John M Hayes are always thorough and meticulous in the preparation of bills but more importantly than that they are very approachable and willing to help. Dealing with them is a pleasure.
Brendan McNeany, Partner, Samuel Phillips
The Judgment given by Mr Justice Leggatt in the case of Involnert Management Inc v Aprilgrange Ltd and Others  EWHC 2834 (Comm), ruled that interest on costs, which under the Judgment Act 1838 (Section 17) was at a rate of 8%, should not be applied in this case from the date of Judgment, but would apply from a date of 3 months hence.
The reason for this ruling was that it gave both the Defendants and Claimant time to ascertain a full quantification of the Claimant’s total liability under the Judgment. Mr Justice Leggatt referred to various cases of relevance to his considerations, which had been raised by Counsel, and the Judgments arrived at in those particular cases.
All of the cases appertained to the time at which interest under the Judgment Act 1838 should be applied – from the date of Judgment, or from a date to be decided. Reference was made to the Civil Procedure Rules (April 1999), which amended Section 17 of the Judgments Act 1838 for interest to run “from such time as shall be prescribed by rules of court”.
In recognition of the fact that costs would be substantial in this case, Mr Justice Leggatt ordered interim payments to be made, and that interest on the remaining costs would be applied at the Bank of England base rate plus 2% from the dates the costs were incurred, until a date 3 months after the orders for costs were made, and that the rate prescribed by Section 17 of the Judgments Act 1838 would apply thereafter.
The effects of this Judgment may have some ramifications in the longer term on the whole system of interest application. In Lord Neuberger’s ruling in the case of Simcoe v Jacuzzi Group Plc  EWCA Civ 137 the door was effectively slammed shut on the application of the same principle being applied in the County Court, and he rejected any challenge to the application of CPR 40.8 in a Court at County Court level.
However, his comment in the ruling disbarred the challenge “in the absence of any occurrence by the Treasury” (that is not to say that things may not change in the future due to the changing economic circumstances putting back pressure on the Treasury to reconsider).
It raises the question also, of whether the same degree of discretion may eventually filter down to the lower courts, bearing in mind that the costs sought at County Court level, may be possibly just as proportionately burdensome to the payer as those awarded in the High Court.
It becomes a matter of the differing status of the debtor and the ability to satisfy the whole Judgment sum plus costs involved. There is no less a need for the debtor to realise the size of the total to be paid, than in any other Court. So it would not be that surprising to see a move to change or extend the CPR concerned.
So far as overall costs are concerned, currently the Judgment Act 1838 rate of interest on costs owing to the payees, equates coincidentally to the average Return on Capital Employed (7%-10%) in the UK commerce generally. The door remains open for representation to amend the length of time allowed before this level of interest is applied (including foreshortening it).
There are two ways available to better the returns for the outlay on representation – a speedier presentation of the costs computation, which would involve a faster turnaround on cost drafting, and a “sliding scale” on a monthly basis, where the starting point is the Bank of England base plus 2% initially, rising over the term to the Judgment Act 1838 percentage.
This could have the effect of bringing home to the payer that there are penalties for delay, in much the same way that Judges have the power to remove interest elements receivable for not presenting costs involved on time by the payees.