Attrill & Ors v Dresdner Kleinwort Ltd & Anor

The rate of interest on damages is discretionary. It should fairly compensate the recipient for being kept out of money, using a broad-brush assessment rather than a precise calculation. The court may consider the objective characteristics of the recipient, including whether the claimant is an individual rather than a commercial concern.

Contractual payments expressed in euros may be converted into sterling by reference to the parties’ established contractual practice. Indemnity costs require conduct or circumstances taking the case out of the norm, including conduct unreasonable to a high degree. Interim payments on account of costs require a sum that will almost certainly be shown to be due on detailed assessment.

The claimants, former employees of Dresdner Kleinwort Ltd and Commerzbank AG, had previously obtained judgment for breach of contract concerning guaranteed bonus payments. The court determined consequential issues concerning interest on damages, the sterling exchange rate applicable to euro-denominated bonuses, amendment of the defence, the basis of assessment of costs, interim payments on account of costs, and permission to appeal.

The central questions were the appropriate compensatory interest rate, whether the bonuses were to be converted using the payment-date or annual average exchange rate, and whether the defendants’ conduct justified indemnity costs.

1. Interest. The court applied a broad-brush approach to compensatory interest. The appropriate rate for individual former employees was the cost of unsecured borrowing by individuals, fixed at 5% above Barclays bank base rate. The claimants’ enhanced rate following expiry of the Anar claimants’ Part 36 offer was fixed at 10% above base rate under CPR 36.14(3)(a).
2. Exchange rate. The bonus letters expressed sums in euros but required payment in local currency. The contractual documents and established practice showed that sterling conversion was made at the calendar-year average exchange rate. Judgment was therefore to be entered in sterling by reference to the average euro-sterling rate for 2008.
3. Amendment. The defendants were permitted to amend their defence to raise the exchange-rate issue. It would have been manifestly unjust to determine the issue on an erroneous basis, and the claimants suffered no material prejudice because the issue was resolved by documentary evidence.
4. Costs. The litigation itself was hard fought but did not independently justify indemnity costs. The defendants’ conduct in introducing and relying on the MAC clause to avoid contractual bonus commitments was highly reprehensible and unreasonable to the high degree required for indemnity costs. Costs were therefore to be assessed on the indemnity basis.
5. Interim costs and appeal. Separate legal representation did not justify discounting interim payments, although specific unnecessary duplication could be considered on detailed assessment. Applying CPR 44.3(8), the claimants were entitled to interim payments of 50% of the claimed costs. Permission to appeal was refused, but a stay was granted pending any application to the Court of Appeal.

The judgment determines consequential matters following an earlier judgment in the same proceedings. No lower-court decision is stated.