Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd. & Anor

Interest under section 35A of the Senior Courts Act 1981 should generally reflect the commercial cost of borrowing for claimants in the relevant class. The former presumption of base rate plus 1 per cent remains appropriate for earlier periods, but is not appropriate where exceptionally low base rates mean that it no longer reflects commercial borrowing conditions. Judgment-rate interest under section 17 of the Judgments Act 1838 is not ordinarily appropriate before judgment in a commercial dispute merely because liability was determined before quantum. Interest may be reduced or disallowed for unreasonable delay, but ordinary litigation priorities, an appeal and reasonable negotiations do not necessarily constitute such delay.

Persimmon sought interest on sums awarded against Hall Aggregates and Cemex UK Properties. Earlier judgments awarded £46,920.10 for remedial works and £1,146,257.70 in damages for works which the defendants had failed to carry out. The defendants accepted liability for 8 per cent judgment interest after judgment but disputed the pre-judgment rate and argued for abatements because of alleged delay. Persimmon sought 2 per cent over base, and judgment-rate interest for the period between the judgment on liability and the later assessment of damages. The court determined the appropriate commercial rate, the availability of judgment-rate interest before judgment, and whether Persimmon had unreasonably delayed its claim.

1. Commercial rate. Interest under section 35A of the Senior Courts Act 1981 is compensatory. The appropriate rate is guided by the rate at which claimants with the general attributes of the actual claimant could borrow, without taking account of special or peculiar attributes. The historical presumption of 1 per cent over base remained applicable up to 5 February 2009. After the base rate fell from 1.5 per cent to 1 per cent, the appropriate rate was 2.5 per cent.
2. Judgment-rate interest. The court declined to award 8 per cent under section 17 of the Judgments Act 1838 before judgment. CPR 40.8 permitted an earlier commencement date, but that discretion had to reflect justice and did not justify imposing the judgment rate where it was otherwise inappropriate. The fact that liability had been determined before quantum, and the existence of an intervening appeal, did not justify judgment-rate interest in this commercial dispute.
3. Delay. The court adopted the approach in Claymore and Nautilus Properties Ltd that unreasonable delay may justify disallowing or reducing interest. Delay should be assessed realistically, allowing for the ordinary demands of business litigation. Persimmon’s delay in intimating the claim was not unreasonable in the circumstances. Nor was it unreasonable to await the Court of Appeal’s decision on liability, conduct negotiations and then seek directions for the assessment of damages.
4. Disposition. Persimmon was entitled to interest at 1 per cent over base up to 5 February 2009 and thereafter at 2.5 per cent. It was not entitled to judgment-rate interest before judgment or to any abatement for delay. Once judgment required payment of a sum, judgment interest was payable from the date of that judgment. The parties were directed to agree the figures.