Jefford v Gee

Interest on damages compensates a claimant for being deprived of money which ought to have been paid, not for the injury itself. Interest on past pecuniary loss should ordinarily be assessed broadly, commonly at half the appropriate rate from the accident to trial. No interest is payable on capitalised future loss. Interest on pain, suffering and loss of amenities should ordinarily run from service of the writ to trial.

The appropriate rate is generally the average short-term investment-account rate for the relevant period. Interest is separate from the cause of action, so a payment into court does not include it and costs are assessed by comparing the payment with damages exclusive of interest. Exceptional delay may justify departure from these guidelines.

The claimant was injured when the defendant negligently drove into his motor-scooter. Liability was admitted. The defendant paid £4,250 into court, but the claimant proceeded to trial.

Mr Justice Waller awarded special and general damages. He refused interest on special damages but awarded interest at 6½% on the whole award of general damages from the accident to trial. The defendant appealed against the interest award. The claimant cross-appealed, seeking interest on all damages and a higher rate.

The Court of Appeal addressed the proper basis for awarding pre-judgment interest in personal-injury cases, including the effect of payment into court.

Disposition and principles

1. The Court, in a single judgment prepared by Lord Denning MR, Davies LJ and Salmon LJ, allowed both the appeal and the cross-appeal. The order was varied.

2. The statutory power to award interest gives effect to the principle that a defendant who wrongfully withholds money due to a claimant should compensate the claimant for the resulting loss of use. Interest is not compensation for the damage itself.

3. Special damages represent past pecuniary loss. Interest should in principle run from the dates of the individual losses, subject to receipts and recoupment. In ordinary cases, a broad award of interest on the total special damages from the accident to trial at half the appropriate rate is fair.

4. Capitalised future earnings attract no interest. The award is the present value at trial of a future loss, so the claimant receives the money in advance. By contrast, interest on the indivisible award for pain, suffering and loss of amenities should generally run from service of the writ to trial.

5. The appropriate rate is the average rate payable on the Court's short-term investment account over the relevant period. For this case it was 6%; special damages therefore bore interest at 3%.

6. Interest is not part of the cause of action. Under Order 22, rule 1, a payment into court is made in satisfaction of that cause of action and should therefore disregard interest. The costs comparison is likewise made exclusive of interest.

The Court awarded interest on the special damages of £2,131 11s 6d at 3% from 30 November 1966 to trial, and on £2,500 for pain, suffering and loss of amenities at 6% from service of the writ on 2 August 1967 to trial. There was no order as to costs. The Court also gave guidance, stated to be capable of adjustment for gross delay, on fatal-accident awards, tax and the form of judgment.

• Court of Appeal (Civil Division) — allowed the defendant's appeal and the claimant's cross-appeal, and varied the interest award.

• First instance — Mr Justice Waller, on 16 June 1969, awarded damages, refused interest on special damages, and awarded interest on general damages at 6½% from the accident to trial.