Deutsche Bank AG v Sebastian Holdings Inc and another [2024] EWCA Civ 245
The appeal arose from a point of construction on s. 24(2) of the Limitation Act 1980, as to when time commences to run for limitation purposes on interest on costs.
The matter proceeded to Trial in November 2013 and the Defendant was ordered to pay 85% of the Claimant’s costs of the action on the indemnity basis, to be subject to detailed assessment if not agreed. An order for a payment on account of costs of £32m plus VAT was made. The assessment process commenced in 2017. The assessment hearing commenced before Senior Costs Judge Gordon-Saker. The assessment was not concluded until a Final Costs Certificate was issued on 11 May 2023. In the final assessment the Costs Judge disallowed 12 months’ interest as a result of DB’s delay in pursuing the detailed assessment proceedings.
In the High Court, Dias J ruled that interest on costs became due on the date of the Costs Order; 8 November 2013, leading to the Claimant being unable to recover approximately £775,000 in interest.
This was appealed on the basis that “due” in s. 24(2) refers to when the interest liability is enforceable or payable, not when it accrues. Such interpretation would mean that the Claimant was not precluded from recovering the interest in question.
The appeal was granted. In allowing the appeal, the Court of Appeal held that for the purposes of section 24(2) of the Limitation Act 1980, which provides that “No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due”, “due” meant “payable”. Accordingly, where costs were ordered to be assessed, time began to run for limitation purposes on interest on those costs from when they were quantified in the final costs certificate, which was when they became enforceable, resulting in the Claimant being able to recover the full amount of interest on its legal costs from the date the costs were quantified in the Final Costs Certificate issued in May 2023.
Commentary
Whilst interest on costs runs from the Costs Order, interest on costs for the purpose of limitation runs from the date the costs are quantified