Yao Essaie Motto and Others v Trafigura Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Senior Costs Judge |
| Judgment Date | 29 June 2011 |
| Neutral Citation | [2011] EWHC 90206 (Costs) |
| Court | Senior Court Costs Office |
| Docket Number | Case No: HQ06X03370 Application No: 10.A.3914 |
| Date | 29 June 2011 |
[2011] EWHC 90206 (Costs)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
SENIOR COURTS COSTS OFFICE
Clifford's Inn, Fetter Lane
London, EC4A 1DQ
Chief Master Hurst
THE SENIOR COSTS JUDGE
Case No: HQ06X03370
SCCO Ref: PTH 1002160 & 1002161
Application No: 10.A.3914
Mr Benjamin Williams (instructed by Leigh Day & Co) for the Claimants
Mr Nicholas Bacon QC and Mr Daniel Saoul (instructed by Macfarlanes LLP) for the Defendants
Hearing dates: 10 & 12 May 2011
On the Claimants' Application in Respect of Interest on Costs
Table of Contents
| Paragragh Number | |
| INTRODUCTION | 1 |
| THE LAW | 10 |
| THE JURISDICTION OF THE COURT | 21 |
| Deemed Orders | 33 |
| THE INCIPITUR RULE OR THE ALLOCATUR RULE? | 38 |
| THE POWERS OF THE COURT WITH REGARD TO THE STARTING POINT | 58 |
| WHAT IS THE POSITION OF FUNDING THIRD PARTIES? | 69 |
| Implied Terms in the CFAs | 70 |
| Subrogation | 100 |
| The ATE Premium | 106 |
| CONCLUSIONS | 109 |
| The Jurisdiction of the Court | 109 |
| Deemed Orders | 111 |
| The Incipitur Rule or the Allocatur Rule? | 112 |
| Powers of the Court With Regard to the Starting Point | 118 |
| What is the Position of Funding Third Parties? | 121 |
| Implied Terms in CFAs | 121 |
| Subrogation | 128 |
| The ATE Premium | 130 |
| Summary | 131 |
Senior Costs Judge:
INTRODUCTION
The Claimants have made an application in these terms:
"This application is in relation to interest in order for the court to address, as a supplementary preliminary issue, whether interest is recoverable on costs incurred under CFAs.
Two recent Circuit Court decisions conclude that such interest is not recoverable, and the Defendants have adopted these decisions."
The two decisions referred to are Gray v Toner (11 November 2010, His Honour Judge Stewart QC), and Bridle v Ikhlas (22 February 2011, His Honour Judge Charles Harris QC). Although those decisions are persuasive only, I do recognise that both Judges are Designated Civil Judges of great experience, who are well versed in dealing with issues relating to costs. It is clear from his judgment that HHJ Harris QC was not aware of the decision in Gray v Toner, until after he had written his decision. It is, however, necessary to bear in mind that the statutory background for both those cases is Section 74 of the County Courts Act 1984, whereas the statutory background for the issue before me is Section 17 of the Judgments Act 1838, as amended. The relevant provisions of the CPR are, of course, the same in the High Court and the County Court.
Mr Williams, having successfully argued before HHJ Stewart QC that no interest should be payable, now finds himself in the position of having to argue that the opposite is the case, and says that he overlooked a particular aspect (see paragraph 33ff below), which, had he brought it to the Judge's attention, could well have resulted in a different decision. He explained that in Gray v Toner the incipitur question (i.e. the question of whether Hunt v Douglas had been reversed by the 1999 amendment to the Judgments Act) in fact emerged only on the day of the appeal, in oral argument. It was not raised in the lower court or in his skeleton for the appeal.
Both parties agreed, that, whatever the outcome of this hearing, there would be bound to be an application for permission to appeal. I accept that the issues raised are difficult, and any decision from a higher Court will have ramifications far beyond this particular case. It is also clear that authoritative guidance needs to be given as to how interest on costs is to be treated in the future. For those reasons I have set out in considerable detail, both the arguments relied on, and the authorities called in aid to support those arguments. This has inevitably resulted in a lengthy judgment.
Put simply, the Claimants' case is that the Incipitur Rule, as explained by Lord Ackner in Hunt v RM Douglas (Roofing) Ltd [1990] 1 AC 398 applies, and that interest at 8% should run in respect of costs (the judgment debt) from the date of the compromise agreement. The Tomlin Order embodying the compromise was approved by MacDuff J, in respect of claims by children on 23 September 2009.
Given that the costs claimed from the Defendants exceed £100 million, it will be seen that the amount of interest payable would be very substantial, being on the figures claimed, in the order of £800,000 plus per annum, less an allowance for the £30 million paid on account by the defendants.
In civil litigation, save where a party is legally aided, any costs recoverable from the paying party belong to the receiving party, not to the legal representatives. Thus, in this case, on the face of it, any interest recovered would have to be paid to the individual claimants. Mr Williams seeks to overcome this difficulty by suggesting that implied terms should be inserted into the conditional fee agreements, entitling Leigh Day & Co and counsel to retain any interest covered.
The Defendants for their part suggest that, since the amendment of Section 17 of the Judgments Act 1838, in 1999, and the introduction of the Civil Procedure Rules, the decisions of the House of Lords in Hunt v Douglas Roofing Ltd and Thomas v Bunn [1991] AC 362 are no longer binding, and that the allocatur rule should apply, ie, that no interest should run until the costs have been assessed and quantified, and an interim or final certificate issued by the court.
The background facts of this case are set out at paragraphs 1 to 20 of my judgment, dated 15 February 2011, to which reference should be made.
THE LAW
It is necessary to consider the Judgments Act 1838, the relevant Civil Procedure Rules, and the numerous authorities in some detail.
As originally drafted, Section 17 of the 1838 Act read:
" Judgment Debts to Carry Interest
Every judgment debt shall carry interest at the rate of [8] pounds per centum per annum 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."
Section 17 was amended, with effect from 26 April 1999, by the Civil Procedure (Modification of Enactments) Order 1998 (SI 1998/2940) Article 3. The amended section reads:
" Judgment Debts to Carry Interest
(1) Every judgment debt shall carry interest at the rate of 8 pounds per centum per annum from such time as shall be prescribed by Rules of Court until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment.
(2) Rules of Court may provide for the court to disallow all or part of any interest otherwise payable under sub-section (1)."
Section 18 of the 1838 Act remained unchanged throughout:
" Decrees and Orders of Courts of Equity, etc, to have Effect of Judgments
All decrees and orders of courts of equity, and all rules of courts of common law […] whereby any sum of money, or any costs, charges, or expences, shall be payable to any person, shall have the effect of judgments in the superior courts of common law, and the persons to whom any such monies, or costs, charges or expences, shall be payable, shall be deemed judgment creditors within the meaning of this act; and all powers hereby given to the Judges of the superior courts of common law with respect to matters depending in the same courts shall and may be exercised by courts of equity with respect to matters therein depending […] and all remedies hereby given to judgment creditors are in like manner given to persons to whom any monies, or costs, charges, or expences, are by such orders or rules respectively directed to be paid."
The relevant Civil Procedure Rules are:
" 40.8 Time from which interest begins to run
(1) Where interest is payable on a judgment pursuant to section 17 of the Judgments Act 1838 or section 74 of the County Courts Act 1984, the interest shall begin to run from the date that judgment is given unless –
(a) a rule in another Part or a practice direction makes different provision; or
(b) the court orders otherwise.
(2) The court may order that interest shall begin to run from a date before the date that judgment is given.
44.3 Court's discretion and circumstances to be taken into account when exercising its discretion as to costs
…
(6) The orders which the court may make under this rule include an order that a party must pay –
…
(g) interest on costs from or until a certain date, including a date before judgment."
For completeness I set out the County Court provisions. Section 74 of the 1984 Act reads:
"74. Interest on judgment debts etc
(1) The Lord Chancellor may by order made with the concurrence of the Treasury provide that any sums to which this sub-section applies shall carry interest at such rate and between such times as may be prescribed by the order.
(2) The sums to which sub-section (1) applies are—
(a) sums payable under judgments or orders given or made in a county court …"
The relevant part of the County Courts (Interest on Judgment Debts) Order 1991 provides:
" 2. The General Rule
(1) Subject to the following provisions of this Order, every judgment debt under a relevant judgment shall, to the extent that it remains unsatisfied, carry interest under this Order from the date on which the relevant judgment was given.
(2) In the case of a judgment or order for the payment of a judgment debt, other than costs, the amount of which has to be determined at a later date, the judgment debt shall carry interest from that later date.
…"
It is necessary to look in some detail at the judgments in Hunt v Douglas and Thomas v Bunn, both of which are variously relied on by each party in...
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