Mr Justice Foxton in the case of Rolls-Royce Holdings Plc v Goodrich Corporation [2023] EWHC 2002 (Comm) determined that a party who fails to plead contractual interest is not entitled to statutory interest.
The defendant was successful in obtaining a judgment of over one million dollars and sought pre-trial interest on that sum. In the contract between the claimant and defendant there was a contractual right to claim interest – the defendant had not pleaded a claim for interest in line with the contract. However, the defendant sought interest based upon S.35A of the Senior Courts Act 1981.
S.35A gives the High Court a discretion to award interest on debts and damages, it states:
“(1) Subject to rules of court, in proceedings (whenever instituted) before the High Court for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as rules of court may provide, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and— (a) in the case of any sum paid before judgment, the date of the payment; and (b) in the case of the sum for which judgment is given, the date of the judgment …
(4) Interest in respect of a debt shall not be awarded under this section for a period during which, for whatever reason, interest on the debt already runs.”
Mr Justice Foxton stated that subsection 4 meant that the defendant was not entitled to statutory interest as there was already a contractual interest running on the sum.
Generally, if parties have reached a contractual agreement as to when interest should be paid and at what rate, the court will not award interest under S.35A, as this will be different to what the parties agreed.
Therefore, it is important that any claim for interest is pleaded correctly. If you need assistance with drafting pleadings, please contact a member of the the Dispute Resolution here, who will be able to advise you.
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