The court considered the correct approach to the award of statutory interest.
Held: Hildyard J said: ‘As to (1), it seems to me that the Court’s overall approach in the authorities cited to me is to distinguish between (a) cases relating to money lost in or in relation to the conduct of a business where the general assumption would be that money lost or detained would have to be replaced by money borrowed to maintain that business and (b) cases where any award is an accretion to the funds of the claimant, rather than replacement of monies which the claimant had previously had and put to use.
In cases of type (a), the Court seeks to identify an appropriate interest rate, adopting a broad brush to establish a rate approximating to the cost that a claimant in that line of business or activity would have incurred in borrowing money to replace the money lost or detained. In cases of type (b), of which the paradigm may be personal injury cases, the Court seeks to identify an appropriate rate to represent a minimum return to put the claimant in the position he or she would have been if the money had been placed on deposit at the date of the event that gave rise to the claim.’
Hildyard J summarised as follows: ‘(1) At least where there is no direct evidence as to what the parties knew and did not know, and as a corollary of the objective approach to the interpretation of contracts, the question is what knowledge a reasonable observer would have expected and believed both contracting parties to have had and each to have assumed the other to have had, at the time of their contract ;
(2) that includes specialist or unusual knowledge which only parties entering into a contractual engagement of the sort in question might reasonably be assumed to have; and it also includes knowledge which it is to be inferred, from the nature of the actions they have in fact undertaken, that they had or must have had;
(3) however, it does not include information that a reasonable observer would think that the parties merely might have known: that would open the gate too far to subjective or idiosyncratic speculation;
(4) the fact that material is readily available or notorious may support an inference as to what the parties actually knew;
(5) but (subject to (6) below) where it is demonstrated that one or more of the parties did not in fact have knowledge of the matter in question such knowledge is not to be imputed; nor is the test what reasonable diligence would or might have revealed: in either case that would be inappropriately to introduce impermissible concepts of constructive notice or a duty (actionable or otherwise) to make inquiries or investigations;
(6) the exception is that a reasonable person cannot be assumed to be in ignorance of clear and well known legal principles affecting or incidental the contractual engagement in question.”
Judges:
Hildyard J
Citations:
[2013] EWHC 620 (Ch)
Links:
Jurisdiction:
England and Wales
Citing:
See Also – Challinor and Others v Juliet Bellis and Co (A Firm) ChD 9-Dec-2011
Appeal against order granting summary judgement. . .
See Also – Challinor and Others v Juliet Bellis and Co and Another ChD 25-Feb-2013
. .
Cited by:
Cited – Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd TCC 10-Oct-2013
Dispute as to the approach applicable on calculation of statutory interest on judgment.
Held: Interest was awarded at the normal commercial rate. The correct question was how the Claimant ‘could have put itself in possession of the funds that . .
Cited – Lehman Brothers International (Europe) v Exotix Partners Llp ChD 9-Sep-2019
The parties had contracted to trade global depository notes issued by the Peruvian government. Each made mistakes as to their true value, thinking them scraps worth a few thousand dollars, whereas their true value was over $8m. On the defendant . .
Lists of cited by and citing cases may be incomplete.
Damages
Updated: 13 September 2022; Ref: scu.471965