Mortgage Express v Countrywide Surveyors Ltd

Interest may be recovered as damages for a tortious wrong where the claimant pleads and proves an actual interest loss. The loss may include compound interest, but it cannot be presumed merely because payment was delayed. In a lender’s no-transaction claim, recovery for a lost opportunity to make alternative loans requires evidence that the loans would probably have been made. Statutory interest is discretionary. The court may begin with the claimant’s cost of borrowing and adjust the rate to reflect that statutory interest is simple and the relevant period and market conditions.

This was an assessment of damages following the court’s earlier judgment, delivered on 12 February 2016, which held Countrywide Surveyors Limited liable in deceit concerning 39 mortgage loans. The capital loss and realisation costs were substantially agreed. The dispute concerned whether Mortgage Express could recover compound interest as damages from the dates of the advances to the dates of sale, and the appropriate rate and period for statutory interest under the Senior Courts Act 1981.

Mortgage Express relied on lost opportunities to make alternative loans and on its funding arrangements. Countrywide contended that the alleged loss was speculative and that only simple statutory interest should be awarded, calculated from default.

1. The claim for interest as damages was dismissed. Under Sempra Metals v IRC [2008] 1 AC 561, actual interest losses caused by a tort may in principle be recovered, including compound losses, but the claimant must plead and prove the loss, subject to remoteness and mitigation.

2. The relevant approach in Swingcastle Ltd v Alistair Gibson (a firm) [1991] 2 AC 223 required evidence-based assessment in a lender’s no-transaction case. Mortgage Express had to establish that it would have made alternative loans. The evidence showed that it could satisfy the demand for mortgages and did not establish any unsatisfied demand, refused lending, relevant tranche size, or sufficiently specific funding arrangement. The claim for a short-term money-market investment was not pursued and would in any event have failed.

3. Parabola Investments v Browallia Ltd [2011] QB 477 was distinguishable. That case involved an express finding that profitable alternative trading would probably have occurred. No comparable finding could be made here.

4. Statutory interest was to be awarded under section 35A of the Senior Courts Act 1981 from default to the date of the order. The starting point was the claimant’s cost of borrowing, taken here to be LIBOR. An increase was appropriate because the award was simple rather than compound, but the increase had to reflect the relatively long period and the fall in LIBOR after 2009.

5. The court therefore ordered simple interest at LIBOR plus 0.5% from the date of default. The capital-loss figures were left to be compromised.

This was a first-instance assessment of damages following the liability judgment handed down on 12 February 2016. No appellate history is stated in the judgment.