the amount of the interim payment plus interest thereon at the Judgments Act rate) by 8 July 2014. This payment was duly made by Mr Vik who nonetheless took steps to appeal the order.
These steps were unsuccessful and on 13 September 2016, DBAG applied to restore its original application for a non-party costs order in order to recover the balance of the costs awarded to it under the original judgment and to make Mr Vik a party to the detailed assessment proceedings.
On 10 October 2016, Cooke J ordered Mr Vik to pay “DBAG's costs awarded against the [Defendant] pursuant to paragraphs 3 and 4 of the order of Cooke J dated 8 November 2013 on 8 November plus interest accrued thereon.” He also ordered that Mr Vik be made party to any detailed assessment. Mr Vik's attempts to set aside this order also failed.
All avenues of appeal having been finally exhausted unsuccessfully in 2018, DBGA served its bill of costs on 25 January 2019 in a sum of over £53 million. Detailed assessment commenced in January 2020 before Senior Costs Judge Gordon-Saker and lasted for nearly 100 days, culminating eventually in an assessed figure of £37,693,026.31 (including £1,165,803.20 in respect of the costs of the detailed assessment itself). After taking account of the interim payment made in 2014 as well as various payments made by Mr Vik pursuant to Interim Costs Certificates issued by the Costs Judge along the way, this left a balance of £325,803.20 owing by Mr Vik. A Final Costs Certificate was issued on 11 May 2023 for this sum plus interest. The principal amount and a small amount in respect of interest accrued within the previous six years was paid by Mr Vik on 25 May 2023. However, he denies any obligation to pay earlier accrued interest.
The issue
The following matters were not in dispute between the parties before me:
i) By section 17 of the Judgments Act 1838, every judgment debt carries interest from the date of the judgment until payment, unless the court orders otherwise pursuant to CPR Part 40.8(1). An order for payment of costs is a judgment debt pursuant to section 18 of the 1838 Act;
ii) In Hunt v RM Douglas (Roofing) Ltd, [1990] 2 AC 398 the House of Lords held that an order for costs to be assessed is a judgment debt within the meaning of section 17 of the Judgments Act 1838 such that interest accrues from the date of the order;
iii) Subject to the court's power under the CPR to disallow interest for all or part of the period after judgment, interest on costs at the Judgments Act rate therefore accrues from the date of the order, not from the later date on which the costs are quantified;
iv) However, the order does not become payable until assessment has taken place. Accordingly, prior to quantification, the receiving party cannot take steps to enforce the order for either the principal amount of costs or interest because there is nothing to enforce until the amount has been quantified: Chohan v Times Newspapers Ltd, [2001] 1 WLR 1859. In those circumstances, it can only apply for interim costs certificates;
v) In his judgment of 5 March 2020, the Costs Judge held that Mr Vik was liable for interest on costs at the Judgments Act rate from the date of Cooke J's original judgment against the Defendant, namely 8 November 2013, save that he disallowed the period from 20 July 2016 to 27 July 2017.
In these circumstances, the short and deceptively simple point at issue is whether interest on costs under the 8 November 2013 order first became “due” for the purposes of section 24(2) at the date of the order (and day by day thereafter) or only at the date of the Final Costs Certificate. Mr McLeod on behalf of DBAG submits that interest only first became due on the issue of the Final Costs Certificate and can therefore be recovered in full; Mr Morris on behalf of Mr Vik submits that interest first became due on the date of the original order and that section 24(2) precludes DBAG from recovering any interest accruing more than six years ago.
Principles of statutory interpretation
Unsurprisingly, there was no serious dispute as to the principles applicable to questions of statutory interpretation. They are set out by Lord Hodge in R(O) v Secretary of State for the Home Department, [2022] UKSC 3; [2023] AC 255 at [29]–[31] and can be summarised as follows:
i) The court is endeavouring to ascertain the objective intention of Parliament as expressed in the language under consideration;
ii) The primary source by which such intention is ascertained is always the words themselves when read in their particular context, which may include the section as a whole, a relevant group of sections, other provisions or even the statute as a whole;
iii) The reason why primacy is afforded to the statutory context is because the public at large should ideally be able to understand parliamentary enactments from the words they see on the page without having to resort to secondary materials;
iv) Nonetheless, it is permissible to refer to other sources such as Explanatory Notes, Law Commission reports, reports of Royal Commissions and advisory committees and Government White Papers, which may assist in identifying the purposes of the legislation and the mischief being addressed.
v) Such sources may be referred to whether or not there is any ambiguity or uncertainty and may indeed even reveal an ambiguity or uncertainty: Bennion, Bailey & Norbury on Statutory Interpretation, 8 th ed. (2020), §11.2.
vi) However, external aids to interpretation play a secondary role and do not “displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity.” 1
In the case of consolidating legislation, the starting point is likewise to start from the wording of the statute itself without reference back to earlier provisions or case law. Nevertheless, in cases of real doubt as to the meaning of a provision, there is a presumption that the consolidation was not intended to change the previous law, in which case recourse may be had to earlier legislation and case law: Bennion, Bailey & Norbury (op.cit.) §24.7.
Statutory context
I start with a consideration of the words in their statutory context.
Mr McLeod submitted that on its plain and ordinary meaning, a sum of money becomes “due” when the obligation to make payment falls to be performed. I am not so sure. There is a conceptual distinction between an amount being “due” and being “payable”, and whereas an amount which is “payable” is always “due”, the converse is not necessarily the case. An example would be time charter hire payable in arrears,
where it is well-established that hire is earned and accrues due from day to day but by contractual agreement is only payable at a later date. Thus, the hire may be due but cannot be recovered by action until the due date for payment arrives. Even before then, however, it may be set off against a debt due from the shipowner. It is also counter-intuitive to accept that interest accrues day by day from the date of the order yet at the same time to argue that nothing is in fact “due” until some uncertain future date. As Mr Morris pointed out in argument, if the judgment debtor made payment before execution, it could not conceivably be denied that he had extinguished a liability for something which was otherwise due. In my judgment these...To continue reading
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Deutsche Bank AG v Sebastian Holdings Inc.
...ON APPEAL FROM THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (KBD) MRS JUSTICE DIAS [2023] EWHC 1527 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL Andrew McLeod (instructed by Freshfields Bruckhaus Deringer LLP) for the Tom Morris (in......