Section 24(2) of the Limitation Act 1980 provides that 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. Interest does not start to run until there is least the ability to commence enforcement.
The Court of Appeal has allowed an appeal on this issue in Deutsche Bank AG v Sebastian Holdings Inc and another [2024] EWCA Civ 245.
The appellant, DB, obtained judgment against the respondent, SHI, for US$243m in 2013. In November 2013 SHI was ordered to pay DB 85% of its costs on an indemnity basis subject to detailed assessment if not agreed. Subsequently the second respondent, Alexander Vik was ordered to pay those costs. However, Vik unsuccessfully challenged a non-party costs order against him to the Supreme Court and the European Court of Human Rights which delayed the detailed assessment.
The assessment commenced in 2017 and concluded in May 2023 when a final costs certificate was issued. The High Court, on referral from the cost judge, decided that interest was due when the liability accrued, ie November 2013, which effectively deprived DB of £775,000 in interest. DB argued that the judge was wrong and that “due” means payable in the sense of enforceable.
The Court of Appeal considered that as a matter of language, devoid of context, “due” could mean owing or payable but there are no “arrears” of an amount owing until it has become payable so interest must have become payable for section 24(2) to operate. Use of the word “due” in other sections in the same part of the 1980 Act confirmed this.
Policy considerations justifying the statutory limitation of actions also supported such a construction. The Law Commission Consultation Paper of January 1998 considered the strands of policy: encouraging claimants to enforce their rights within a reasonable period; certainty for defendants and avoiding evidential issues which might disadvantage them in meeting claims after a lapse of time as well as the efficient and effective administration of justice.
There is no statutory limitation period for the execution of judgments generally or for the commencement or conclusion of an assessment of costs which reflects the fact that it may take many years to identify assets amenable to effective enforcement. The receiving party cannot enforce the right to interest until conclusion of the assessment, which dictates that time should not run in section 24(2) until the interest is payable.
Louise Clark is a property law consultant and mediator
