K. v K. (Divorce Costs: Interest)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE ORR |
| Judgment Date | 02 November 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J1102-2 |
| Docket Number | No. 18070 of 1971. |
| Court | Court of Appeal (Civil Division) |
| Date | 02 November 1976 |
[1976] EWCA Civ J1102-2
The Master of the Rolls
(Lord Denning)
Lord Justice Stephenson and
Lord Justice Orr
In The Supreme Court of Judicature
Court of Appeal
SIR JOHN FOSTER, Q.C. and MR. A. WARD (instructed by Messrs. Theodore Goddard & Co., Solicitors, London) appeared on behalf of the Appellant.
MR. A. B. HOLLIS, Q.C. and MR. J. C. BEVERIDGE (instructed by Messrs. Withers, Solicitors, London) appeared on behalf of the Respondent.
The parties were married in 1962 and divorced in 1972. The first part of the divorce proceedings took place in the County Court. That was up to decree absolute. The husband was ordered to pay the wife's costs of those proceedings.
The second part of the divorce proceedings took place in the High Court. These were the ancillary proceedings about periodical payments or a lump sum for the wife. On 17th May, 1974, the husband was ordered to pay the wife a lump sum of £50,000 on or before 1st September, 1974; and also to pay her costs, including those of American advisers and accountants in connection with the application. The husband paid the £50,000 promptly on the due date, 1st September, 1974.
The wife's solicitors in October 1974 lodged a bill of costs (both for the County Court and the High Court) amounting to over £34,000. On taxation in August 1975 the amouut was knocked down to about one-half. The amount allowed was only £16,651.67. For example, the American lawyers' fees were claimed at £9,500: but only allowed at £3,500. The American accountants' fees were claimed at £6,750, and only allowed at £2,400.
On 18th August, 1975, the husband was ordered to pay within 28 days the sum of £16,651.67, the amount of the taxed costs. He paid it on 1st September, 1975, well within the 28 days.
Now the wife's solicitors claim interest on these costs. They do not claim any interest on the £50,000 lump sum. They claim it on the costs of £16,651.67. Although that sum was paid promptly, on the due date, they claim that the husband ought to pay interest on that amount for the previous 15 months. That is, interest on it for 15 months from 17th May, 1974. That was the date when the order for costs was made, although the amount of those costs was not ascertained until August 1975.
The wife's solicitors base their claim on a note in the White Book which, I have discovered, has appeared in every edition since 1884/5:"Interest on costs now runs from the date of the order or judgment in he absence of any order to the contrary; and not, as formerly decided, from the date of the Taxing Master's certificate".
The President, Sir George Baker, rejected the wife's claim for interest on the costs. The wife appeals to this Court.
Since the President's judgment, the husband's solicitors have asked for information as to the date on which the wife's solicitors paid the disbursement for the fees of Counsel and the bills of the English and American lawyers and accountants. These were all paid after August 1975, when the Mils were taxed. This shows the extraordinary nature of the wife's claim. She is claiming interest on those disbursements from 17th May, 1974 to 18th August, 1975, although she did not pay them until afterwards. And she is claiming that interest for her own benefit. If she were to recover that interest, she could not hand it over to the Counsel or lawyers or accountants. She would keep it herself and pay tax on it. It would be taxable in her hands as unearned income at the highest rates. The husband would not be able to deduct it from his gross income for tax purposes. So the real beneficiary would be the tax gatherer.
Nevertheless, extraordinary as it is, we must see if the wife's claim is sustainable in law. This has involved us in some research.
Before 1838 the Courts of Law and of Equity did not award interest at all, either on the sum awarded or on the costs.
In 1838 by the Judgments Act 1838 it was enacted by Section 17 - "That every judgment debt shall carry interest at the rate of 4% (now 71/2%) p.a. from the time of entering up the judgment … until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment".
And by Section 18: "That all decrees and orders of Courts orEquity … whereby any sum of money or any costs, charges or expenses shall be payable to any person, shall have the effect of judgments in the Superior Courts of Common law".
Section 21 applied the same rule to the Courts of Lancaster and Durham; and Section 22 enabled steps to be taken to get interest on judgments of inferior courts.
In applying that Statute, the Courts of Common law held that interest on costs ran - not from the date of the Master's Certificate - but from the time when the clerk of the Court entered in his book the date of the original judgment. The practice is shown in the report of Newton v. The Great Junction Railway Co. (1846) 16 Messon and Welsby 139. On 6th February, 1846 the clerk wrote the words "Judgment signed 6th February, 1846: costs £ ": thus leaving the figure of costs blank, On 13th May, 1846, the Master taxed the costs at £1,322.13s. The Master then filled in the blank with that sum. So that, on the formal record of the Court, it appeared simply: "Judgment signed 6th February, 1846: costs £1,322.13s". Seeing that the record was in that form, the Courts of Common Law held that interest ran from the date shown on the record as 6th February, 1346 and not from the date of the taxation, 13th May, 1846, which did not appear on the record at all. That was a very technical view typical of those days.
In contrast, the Courts of Equity took a sensible view. When they made a decree ordering an account to be taken or costs to be taxed, it was held that interest only ran from the time when the amount payable was ascertained and fell due, and not from the date of the decree. It was so held by Lord Langdale, Master of the Rolls, in Attorney-General v. Lord Carrington (1843) 6 Beavan at page 460.
The Divorce Courts, no doubt, took the same view as the Courts of Equity. They were not in existence in 1838. They only started in 1857.But by Section 52 of the Matrimonial Causes Act, 1857, all decrees and orders of She Divorce Court were to be put in force and executed in the same way as the Court of Chancery.
After the Judicature Act, 1873, the rule of equity prevailed. So much so that in 1875 Parliament enacted a set of Rules of Court. These contained a form of writ of fieri facias, to which there was a note in the statute itself saying that interest on costs ran from "the date of the certificate of taxation", see the Judicature Act, 1875, Schedule 1, Order 42, Rule 12, Apoendix F. On the basis of this form for the next eight years the Courts of Common Law followed the sensible view of equity and held that interest on costs ran from the date of the Master's Certificate of Taxation, see Schroeder v. Cleugji (1877) 46 Common Pleas 365.
In 1884, however, the Courts took a step backwards. They did it because the Rule Committee made a new set of Rules of Court, in which they altered the 1875 note to the writ of fieri facias. Instead of inserting "the date of certificate of taxation", the new note in 1883 said that the day to be inserted shall be "the day of the judgment or order, or day on which the money is directed to be paid, or day from which interest is directed by the order to run, as the case may be". In consequence of this new note - and solely on that ground - the Courts of Common Law went back to their old technical view and held that interest on costs ran from the date of the judgment and not from the date of the allocatur only, see Fyman v. Burt (1884) Weekly Notes 100.
Unfortunately, this was followed by the Courts of Chancery also, see The Landowners' West of England and South Wales Land Drainage and Inclosure Company v. Ashford (1884) 23 Weekly Notes 41; and even by this Court, see Boswell v. Coaks (1887) 57 Chancery 101. A statement to this effect was put into the White Book, and repeated automatically for everafterwards. It was all due to the offending note introduced into the rules in 1883.
In 1965, however, the offending note of 1883 was removed. The old rules were revised and a new set of rules enacted. The old 1883 note (on which Pyman v. Burt was decided) wa3 omitted altogether. What is the result? I do not suppose that the framers of the 1965 rules gave any thought to it. But the plain fact is that we are rid of the 1883 note; and with it we are rid of Pyman v. Burt which was founded on that note alone: and we are rid of the cases which followed Pyman v. Burt. In those circumstances, I think we are entitled to go back to the time before 1883. We can go back to the note which appeared in the statute of 1675, which says that the date to be inserted is "the date of the certificate of taxation". Alternatively, we are entitled to say that the rule of equity should prevail. In the further alternative, we are entitled to apply a little commonsense. Interest should be payable whenever money is "wrongly withheld '-' from the one who is entitled to it, see Jefford v. Gee (1970) 2 Queen's Bench at pages 143/4. When the sum is unascertained, the debtor cannot be expected to pay it until it is quantified. He cannot make a tender until he knows how much it is. He cannot be said to be 'wrongfully with-holding' the money until it is fixed. So in all fairness interest should only run from the date of quantification, see the instances given in Jefford v. Gee (1970) 2 Queen's Bench, page 145. If he is given time to pay, it should only run from the time when payment falls due. That is admittedly the case with the lump sum of £50,000 which was payable on 1st September, 1974. It should also be the case with the...
To continue reading
Request your trial
-
Hunt v R M Douglas (Roofing) Ltd
...of judgment. The Master dismissed this application, concluding that he was bound by the decisions of the Court of Appeal in K. v. K (Divorce Costs: Interest) [1977] Fam. 39 and Erven Warnink B.V. v. J. Townend & Son (Hull) Ltd. (No. 2) [1982] 3 All. E.R. 312. On 20 May 1986 the appellant's ......
- Warnink (Erven) B.v v J. Townend & Son (Hull) Ltd (No. 2)
-
International Shipping Co (Pty) Ltd v Bentley
...Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD D 1; Union Government v Jackson and Others 1956 (2) SA 398 (A); K v K [1977] 1 All ER 576 (CA). A Cur adv Postea (November 10). E Judgment Corbett CJ: The appellant, International Shipping Co (Pty) Ltd ('International'), is a company ......
-
Horan v Quilter
...V COAKS 1887 57 LJ CH 101 RSC O.41 r6 NEWTON V GRAND JUNCTION RAILWAY CO 16 M&W 139 HUNT V DOUGLAS (ROOFING) LTD 1990 1 AC 398 K V K 1977 FAM 39 ERVEN WARNINK BV V TOWNEND 1982 3 AER 312 BORTHWICK V ELDERSLIE STEAMSHIP CO LTD 1905 2 KB 516 Synopsis: ARBITRATION Interest Whether interest ......