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High Court of Justice in Northern Ireland Queen's Bench Division Decisions
You are here: BAILII >> Databases >> High Court of Justice in Northern Ireland Queen's Bench Division Decisions >> Harland & Wolff Ship Repair and Marine Services Ltd v Stolt Off Shore Services SA [2001] NIQB 2 (22 January 2001)
URL: http://www.bailii.org/nie/cases/NIHC/QB/2001/2.html
Cite as: [2001] NIQB 2
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Neutral Citation no. [2001] NIQB 2
Ref:
CAME3322
Judgment: approved by the Court for handing down
Delivered:
22.01.2001
(subject to editorial corrections)
BETWEEN:
Plaintiff
Defendant
CAMPBELL LJ
On 6 October 2000 Ulster Bank Markets Limited ("the Bank") issued an inter-pleader summons asking for an order determining the entitlement of the parties in this matter to a sum of £416,337 or such other sum as might be determined under a bond issued by the Bank. On 22 December 2000 this Court declared that Stolt Off Shore Services SA ("Stolt") was entitled to the entire sum.
Subsequently, on 12 January 2001, an order was made awarding the Bank and Stolt costs against Harland & Wolff Ship Repair and Marine Services Limited ("H&W"). Stolt was also awarded costs it had incurred in respect of an application by H&W for an interlocutory injunction.
Two issues remain to be decided. These are Stolt's application for interest on the sum of £416,337 from 29 September 2000, the date when it made its demand for payment, until the date of receipt of the money at the rate of 7% per annum and H & W's application for a stay, pending an appeal to the Court of Appeal, on payment out to Stolt of the sum of £416,337 paid into court on 23 November 2000
The jurisdiction to give interest
The High Court is given power to award interest on debts and damages by section 33a of the Judicature (Northern Ireland) Act 1978. The relevant parts of the section provide:
"(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 judgement is given, …………….. for all or any part of the period between the date when the cause of action arose and –
…………………………
(b) in the case of the sum for which judgment is given, the date of the judgment.
…………………
(3) Interest in respect of debt shall not be awarded under this section for a period during which, for whatever reason, interest on the debt already runs.
(4) Without prejudice to the generality of Section 55, rules of court may provide for a rate of interest by reference to a rate for which any other enactment provides.
(5) Interest under this section may be calculated at different rates in respect of different periods.
(6) In this section `plaintiff' means the person seeking the debt or damages and `defendant' means the person from whom the plaintiff seeks the debt or damages."
The application of the section is, as stated at the outset, subject to rules of court and Order 18 rule 8 (4) of the Rules of the Supreme Court states:
"A party must plead specifically any claim for interest under section 33A of the Act or otherwise".
As Order 1 rule 3 states that 'pleading' does not include a summons and the interpleader was initiated by summons and the parties then filed affidavits setting out their respective claims there was no pleading in which interest could have been claimed. The claim for interest was made in a letter from Stolt's solicitors dated 10 January 2001. I reject, on the ground that there were no pleadings and therefore was no opportunity to plead a claim for interest, the submission of Mr Horner Q.C. (who appeared with Mr Good for H&W) that this application must fail in limine
The question then arises whether an interpleader comes with the description of 'proceedings' in the section. Mr Stephens Q.C. (who appeared with Mr Lockhart for Stolt) in support of the contention that it is a 'proceeding' referred to a statement by Gibson J. in Allen v Redland Tile Co. (NI) Ltd. [1973] NI 75 at page 77, an application for dismissal of an action for want of prosecution, where he said:
"The scope of a "proceeding" is not readily definable. The courts have generally treated the term which is frequently used in the Rules of the Supreme Court as equivalent to a "step" in proceedings within the Arbitration Acts. As Maugham J. expressed it in Mundy v Butterley Co. Ltd. [1932] 2Ch.227 at page 234:
'I do not think that it is possible to take a step in the proceedings unless comparing the words with the words used in O.XXVI you are taking a proceeding in the action.'
In Donnelly v Gray, Jones J. indicated that in that case if one disregarded an application and order "nothing based on a court document had occurred in the action" for more than two years. I read this to mean that if there has been no such occurrence, there has been a court document or something based on it there has been a proceeding. For instance, filing affidavits in answer to a motion is not a step in a proceeding: Zallinoff v Hammond [1898] 2Ch. 92. Nor is a notice requiring delivery of a statement of claim delivered with notice of entry of appearance: Ives and Barker v Willians [1894] 2Ch. 478. On the other hand, a proceeding may be less than an application to court or an actual appearance in court on the hearing of an application. Delivery of a pleading is an obvious example…."
Mr Stephens relied upon the latter part of this passage as providing confirmation that an application to the court for relief by interpleader is a proceeding. I was referred also to De La Rue v Hernu [1936] 2 All ER 411 where Greene L.J. said at page 417:
"In substance, when an interpleader issue is tried, two actions against the person interpleading are being dealt with, and interpleader proceedings is the method of compelling the parties-either one, or both, or neither of whom may have actually issued a writ – to prosecute their claims. As it is the essence of interpleader proceedings that the person who has interpleaded has no title himself he naturally drops out of the suit. But in effect the entire matter is tried out in the presence of all the parties concerned, and the real claimants are compelled to put forward their claims and to have them adjudicated upon."
In my opinion this passage puts it beyond question that an interpleader application comes within the description of proceedings in section 33A.
In B P Exploration v Hunt [1983] 2 AC 352 the question arose as to whether an award under the Law Reform (Frustrated Contracts) Act 1943 came within the expression "any debt or damages" as used in section 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934. Lord Brandon said at page 373:
"In my opinion the words….in the context in which they occur are very wide, so that they cover any sum of money which is recoverable by one party from another, either at common law or in equity or under a statute of the kind here concerned."
Stolt claimed to be entitled to payment by the Bank up to the full extent of the bond and it was therefore claiming recovery of a debt within the meaning of the section.
The requirements of the section are therefore satisfied and I conclude that the Court has jurisdiction to award interest under section 33A of the Judicature.
Mr Stephens advanced two additional grounds for the award of interest. In the light of the view I have expressed about the application of section 33A it is not strictly necessary for me to express any opinion about these additional grounds however I shall do so shortly. The first is based on the inherent jurisdiction of the Court and Order 17 rule 5 of the Rules of the Supreme Court, which provides that the Court
"may in or for the purpose of any interpleader proceedings make such order as to costs or any other matter as it thinks just."
This rule has been interpreted by the Court of Appeal as giving a court the widest jurisdiction- see B.P.v European- American [1978] 1 Lloyd's Reports 364 at page 366 per Lord Denning M.R. and at page 367 per Roskill LJ.
At common law interest is payable in certain well defined circumstances none of which applies to this case. In equity interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor. But "the mere fact of refusing to pay money which was owing to a plaintiff would not of itself in equity induce the court to give interest against the defendant." Harsant v Blaine, MacDonald & Co (1887) 56 LJQB 511 at 512 per Lord Esler M.R. One of the particular relationships is between obligor and obligee on a bond.
It is long established that interest is not payable on a single bond -Hogan v Page (1798) 1 Bos &P 337. A performance bond is in effect a conditional bond, there is an obligation and a condition which specifies the performance to be secured by the bond. If there is due performance there is no liability under the bond and if there is not there may be liability for a lesser sum than that specified in the bond. If the obligor fails to pay in due time under the bond an agreement for the payment of interest may be implied. Therefore I conclude that it would be open to the court to award interest in this case.
The last ground for claiming the payment of interest, which was only touched upon by Mr Stephens, arises under the Late Payment of Commercial Debts (Interest) Act 1998. The Act applies to what is defined as a 'qualifying debt' and in section 3(2) it is provided that a debt does not carry statutory interest if it consists of a sum to which a right to interest applies by virtue of any enactment other than the Late Payment of Commercial Debts Act. As I have held that a right arises under section 33A of the Judicature Act this disposes of this ground.
Should interest be awarded?
In Business Computers v Anglo- African Leasing [1977] 1 WLR 578 at page 587 Templeman J was invited to exercise his discretion to award interest under the Law Reform (Miscellaneous Provisions) Act 1934 in the same manner as the judicial discretion to award costs, so that interest like costs, will normally follow the event. He said:
"In my judgment the judicial discretion is not so narrowly confined. The principle is that:
'when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding that money from the other ought not in justice to benefit by having the money in his possession and enjoying the use of it…'
per Lord Denning M.R. in Jefford v Gee [1970] 2 QB 130, 143, adopting a principle first stated by Lord Herschell L.C."
Mr Stephens accepted that the Bank could not be faulted for the delay in paying over the amount of the bond as H & W was disputing that Stolt was entitled to receive it. If the Bank were found liable for interest then, he suggested, it would be recoverable from H& W.
In the course of the main proceedings it was stated that the period of notice required under the terms of the bond of a demand from Stolt was to allow H& W time to indemnify the Bank so that it could advance the amount required under the bond. This is not therefore a case in which the Bank has had the use of the money to earn interest or put itself into a position to do so during the time that the bond was in existence. see e.g. Burdick v Garrick (1870) L.R. 5 Ch.App. 233 at 244 per Lord Hatherley L.C.
Although Stolt has succeeded in its claim under the bond it has yet to succeed in its claim to be entitled to that sum or any part of it for breach of contract. There are proceedings in England to resolve this in which H&W is claiming damages against Stolt for breach of contract and Stolt has a counterclaim against H&W. If the amount Stolt has received under the bond exceeds its true loss then H&W will be entitled to recover the overpayment. Mr Horner submitted that it is in those proceedings that Stolt should make any claim that it has against H&W in respect of interest. I agree and accept this submission.
I consider that in the circumstances it would be unjust to make an award of interest against the Bank and in the exercise of my discretion I decline to do so.
The application for a stay of enforcement.
A stay pending appeal is only granted for good reason and the reason advanced is that Stolt is a foreign company with its seat in France. Mr Michael Lynch, a partner in the solicitors acting for Stolt, has attested to the solvency of Stolt and reference has also been made to the jurisdiction of the court under the Civil Jurisdiction and Judgments Act 1982 and the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.
The full amount of the bond was paid into court on 23 November 2000. For the period of 21 days from the date of payment it did not carry any interest and thereafter it has carried interest under the Court Funds (Amendment) Rules (NI) 1999 at the rate of 3.25% per annum.
The purpose of the bond was to give Stolt the right to immediate payment when it made its claim on 29 September 2000. Almost four months later it has not received the money and it is inevitable that a further period of time must pass before an appeal can be decided. By such time the purpose for which the bond was required may well have been defeated. An award of additional interest of 3.75% to bring the rate up to a commercial one may provide some recompense to Stolt but it is not the same as having the capital sum. Despite the benefits of the Civil Jurisdiction and Judgments Act 1982 I cannot ignore the fact that Stolt has its seat abroad. Therefore subject to the proviso that Stolt gives security for repayment of the sum of £416,337, to the satisfaction of the solicitors acting for H&W, an order will be made for payment out. Pending the giving of such security the money will remain in court and will be subject to an additional charge for interest of 3.75% against H& W from the date of this order until further order.
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
BETWEEN:
Plaintiff
Defendant