Interest on a £38 million costs order is due on the date of the original order and accrues from day to day thereafter, a judge has ruled followign a 10-year legal battle. The Honourable Mrs Justice Dias described the application before her in Deutsche Bank AG v Sebastian Holdings Inc as raising ‘a short but interesting point of statutory construction on which there is surprisingly no direct authority’.
The 12-page judgment centres on recovery of arrears of interest under a non-party costs order following ‘long-running and hard-fought litigation’ between the parties.
Judgment in favour of the bank was made in excess of $243m as well as for an interim payment of £34m to be made and 85% of Deutsche Bank’s costs on an indemnity basis.The interim payment, with interest, was made. The bank served a bill of costs totalling more than £53m. Detailed assessment, which lasted nearly 100 days, found an assessed figure of £37,693,026.31 in 2020.
Taking the 2014 interim payment into consideration, the costs judge found a balance of £325,803.20 was owed plus interest. Alexander Vik, the defendant for costs purposes, paid the principal amount and a small amount in respect of interest accrued within the previous six years. He denied having to pay any earlier accrued interest.
Dias said the issue of costs summarily accessed and accrued interest ‘only arises where there is a delay for assessment’.
She said: ‘It has to be hoped that there will be few cases indeed where a detailed assessment takes more than six years, let alone nearly 10 years from the date of the order. While delay is obviously not unknown, it is unlikely that the draftsman of the 1980 [Limitation] Act had the exceptional circumstances of this litigation in contemplation.’
She said it did not seem ‘absurd or unjust’ for parliament to have imposed a cut-off point for the recovery of interest given that ‘there is no time limit as such’ in the Limitation Act.
She added: ‘On the contrary, but for section 24(2), a judgment creditor could execute a judgment whenever it saw fit and recover interest in full going back many years, if not decades. It seems to me that there is therefore a very powerful policy argument in favour of such a cut-off since it encourages a judgment creditor to enforce its judgment with due expedition and discourages the pursuit of stale claims.’
Acknowledging that a receiving party may not be responsible for assessment delays beyond six years, the judge said: ‘The court has sufficient tools at its disposal to do justice in that situation by issuing interim costs certificates.’