Sycamore Bidco Ltd v Breslin & Anor

Interest on damages is compensatory. It normally runs from the date when the cause of action and loss accrue. Ignorance of liability, uncertainty about quantum, or a genuine dispute does not ordinarily postpone interest. Departure requires a strong and particularly good reason, such as a commercial practice making earlier payment unreasonable or unreasonable delay by the claimant.

The relevant interest rate is assessed broadly by reference to the borrowing costs of the class having the claimant’s general attributes. The usual 1% above base-rate presumption may be displaced by evidence and fairness. Judgment interest changes when judgment finally fixes the sum, rather than when the later order is made.

The claimant had previously recovered £5.25m in damages for breach of warranty. This first-instance judgment determined the consequential interest payable on that sum.

The parties disputed the starting date, the date on which interest under section 35A of the Senior Courts Act 1981 should end, and the applicable rate. The defendants relied on their ignorance of the claim and the lack of a fully particularised quantum case. The central issues were when the damages became interest-bearing, what constituted the relevant judgment under the statutory scheme, and whether the conventional commercial rate should be displaced.

1. Starting date. Interest is compensatory rather than punitive. Following the principles in BP Exploration Co (Libya) Ltd v Hunt [1979] 1 WLR 783 and Tate & Lyle v GLC [1982] 1 WLR 149, the ordinary starting point is the date when the cause of action and loss accrue. The discretion to depart from that rule is real but subject to a strong limitation. A strong and particularly good reason is required.
2. The defendants’ ignorance of the possible warranty claim did not justify postponement. Nor did their lack of precise knowledge of quantum before the expert report. Those circumstances were common in contractual and commercial claims and did not make this case exceptional. Westdeutsche Landesbank v Islington BC [1994] 1 WLR 938 provided a compelling illustration. The commercial-payment exception in Claymore Services v Nautilus [2007] EWHC 805 (TCC) was distinguishable because a quantum meruit claim ordinarily required a final account and a reasonable opportunity for assessment.
3. Under section 35A of the Senior Courts Act 1981, section 17 of the Judgments Act 1838 and CPR 40.8, the relevant judgment was the judgment which finally fixed the damages. It was not the later order dealing with costs, permission to appeal and other consequential matters. The change from section 35A interest to judgment-debt interest therefore occurred on 15 January 2013.
4. For the rate, the court adopted a broad-brush, class-based approach. It considered the borrowing rate of persons with the claimant’s general attributes, disregarding peculiar personal circumstances. The conventional 1% above base-rate presumption was rebutted by evidence concerning private-equity acquisition companies and the claimant’s borrowing.
5. The appropriate rate was 3% above base rate until 5 February 2009, and 2.5% thereafter, reflecting the sharp reduction in base rates and the reduced representativeness of the conventional rate. Interest accordingly ran from 9 November 2007 to 15 January 2013 on that basis.

The judgment records that two earlier judgments in the same proceedings awarded the claimant £5.25m for breach of warranty. No appeal history is stated.