Walter Lilly & Company Ltd v MacKay & Anor

Where a construction contract provides a substantive contractual remedy for late payment, interest under the Late Payment of Commercial Debts (Interest) Act 1998 is unavailable for the same debt. Contractual interest may run from when sums could reasonably have been ascertained and certified, rather than only from the date of final pleading. Discretionary interest should compensate a successful claimant kept out of money until judgment, without penalising the losing party.

Indemnity costs require conduct or circumstances taking the case out of the norm. The court must consider all the circumstances, including unreasonable pursuit or resistance of issues and the rejection of reasonable settlement offers. A party seeking extended time to pay a substantial judgment must provide full and reliable evidence of income, assets and access to funds.

The judgment dealt with issues left outstanding after the substantive judgment handed down on 11 July 2012. The claimant had substantially succeeded in its claims against the defendants, while the counterclaim had been reduced substantially.

The remaining issues concerned contractual and discretionary interest, the appropriate basis for assessing costs, an interim payment on account of costs, and the defendants’ application for extended time to pay the judgment sum. The court had to determine when interest should run, whether the defendants’ conduct justified indemnity costs, and whether the evidence supported delaying payment.

1. Interest. The court confirmed that the contractual remedy of Bank of England Base Rate plus 5 per cent displaced any claim under the Late Payment of Commercial Debts (Interest) Act 1998. Contractual interest was awarded on sums which should have been ascertained, certified and paid earlier, using midpoint dates where appropriate. A pleading error prevented recovery of contractual interest for part of the Static Security claim, but the same interest was awarded discretionarily for that period.
2. The fact that some claims were particularised later in the proceedings did not postpone contractual interest where the contractual machinery had been triggered and sufficient information existed for interim ascertainments. Interest on the prolongation, thickening and head office overhead and profit claims was therefore allowed from the dates identified by the court. Discretionary interest was awarded thereafter until judgment because the claimant had been kept out of sums which should have been paid earlier.
3. Costs. Applying the principles accepted in The Mayor & Burgesses of the London Borough of Southwark v IBM UK Limited [2011] EWCH 653 (TCC), indemnity costs were justified where the defendants’ conduct, including unreasonable resistance to settlement and pursuit of unsupported or excessive issues, took the case out of the norm. The claimant was awarded standard costs up to 11 November 2011 and indemnity costs thereafter.
4. The claimant was awarded an interim payment of £1.9 million on account of costs. The defendants’ application for extended time to pay was refused on the evidence available. A party with substantial assets seeking time to pay must provide proper evidence of income, deposits, significant assets and access to funds. The application could be renewed with adequate evidence.

Not an appeal. The judgment dealt with outstanding consequential issues following the substantive judgment handed down on 11 July 2012.