Socimer International Bank Ltd v Standard Bank London Ltd

Interest is ordinarily awarded from the date on which the cause of action arose. The court may adjust that period where the claimant’s excessive delay was the predominant cause of being kept out of the money. A liquidator is entitled to a reasonable period to investigate and formulate claims, having regard to the complexity of the liquidation.

Interest is not excluded merely because compensation reflects a valuation or an accounting effect rather than a conventional payment loss. Under CPR Part 36, enhanced interest and indemnity costs ordinarily follow unless that result would be unjust. General indemnity costs require conduct taking the litigation outside the norm.

Following an earlier judgment determining Socimer’s substantive claims against Standard Bank, the court considered consequential issues concerning interest and costs.

The issues were whether interest should be reduced for delay, whether interest was recoverable on the amount awarded for SOCMA depositary receipts, whether Socimer’s Part 36 offer justified enhanced interest and indemnity costs, and whether Standard’s conduct justified indemnity costs for the whole proceedings.

1. Interest and delay. The discretion under section 35(a) of the Supreme Court Act 1981 is wide, but interest ordinarily compensates a claimant for being kept out of money from the date the cause of action arose. The court may adjust the award where the claimant’s excessive delay, rather than the defendant’s maintenance of its defence, was the predominant cause of the deprivation.
2. A liquidator in a complex liquidation is entitled to a reasonable period to investigate claims and decide whether pursuing them is in the creditors’ interests. Socimer was entitled to interest from 20 February 1998 to 1 October 1999, but its failure to intimate the clause 14 claim until 12 December 2002 was excessive. Interest was therefore disallowed for the period from 1 October 1999 to 12 December 2002 in relation to the entirety of the claim.
3. SOCMA judgment amount. The accounting character of the loss did not justify denying interest. Socimer’s inability to remove the relevant liability from its balance sheet meant that its net assets were lower than they should have been. Interest on the SOCMA judgment amount was therefore allowed from 12 December 2002, when the claim was first intimated, notwithstanding later amendment and pleading of the primary case.
4. Part 36. Under CPR Part 36.21, the court should make the specified enhanced-interest and indemnity-costs orders unless unjust, taking account of the offer, its timing, the information available, and the parties’ conduct concerning information. It was not unjust to award interest at US Prime plus 9 per cent from 7 January 2005 to judgment, equivalent to 10 per cent above base rate, and indemnity costs for the corresponding non-SOCMA proportion of the relevant period.
5. General indemnity costs. Although criticisms of Standard’s witnesses and litigation conduct were made, the case remained hard-fought commercial litigation within the norm. General indemnity costs under CPR Part 44.3 were refused. The court would hear counsel on the wording of the order.