Assetco Plc v Grant Thornton UK LLP

In commercial claims, compensatory interest is assessed broadly by reference to the borrowing rate reasonably applicable to persons with the claimant’s general characteristics. Detailed evidence of the claimant’s actual borrowing is ordinarily unnecessary. A blended rate may be appropriate.

Enhanced interest under Civil Procedure Rules 1998, r.36.17 is discretionary and is not automatically fixed at the 10% maximum. The rate must be proportionate to all the circumstances, including the parties’ conduct and the extent to which the Part 36 regime has been engaged.

A stay of execution pending appeal requires solid grounds, usually involving a risk of irremediable harm. The court must weigh the competing risks and make the order best serving the interests of justice.

The claimant had succeeded against the defendant in liability and quantum judgments arising from negligent audits. Damages were assessed at approximately £22 million. The court then considered consequential matters: compensatory and enhanced interest, costs and interest on costs, the form of the costs bill, permission to appeal, a stay of execution and time for payment.

The claimant had made Part 36 offers of £10 million and £17.5 million. The defendant did not resist the principal Part 36 consequences but disputed the applicable interest rates. It also sought a stay because of concerns about recovering the judgment sum if an appeal succeeded.

1. Compensatory interest. The appropriate rate is a broad-brush discretionary assessment. The court should consider the rate at which persons with the claimant’s general attributes could borrow, rather than the claimant’s precise borrowing position or the defendant’s profit. Three-month LIBOR was appropriate; EIBOR was unsuitable because the claim and judgment were in sterling. Having regard to the evidence without undertaking a detailed inquiry, the appropriate rate was three-month LIBOR plus 2%.
2. Enhanced interest. Under Civil Procedure Rules 1998, r.36.17, enhanced interest is the default where the claimant beats its Part 36 offer unless unjust. The 10% figure is a maximum, not a starting point. The award may contain a non-compensatory element, but must be proportionate and reflect all the circumstances. The present case was materially less egregious than OMV Petrom SA v Glencore International AG; an enhancement of 3% above the compensatory rate was appropriate, producing 5% above LIBOR.
3. Interest on costs and costs bills. Enhanced interest on costs was refused. Indemnity costs, the additional £75,000 and enhanced interest on the principal already addressed the relevant matters, and further enhancement risked disproportionate double counting. The parties were dispensed from submitting electronic costs bills under Practice Direction 47, para.5.1(a)(iii).
4. Stay. The defendant had to show solid grounds. There was a real risk that the claimant could distribute the judgment monies and that recovery would then be impossible if an appeal succeeded. The appropriate order was a stay conditional on payment into court, which would give the claimant a security interest. Post-judgment interest remained payable at 8% under the Judgments Act 1838.
5. Permission to appeal was refused. Payment into court was directed within 35 days, with the logistics and interest top-up to be agreed.

This was a consequential judgment following the court’s liability judgment of 31 January 2019, [2019] EWHC 150 (Comm), and quantum judgment of 7 February 2019, [2019] EWHC 191 (Comm). The court had found the defendant liable and assessed damages at approximately £22 million.