Budget & Interim Payments and Pre-Judgment Interest
Posted on 13th August 2024 at 15:27
By Sean Linley, Senior Costs Draftsman
Payments on Account & Costs Budgeting
Another example of the relationship between Costs Budgets and Payments on Account comes in the case of Irwell Riverside Developments Ltd v Arcadis Consulting (UK) Ltd [2024] EWHC 2110 (TCC) (09 August 2024).
Mr Roger Ter Haar KC allowed a sum of 90% of the budgeted costs and 75% of the incurred costs. The case is another reminder of the power of a strong Costs Budget. A high payment on account helps narrow costs arguments and is also a positive for cash-flow.
In the case at hand the court had earlier found the Claimant was only partially successful and as a result had a percentage costs order of 60%. Consequently the court allowed 90% of 60% of the budgeted costs and 75% of 60% of the incurred costs. The budget was just over £1.1million and this still resulted in an interim of £592,964.77. Not an insignificant amount!
The case follows a series of authorities with multiple decisions seeing budgeted costs of 90% (or higher) ordered as a payment on account of costs.
A strong budget will pay dividends as it will help maximise any payment on account of costs down the line.
It's also a reminder to prospective paying parties that they could be on the hook for a significant sum on the conclusion of proceedings and should be viewed as an incentive to seek earlier resolution of claims.
Interest Entitlement Varied
Another point of note is that the court awarded pre-judgment interest at 8% per annum. In Irwell Riverside Developments Ltd the court ordered that:
"interest is payable from the date of payment of each cost invoice".
Citing Sir Alastair Norris in Sharp and others v Blank and others [2020] EWHC 1870 (Ch); [2020] Costs LR 835:
"... A claim for pre-judgment interest on costs is commonplace, and it was for the Claimants to decide whether any protective measures were required, not for the Defendants to call for them. I shall exercise the discretion in the way in which it is customarily exercised and order the Claimants to pay interest on the Defendants' costs at the applicable Bank of England base rate from the date of payment of each invoice until the earlier of (i) payment of such costs or (ii) the date from which interest at the rate prescribed by the Judgments Act 1838 become payable."
A reminder that the court can and will order pre-judgment interest where appropriate and something litigators shouldn't overlook seeking when the court makes the order as to costs.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk. We can assist with advice on budgeting, interim payments and more!
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