Comments on proposals in relation to Pre
and Post Judgment Interest on claims for debt and damages (excluding
PI)
Question 4. Do you have any comments on the
draft clauses of the Bill relating to the setting of pre—and
post-judgment interest?
Comments:
a. In so far as the draft clauses mainly enable
rates of interest, whether simple or compound to be prescribed
by secondary legislation it is not possible to make much substantive
comment. It will therefore be crucial that there is effective
consultation in relation to any proposed secondary legislation.
b. The prompt updating of any rates set for pre-judgment
interest in particular would have to be provided for or the same
objection noted in the impact assessment to the current setting
of the prescribed judgment rate, that it is not kept up-to-date
and may not always therefore be at an appropriate level, would
arise. In theory the current position that the pre-judgment rate
is in the court's discretion should enable rates appropriate at
the time to be awarded.
c. It is difficult to see any good reason for
taking away in relation to pre-judgment interest (except in non-sterling
cases) any residual discretion in the court to disallow or vary
the specified interest rate or type (simple/compound) to enable
justice to be done in individual cases, particularly when that
discretion is given in relation to post-judgment interest in draft
clause 11(5).
Clause 11(5) in effect gives the court more
discretion in relation to post-judgment interest than it has now.
Whilst it is true that section 17 of the Judgments Act 1838 states
that rules of court may provide for the court to disallow all
or part of the interest otherwise payable, the only such provisions
in the CPR seem to be in relation to interest on costs in CPR
47.8 (3) and 47.14(5) (and CPR 40.8 also states that
interest shall run from the date of judgment "unless the
court orders otherwise").
d. The ability to recover compound interest in
appropriate cases is a welcome proposal in principle.
e. The proposed clauses, (as do section 35 of
the Senior Courts Act 1981 and section 69 of the County
Courts Act 1984), provide that there will be no power to award
interest in respect of a debt or damages where interest already
runs eg under statute or contractually.
"Another example" is mentioned at
the end of paragraph 34 of the Explanatory Notes of interest
payable under statute but the example does not appear.
If this excludes the award of interest where
the Late Payment of Commercial Debts (Interest) Act 1998 applies,
it would need to be ensured that there was equivalence and fairness
between the differing regimes both as to rate and whether the
interest be simple or compound.
f. Clause 11 on post-judgment interest applies
in relation to all judgment debts (High or county court) and subsection
(2) says that any cases to which the section does not apply will
be specified by order. So again it is not possible to make any
definite comments in advance of a consultation on the details
proposed in secondary legislation, save to suggest that this may
be the opportunity to bring High and County court judgments and
their enforcement into line and to review the County Courts (Interest
on Judgment Debts) Order 1991.
There seems to be no sustainable reason why
in the county court there should be no interest on judgments under
£5,000, (unless there is contractual interest or statutory
interest under the Late Payment of Commercial Debts (Interest)
Act 1998), unless transferred to the High Court for enforcement,
nor why if interest is payable it does not run when there are
enforcement proceedings, unless they are unsuccessful (so that
if the enforcement proceedings are partially successful, the remainder
of the debt becomes interest free).
Question 5. Do you agree with the impact assessment
on the proposed reforms relating to the setting of pre—and
post-judgment interest at Annex D?
Comments:
a. The comments given in answer to question 4 are
repeated.
b. It is not understood why or on what basis
it is stated in paragraph 27 of the "Evidence Base",
referring to pre-judgment interest, that "…85% of all
claims are under £5,000 (all these claims certainly
would not fall into the affected claim pool."
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