Challinor v Julian Bellis & Co.  EWHC 620 (Ch) and Sycamore Bidco Ltd v Breslin  EWHC 174 (Ch) are cases addressing the issue of what rate of interest should be applied to damages.
Issues like this are often decided on minimal argument, yet can involve significant sums. In Challinor, the award was 3% above base, and in Sycamore, 3% reducing to 2.5%.
The jurisdiction to award interest (to judgment) derives from s. 35A of the Senior Courts Act 1981 and (from judgment) from s. 17 of the Judgments Act 1838 read with CPR 40.8.
The major points are:
The former practice in commercial cases of awarding 1% above base rate is no longer presumed.
The principle behind awarding interest is to achieve restituo in integrum.
The approach may differ between a case where the award seeks to replace money C has lost, and one where the award represents an accretion to C’s funds (e.g. typically a personal injury case). In the former, the rate at which C might have borrowed might be an indicator of the rate to be awarded whereas in the latter, a depositor rate might be a more appropriate comparator.
It is uncertain to what extent the court should rely on evidence of actual lending rates which may have been charged to the receiving party as distinct from evidence of what a person in the same class of persons as the receiving party might have been charged. Regardless of this distinction it is apparent that, evidence of prevailing rate scan be persuasive in helping a judge come to a figure: in Attrill v Dresdner Kleinwort  EWHC 1468 (QB), the award was 5% over base based on evidence that this was a typical rate for unsecured borrowers since 2008.
The stark difference between the opposing submissions on interest in Sycamore, are salutary: C argued for Â£1.31m and D for only £81,000 (C substantially succeeded).The lesson for those preparing a claim is that they should consider adducing specific evidence about what borrowing rates were available to someone in the same class of persons as the claimant: such evidence could substantially boost the ultimate award.
Lawrence Caun / 1st Apr 2013
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