No interest on costs of loan in personal injury claim

This is one to watch for a possible appeal according to a commentary and update by Gordon Exall of Kings Chambers. Ben Williams QC acted for the Claimant. Of relevance to credit hire matters where reference to Diriye v Bojaj and Quicksure [2020] EWCA Civ 1400 and the issue of impecuniosity as they related to funding arrangements.


The article appears in Civil Litigation Brief:


”I am grateful to Paul Wainwright for sending me a copy of the judgment of District Judge Baldwin in Godfrey -v- Automotive Products Limited (17th December 2020). This decision, by the regional costs judge, considers whether a claimant in a personal injury case can recover interest on a loan taken out to fund litigation disbursements. A copy of the decision is available here.


THE CASE

The claimant had settled a personal injury case against the defendant. There was an issue in relation to assessment of costs in relation to whether the claimant could properly claim the costs of interest he had paid on a loan to fund disbursements.


THE DISTRICT JUDGE’S DECISION

The judge found that he had the power to award interest, however any discretion would not be exercised in the current case.


26. Accordingly, I am satisfied that there is no bar to a costs judge exercising the power granted to the Court under r. 44.2(6) at any time when the Court is being asked to exercise its general discretion as to costs afforded by r. 44.2 generally. That is sufficiently clear, in my judgment, from a plain reading of the rule and not detracted from elsewhere.


27. Nevertheless, despite the attractive and forceful arguments advanced by Mr Williams, underpinned as they were by impeccable foundations of logic, I am not persuaded to exercise any such discretion in the Claimant’s favour, in that I am not satisfied overall that this is what justice requires.


28. Firstly, I am being asked to assume that there was a real and genuine need for the Claimant to finance his disbursements by way of a loan as a result of impecuniosity. In other words, it seems to me, to come to a conclusion that the claim is likely to have been stifled, without such financial assistance being provided Indeed, Mr Williams draws a parallel with impecuniosity in credit car hire claims. However, it cannot be overlooked, in my view, that impecuniosity in the realm of credit hire is not self-proving, as has been highlighted by recent changes to CPR PD16 and in Diriye v Bojaj and Quick-Sure [2020] EWCA Civ 1400. Whilst other judges might be prepared to make such assumptions in the costs arena, perhaps when furnished with rather more information and/or context than in the instant case, I prefer to adopt a more cautious approach in the context of lower value, sometimes high volume, personal injury claims into which category this claim, I believe, fits. Accordingly, at a very basic level, I am not persuaded that the evidence before me is sufficient to engage the operation of any discretion.


29. It might be said that this ignores the “class of litigant” approach in Jones, but this, to my mind, is somewhat circular, certainly in this claim, as it asks the Court to make assumptions as to any such class without more. I also accept the proposition that the decision in Jones is more focussed upon the facts of that case, namely the notion of the reality of the loan arrangement with the solicitors and the interest rate which should be applied, rather than providing any overarching principle or encouragement as to the exercise of the Court’s discretion as to compensating for disbursement funding loan interest generally in personal injury claims going forward. If that was intended, any wider applicability seems to have been singularly overlooked by many lawyers in this field for some time.


30. Nevertheless, if I were persuaded to exercise my discretion in principle, what rate ought I to be considering applying? Again, I am unpersuaded that I should take judicial notice that the 15.3% APR is within a reasonable band for unsecured loans for someone in the position of the Claimant, not least because of the assumption issues already discussed, but also in the context of some of the other personal injury cases examined, for example Jones (as above, 4% above base) and 5% in Marbrow, whilst also noting the 15% rate in Nosworthy. On the face of it, 15.3% seems very much on the high side to me and the lower end rates much more in keeping with the sort of compensatory interest (other than per the Judgments Act) awarded on special damages themselves, in these times of record low interest rates.


31. But, why should the Court be engaging in any sort of guessing or “doing one’s best” type of exercise at all in this situation? Does justice and equivalence demand it, as Mr Williams urges?


32. My answer, in line with the overall conclusion of Master Brown in Nosworthy, is “no”. The overriding objective encourages the Court to deal with all matters justly and at a proportionate cost. This finds an echo, in my judgment, in both Jones and Simcoe where there is significant encouragement to the assessing judge not to engage in in-depth evidence gathering exercises, but to adopt a broad brush, that is a proportionate approach.


33. I disagree that Master Brown was importing any element of “exceptionality” into his approach. Rather, in my judgment, he was concluding that nothing out of the ordinary was present in order to persuade him to exercise any discretion to depart from the normal proportionate approach, to award Judgment Act interest on costs in personal injury claims from the date of the order for costs. The effect of such a standard approach is not simply to compensate for being out of funds generally in terms of the payment of such costs, but goes rather further by way of the regulated rate, currently of 8%, in terms of an element of noticeable over-compensation, when base rates are as they are, and therefore off-setting, to a not insignificant amount, any injustice of the type characterised by Mr Williams in terms of under-compensation, massive or otherwise.


34. Mr Williams would no doubt be justified in responding that none of this does anything to redress the peculiar and unjustified dichotomy of approach, comparing the apparent normal or normalised practice in the Commercial Court with that of the civil courts generally in most personal injuries litigation. Whilst it might be engaging for this Court to consider itself as being placed in the potential vanguard of a movement for change in that regard, it seems to me that there are conceivably many differences of substance at many levels between commercial cases and the funding of the same and most personal injury claims, which might be said to underlie the failure of such an equalisation to have “taken off” up to now, but that this is not the occasion for this issue, whether of principle or policy, to be resolved.


35. In conclusion, therefore, whilst I am persuaded that a discretion exists to award interest from a date before the order for costs, encompassing interest of the type at issue here, I am not persuaded that it is appropriate for me actually to exercise any such discretion in favour of the Claimant in any of the alternative ways contended for by Mr Williams. The oral review accordingly results in no adjustment on the issue raised.”


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