Claymore Services Limited v Nautilus Properties Limited – effect of delay

[2007] EWHC 805 (TCC)

Following the settlement of the claimant building contractor’s claim for payment for work done to the defendant’s property, the court was asked to determine the interest due to the claimant. Jackson J awarded the claimant interest on the sum agreed at a rate of 2% over base rate from the date when the action accrued but reduced the award by 50% for a period of one year during which Claymore had unreasonably delayed in bringing the action.

Comment: the court’s discretion to disallow interest where there has been unreasonable delay on the part of the claimant has been exercised before in Quorum A/S v Schramm (No 2), a complex insurance case concerning damage to a pastel painted by Degas entitled La Danse Grecque. Thomas J rejected the argument that claimants are entitled to wait until the end of the limitation period before beginning proceedings. Since, however, interest rates had been high during the relevant period, he only deprived the claimant of 50% of the interest for that period.

As for the rate of interest, claimants can seek to recover a rate of interest which reflects the loss which they have actually suffered. However, whilst it is permissible to adduce evidence about the type of claim eg one brought by a small rather than a large company (Jackson v Royal Bank of Scotland), it is not appropriate to adduce evidence about the particular financial standing and affairs of the particular claimant. In this case, Nautilus argued for the commercial rate of 1% over base rate, accepted in recent years as the appropriate starting point in commercial cases (Reed Executive plc v Reed Business Information Ltd). The judge rejected this on the ground that Claymore was a small business that would have had to pay interest at a higher rate had it sought to borrow money. In an earlier case, the claimant was a small businessman who had been charged at a rate of 4.5% above base rate during the relevant period. The court concluded that there was insufficient evidence to support the contention that this was a rate typically charged to small businesses in such circumstances and awarded instead a rate of 3% over base rate (Jaura v Ahmed).