Harlequin Property (SVG) Ltd & Anor v Wilkins Kennedy (a firm)

Where damages are payable in a foreign currency, the court may express the judgment in sterling if that currency most accurately reflects where the claimant’s loss was felt and best achieves restitution. Interest is compensatory. It should reflect the real cost of borrowing, rather than create a windfall based on borrowing which the claimant neither incurred nor could realistically have obtained. The general rule that the unsuccessful party pays costs may be departed from where the successful claimant failed on substantial issues. A proportionate percentage reduction may be preferable to issue-based orders. An interim payment on account should be fixed at a level below the amount expected on final assessment.

The judgment determined consequential matters following the merits judgment in [2016] EWHC 3188 (TCC). The second claimant’s claim had been dismissed, while the first claimant had succeeded on a substantial claim concerning negligent advice about the absence of a binding valuation process for construction works.

The court determined the currency and payment mechanics for the judgment sum, the admissibility and rate of interest evidence, liability for costs, and the appropriate interim payment on account of costs. The central issues were how to express a loss arising from payments made in different currencies, how to assess compensatory interest, and how to reflect substantial partial success in the costs order.

1. The judgment sum was expressed in sterling at £7,443,821.12. Applying The Canadian Transport [1979] AC 685, the relevant currency was that in which the loss was felt and which most nearly compensated the claimant. The material payments were made in sterling. The later expression of the figures in US dollars was for accounting purposes.
2. The judgment sum was ordered to be paid into court by close of business on 13 January 2017. This provided temporary protection for investors and addressed the insolvency concerns without requiring control by either party’s solicitors. The parties had liberty to apply on 72 hours’ notice.
3. The late expert report on SVG borrowing rates was inadmissible. It was irrelevant because the claimant had not borrowed to finance the development, and it addressed prime rather than the claimant’s actual financial position. The report was also served without explanation or permission shortly before judgment.
4. Interest was not recoverable as special damages because no borrowing or actual interest loss had been proved. A rate based on hypothetical sub-prime borrowing would create a windfall. The proper approach was to reflect the real cost of borrowing, using a percentage over base rate. Interest was awarded at 1.5% above base rate from 1 January 2010.
5. The claimant was the successful party, but had failed on substantial parts of its claim. Applying CPR rule 44.2, the court ordered the defendant to pay 60% of the claimant’s costs, assessed on the standard basis if not agreed. An interim payment of £2 million was ordered under CPR rules 44.2(8) and 44.18, representing two thirds of the recoverable costs and a sum below the amount expected on final assessment.

The judgment followed the merits judgment in the same proceedings, [2016] EWHC 3188 (TCC), which dismissed the second claimant’s claim and allowed part of the first claimant’s claim. This judgment determined costs and other consequential matters.