QUEENS BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| QUORUM A S|| Claimants|
|- and -|
|Charles William SCHRAMM|
(Sued on his own behalf and on behalf of all other members of Lloyd’s subscribing to policy 497 91 NO276)
Mr Nicholas Davidson QC and Miss Sue Carr (instructed by Pinsent Curtis Biddle) for the Defendants
Crown Copyright ©
Mr Justice Thomas:
I THE ISSUES ON INTEREST
(1) The date from which interest should run.
(2) Whether there should be any reduction in the period for which interest was awarded or the rate at which it should run because of the delay by the claimants in relation to the bringing and pursuit of the claim.
(1) The date from which interest should run
“…. interest will generally run from the date of accrual of the cause of action in respect of money then due or loss which then accrues; and in respect of loss which accrues at a date between accrual of the cause of action and judgment, from such date. For convenience, I shall refer to these dates compendiously as the “date of loss”, although I recognise that the term is not altogether appropriate in a case of restitution…..
But the power to award interest is discretionary, and there is certainly no rule that interest will invariably run from the date of loss. It is no part of my task to attempt to define the circumstance in which the court will depart from the fundamental principle; indeed, since the discretion to award interest is unfettered, it would be improper to do so. There appear, however, to be three main groups of cases in which, in the exercise of its discretion, the court may depart from the fundamental principle. ”
“The first group of cases concerns the position of the defendant. The court may consider, in the light of all the circumstances, that his position was such that it would not be just to make the defendant pay interest from the date of loss. It may do so if, for example, the circumstances were such that the defendant neither knew, nor reasonably could have been expected to know, that the plaintiff was likely to make a claim, and so was in no position either to tender payment, or even to make provision for payment if the money should be found due. In such a case, the court may in its discretion only grant interest from the date of the plaintiff’s claim, or even from such a date as will allow reasonable investigation of the claim. Again, to quote from Lord Wilberforce’s speech in the Firestone case, at page 836:
“In a commercial setting, it would be proper to take account of the manner in which and the time at which persons acting honestly and reasonably would pay””
“The basic principle is, however, that interest will be awarded from the date of loss. Furthermore, the mere fact that it is impossible for the defendant to quantify the sum due until judgment has been given will not generally preclude such an award. Thus, in Admiralty, in collision cases where the ship is totally lost, interest has been held to run from the date of the loss (see eg The Berwickshire  P.204 and Owners of Leisbosch Dredger v Owners of SS Edison  AC 449, 468) and in the case of a salvage award, from the date of the rendering of the salvage services: see The Aldora  Q.B. 748. There must have been many cases in the commercial court in which, although the quantum of damages was in doubt until the date of the judgment, interest was awarded from the date of loss.”
(2) Should interest run for the entire period at the agreed rate?
“The second group of cases concerns the conduct of the plaintiff. If, for example, the plaintiff has been guilty of unreasonable delay in prosecuting his claim, the court may decline to award interest for the full period from the date of loss. This may be to encourage plaintiffs to prosecute their claims with diligence, and also because such conduct may lull a defendant into a false sense of security, leading him to think the claim will not be pursued against him…”
“In cases where the delay and the degree of fault are so substantial that the predominant cause of the plaintiff being out of his money can be seen to be his own failure to prosecute the claim, rather that the defendant’s maintenance of his defence, it is not difficult to see that the policy should be that a successful plaintiff should not be compensated for loss of use of the money. However, in order for it to be said that the plaintiff’s fault has displaced the defendant’s fault as the predominant cause of the plaintiff being kept out of his money, the delay in question would have to be very substantial and not merely relatively short periods of weeks or months during which in commercial litigation lulls in activity inevitably occur and the plaintiff’s fault would have to be very substantial, as where an action has inexcusably been allowed to go to sleep for years.”
(1) Success by underwriters on the valued policy issue.
(2) A consideration of the CPR Part 36 offers.
(3) The conduct of the claimants.
(4) Consideration of the overall success.
(1) Success on the valued policy issue
(2) The Part 36 offers
“In deciding what order to make about costs the court is required to have regard to all the circumstances including any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention (whether or not it is made in accordance with Part 36). Where a claimant has made a Part 36 offer and fails to obtain a judgment which is more advantageous than that offer, that circumstance alone will not lead to a reduction in the costs awarded to the claimant under this rule.”
“32. The submission has some superficial attraction on the facts of the present case; but, for my part, I would reject it. It seems to me that a court should resist invitations to speculate whether offers to settle litigation which were not in fact made might or might not have been accepted if they had been made. There are, I think, at least two reasons why a court should not allow itself to be led down that road. First, the rules of court provide the means by which a party who thinks that his opponent is not open to reason can protect himself from costs. He can make a payment in; he can make a Calderbank offer; now, under the Civil Procedure Rules 1998, he can make a payment or an offer under CPR pt 36. The advantage of the courses open under the rules is that they remove speculation. The court can see what offer was made, when it was made, and whether it was accepted. Second, speculation is likely to be a most unsatisfactory tool by which to determine questions of costs at the end of a trial. It is not, I think, suggested that each party would be required to disclose, at that stage, what advice it had received, from time to time, as to the strengths and weaknesses of its claim or defence. but without knowing that – and without a detailed knowledge of the financial and other pressures to which each party was subject from time to time – speculation would be hopelessly ill-informed. If Mr Gaunt’s submission were to be accepted generally, there would, I think, be a serious danger that, at the end of each trial, the court (in order to decide what order for costs it should make) would be led into another, potentially lengthy, inquiry on incomplete material into “what would have happened if …?” I am not persuaded that that could be compatible with the overriding objective to deal with cases justly.”
“4. From those cases it is clear that it is manifestly desirable that the outcome of litigation, including the outcome as to costs, should be reasonably predictable. Yet the facts of cases vary infinitely and the rule maker cannot make provision for every eventuality. The rules therefore leave the judge a measure of discretion in an attempt to produce justice in line with principle; and so as long as the judge acts in accordance with principle, this court, which lacks the advantage of having seen the case develop, will not interfere with the decision of the judge. Another way of putting it is to say the court will not interfere unless the judge is plainly wrong.
10. But Simon Brown LJ draws attention in paragraph 40 [in Amber v Stacey] to a possibly important consideration, that a party may be able to establish that it was their opponent’s unreasonable conduct which prevented them making a properly informed decision about their prospects in the litigation and thus avoid what would be the usual costs order. That is an important consideration to bear in mind because manifestly the court is concerned that each party should be able to assess its case realistically with a view to being able to make a sensible offer; and it is a fair point to make that in the present case the parties were a long way apart. In many ways the judge came down much closer to the defendant’s side than to the claimant’s side and it is a fair point to make that the claimant indicated that it really was not interested in talking at the level at which the defendant was talking; but nonetheless the end position was that the claimant beat both payments in.”
“We look forward to hearing whether or not the payment is accepted. We can assure you it is “fighting” payment in, it will not be improved upon and if not accepted the matter will proceed to trial.”
(3) The conduct of the claimants
(a) The claimant’s initial failure to be frank about what was happening in their attempt to market La Danse Grecque before the fire.
(b) The failure to give proper discovery in relation to the receiver’s documents.
(c) The claimants’ refusal to call Mr Uppstrøm until the trial had commenced.
I will deal with each in turn.
(4) Who succeeded?
Conclusion on costs