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PI and Civil Litigation

Law - practice - procedure

10 APR 2014

Interest - Secretary of State for the Department for Energy and Climate Change (2) Coal Products Limited v Jeffrey Jones and Others [2014] EWCA Civ 363; (2014) APIL 015

Interest - Secretary of State for the Department for Energy and Climate Change (2) Coal Products Limited v Jeffrey Jones and Others  [2014] EWCA Civ 363; (2014) APIL 015
The claimants were awarded costs and disbursements following the successful outcome of their case. The defendant appealed against the rate of interest awarded on the claimants' disbursements. The appeal was dismissed on the basis that the claim for interest was actual rather than notional and the rate adopted was reasonable.
Patten LJ, Gloster LJ and Sharp LJ
The case arose from the Phurnacite Workers Group Litigation where a number of claimants' were successful in their claims for damages. The judge subsequently ordered the defendant to pay damages plus a proportion of costs and interest. Each claimant had an agreement with their solicitor which gave them credit to spend on disbursements on the understanding that it would be repaid by the defendant if the case was won or recovered from the ATE providers if the case was lost. The rate of interest was set at 4% above base rate.
It was agreed between the parties that the agreements were genuine and valid and that the claimants were entitled to pre-judgment interest on disbursements in principle. The rates were also agreed, save to say that the defendants sought application of a lower rate which applies to borrowing by business lenders rather than the higher rate which the claimants could expect to be offered if lending as private individuals with modest means.
This was because in reality the claimants were never at risk of having to pay any interest and the agreements, argued the defendants, were simply a vehicle to enable the claimants' solicitors to claim interest at a higher rate than what they would have been charged on borrowing otherwise.
It was found that had the claimants funded the disbursements by bank loan, there would have been a valid claim for any interest charged. The solicitors simply fulfilled the role of the bank and offered better terms. The Court of Appeal added the claim for interest was real rather than notional and in the absence of any evidence to suggest the agreements were invalid or the rate unreasonable there was no reason not to allow the claim.
Agreements to recover interest on disbursements are rare in the context of personal injury litigation however the courts appear happy to endorse their use provided there is an actual claim for interest and the rate is reasonable. This is a positive decision for claimant solicitors who are otherwise expected to see a reduction in fee income following the Jackson reforms.
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