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Godfrey v Automotive Products Limited (unreported, 17 December 2020) - Paul Erdunast, Temple Garden Chambers

29/01/21. Can a Claimant who is required to take out a loan in order to fund litigation disbursements recover interest on the loan from the Defendant? DJ Baldwin, a regional costs judge, decided that the answer was ‘yes’ in theory, but he declined to exercise it where there was no evidence of the Claimant’s finances or the loans market.

The argument

Mr Williams QC on behalf of the Claimant argued that where the Claimant has taken out a loan to fund litigation disbursements, it would be unfair to deny an award of the interest on that loan. Such an award would be payable under CPR 44.2(6)(g), which provides a power to award pre-judgment interests on costs. Where an individual has taken up a loan to vindicate their rights, the failure to award them the interest under that loan can be seen as an unjustified deduction from their damages. Furthermore, he pointed out that the Commercial Court appears to take this approach to CPR 44.2(6)(g) when it comes to the funding of commercial claims.

As to the absence of evidence on whether a loan was indeed required or on whether the 15.3% was reasonable, Mr Williams QC suggested that these holes can be filled by judicial notice. He stated that such a private citizen is generally likely to be in a relatively impecunious position, so even in the absence of ‘impecuniosity’, this approach should be readily countenanced...

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