Other Areas of Law
Interest on Costs paid to Negligent Legal Representatives

The High Court recently provided litigants with some guidance as to the principle of a party claiming interest on costs paid to legal representatives in actions which are subsequently held to have been negligently conducted.


Surely, the principle that such a party should recover interest on the returned fees is sound in law, corresponding with such judgments as Lord Denning in  Jefford v Gee [1970] 2QB 130 at 146:  [interest] should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him”  or Lord Mustill in Giles v Thompson [1994] 1 AC 142 (167 D) at 925: “The power to award interest is discretionary and that the exercise of this power should correspond with reality”. Clearly such a litigant had – in reality – been kept out of money which otherwise would have been put to other use.



Well, not so, according to Mr Justice Dingemans in Schumann (1) Chinnock (2) v Veal Wasbough [2013] EWHC 3070 (QB). In a refreshingly short (just five short paragraphs) judgment on a preliminary issue, the court declined to exercise its discretion to award such interest and follow recent authority to this end.


The learned judge held that such an order for interest was “not usual” which may indicate that there may be proper reasons to decline to award it. He held that there were safeguards to parties not being kept out of pocket for long periods which were already in existence, such as the summary assessment of costs for interlocutory matters and payments on account of costs. In the context of this case, it was held that there was not a “very long delay” rendering the making of such an order appropriate.


As a matter of principle, it was further held that any such loss which the claimant parties could be held to have suffered should properly be characterised as a “cost of being involved in litigation” and that the calculation of any award would “introduce an unnecessary level of sophistication into the process of assessing costs, with parties being required to show not only when bills were rendered, but how and when they were paid”, with such calculations likely to “generate further costs for both parties” and thereby creating further “barriers to parties litigating in the Courts”.


The conciseness of the forthright judgment and its clear ‘Jackson Reform Tenor’ may mean that it is taken as persuasive authority against not only claims for awards of such interest, but also in respect of more remote awards of interest in respect of other sums of money paid by one party to another.



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