The Court of Appeal has dismissed the government's challenge to an order for it to pay the interest charges on six-figure disbursement costs.

The Department of Energy & Climate Change, along with contractor Coal Products Limited, was ordered in December 2012 to pay 80% of the claimant costs after an earlier judgment on industrial disease liability for eight former employees.

The trial on liability took more than six weeks and the claimants' disbursements exceeded £787,500.

The claimants' solicitors, Cardiff-based Hugh James, had agreed to fund those disbursements but only if their clients entered a funding agreement with the firm: if the case was successful, interest would be repaid by the defendant and if not, by the claimants' insurers.

In May 2013, Mrs Justice Swift ordered the defendants to pay pre-judgment interest on disbursements at the rate of 4% above base rate - a decision they subsequently appealed.

In a Court of Appeal judgment published this week, Lady Justice Sharp ruled the original judge was right to consider the agreement between the claimants and their firm as proper and binding.

The fact that payment of the interest was contingent on the claim winning did not make them 'unreal or notional', she added.

'The claimants did borrow money from Hugh James. It funded disbursement of over £787,500, a very substantial outlay for a medium-sized firm. The claimants won their claims and recovered damages... the liability had crystallised. Their interest liability was therefore no longer contingent. It was entirely real.'

Sharp said the claims were brought by people 'of modest means' and this funding arrangement with their own law firm was considered to be fair.

She added: 'They needed to fund their claims and they borrowed to finance their disbursements at what was conceded to be a reasonable interest rate for private individuals in their circumstances, certainly in comparison to what would have been charged in the open market.'

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