Be careful regarding interest on disbursement funding loans and advice given to Clients regarding recovery of the same.

Master Gordon Saker made it clear in Marbrow v Sharpes Garden Services Ltd[2020] EWHC B26 (Costs) (10 July 2020) that interest paid on a disbursement funding loan was not regarded recoverable as an item of cost or, that the rules were designed to let interest to run from an earlier period than Judgment and thus allowing the interest to be recovered that way. The case of Hunt v RM Douglas (Roofing) Ltd [1987] 11 WLUK 221 was cited by the Defendant where the Claimant attempted to recover on the taxation of his costs the interest that he had incurred under an overdraft to fund the disbursements required for his claim. The Court of Appeal held that funding costs had never been included in the categories of expense recoverable as costs and to include them would constitute an unwarranted extension. Master Gordon Saker said that it was clear from the case of Hunt v RM Douglas (Roofing) Ltd that interest incurred under a disbursement funding loan could not be recoverable as a category of expense and ultimately disallowed the item within the bill. Consideration was then given to CPR 44.2(6)(g), which gives the Court the power to order the payment of interest on costs from a date before Judgment. However, Master Gordon Saker decided that the inceptor rule remained the default position and no provision had been made in the Legal Aid, Sentencing and Punishment of Offenders Act 2013, to enable the recovery of funding costs or by creating a default entitlement to pre-judgment interest.