In 2013, following the claimant’s successful claim for damages against the defendant, an order for costs was made against the defendant, such costs to be subject to detailed assessment if not agreed. Since the defendant did not make any payment, the claimant obtained a non-party costs order against V which required V to pay the claimant’s costs under the costs order plus interest thereon pursuant to section 17 of the Judgments Act 1838. Following detailed assessment, a final costs certificate was issued in 2023. Although V paid the principal amount and an amount in respect of interest which had accrued within the previous six years, he denied any obligation to pay earlier accrued interest. The Senior Costs Judge referred to the High Court the issue of whether the claimant was barred from recovering such interest by section 24(2) of the Limitation Act 1980, which provided that no arrears of interest in respect of any judgment debt (which included an order for costs) were recoverable after the expiration of six years from the date on which the interest became “due”. The judge held that on a true construction of section 24(2), the date on which interest in respect of a judgment debt became “due” was the date on which the liability to pay the interest crystallised, rather than the date on which that liability became enforceable. It followed that where costs were ordered to be assessed, interest became “due” within the meaning of section 24(2) of the 1980 Act on the date of the original costs order and accrued from day to day thereafter, with the consequence that the claimant was unable to recover interest which had accrued more than six years previously. The claimant appealed, on the ground that the judge was wrong to treat “due” in section 24(2) as referring to the date on which the interest liability accrued. The word “due” meant payable (in the sense of enforceable) and no interest on costs was payable until the costs had been quantified in the final costs certificate.
On the claimant’s appeal—
Held, appeal allowed. As a matter of language, devoid of context, “due” might mean owing or payable; either was a natural use of language. The word “arrears”, however, was not neutral in the same way as “due”, and its place in section 24(2) supported the claimant’s construction. There were no “arrears” of an amount owing until it had become payable. Section 24(2) barred recovery of “arrears of interest”. That which had to have become due in order to commence time running was “the interest”, which was a reference back to the “arrears of interest”, recovery of which was precluded by the subsection. In other words the starting point for the commencement of the running of time which was identified in the subsection was “the date on which the [arrears of] interest became due”. That could only mean when the interest became payable, rather than owing, because there were no arrears of interest unless and until the interest was payable. Further support for that construction lay in the use of the word “due” in other sections in the same Part of the Act, and in particular section 19 of the Act which was concerned with “arrears of rent”; and sections 20(5) and 22 which were concerned with “arrears of interest”. Accordingly, the language of the subsection, in its surrounding context in the Act, dictated that “due” in section 24(2) meant payable (paras 14, 18–21, 36, 62, 63, 64).
Andrew McLeod (instructed by Freshfields Bruckhaus Deringer LLP) for the claimant.
Tom Morris (instructed by Brecher LLP) for Mr Vik.
The defendant did not appear and was not represented.