Hunt & Ors v Optima (Cambridge) Ltd & Ors

Discretionary interest is primarily compensatory rather than punitive. The usual starting point is interest from the date loss was incurred, subject to the court’s discretion. Future remedial costs do not attract interest where the award already reflects their current assessed value and interest would over-compensate the claimant. Unreasonable delay may justify reducing interest, but delay must be assessed realistically and only treated as unreasonable where the claimant has neglected the claim for a significant period. Unqualified without-prejudice mediation communications remain inadmissible after judgment. Costs may be reduced for inadequate quantification and unrealistic claims, but an approved costs estimate does not itself determine recoverability. Where overlapping liabilities arise from different legal bases, enforcement is not automatically reduced rateably.

The claimants succeeded at trial against Optima and, in part, against Strutt & Parker and related defendants in proceedings concerning defects in leasehold flats and associated professional services. This judgment dealt with interest, costs, interim payment, execution of overlapping awards and permission to appeal against the substantive judgment.

The court considered whether interest should run on future remedial costs, historic losses and capital diminution, whether alleged procedural delay justified reducing interest, how settlement offers affected costs, and whether awards against different defendants should be set off or reduced on enforcement.

1. Interest. Discretionary interest is broadly compensatory, not punitive. The usual starting point is the date on which loss was incurred, subject to the court’s overall discretion: [2007] EWCA Civ 3. No interest was allowed on future remedial costs because those losses had not yet been incurred and the sums already reflected costs assessed at the first quarter of 2013. Interest on specific historic losses and general damages was allowed at 2% above base rate for the appropriate periods.
2. Against Strutt & Parker, damages were assessed by capital diminution at the dates of purchase. Interest therefore ran on a simple basis at bank rate plus 2% from each completion date to judgment. The claimants had not culpably delayed proceedings. The approach in Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC) was applied: delay must be assessed realistically, and a reduction is justified only where the claimant has neglected the claim for a significant period.
3. Costs and offers. The proper question when considering a commercial settlement offer was whether the claimant ought clearly to have accepted it, following Sahota and others v Sahota [2006] EWHC 344 (Ch). The claimants were not unreasonable in rejecting the proposed buy-back arrangements. Their inadequate and optimistic quantum presentation nevertheless justified a 10% reduction in overall costs, leaving them entitled to 90% of costs on the standard basis.
4. Unqualified without-prejudice mediation communications and discussions remained privileged and inadmissible. Only Part 36 offers or communications expressly made without prejudice save as to costs could be considered. An approved costs estimate was irrelevant to the overall costs percentage absent detrimental reliance; it remained relevant to detailed assessment and any payment on account.
5. Overlapping awards and appeal. The awards against Optima and Strutt & Parker arose on different legal bases. No rateable reduction was appropriate. Payment by Optima into the required trust account would satisfy the relevant common-parts element, but would not eliminate the separate capital-diminution compensation due from Strutt & Parker. The parties had liberty to apply if enforcement difficulties arose. Permission to appeal was refused because the proposed grounds were not reasonably arguable.

The judgment itself records the substantive trial judgment handed down on 29 April 2013. The present judgment determined consequential issues concerning interest, costs, enforcement and permission to appeal.