Interest

Abstract

By the time I had got my act together, all the topics on commercial remedies that I would have liked to write on had been chosen by other contributors. So here I am with a chapter on interest which, at least at first sight, may be thought to be of little, if any, interest. In fact, the topic throws up a surprising number of intriguing issues that are important both in practice and theoretically. These include: are there and, if so, what are the principles that govern the award of statutory interest; what did Sempra Metals Ltd v IRC decide; and what is the relationship between statute and common law in this area? In practice, interest can make a huge difference to the quantum of claims. So in the recent decision in Littlewoods Ltd v HMRC the Court of Appeal pointed out that the difference between the compound interest claimed, and the simple interest that the defendant accepted was payable, amounted to over £1.1 billion. It is also noteworthy at the outset that, apart from leading cases on interest, some of the leading cases on general principle within the law of obligations have turned on questions of interest, such as Woolwich Equitable Building Society v IRC (No 2). The initial task of this chapter is to provide an overview of an area of the law that for many academics and students is relatively unfamiliar. We then move to the heart of the chapter (those who already know the basics on interest may choose to skip the overview and go straight to section 11.3) which considers a number of specific questions, some of which are both topical and difficult. Overview Post-judgment Interest Judgment Debt Interest A court’s award of damages or an agreed sum constitutes a ‘judgment debt’. Under section 17(1) of the Judgments Act 1838 simple interest automatically runs on a ‘judgment debt’ at a rate of what, since 1993, has been 8 per cent. By the Civil Procedure Rules (CPR) 40.8, the interest on a judgment debt runs from the date of the judgment unless the court orders otherwise.