Sycamore Bidco Ltd v Sean Breslin (No 3) (2013)


With regard to the interest payable on judgments under the combined effect of the Senior Courts Act 1981 s.35A, the Judgments Act 1838 s.17 and CPR r.40.8, the court construed the word "judgment" and examined factors affecting determination of the correct start and end dates, and the rate at which interest was payable.


Following an award of damages of £5.25 million in favour of the claimant (S) for breach of warranties, the court was required to determine the amount of interest payable by the defendants (BD).

S had bought shares in a company owned by BD. The latter had withdrawn from the day-to-day running of the company and given warranties as certified by the company's auditors. Because of their lack of personal involvement in the company, they had been ignorant of S's claim until receipt of the letter before action. Whilst they had been found liable to S, there was a dispute as to the correct start date, end date and rate of interest. S's case was that the start date was the date on which the cause of action accrued, that the end date depended on the meaning of "judgment" for the purposes of the Senior Courts Act 1981 s.35A and the Judgments Act 1838 s.17, and that a rate of three per cent above base rate was justifiable. BD argued for a variety of later commencement dates and end dates, and for an interest rate of one per cent over base rate, as was the presumption in the Commercial Court. Their case was that their ignorance of the claim meant that interest should not start to run until the point at which it had been fully quantified.


(1) With regard to the interest start date, the basic proposition was that interest would normally start running when the cause of action accrued. Any exceptions to that rule would be true exceptions and were not to be taken as making significant inroads into the general proposition, BP Exploration Co (Libya) Ltd v Hunt (No.2) [1979] 1 W.L.R. 783 and Tate & Lyle Industries Ltd v Greater London Council [1982] 1 W.L.R. 149 applied, Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC), [2007] B.L.R. 452 and Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd explained and Westdeutsche Landesbank Girozentrale v Islington LBC [1994] 1 W.L.R. 938 considered. While the BP case identified broad classes of cases where interest might be postponed, and while those classes were not closed, the court did not have an unfettered discretion to do what it liked on a case-by-case basis (see paras 6-16 of judgment). In many contractual claims, a defendant might be unaware of any breach for a period after it had occurred. Such ignorance was no reason to postpone the commencement of interest on the resultant damages claim. Similarly, ignorance as to the precise value of the claim was no reason for postponement. It would be wrong in principle to disallow interest for a period when particulars of loss were unclarified (paras 25-26, 29, 31-32). (2) In order to make sense of the scheme for payment of interest, the word "judgment" in s.35A of the 1981 Act, s.17 of the 1838 Act and CPR r.40.8 had to be construed so as to mean the same thing. Ordinarily there would be no significant period of time between a handed-down judgment and the final order tying up all outstanding matters. However, in the instant case, that period had been prolonged, which made the financial consequences worth arguing about. The "judgment" for the purposes of the three statutory provisions, was the one which specified a money award; the order embodying the fruits of that judgment was an order, not a judgment. The prima facie statutory position was that s.35A interest would cease, and judgment debt interest would start, when the "judgment" was delivered. The mere fact of delay between judgment and the order embodying the judgment was no reason for departing from that prima facie case (paras 36-43). (3) The latest Commercial Court Guide indicated that there was no presumption that the interest rate was "an appropriate measure of a commercial rate of interest". The starting point, according to Tate & Lyle, was the rate at which a person in the claimant's circumstances could borrow money, although that principle had not been pursued to its logical conclusion, Fiona Trust & Holding Corp v Privalov [2011] EWHC 664 (Comm) applied and PGF II SA v Royal & Sun Alliance Insurance Plc [2010] EWHC 1459 (TCC), [2011] 1 P. & C.R. 11 and Baker v Black Sea & Baltic General Insurance Co Ltd [1996] L.R.L.R. 353 considered. The court had to adopt a fairly broad brush approach to the award of interest. The economic downturn would be a fair reason to depart from the presumed rate of one per cent above base rate, Keyser Ullman and Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2012] EWHC 2429 (TCC), [2012] C.I.L.L. 3265 applied (paras 45-52). (4) The court determined precise start and end dates for s.35A interest and set a rate of three per cent above base rate for the first three months and 2.5 per cent above base rate thereafter (para.58).

Judgment accordingly