Deutsche Bank AG v Sebastian Holdings Inc & Anor

Factual and Procedural Background

The appeal concerns the interpretation of section 24(2) of the Limitation Act 1980, specifically regarding when the limitation period begins to run for interest on costs where the order is for costs to be assessed. The Appellant brought proceedings against the Defendant, succeeding at trial in 2013 with a costs order made against the Defendant to pay 85% of the Appellant's costs on an indemnity basis, subject to detailed assessment. Subsequent non-party costs orders were made against a third party, who challenged these orders but was unsuccessful. The detailed assessment process, which commenced in 2017, was unusually prolonged, lasting approximately 100 hearing days over three years, concluding with a Final Costs Certificate issued in May 2023. Prior to conclusion, the Costs Judge referred the issue of statutory construction to the High Court and disallowed 12 months' interest due to the Appellant's delay in pursuing the assessment proceedings.

Legal Issues Presented

1. What is the correct interpretation of the word "due" in section 24(2) of the Limitation Act 1980 in the context of interest on costs where the costs are subject to detailed assessment?
2. Does the limitation period for recovery of interest on costs begin from the date the interest liability accrues or from the date the interest becomes payable/enforceable?
3. In cases involving non-party costs orders, from which date does the limitation period commence for interest on costs?

Arguments of the Parties

Appellant's Arguments

• The term "due" in section 24(2) should be construed as "payable" or "enforceable," meaning interest on costs is not payable until the costs have been quantified in the Final Costs Certificate.
• Alternatively, if "due" means when the interest liability accrues, the relevant date should be the date of the non-party costs order (NPCO) in 2016 rather than the original costs order in 2013, because the NPCO is the enforceable judgment debt against the third party.

Respondent's Arguments

• The Judge held that "due" means the date on which the interest liability accrues, i.e., from the date of the Costs Order in 2013 and daily thereafter.
• This construction results in the Appellant being barred from recovering approximately three and a half years’ worth of interest on the assessed costs.
• The distinction between "due" and "payable" reflects a conceptual difference, with "due" meaning when the liability crystallises (accrues), supported by the statutory context and legislative history.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed statutory interpretation exercise focusing on the meaning of "due" in section 24(2) of the Limitation Act 1980. It acknowledged that "due" can mean either "owing" or "payable" depending on context, but rejected both parties' initial submissions that favored exclusively one meaning without context. The court emphasized that the presence of the word "arrears" in the subsection implies a requirement that the interest must be payable, as arrears presuppose a fixed payment date and a failure to pay.

The court examined analogous statutory provisions (sections 19, 20(5), and 22 of the Act) and binding authority, notably Barclays Bank plc v Walters, which held "due" to mean "payable" in the context of interest recovery. This reinforced the presumption that the same word used for similar purposes in the Act should bear the same meaning.

Policy considerations further supported the interpretation that "due" means "payable." The court noted the balance statutes of limitation strike between enabling claimants to enforce rights and protecting defendants from stale claims and evidentiary difficulties. The "use it or lose it" principle was highlighted as a key rationale for limitation periods. The court found that the limitation period should not start until the claimant is able to enforce payment, which in the context of costs subject to detailed assessment, occurs only once the costs are quantified and payable.

The court rejected the opposing argument that the limitation period should run from the date the interest liability accrues (i.e., from the costs order date), as this would unjustly bar recovery of interest where assessments can take many years. The court also rejected reliance on legislative history as unnecessary and unhelpful given the clarity of the statutory language and context.

Accordingly, the court concluded that "due" in section 24(2) means "payable," and therefore the limitation period for interest on costs does not begin until the interest is payable following detailed assessment.

Holding and Implications

The court ALLOWED THE APPEAL.

The core ruling is that the limitation period under section 24(2) of the Limitation Act 1980 for recovering interest on costs subject to assessment begins to run when the interest becomes payable (i.e., when the costs have been quantified and are enforceable), not when the interest liability first accrues. This interpretation protects parties from losing interest entitlement due to protracted cost assessments and aligns with statutory language, precedent, and policy considerations.

The direct effect is that the Appellant is entitled to recover interest on costs that accrued prior to the six-year limitation period measured from the date the interest became payable, thus reversing the disallowance of interest by the Costs Judge. No new precedent beyond the interpretation of section 24(2) is established, but the decision clarifies the application of limitation periods to interest on costs in detailed assessment proceedings.