Case Alert -  EWCA Civ 87
Court of Appeal confirms basis for awarding discretionary interest to an individual claimant
When a court awards debt or damages, it has a discretion to also award simple interest, pursuant to section 35A of the Senior Courts Act 1981. In this case, the claimant (an individual) appealed against an award of 3% per annum, and the Court of Appeal re-affirmed the following principles to be applied when a court assesses the rate of pre-judgment interest to be applied:
(1) Interest is awarded to compensate claimants for being kept out of money, rather than to compensate for damage;
(2) The court will consider the position of persons with the claimant's general attributes and the court does not inquire into the detailed financial position of the claimant;
(3) Many claimants do not fall clearly into a category of those who would have borrowed (there is a general presumption that commercial claimants would have borrowed less than individuals) and those who would have put money on deposit, and a fair rate for them may often fall somewhere between those two rates.
Applying those principles to this case, the Court of Appeal recognised that, although the rate awarded may have been lower than the borrowing rate for an individual over the relevant period, it was well above the deposit rate and so fell within the wide boundaries of the legitimate exercise of the court's discretion. Although the borrowing rates for individuals may be higher than that for businesses, it was unrealistic to find that all the money would have had to have been borrowed: "A blended rate may well result in rates comparable to the commercial rate, given the much lower deposit rate". The judge had also been entitled to take into account a delay in the prosecution of the proceedings for 3 years.