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Entitlement to statutory interest on costs

It is established that a party entitled to costs is also entitled to interest at 8% per annum. But what is the exact date when the interest starts…

Under Section 17 of the Judgments Act 1838  “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….”.

When it comes to County Court cases, Section 74 of the County Courts Act 1984  applies and provides that any sums payable under judgments or orders shall carry interest at such rate and between such times as may be prescribed by the order.

It is therefore established that a party entitled to costs is also entitled to interest running at a rate of 8% per annum. The question that often arises is the exact date when the interest starts accruing on those costs. It has been accepted for years, in particular since the decision in Hunt v R M Douglas (Roofing) Ltd that interest on costs runs from the date of the judgment at which the order for costs is granted. This is the rule, even though the amount of the costs payable has still to be assessed.

In some circumstances, under CPR 40.8 and CPR 44.2(6)g the court may order interest on costs to run from a date other than the date of judgment. This discretion is not limited and should be exercised in accordance with the overriding objective of dealing with cases justly.

This is what has happened in the case of Involnert Management Inc v Apilgrange Limited and Others [2015] EWHC 2834 (Comm) in which it was held that the date from which Judgments Act interest runs should be postponed. It was in fact decided that it should run from the date set by the CPR rules for commencing detailed assessment proceedings, that is three months from the date when the costs order was made.

For further guidance on statutory interest on costs, contact our insurance solicitors.

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