An interesting decision in the English High Court from Males J today, Equitas Ltd v Walsham Bros & Co Ltd [2013] EWHC 3264 (Comm). A complex claim arising out of the Lloyd's débâcle by a syndicate's assignee to make brokers account for payouts under reinsurance policies. One curious holding is that the duty to account is a continuing duty, so that apparently it never gets time-barred. More intriguing, however, is a claim for compound prejudgment interest on the basis of LIBOR + 1. This is made under Sempra v IRC [2007] UKHL 34, [2008] 1 AC 561. Defendants say, with some justification, that this is essentially a common-law claim for interest as of course for late payment, and that in the admitted absence of any detailed evidence this is exactly what Sempra says you can't have. On the contrary, they argue: under Sempra you've got to prove exactly how much you personally have had to pay to borrow, or how much interest you would have made and now haven't.

Males J is having none of it. Looking at the facts of Sempra, he says it is "a case where, despite what was said about the need to plead and prove a loss, the damages actually awarded were determined by taking a conventional rate and awarding compound interest. This did not depend on any evidence as to the taxpayer's actual loss, but was simply the interest which a substantial commercial company would have to pay to borrow the amount in question in the market at the relevant time, regardless of what the taxpayer had actually done. Although it may be that this approach was not the subject of specific argument in the House of Lords, it was clearly an approach which the House endorsed" ... and he duly follows the same approach in regard to Equitas.

Do list members share my impression that if this is right, in debt claims the statutory jurisdiction under the Senior Courts Act 1981 to award prejudgment interest is now close to redundant?


Andrew