Background
The appellant (“DB”) brought proceedings against Sebastian Holdings Inc (“SHI”) in connection with loss-making FX and equities derivatives trades. DB claimed c. $250 million and SHI counterclaimed for x $8 billion. Trial took place in 2013. Following a 14 week trial, Cooke J ordered that SHI pay DB $243m. The counterclaim was dismissed. By an order dated 08.11.13 Cooke J ordered SHI to pay 85% of DB’s costs and made an order for an interim payment of approximately £34.5 million.
The costs assessment began in 2017. DB served its final detailed bill of costs on 25.01.19. The assessment hearing lasted 100 days and a final costs certificate was issued on 11.05.23.
Prior to the conclusion of the detailed assessment Master Gordon-Saker referred the issue of construction of s.24(2) of the Limitation Act 1980 to the High Court. Section 24 of the 1980 Act provides that:
(1) An action shall not be brought upon any judgment after the expiration of six years from the date on which the judgement became enforceable.
(2) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.
There was no dispute between the parties that an order for payment of costs to be assessed is a judgment debt within the meaning of the Judgments Act 1838 so as to carry interest pursuant to section 17; that interest accrues from the date of the order and not the date of assessment, and that a costs order is not enforceable as a judgment until the detailed assessment has been carried out (or costs are agreed).
Dias J considered the meaning of “due” in s24(2) and decided that this meant the date on which the interest liability accrues. She concluded that interest first became due on 08.11.13; and as a consequence DB would be unable to recover interest for a period of approximately 3.5 years (C. £775,000.00).
DB appealed. DB submitted that the meaning of the word “due” in s. 24(2) means payable, so that time did not run until the costs had been assessed.
The Court of Appeal explained that, devoid of context “due” can mean either owing or payable; however the word “arrears” in s. 24(2) is not neutral in the same way as “due” and that there are no arrears of an amount owed until it has become payable. The Court referred to other sections of the same Act which were clear that time runs from the point at which a debt is payable rather than when it accrued.
The Court concluded that within s. 24(2) Limitation Act 1980 “due” means payable. The appeal therefore succeeded.
Link to Judgment: Deutsche Bank AG v Sebastian Holdings Inc & Anor [2024] EWCA Civ 245 (14 March 2024) (bailii.org)
Author - Fidelma Padfield, Senior Costs Consultant
