s17 of the Judgments Act 1838 and CPR 44.2 (6) (g) allows the High Court to award pre-judgment interest on costs.
In the writer’s experience, the award of pre-judgement interest is only common in the Commercial Court. It is usually awarded on long-running cases where costs have been paid on a private fee paying basis and there has been a large outlay on costs. The interest will usually be awarded from the date that the successful party paid the law firms’ invoices. There must be a good reason to award pre-judgment interest, but there is no requirement to establish exceptional circumstances. The comments of Lord Justice Waller in Bim Kemi AB v Blackburn Chemicals Ltd  EWCA Civ 889 summarise the position well:
‘…….in principle there seems no reason why the Court should not do so [i.e. make an award of pre-judgment interest] where a party had had to put up money paying its solicitors and been out of the use of that money in the meanwhile’.
In the recent of case Puharic v Silverband , the Court awarded pre-judgment interest at a rate of 2% over base rate. In the writer’s experience, awards of between 1 and 2% are common.
Pre-judgment interest is a tool that is not routinely considered by litigators. It is important that litigators have pre-judgment interest at the forefront of their minds when dealing with the issue of legal costs following a final hearing. The remedy helps to put the successful party back in the position it would have been in had the litigation not been necessary. If the successful party had not had to pay their lawyers, they would have utilised the money elsewhere or would not have had to have incurred the costs of borrowing it.
Have you had any recent experiences of pre-Judgment interest? If yes, then please feel free to share them through this blog.
This blog was written by Andrew McAulay. Andrew is a Partner at Clarion and the Head of the Costs and Litigation Funding team. He can be contacted on 07764501252 or at firstname.lastname@example.org