In February and May, we told you of a two matters which had been brought to our attention in relation to interest on costs.

Since then, there have been further development in relation to the Gray –v- Toner and was recently referred to in Motto –v- Trafigura (SCCO Ref PTH1002160 + 1002161.  Senior Costs Judge Hurst concluded that the incipitur rule still applied but also stated that Rule 40.8 of the CPR gave the Court the power to make an order that interest would run from the date other than the date that Judgment was given.  He also stated that any interest payable belonged to the Claimant and that it was inappropriate to imply into the CFA’s any term that the Claimants should account for any interest recovered.  Therefore, he concluded that interest should run from the date when an interim or final Costs Certificate was issued by the Court.

This therefore means that the incipitur rule had been endorsed by Senior Costs Judge Hurst.

We are sure that there will be objections raised by Defendants and that they will still try and argue that Gray –v- Toner applies.

He quoted as follows:-

“ The cause is the costs system.  At the moment Claimants are not able to lose a penny, even if they lose their case and if you can’t lose anything, why shouldn’t you sue, even if your chances of winning are negligible?  That is the mechanics of the compensation culture at present.  The new law we are proposing will mean that the mark up for a winning Claimant’s fees will be paid from the Claimant’s damages and not from the Defendant.  Therefore, this will make the Claimant’s lawyers more cautious to take on cases, and Claimants will have an interest in what they are paying their lawyer.  That will be the key to reducing costs, by taking costs out of the system, there will be less money for referral fees.

There is no doubt that the way the system works at the moment gives a perverse incentive to people to ramp up their claims.  We have to reverse the mechanics of a system which is having not only financial, but cultural implications, in terms of people rushing to the Courts, putting in claims unnecessarily”

However, an appeal in respect of such a matter was brought by a Claimant and was set down before HHJ Stevenson in the Liverpool County Court, the matter being Gray –v- Toner CC (Liverpool) (Judge Stewart QC) 11.11.10.  This was a matter where the Claimant sought interest on their costs from the date of the final order.  However, when the matter came before HHJ Stevenson, it was adjudged that interest was not recoverable for the period prior to the assessment hearing, but would run from the date of the Assessment Hearing.  This was because the matter was funded under a CFA and HHJ Stevenson advised that as no fees are paid by the receiving party under the terms of the CFA until the matter has been concluded, then there should be no interest payable.  This is because the Claimant had not been “out of funds”.

This would therefore go against the incipitur rule and would also lead back into the Judgement handed down in the matter of Crema –v- Cenkos (2011) EWCA Civ 10 above.

New Court fees in respect of both Civil and Family matters were given by the Lord Chancellor.  These can be found at legislation.gov.uk under Statutory Instruments.  The Civil Proceedings Fees (Amendment) Order 2011 – 2011 No. 586 (L.2) and The Family Proceedings Fees (Amendment) Order 2011 – 2011 No. 587 (L.3)