Irena Ferme v Simon Matthew Gwinnutt

On an appeal concerning proof of interest in a liquidation, a creditor cannot rely on the Late Payment of Commercial Debts Interest Act 1998 for interest arising from delayed repayment of a land-purchase deposit. The Act is confined to commercial contracts for the supply of goods or services.

Interest as damages for delayed payment may be provable, but the claimant must establish both breach and actual loss. A bare assertion that interest is legally due is insufficient. The statutory insolvency regime governs interest on proved debts. Where the underlying debt was paid before liquidation, no remaining debt bears interest under the relevant provisions.

The applicant appealed under r.14.8 of the Insolvency (England and Wales) Rules 2016 against refusal to admit a proof of debt. She claimed as assignee for interest, solicitor’s costs, statutory compensation and expenses arising from the delayed repayment of a £40,800 deposit connected with contracts for the purchase of two flats.

The underlying debt was paid before the company entered liquidation. The principal questions were whether interest was recoverable under the Late Payment of Commercial Debts Interest Act 1998, as damages for breach of contract, or under the statutory insolvency rules.

1. Appeal dismissed. None of the potential routes identified by the court established an admissible proof for the claimed interest or additional sums.
2. The Late Payment of Commercial Debts Interest Act 1998 applies only to commercial contracts for the supply of goods or services. An agreement to return a deposit paid under contracts for the purchase of land is not such a contract. The claim therefore did not fall within the Act, including its statutory compensation provisions.
3. The insolvency interest regime is a complete statutory code. Rule 14.23 of the Insolvency (England and Wales) Rules 2016 replaces contractual or other rights to interest on proved debts. The underlying £40,800 debt had been paid before liquidation, so no unpaid debt remained on which statutory interest could be proved.
4. Interest may in principle be claimed as damages for breach of contract caused by delayed payment. The claimant must, however, provide sufficient information to establish breach and loss. Proofs of debt are not pleadings, but a proof claiming interest as damages must contain enough material to show actual or real loss. The evidence established delay but did not establish resulting loss.
5. An appeal under r.14.8 is a rehearing. The court decides afresh, on the balance of probabilities, whether a debt exists and whether interest is provable under rule 14.23.
6. Interest under rules 14.23(2)–(6) relates to the debt identified in rule 14.23(1). Since that debt had been paid before liquidation, those provisions could not assist. The possible argument that statutory interest might be claimed on damages for delayed payment was outside the scope of the appeal and raised difficulties concerning a purposive construction.
7. The court could not identify an established entitlement to solicitor’s costs or statutory compensation. The applicant was invited to consider whether further evidence or an amended or new proof might be available, including evidence of contractual interest provisions, but no such issue was decided.

This was an appeal under r.14.8 of the Insolvency (England and Wales) Rules 2016 against refusal to admit a proof of debt. No earlier judgment citation is stated.