Novoship (UK) Ltd & Ors v Mikhaylyuk & Ors

A quantified judgment for principal is a final judgment debt under section 17 of the Judgments Act 1838, even where interest is assessed by a later judgment. The court may order interest on subsequently quantified pre-judgment interest from the earlier judgment date under CPR 40.8(2), particularly where the interval is short, there is no culpable delay, and postponement would disadvantage the claimant. For a judgment in foreign currency, section 44(a) of the Administration of Justice Act 1970 permits a rate reflecting the borrowing cost of that currency. The rate may be variable, such as US LIBOR plus a margin.

The claimants had obtained judgment on 14 December 2012 against the relevant defendants for quantified principal sums. The court adjourned assessment of pre-judgment interest, which involved substantial compounded dollar interest. The issues were when Judgments Act interest began on the principal, whether interest could run on the subsequently assessed pre-judgment interest from 14 December, and whether the statutory 8 per cent rate applied to dollar liabilities.

1. Judgment debt and commencement date. The court distinguished Thomas v Bunn [1991] 1 AC 362. That decision concerned the choice between an interlocutory judgment and a later damages judgment. It did not require postponement where separate judgments quantified principal and interest. The 14 December judgment was final and quantified the principal, and therefore attracted interest under section 17 of the Judgments Act 1838 from that date.
2. Interest on interest. Under CPR 40.8(2), the court had discretion to order interest from a date before the judgment assessing the interest. The relevant considerations included the short interval between the two judgments, the agreed quarterly compounding before judgment, absence of culpable delay, the impracticality of resolving the interest issue on 14 December, and the fact that post-judgment compounding would cease. Interest on the pre-judgment interest was therefore ordered from 14 December.
3. Rate for dollar judgments. The statutory 8 per cent rate is not a default rate for non-sterling debts and does not represent current dollar borrowing costs. Section 44(a) of the Administration of Justice Act 1970 enables the court to select a rate appropriate to the currency. The court adopted the compensatory principle, namely that interest should reflect the cost of borrowing, consistently with Fattal and Fattal v Walbrook Trustees (Jersey) Limited and Another [2009] 4 Costs LR 591 and Standard Chartered Bank v Ceylon Petroleum Corporation [2011] EWHC 2094 (Comm).
4. The appropriate rate was three-monthly US LIBOR plus 2.5 per cent, payable at the applicable rate from quarter to quarter. Section 44(a) permitted a variable formula rather than only a fixed figure. The claimants' dollar business, London borrowing market and agreed pre-judgment rate supported that conclusion.

First-instance decision determining the commencement and rate of post-judgment interest following the quantified principal judgment of 14 December 2012.