The Cap On Recoverable Costs Of And Other Interesting Points

Marbrow v Sharpes Garden Services Ltd

Master Gordon-Saker determined three issues which arose in the course of a detailed assessment, namely:

i) whether the caps on recoverable costs of costs budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include or exclude value added tax;

ii) whether the Claimant was entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan; and

iii) whether the Claimant’s entitlement to interest should run from 3 months after the date of the order for costs.


Do the caps on recoverable costs of budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include value added tax? No…

“To my mind the caps provided by paragraph 7.2 cannot include value added tax because they are expressed as percentages of figures which do not include value added tax. All of the figures set out in a budget exclude value added tax – as Precedent H makes clear. 2% of £100,000 excluding value added tax, would be £2,000 excluding value added tax.”

Is the Claimant entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan? No…

“In my judgment it is clear following Hunt [v RM Douglas (Roofing) Ltd [1987] 11 WLUK 221] that interest incurred under a disbursement funding loan cannot be recoverable as costs. Item 481 in the bill must therefore be disallowed.”

Should the Claimant’s entitlement to interest run from 3 months after the date of the order for costs? No…

“…the court should depart from the incipitur rule only where that is what justice requires in the particular case and should avoid awarding interest from different dates on different components of costs…. Mr Gibbs’ argument, in effect, is that the default position should be that interest should run only from the date on which notice of commencement of detailed assessment is or should have been served. However that is not the default position and no reason has been shown to depart from the general rule.”

Finally, the Master had to decide whether there was any particular reason to award interest on part of the costs before judgment.

[Secretary of State for Energy v Jones [2014] EWCA Civ 363] was a rather different case to the present: a group action in which the disbursements came to a total in excess of £787,500. The present case is a straightforward personal injury claim. No evidence of the Claimant’s means has been produced but for present purposes I am happy to accept, on my reading of the papers, that it is unlikely that the Claimant would have had the means to fund disbursements other than by a loan. That is almost certainly the case for the vast majority of claimants in personal injury actions. Yet the incipitur rule remains the default position and parliament did not choose, when enacting the Legal Aid, Sentencing and Punishment of Offenders Act 2013, to make specific provision for the funding of disbursements whether by enabling the recovery of funding costs or by creating a default entitlement to pre-judgment interest.”

“In my view, justice does not require a departure from the general rule in this case and the Claimant should be entitled only to interest from the date of the costs order. The higher rate of interest under the Judgment Act should go some way to compensating the Claimant for the interest that he is liable to pay for funding the disbursements.”

MARBROW V SHARPES GARDEN SERVICES LTD [2020] EWHC B26 (COSTS)