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EXTRA DIVISION,
INNER HOUSE, COURT OF SESSION
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Lord Kingarth
Lord Reed
Lord Marnoch
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[2008] CSIH 27
A13/00
OPINION OF THE COURT
delivered by LORD REED
in the cause
RONALD EVAN WILSON
Pursuer and Respondent;
against
DUNBAR BANK PLC
Defenders and Reclaimers:
_______
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Act: Haddow, Q.C, Davidson; Drummond Miller W.S. (Pursuer and Respondent)
Alt: Sandison; DLA Piper Rudnick Gray Cary Scotland LLP (Defenders and Reclaimers)
26 March 2008
Introduction
[1] During 1995
the pursuer completed a residential development in Edinburgh, comprising six flats. He had carried out the development with the
assistance of borrowings from the defenders, which were secured over the
development. As the pursuer was unable
to repay the borrowings, the defenders called up their security, and took
possession of the subjects in September 1996.
The subjects were subsequently sold.
In the present action, the pursuer seeks damages from the defenders on
the basis that they failed to sell the subjects for the best price that could
reasonably have been obtained, contrary to their duty in delict and under
section 25 of the Conveyancing and Feudal Reform (Scotland) Act 1970.
[2] That contention
was upheld by the temporary judge. He
found that the development had been sold as a whole to an investor, without any
meaningful attempt to sell the individual flats on the residential market,
where a higher price could have been expected to be achieved. He quantified damages on the basis that the
subjects should have been sold by 31 December 1996 for a total sum of about
£255,000 (which would have enabled a net balance to be paid to the pursuer
after satisfaction of his debt then due to the defenders), rather than (as was
in fact the case) being sold in October 1997 for £195,000 (all of which was
applied in satisfaction of the debt then due to the defenders). After taking account of the pursuer's
borrowings at the relevant dates, and the additional expense which would have
resulted from a sale at a higher price than was in fact achieved, the resultant
award of damages was £66,400. The judge
also granted decree for interest on that sum at the rate of 8 per cent per
annum for the period from 31 December 1996 to the date of decree. The interest so awarded amounted to
£50,600. The judge in addition specified
that interest should run on the aggregate of the damages and the interest to
the date of decree (a total sum of £117,000) at the rate of 8 per cent per
annum from the date of decree until payment.
[3] In the
present appeal, no issue is taken with the judge's conclusion that the
defenders failed to perform the duties in question. It is however maintained that he erred in his
assessment of damages and in his treatment of interest.
Damages
[4] A number of
arguments were advanced in criticism of the judge's approach to the assessment
of damages. First, it was submitted that
he had erred in deciding that proof of loss could be found in the evidence of a
valuation expert, Mr Watt, who had
provided a report to the defenders in September 1996, advising them on the
value and marketing of the flats.
Counsel drew attention to the language used by the judge at paragraphs
178-179 of his Opinion:
"[178] In my opinion the evidence given by Mr Watt
as to what might have been achieved had adequate marketing to the residential
market taken place, provides a sound basis for the quantification of the
pursuer's loss.
[179] Furthermore, in assessing the pursuer's loss
as a result of the defenders breach of duty, I consider that an appropriate
yardstick is the acceptable evidence on what the flats ... could have realised in
the residential market if adequate marketing had been put in place."
While the language used by the judge in that passage ("might"
and "could") permits the argument to be advanced, it is clear from other parts
of his Opinion that he understood the need for loss to be established on a
balance of probabilities. At paragraph
176, for example, he said:
"The
critical questions are whether there is sufficient proof of the existence of an
available market, which as a result of breach of duty on the part of the
creditors, has not been approached, and which, if approached, would have been likely
to have produced a better price than was in fact achieved".
[5] Secondly, it
was submitted that the judge had fallen into error in assessing damages on the
basis of the price achievable in an available market, when there was no
evidence that there was some person in the market who would have paid more than
was actually paid. Counsel referred in
that regard to the Opinion of Lord President Hope in Dick v Clydesdale Bank plc 1991
SC 365. That case concerned the sale of
agricultural land on the open market.
The sale was criticised by the pursuer on the basis that the land had
been sold without regard to what he described as its "hope" value for
development. The pursuer's averments
were held to be irrelevant, the Lord President stating (at page 371):
"The
pursuer's averments about the hope value indicate that the amount of the
discount from the net developable value of the subjects, which is substantial,
all depends upon how high the purchaser considers the hope to be. This in turn raises the question whether
there was in fact anyone in the market at that time who was willing to pay more
than the agricultural value of the land to reflect this. It is this question which the pursuer's
averments completely fail to address....It is clear that, because of the planning
history of the land and the lack of positive indications in favour of
permission for development at the time of the sale, it would have been a wholly
unreasonable restriction on the defenders' right to sell the subjects for them
to be required to have insisted on a price which reflected a hope value for
development before they accepted any offer received by them after
advertisement. In my opinion the
creditor is not to be subjected to the risk of challenge simply on the theory
that the subjects may have had a greater value than was realised by the
sale. What matters is the reality of the
market place in which the subjects are exposed at the time when he decided to
sell. So long as he takes all reasonable
steps to attract competition in that market it can be expected to find its own
level and establish what the property is worth.
The creditor is to be criticised for not taking further steps to attract
an appropriate purchaser only if there is evidence to show that had these steps
been taken a better bargain would have been achieved. So it would only be if the pursuer is in a
position to prove that there was somebody in the market at the time who could
be reached by advertisement in the manner described by him, and who was willing
to pay an enhanced value to reflect the hope of development, that his case
against the defenders can get off the ground.
His failure to aver that any such person existed, and that a price at
the enhanced value was in fact capable of being obtained in the market at the
relevant time, is fatal to the relevancy of his case."
[6] Although counsel
for the defenders relied on these observations, they appear to us to have no
application to the circumstances of the present case. The problem in the case of Dick was that the pursuer had failed to
identify an available market which, if approached by way of appropriate
marketing, would have been likely to produce a better price than was in fact
achieved. In the context of agricultural
land said to have "hope value", the identification of an available market
required, in effect, the identification of a potential buyer. In the present case, on the other hand, the
judge's conclusions that the flats were not marketed in the residential market,
and that they should have been, were not criticised. As a result of the defenders' failure, the residential
market was never tested, no potential individual purchasers were identified or
made offers for the flats, and accordingly the market price was not established
by the residential market. In those
circumstances, the judge had no alternative but to proceed on the basis of
expert valuation evidence as to the sum which could have been expected to be
achieved if the flats had been properly marketed. It is implicit in such evidence that a market
existed in which there were persons who could be expected to buy the flats at
the prices estimated by the valuer. It
was unnecessary, and would be unrealistic to expect, that the pursuer should
prove that there were specific individuals who would have bought the flats in
the residential market at particular prices.
[7] Thirdly, a
number of criticisms were made of the judge's treatment of Mr Watt's
evidence. Counsel observed in the first
place that the judge's Opinion was issued 18 months after the conclusion of the
proof, and 21 months after the relevant evidence had been heard. Counsel submitted that such a delay in
rendering judgment tended to undermine confidence that the judicial process had
operated effectively, and created a situation where an appellate court should
scrutinise with particular care any finding of fact which was disputed on
appeal. The critical findings in the
present case were inferences drawn by the judge from the evidence of Mr
Watt. An appellate court could evaluate
the soundness of those inferences. The
judge's findings were in counsel's submission not entitled to any special
consideration, or were at least entitled to very little.
[8] Counsel's
submission as to the consequences of delay in the issuing of an Opinion was
based on the judgment of the Court of Appeal in Goose v Wilson Sandford &
Co, 13 February 1998.
In that case, the judge had made mistakes in his treatment of some parts
of the evidence, and had failed to make any findings in respect of other
material parts. He had also mislaid his
notes of counsel's submissions. A ground
of appeal was that the court should infer that the judge had forgotten parts of
the evidence and had no clear recollection of the witnesses by the time he came
to deliver his judgment. In the present
case, on the other hand, the judge prepared a detailed Opinion of some 66
pages. He did so with the assistance of
a transcript of the evidence. It has not
been suggested that he erred in any respect in his recollection of the evidence. His Opinion contains what appears to be a
careful account of the witnesses and their evidence. In these circumstances, although the delay is
unsatisfactory, the complaint about delay takes the appeal no further
forward. As was said by Lord Scott of
Foscote, giving the judgment of the Privy Council in Cobham v Frett [2001] 1 WLR 1775 at pages 1783-1784:
"In
their Lordships' opinion, if excessive delay, and they agree that 12 months
would normally justify that description, is to be relied on in attacking a judgment,
a fair case must be shown for believing that the judgment contains errors that
are probably, or even possibly, attributable to the delay. The appellate court must be satisfied that
the judgment is not safe and that to allow it to stand would be unfair to the
complainant."
The approach of this court to the judge's findings in fact is
accordingly that described by Lord Thankerton in Thomas v Thomas 1947 SC
(HL) 45 at page 54:
"(1) Where a question of fact has been tried by a
Judge without a jury, and there is no question of misdirection of himself by
the Judge, an appellate Court which is disposed to come to a different
conclusion on the printed evidence should not do so unless it is satisfied that
any advantage enjoyed by the trial Judge by reason of having seen and heard the
witnesses could not be sufficient to explain or justify the trial Judge's
conclusion. (2) The appellate Court may take the view that,
without having seen or heard the witnesses, it is not in a position to come to
any satisfactory conclusion on the printed evidence. (3) The
appellate Court, either because the
reasons given by the trial Judge are not satisfactory, or because it
unmistakably so appears from the evidence, may be satisfied that he has not
taken proper advantage of his having seen and heard the witnesses, and the
matter will then become at large for the appellate Court. It is obvious that the value and importance
of having seen and heard the witnesses will vary according to the class of
case, and, it may be, the individual case in question."
We would add to that familiar passage a citation from Lord
Hoffmann's speech, with which the other members of the House agreed, in Biogen Inc v Medeva plc [1997] RPC 1 at
page 45:
"It
is true that in Benmax v Austin Motor Company Limited [1955] A.C. 370 this House decided that, while
the judge's findings of primary fact, particularly if founded upon an
assessment of the credibility of witnesses, were virtually unassailable, an
appellate court would be more ready to differ from the judge's evaluation of
those facts by reference to some legal standard such as negligence or
obviousness. In drawing this
distinction, however, Viscount Simonds went on to observe, at page 374, that it
was 'subject only to the weight which should, as a matter of course, be given
to the opinion of the learned judge'.
The need for appellate caution in reversing the judge's evaluation of
the facts is based upon much more solid grounds than professional
courtesy. It is because specific findings
of fact, even by the most meticulous judge, are inherently an incomplete
statement of the impression which was made upon him by the primary
evidence. His expressed findings are
always surrounded by a penumbra of imprecision as to emphasis, relative weight,
minor qualification and nuance (as Renan said, la vérité est dans une nuance), of which time and language do not
permit exact expression, but which may play an important part in the judge's
overall evaluation. It would in my view
be wrong to treat Benmax as
authorising or requiring an appellate court to undertake a de novo evaluation of the facts in all cases in which no question
of the credibility of witnesses is involved."
[9] Against that
background, counsel's numerous criticisms of the judge's treatment of Mr Watt's
evidence can be dealt with relatively shortly.
It was said, first, that Mr Watt was not an expert witness instructed
for the purposes of the present proceedings, and as such under a duty to the
court, but a valuer who had been involved in advising on the valuation and
marketing of the flats at the material time.
The suggestion appeared to be that less weight should therefore have
been attached to Mr Watt's evidence.
This appears to us to be a point without substance. The assessment of the credibility and reliability
of the evidence was a matter for the judge.
The fact that Mr Watt had provided his valuation at the time, for
purposes unconnected with the litigation, rather than being instructed on
behalf of one of the parties ex post
facto for the purposes of the action, did not necessarily detract from his
evidence: other things being equal, those might on the contrary be reasons for
attaching greater weight to it.
[10] The next
criticism was that the judge had omitted to mention a number of matters and
therefore, it was submitted, must have failed to take them into account. We would observe that it cannot necessarily
be inferred, from a judge's failure to mention a piece of evidence, that he has
therefore forgotten or ignored it. As
Lord Simonds said in Thomas at page
61,
"The
trial judge has come to certain conclusions of fact; your Lordships are
entitled and bound, unless there is compelling reason to the contrary, to
assume that he has taken the whole of the evidence into his consideration."
In the present case, the "omissions" in question appear to us
to be unsurprising, and we draw no adverse inference from them.
[11] It was said,
first, that the judge had omitted to mention the "fact" that Mr Watt had no
expertise in the valuation of residential properties in the east of Scotland; that there was a lack of comparable properties
on which to base a valuation; that the content of his 1996 report was
essentially hearsay, in that it relied heavily on the views of another
surveyor; that he had apparently not inspected the subjects himself; and that
his report was produced without any knowledge of the previous marketing of the
subjects.
[12] What Mr Watt
said in evidence was that his area of practice in geographical terms covered
the whole of Scotland, so far as development appraisals were concerned, and the
west Central Scotland area, so far as individual houses were concerned. The property in question was unusual in that
it was located in an area of publicly owned housing with few if any
comparables. He had his own views of the
property, but because it was a unique development he engaged a local surveyor
so as to obtain what he described as "a second opinion". It was not suggested to Mr Watt in cross-examination
that he lacked relevant expertise, or that his report reflected the views of
the Edinburgh surveyor rather than his own
opinion. The suggestion by counsel, in
this appeal, that Mr Watt had apparently not inspected the subjects, rests upon
his response, when asked for his view of another surveyor's description of the
subjects as "reasonably attractive" and "generally furnished to reasonable
standard in keeping with normal marketing expectations", that he could not
comment. The matter was not pursued
further. It was not suggested to him
that he might not have inspected the subjects.
His report, on the other hand, to which he spoke in evidence, stated: "We confirm having inspected the subjects". In relation to the previous marketing of the
subjects, Mr Watt accepted in evidence that he did not know the details of how
they had been previously been marketed: for example, the particular
publications in which they had been advertised.
He was however aware that they had been "vigorously marketed over a two
year timescale"; that "various selling agents [had] been employed"; that
"several people [had] shown an interest in purchasing these flats and indeed
some going as far as instructing surveyors and valuers to inspect certain of
the flats for loan purposes"; and that "no sales have been achieved", apparently
because "when valuers were instructed to undertake valuations for loan security
purposes their valuations were considerably lower than the prices sought by the
selling agents". He was also aware of
the prices at which the flats had been marketed. It was not suggested to him that the reliability
of his opinion was undermined to any extent by his lack of knowledge of more
precise details. On the contrary, he
said in re-examination that those details confirmed that the information which
he had been given at the time of his report was correct.
[13] It was next
said that the judge had omitted to mention that Mr Watt's report addressed
itself to the question of separate sales of the flats, rather than to the sale
of the subjects as a whole, only because that was what he had been instructed
to consider, and that Mr Watt's own view was that the sale of the subjects as a
whole had been a reasonable approach for the defenders to adopt. These points appear to us to be of no
relevance. At the stage of assessing
damages, the judge was concerned only with the price which could have been
achieved if the subjects had been sold as individual flats rather than as a
whole: he had already concluded that it
had been a breach of duty on the part of the defenders to sell the development
as a whole, and his conclusion in that regard is not challenged. Counsel's submission in any event does not
accurately reflect what Mr Watt said in evidence. In the passage in question, what was put to
him was that "from the [defenders'] point of view, the most sensible approach
would be to attempt a disposal of the subjects as a whole". Mr Watt agreed that he could see that as a
reasonable attitude, but he also agreed that someone had to make a decision
about the differential in prices. In
other words, it would be in the defenders' interest to sell the subjects
quickly and to recover the borrowings - which could be achieved by selling the
subjects as a whole - but they would achieve a higher price for the flats by
selling them individually, although that might take longer; and someone other
than a valuer had to decide which was the more appropriate course of action.
[14] It was next
said that the judge had omitted to mention Mr Watt's evidence that valuation
was a matter of opinion, the actual price being determined by the buyer and
seller rather than the surveyor, and that he was merely disappointed, not
surprised, by the offer ultimately made for the subjects. The first of these points goes without
saying. In the absence of actual sales
of the individual flats, the prices which could have been expected to be
realised could only be established by means of opinion evidence. In
relation to the second point, Mr Watt explained in evidence that, when
he learned of the offer that had been made, he assumed (incorrectly) that
proper marketing of the subjects by the defenders' agents, D.M. Hall, had taken
place. On that assumption, he wrote to
the defenders that he considered the offer disappointing. Asked in evidence about his use of the word
"disappointed" rather than "surprised", he said that, because he knew of the
previous unsuccessful marketing of the subjects (prior to the calling up of
the security), he was not totally
surprised. In that regard, it was put to
Mr Watt that there might be two different sorts of expectation: "one is an expectation which is really more
of a hope that one will get a certain
figure, and the other sort of expectation might be one that that is actually
what you will get." He was then asked:
"And
the fact you have used the word 'disappointing', would that suggest that the
valuations that had been given tended towards the hope end of the spectrum
rather than the more solid expectation end?"
He answered:
"No,
I think the reason I used the word 'disappointed' was that I was disappointed
all round that that was the price, which in my own view was lower than
expectation, expected, although not totally surprised because of the history."
This evidence appears to us to be of little significance,
since Mr Watt's reaction, whether of disappointment or of surprise, was based
on a false premise: namely, that proper marketing had taken place. It was not suggested to Mr Watt that his
reaction undermined the reliability of his valuation, on the hypothesis that
proper marketing had taken place; and
we see no reason why the judge should have mentioned this particular part of
the evidence in his Opinion.
[15] It was next
said that the judge had failed to appreciate the significance of Mr Watt's
evidence that it was only "possible" that more extensive marketing of the
subjects might have attracted other offers, and that to say any more than that
it might have "helped" to overcome the existing unease in the market about
those subjects would be a hypothetical exercise on which he was not prepared to
embark. These criticisms are based on a
tendentious account of the evidence. In
relation to the first point, the proposition which was put to Mr Watt was that
"unless suitable marketing is done you might end up in a situation where there
is an offer made at an early stage before it is plain whether there is any
alternative offers going to come"; to which Mr Watt responded,
"Possible". In relation to the second
point, Mr Watt said that rigorous marketing "certainly would have helped", and
that he was "sure it would have helped".
When that answer was repeated back to him, he said: "Beyond that I cannot obviously answer
because it is hypothetical". The
language used by Mr Watt in those answers permits, semantically, an argument to
be advanced that he was not saying that it was more likely than not that a
higher price would have been obtained if the subjects had been properly
marketed. That proposition was not
however put to him. He spoke to his
valuation; and nothing in his evidence indicated any qualification of it or any
departure from it.
[16] It was next
said that the judge had omitted to give due regard to the fact that Mr Watt
had joined with D.M. Hall in advising the defenders to accept the offer for the
subjects which they in fact accepted. It
was however clear from Mr Watt's evidence that he had supported D.M. Hall's
advice under the mistaken assumption that proper marketing of the subjects had
taken place, and in reliance upon a letter from D.M. Hall which described the
difficulties which they claimed to have experienced on site with potential
purchasers: a letter which the judge found to be "grossly misleading". Mr Watt was cautious in expressing a view as
to what his advice would have been if he had known that the subjects had not
been properly marketed, referring more than once to D.M. Hall's reputation and
to the high respect in which he held them.
That evidence was given before the judge had found that D.M. Hall's
response to the defenders' marketing instructions was "one of almost total
inaction", that their advertising of the subjects was "a sham", and that their
written report on their marketing efforts was "grossly misleading". In that situation, it was open to the judge,
as we have explained, to treat Mr Watt's valuation of the subjects as evidence
of what they could reasonably be expected to have fetched if proper marketing
had taken place. We note, in that
regard, that Mr Watt's valuation was more conservative than D.M. Hall's, and
that evidence was given by Mr Nisbett of D.M. Hall describing Mr Watt's
valuation as being "within reasonable parameters of professional opinion". Mr Watt's valuation was also slightly more
conservative than that of Mr Maguire, who was the other chartered surveyor to
give evidence, and who had valued one of the flats earlier in 1996. Mr Watt was not challenged in
cross-examination on the basis that his valuation was excessive.
[17] Finally, in
relation to damages, it was submitted that Mr Watt's valuation did not provide
any basis for the figure of £255,000 which the judge adopted as the amount
which the subjects could have been expected to realise. In his report, Mr Watt considered
separately the open market value of the flats and their estimated restricted
realisation price. The open market value
of each of the three lower flats was £44,000, and the open market value of each
of the three upper flats was £45,000, producing an open market value of all six
flats on an aggregate basis of £267,000.
The estimated restricted realisation price, assuming a six month
marketing timescale, was £40,000 in respect of each of the lower flats and
£41,000 in respect of each of the upper flats, producing an estimated
restricted realisation price of all six flats on an aggregate basis of
£243,000. In his evidence, Mr Watt
described the estimated restricted realisation price as being the estimated
price that the properties would sell for under the circumstances of a forced
sale with a limited time scale. Returning
to the report, Mr Watt recommended that the flats should be marketed at prices
in the region of £44,000 per unit, and that it might be advisable to advertise
the first two units at slightly lower prices of £41,000 or £42,000. He concluded:
"On
the basis that this course of action is adopted and provided there is a
vigorous marketing campaign including extensive advertising then we would
expect that the majority if not all of these flats could be disposed of within
three to four months."
The judge explained his adoption of the figure of £255,000 as
follows:
"Mr
Watt was satisfied when he gave his advice to the defenders in September 1996
that there was a residential market for the [subjects]. At that time he produced an aggregate
valuation of £267,000 and an estimated restricted realisation price of
£243,000. On the basis that there was a
vigorous marketing campaign he expected that the majority if not all of the
flats could be disposed of within three to four months. To take account of the possibility of the
minority of the flats taking a longer period to sell, and in exercising a broad
judgement, I propose to use a mid-point figure between £267,000 and £243,000 as
the appropriate starting point, namely £255,000."
Counsel did not dispute that the judge was entitled to
proceed on the basis that all of the flats should have been sold by 31
December 1996. He argued, however, that Mr Watt's
valuation did not support a higher figure, as at that date, than £243,000.
[18] The
relationship between Mr Watt's conclusion ("On the basis...") and his earlier
open market valuation and estimated restricted realisation price was not
explored in evidence. It is however
apparent that it was Mr Watt's
expectation that "the majority if not all" of the flats could be sold within
three to four months if they were marketed at prices in the region of £44,000
(i.e. at prices at, or slightly below, their open market value), with the first
two units being advertised at slightly lower prices. It is reasonable to infer that the prices at
which Mr Watt expected "the majority if not all" of the flats to be sold if
marketed in that manner must have been his open market valuations of £44,000 -
£45,000, rather than his restricted realisation prices of £40,000 - £41,000: it
would not be customary in Scotland under any circumstances (least of all in a
forced sale) to market property at an asking price well above the price which
one was expecting to achieve. One can
therefore infer from Mr Watt's evidence that most if not all of the flats
could be sold by the end of 1996 for prices corresponding to their open market
valuation. Any remaining flats would
have to be sold at the estimated restricted realisation price in order to
achieve a quick sale. The resultant
figure would therefore be somewhere between £243,000 and £267,000. Mr Watt's evidence would suggest a figure
closer to £267,000 than to £243,000 ("the majority, if not all..."). In adopting the mid-point figure of £255,000,
the judge has exercised a broad judgment, as he was entitled to do in a case
where the amount of damages did not admit of precise calculation.
Interest
Introduction
[19] The pursuer's
claim was quantified in his pleadings on the basis that he should have received
from the defenders a sum of £92,000 (being the net free proceeds of the sales
which would have been achieved, if proper marketing had taken place, less the
costs owed to the defenders) on about 8 November 1996. He therefore concluded for payment of £92,000
"with interest thereon at the rate of eight per cent per annum from 8
November 1996
(or from such date as to the Court shall seem appropriate) until payment".
[20] The judge's
conclusion was that the pursuer should have received a sum of £66,400 on about
31 December 1996. He decided that the
pursuer was entitled to interest at the judicial rate on that sum from 31
December 1996
to the date of decree. In that regard,
the judge said:
"As
at 31 December 1996...the
pursuer would have received an ascertainable sum of money after deduction of
his indebtedness to the defenders.
Because of the defenders' breach of duty, as at that date the pursuer
was standing out of his money, and, in my opinion, the defenders as the
wrongdoers were wrongfully withholding money from him. He could have used that sum to his advantage
either to obtain interest or to reduce other borrowings."
The judge decided that interest should run from the date of
decree until payment on the aggregate of £66,400 and £50,600, the latter sum
being the amount of the interest up to the date of decree. In that regard, the judge said:
"In
my opinion, when a decree is granted and that decree includes within it a
proportion of interest assessed under reference to section 1(1) of the Act [viz the Interest on Damages (Scotland)
Act 1958, as amended by the Interest on Damages (Scotland) Act 1971], that
decree, inclusive of all its constituents, becomes a decree upon which simple
interest begins to run at the relevant rate.
If the contrary were the case it would allow a defender, in relation to
the accrual of interest to date of decree, to delay without penalty the payment
of that interest."
Notwithstanding the form of the pursuer's conclusion, the
judge granted decree:
(1) for payment
of £66,400;
(2) for payment
of interest at the judicial rate on £66,400 from 31 December
1996
until the date of decree; and
(3) for payment
of interest at the judicial rate on £117,000 from the date of decree
until payment.
This was challenged on the basis that the judge had awarded
interest upon interest. It was submitted
that interest should have been awarded only upon the principal sum of £66,400,
from 31 December 1996 until payment.
[21] This question
turns upon the interpretation of section 1(1) of the Interest on Damages (Scotland) Act 1958, as amended by section 1
of the Interest on Damages (Scotland) Act 1971. In order to understand the purpose and effect
of the 1958 and 1971 Acts, and the parties' arguments in relation to this
matter, it is necessary first to consider the common law, and the successive
stages of its amendment by statute.
Interest at common law
[22] In Wisely v John Fulton (Plumbers) Ltd 2000 SC (HL) 95 Lord Hope of Craighead
summarised (at page 98) the common law's approach to interest:
"The
general principle of the common law is that, apart from contract, a party will
only be entitled to interest on money if the principal sum has been wrongfully
withheld and not paid on the day when it ought to have been paid: Carmichael
v Caledonian Railway Co (1870) 8
M (HL) 119 at p 131, per Lord
Westbury;
Kolbin & Sons v Kinnear
& Co 1931 SC (HL) 128 at p 137, per Lord Atkin".
[23] In holding
that a person from whom a payment has been wrongfully withheld is entitled to
interest ex mora debitoris, Scots law
follows Roman law and the ius commune,
and differs from English law: see Zimmerman,
The Law of Obligations: Roman Foundations of the Civilian Tradition
(1990), pp. 791, 799; Johnston, "Breach
of Contract", in Reid and Zimmerman, A
History of Private Law in Scotland, Vol. 2 (2000), pp. 176-178. As in Roman law (cf. D.18.6.20; Kaser, Das
Römische Privatrecht, 2nd ed (1971), Vol 1, p. 516),
interest ex mora has been understood
in Scots law as being compensatory in nature.
Erskine, for example, describes interest as being due on the late
payment of a debt on account of damage (nomine
damni): Institute, III.3.80. Bell provides a fuller explanation in his
Commentaries (5th ed., page 646):
"I. OF INTEREST, NOMINE DAMNI. - In observing the
difference between a claim for damage on breach of a pecuniary obligation, and
a claim for damage on breach of an ordinary contract, it is obvious that the
general principle upon which both depend is the same. Wherever one suffers loss by breach of
contract, he, by whose failure in his engagement the loss comes, is bound to
indemnify the suffering party; and the
difference between DAMAGE in ordinary contracts, and INTEREST in pecuniary
obligations, arises from the nature of the injury which the party in those
several contracts may be supposed to have in contemplation at entering into the
contract, as the inevitable consequence of failure .... In pecuniary obligations there is not
necessarily any particular injury or damage presented to the debtor, which he
is to lay his account with as the inevitable consequence of breach of
contract; but the evil suffered is the
extent of the loss sustained, by not gaining the ordinary legal profits of
money, or what is necessary to be paid in order to replace it from another
source. This claim for interest on
account of damage suffered, is not repugnant even to the Canon law; and where damage could be shewn actually to
have arisen from breach of engagement, a claim for it seems to have been
allowed under that system. But according
to the juster principles of Roman jurisprudence, not only an express breach of
contract, but also an inconvenient delay in payment, gave a claim for
interest.- Minus solvit qui tardius solvit nam et tempore minus solvitur. Since the prejudice against the taking of
interest expired on the Reformation, the law of Scotland has been settled, that breach of contact, or mora in payment, raises this claim
without any injury into actual damage, and estimating all losses arising from
this cause by the same rule, viz. according to the legal rate of interest."
The same understanding of interest ex mora debitoris as being compensatory in nature can be seen in
the judicial decisions discussed below, and is epitomised in Lord Kincairney's
dictum in Roissard de Bellet v Scott's Trustees (1897) 24 R 861 at page
865:
"In
the ordinary case the damage due for delay in payment of money is nothing but
interest."
[24] The date from
which a payment can be regarded as wrongfully withheld depends on the context,
as was observed by Lord Hamilton, delivering the Opinion of the court, in Elliott v Combustion Engineering Ltd 1997 SC 126 at page 131:
"Lord
Westbury's dictum requires to be
applied in any particular case in the context of the transaction in
question. The expression 'by virtue of
the principal sum of money having been wrongfully withheld, and not paid on the
day when it ought to have been paid' does not confer a wide discretion on the
court or on an arbiter to determine, untrammelled by legal rules, the date from
which interest is to run.
In relation to contractual debt
parties may expressly agree the date or event from which interest will run on
any outstanding principal sum. In some
cases (for example, contracts of loan) the law will imply an obligation to pay
interest from the date when the principal sum is due. Otherwise, subject to the exception (admitted
at least in the case of open accounts) of interest running from a specified
date following the making in advance of a demand to that effect, modern
authority indicates that in general interest runs on contractual debts from
judicial demand."
[25] Since interest
is ordinarily due on a contractual debt only once a judicial demand for payment
is made, the proper form of conclusion in an action for payment of such a debt
is generally for interest "from the date of citation until payment" (Maclaren, Court of Session Practice (1916), pp.
298-299). In accordance with that form
of conclusion, the court grants decree to a successful pursuer for payment of
the debt, with interest at the judicial rate from the date of citation. The court does not grant decree for both the
debt and the interest on the debt for the period between the date of citation
and the date of decree, with interest accruing thereafter at the judicial rate
on both amounts. That is because the sum
which has been wrongfully withheld, and which is the subject matter of the
action, is the principal debt. Interest
is due on the debt from the date of citation, because payment of the debt was
wrongfully withheld once it was judicially demanded; but the interest is not itself a principal debt
forming part of the subject matter of the action.
[26] The position
is different where interest is due on a debt prior to citation, usually by
virtue of a contractual provision. In
such a case, it is usual in modern practice to seek interest at the agreed rate
from the date when the debt became due until payment, in accordance with the
contract (cf. Bank of Scotland v Davis 1982 SLT 20). It is however also possible to sue, first, for
payment of the principal debt, and secondly, for payment of the arrears of
interest which have accrued to the date of citation, with interest on the total
of those sums at the judicial rate from the date of citation: see, for example, Jolly v McNeill (1829) 7
S 666, Napier v Gordon (1831) 5 W & S 745 and Maclean v Campbell (1856)
18 D 609.
[27] Since these
authorities were relied on by counsel for the pursuer in the present case in
order to support the judge's approach, it is important to understand the basis
on which these decisions proceeded. The
rationale of the decisions was that the arrears of interest were themselves a
debt, and were therefore (like the principal debt) wrongfully withheld after a
judicial demand for payment had been made.
That was explained in each of the cases which we have cited. In Jolly
v McNeill, the issue was
discussed only in the course of the argument (the opinions being concerned with
a different point), when, in response to a submission that this was the first
occasion on which interest had been allowed on interest on a contractual debt,
the members of the court interjected (at page 668) that that had only been done
from the date of citation, that the defender should then have paid the debt,
and that "the interest then became principal, and interest is due upon
that". In Napier v Gordon, Lord
Brougham LC said of the arrears of interest (at page 758):
"It
is just as much liable to interest from that day [viz. the date of citation], up to the time of payment, as the
principal. The party refusing payment on
the citation has put himself in mora,
and is just as much liable to pay interest upon that as upon the principal, or
any other debt which one man owes another... it is not because it is interest,
but because it is the subject matter of
the action, that the Scotch law gives interest, contrary to the principle of
the English law, from the instant that the party being called upon to pay, and
who ought to pay on the citation, refuses to pay, and thereby becomes, under
the Scotch law, in mora."
In Maclean v Campbell the same point was made, for example by Lord Murray (at page
611):
"The
pursuer has been found entitled both to principal and interest down to the date
of citation. The principal and interest
together form the sum that was due, and therefore on both the defenders ought
to pay interest from that date."
Lord Cowan, in the same case, cited the speech of Lord
Brougham LC in Napier v Gordon, and observed (ibid):
"Here
it is clear that the claim for the principal and interest forms the
subject-matter of the action."
The difference between the approach adopted in these
decisions, and the general approach to interest on debt (i.e. that interest
runs from the date of citation), thus reflected the fact that the arrears of
interest were themselves a principal debt forming part of the subject-matter of
the action.
[28] Following that
approach, Maclaren stated in his Court of
Session Practice (at page 301) that, where interest was due from a date
prior to citation, the usual form of conclusion was for interest from the date
in question until payment, but that in such a case there was no reason why the
pursuer should not conclude for payment of, first, the sum of the principal
debt, and secondly, the sum of the arrears of interest to the date of citation,
with interest on the total of those two sums from the date of citation until
payment. In that regard, Maclaren stated
(at pages 301-302):
"What
is really due at the date of citation is two sums - first, principal, second,
interest upon the principal from the date when interest became due either ex pacto or ex lege until the date of citation, and these two sums might have
been sued for as one sum upon which interest would run from the date of the
legal demand, i.e. the date of citation."
That approach to the appropriate forms of conclusion was
followed in the Encyclopaedia of Scottish
Legal Styles (1935), Vol. 1, pages 55-59, and is currently followed in Green's Litigation Styles, pages A2051
and A2058. It is to be noted that, if
that approach is followed, the court does not pronounce a decree under which
interest runs on the interest accruing between the date of citation and the
date of decree: that is because the
interest accruing after citation on the debts of which payment has been
wrongfully withheld is not itself a principal debt forming part of the subject-matter
of the action.
[29] The same
approach was followed more recently in the case of Nash Dredging Ltd v Kestrel
Marine Ltd 1986 SC 198, as a matter of construction of an agreement in
settlement of an action. The court
awarded interest at the judicial rate, from the date when the principal sum was
paid under the agreement, on the arrears of interest which had accrued to that
date, on the basis that the agreement was
"one
in which the defenders had conceded their liability to pay accrued interest as at
[the relevant date], and in which that date was to be deemed to be the date
when the arrears became due and payable"
(per Lord President
Emslie at page 207). Payment of the
arrears having been judicially demanded, interest accordingly ran on the arrears. The Lord Ordinary, Lord Ross, explained
(at page 201):
"As
Lord Cowan pointed out in Maclean
v Campbell, at p. 611, under reference to Napier v Gordon, where the subject-matter of the action is interest, the law
of Scotland may award interest on that interest, In ... the instant case the outstanding
interest is in the same position as a principal sum which has been wrongfully
withheld."
[30] Interest on
damages was subject under the common law to the same general principle as
interest on debt. Since damages do not
become a liquid debt until awarded by the court, it followed that damages could
not ordinarily be said to be wrongfully withheld until they had been awarded,
and therefore that damages could not ordinarily attract interest until the date
of decree. Lord Hope explained in Wisely (at page 98):
"This
common law principle [viz. the principle stated by Lord Westbury in Carmichael v Caledonian
Railway Co and by Lord Atkin in Kolbin
& Sons v Kinnear & Co]
was applied to awards of damages. The practice
both in England and in Scotland was that interest was not due on sums awarded as
damages until the making of the award.
As Lord Justice-Clerk Thomson said in Macrae v Reed & Mallik
Ltd 1961 SC 68 at p. 72: 'It has
long been our practice that where, in actions of damages, damages are awarded
interest runs only from the date of the final decree. The reason is that it is then, and only then,
that the illiquid claim for damages is quantified and made liquid. Once there is a final decree for a specified
sum that sum is payable at the date of the final decree, and if it is not then
paid, it carries interest as payment is wrongly withheld. That is in consonance with the accepted
principle as laid down in Carmichael
by Lord Westbury where he said (at p 131):
'Interest can be demanded only in virtue of a contract, express or
implied, or by virtue of the principal sum of money having been wrongfully
withheld, and not paid on the day when it ought to have been paid'."
[31] The general
principle in relation to interest on damages was therefore that, since it was
only once damages were quantified and made liquid that payment of that sum
could be said to be "wrongfully withheld", it was only from the date of decree
that interest was ordinarily payable on that sum. That approach was approved by the House of
Lords in F.W. Green & Co v Brown and Gracie Ltd 1960 SLT (Notes)
43, a case concerned with damages for breach of contract, where Lord Keith of
Avonholm (with whose speech Viscount Simonds and Lord Reid agreed) said at page
44:
"Quantification
will generally fix the earliest date from which interest can reasonably be
taken to run and that will generally coincide with the date of decree, where
the pursuer is successful."
Lord Keith added that, where there was a frivolous defence or
an unjustified appeal or other obstructive procedure designed to hold up
payment, that might constitute wrongful withholding. In such circumstances, the court had on
occasion awarded interest on damages from a date prior to the final decree
(e.g. Clancy v Dixon's Ironworks Ltd 1955 SC 17), although there appears to have
been no case in which interest was awarded from an earlier date than the date
on which the amount of the damages was fixed (cf. British Railways Board v Ross
and Cromarty Council 1974 SC 27 per
Lord President Emslie at page 39).
[32] Finally, in
relation to the general approach of the common law, it is necessary to bear in
mind that, in addition to the principle that interest is payable ex mora as a form of compensation for
delay in the performance of an obligation to pay money, whether the obligation
arises ex contractu or ex delicto, our law has also developed
general principles that damages are payable for breach of contract and for the
breach of delictual obligations.
Interest may in some circumstances enter into the assessment of damages,
in accordance with the principles governing such assessment (as explained, for
example, in Hadley v Baxendale (1854) 9 Ex 341). An example is the case of Dunn & Co v Anderson Foundry Co Ltd (1894) 21 R 880 (as explained by Lord Keith
of Avonholm in F.W. Green & Co Ltd
v Brown & Gracie Ltd at page
44). The principles applicable in
considering such awards of damages were stated by Lord Atkin in Kolbin & Sons v Kinnear & Co at page 137:
"It
seems to be established that, by Scots law, a pursuer may recover interest by
way of damages where he is deprived of an interest-bearing security or a
profit-producing chattel, but otherwise, speaking generally, he will only
recover interest, apart from contract, by virtue of a principal sum having been
wrongfully withheld and not paid on the day when it ought to be paid".
More recent authorities from other jurisdictions (including Sempra Metals Ltd v Inland Revenue Commissioners [2007] 3 WLR 354) demonstrate the
continuing importance of the court's ability to take interest losses into
account when awarding damages. Although
a connection can be made between the inclusion of interest losses in an award
of damages and the award of interest ex
mora (as Bell explained in the passage from the Commentaries quoted earlier, and as Lord Atkin's dictum implied in
bringing those two concepts together), in that both are compensatory in purpose,
they are conceptually distinct and proceed on different principles. In the present case, no claim was made for
interest to be included in the assessment of damages, and interest was not
awarded on that basis. It is therefore
unnecessary to consider further the principles to be applied by the court, as
regards interest, when assessing the amount of damages which it awards.
The Law Reform (Miscellaneous Provisions) Act 1934
[33] In order to understand the statutory
innovations upon the common law's approach to interest on damages, it is
necessary to make two detours south of the Border, as each of the 1958 and 1971
Acts was to some extent modelled upon earlier English legislation.
[34] The common law
of England in relation to interest differed
fundamentally from that of Scotland.
As Lord Denning MR stated in Jefford
v Gee [1970] 2 QB 130 at page
143:
"The
rule of the common law of England was that, in the absence of express agreement,
interest could not be recovered on a debt or damages: and Equity in this respect followed the law."
Certain inroads on that general principle were however made
by statute. In particular, section 17 of
the Judgments Act 1838 provided that every judgment debt should carry interest
from the time of entering the judgment.
The consequence was that in England, as in Scotland, interest was not
due on sums awarded as damages until the making of the award; but interest then ran on the award in England
on the basis of a statutory provision, whereas interest was due in Scots law on
the basis of the common law principle that interest ran on a liquid debt the
payment of which was wrongfully withheld.
[35] The common law
of England was further amended by the Law
Reform (Miscellaneous Provisions) Act 1934, so as to give effect to a
recommendation contained in the Second Interim Report of the English Law
Revision Committee (Cmd. 4546, 1934).
Section 3 of the 1934 Act provided:
"(1) In any proceedings tried in any court of
record for the recovery of any debt or damages, the court may, if it thinks
fit, order that there shall be included in the sum for which judgment is given,
interest at such rate as it thinks fit, on the whole or any part of the debt or
damages for the whole or any part of the period between the date when the cause
of action arose and the date of the judgment:
Provided that nothing in this section -(a) shall authorise the giving of
interest upon interest; or (b) shall
apply in relation to any debt upon which interest is payable as of right
whether by virtue of any agreement or otherwise; ... ".
[36] The thinking
behind section 3 was set out in the Law Revision Committee's report (the
relevant section of which was quoted in the analogous Scottish report which
preceded the 1958 Act, as explained below).
In short, the Committee considered that
"In
practically every case a judgment against the defendant means that he should
have admitted the claim when it was made and have paid the appropriate sum for
damages"
(para. 8). The
Committee saw no reason to distinguish in that regard between debts, damages
for breach of contract, special damages for tort, and cases where general
damages were given, as for instance for libel, or for pain and suffering in
personal injury cases.
[37] Consistently
with that approach, section 3 conferred on the court a discretionary power to
award interest, in all proceedings for the recovery of debt or damages, for the
period between the date when the cause of action arose and the date of the
judgment (interest for any period after the date of judgment already being
provided by the 1838 Act). Under section
3, any interest awarded on damages in respect of the period prior to judgment
would be included in the sum for which judgment was given. That sum would then bear interest from the
date of the judgment under the 1838 Act.
The proviso in section 3(1)(a) was therefore not concerned with interest
accruing after the date of the judgment.
[38] Section 3 was
considered by the House of Lords in Riches
v Westminster Bank Ltd [1947] AC 390. The question was whether income tax
was payable on interest awarded under section 3: it was argued that such interest was in
reality a form of damages. The tenor of
the speeches was that the interest was undoubtedly compensatory, but was
nonetheless income rather than capital.
Lord Wright, for example, said (at page 400):
"the
essence of interest is that it is a payment which becomes due because the
creditor has not had his money at the due date.
It may be regarded either as representing the profit he might have made
if he had had the use of the money, or conversely the loss he suffered because
he had not that use. The general idea is
that he is entitled to compensation for the deprivation. From that point of view it would seem
immaterial whether the money was due to him under a contract express or implied
or a statute or whether the money was due for any other reason in law. In either case the money was due to him and
was not paid, or in other words was withheld from him by the debtor after the
time when payment should have been made, in breach of his legal rights, and
interest was a compensation, whether the compensation was liquidated under an
agreement or statute ... or was unliquidated and claimable under the Act as in
the present case. The essential quality
of the claim for compensation is the same and the compensation is properly
described as interest."
Lord Normand considered that, under Scots law also, interest
awarded on the ground of wrongful withholding had a compensatory nature:
"Claims
for interest may arise in Scots law ex
pacto, ex lege or ex mora ... Interest
ex mora corresponds to the interest
awarded to the present appellant under the Law Reform (Miscellaneous
Provisions) Act, 1934, s. 3. That
interest ran from the date at which the principal sum was first wrongfully
withheld from the appellant and it is wrongful retention of the debt from the
creditor that is the legal ground for an award of interest ex mora in Scotland: per
Lord Westbury in Carmichael v Caledonian Ry. Co The correspondence is not complete; for example, interest is awarded by the
Scottish courts as of right, whereas in England the award depends on the exercise of a discretion
which the statute has committed to the jury or the court. Nevertheless the principle of the decision in
this appeal will apply to interest awarded ex
mora in Scotland. The retention
of the principal sum in the present instance was fraudulent, but the award of
interest either under the statute in England or ex mora
in Scotland does not depend on proof of fraudulent retention or
of negligent retention of the principal.
The commonest example indeed of an award of interest ex mora is a decree for interest from
the date of citation in an action in which the pursuer has successfully sued
for the disputed amount due to him on an open account, where there is neither
averment nor proof of fraud or negligence (Blair's
Trustees v Payne (1884) 12
R 104). The wrongful withholding is
then merely the refusal of the creditor's demand contained in the summons and
the implied denial of his right. Even
when there is no proof of fraud or negligence the interest awarded is sometimes
spoken of as damages both in England and in Scotland. But in Scotland at least it would, I think, be more appropriately
described as compensation"
(pages 411-412). It
was also observed by Lord Wright (at page 401) that the effect of section
3(1)(a) was to exclude the power to give compound interest.
The Interest on Damages (Scotland) Act 1958
[39] In Scotland, the common law governing interest
on damages was amended by the Interest on Damages (Scotland) Act 1958, which followed a
recommendation of the Law Reform Committee for Scotland.
In their Third Report, "The rules governing the date from which interest
on an award of damages is, or may be, ordered by the court to run" (Cmnd 141,
1957), the Committee responded to an invitation by the Lord Advocate "to
consider the rules governing the date from which interest on an award of
damages is, or may be ordered by the court to run". They noted that it had long been the practice
in actions of damages to conclude for interest "from the date of the decree to
follow hereon until payment", and that the rule that interest was not payable
on damages until the date of decree was based upon the principle that the
damages did not become liquid until then.
The decree from the date of which interest normally ran was the final
decree: that is to say, in a case where
an appeal was taken to the Inner House or the House of Lords, the date on which
the judgment of the appellate court was applied. The Committee observed (at para. 2):
"Both
the Inner House and the House of Lords have discretion to award interest from a
date earlier than that of their judgment in an appeal. It is not clear, however, what is the
earliest date from which they may award interest. It is not the normal practice for this
discretion to be exercised, because the party who is unsuccessful in the Court
of first instance has a right to appeal, and the delay caused by the appeal is
lawful and is not generally regarded by the Court as unreasonable ... But there
are some reported cases in which interest on damages has been awarded either
from the date of the jury's verdict, or from the date on which the verdict
might have been applied but for unjustifiable delay by the defender."
[40] Against that
background, the proposal which the Committee had considered was that power
should be given to the court to award interest from a date earlier than the
date of the jury's verdict or the judge's decree. Two such earlier dates had been suggested as
the beginning of the period from which interest might run: the date when the cause of action arose, and
the date of citation:
"The
former is the date applicable in England [under section 3(1) of the 1934 Act], but we consider
that, if any change is to be made in the law of Scotland on this matter, the earliest date from which the
court should be empowered to award interest is the date of citation. We reach that view because we think that
cases must be rare in which it could be equitable that a defender should be
found liable to pay interest on an award of damages from a date earlier than
that on which he had received a formal claim for payment by being cited. Even this proposal involves a departure from
strict adherence to the principle at present accepted in Scotland that interest is not payable on damages until the
amount of damages is liquidated. Such a
departure might be justified on the theoretical ground which was apparently
accepted by the English Law Revision Committee (Cmd 4546, paragraphs 8 and 9) -
viz, that when the court makes an award of damages it in effect decides that
the defender should have admitted the claim when it was made and that he should
then have paid the appropriate sum in damages.
In our view a more important reason for making such a departure is the
practical consideration that it would remove the interest which a defender at
present generally has in delaying proceedings"
(para. 3). The
Committee added (at para. 5):
"In
the event of a discretionary power such as is suggested being given to the Courts,
we assume that the normal practice of awarding interest only from the date of
final decree would continue except where the defender had caused unreasonable
delay."
The Committee's recommendation was:
"That
all Courts having jurisdiction in questions of damages should be empowered to
award interest from the date of citation."
[41] What the
Committee envisaged was therefore a relatively minor reform, extending (or at
least clarifying) the court's power to award interest on damages from a date
prior to the date of the final decree, where the defender had caused
unreasonable delay. The court's power to
fix a date, in advance of the damages becoming a liquid debt, as at which they
would attract interest on the ground of wrongful withholding as if the debt had
been liquidated then, would extend as far back as the date of citation.
[42] Section 1 of
the 1958 Act, as originally enacted, provided:
"1.-(1) Where the court having jurisdiction in any
action for damages pronounces an interlocutor decerning for payment by any
person of a sum of money as damages, the interlocutor may, if the circumstances
warrant such a course, include decree for payment by that person of interest on
the sum or any part thereof at such rate as may be specified in the
interlocutor, from such date as may be so specified (being a date not earlier
than the date on which the action was commenced against that person) until the
date of the interlocutor.
(2) Nothing
in this section shall-
(a) authorise the granting of interest upon
interest, or
(b) prejudice any other power of the court
as to the granting of
interest,
or
(c) affect the running of any interest which
apart from this section would run by virtue of any enactment or rule of law."
[43] Although there
are similarities between section 1 of the 1958 Act and section 3 of the 1934
Act, there are also significant differences.
One such difference concerns the earliest date from which interest might
run. Another concerns the form in which
judgment would be given. As already explained,
interest awarded under section 3 of the 1934 Act was included in the sum for
which judgment was given, with the consequence that that aggregate sum would
then bear interest from the date of the judgment as a judgment debt. Section 1 of the 1958 Act, on the other hand,
envisaged that the court would pronounce "an interlocutor decerning for payment
... of a sum of money as damages". In such
a case, the interlocutor could in addition "include decree for payment ... of
interest on the sum" (or part of it) at a rate specified in the interlocutor
from a date also so specified. The
interest so awarded was to run "until the date of the interlocutor"; but, in accordance with section 1(2)(c), judicial
interest would then run at common law on the damages for which the court had
decerned. The court would not calculate
the amount of the interest to the date of decree and then decern for payment of
that sum, with interest running on that sum from the date of decree, for two
reasons. First, such an interlocutor would
not conform to the terms of section 1(1).
Secondly, if the court were to exercise its discretion to award interest
on the damages under section 1(1), that would be on the basis that the damages
could be regarded as having been wrongfully withheld. The interest so awarded would not itself be a
principal debt forming part of the subject-matter of the action, and therefore
would not itself be a sum which would bear interest (unlike the arrears of
interest judicially demanded in such cases as Napier v Gordon). The appropriate form of conclusion would
therefore be the same, mutatis mutandis,
as where a debt was sued for, on which interest ran from judicial
citation: a conclusion, in other words, for
payment of damages, with interest from the date of citation until payment.
[44] The 1958 Act
was considered in Macrae v Reed & Mallik Ltd. In accordance with the approach to statutory
interpretation adopted at that time, no reference was made to the Committee's
report. Although differing views were
expressed by the members of the court as to the circumstances in which the discretion
conferred by section 1 should be exercised, and as to the application of
section 1 to awards of solatium (a majority of the court being of the
opinion that section 1 could not apply to such awards), all the members of the
court were agreed that the effect of section 1 was to enable the court to treat
a sum awarded as damages (or part of it) as having been wrongfully withheld
from the date of citation (or some later date, prior to the date of decree),
and on that basis to include in its interlocutor an award of interest on that
sum. Lord Justice-Clerk Thomson noted
(at page 74) that interest awarded under section 1 was analogous to interest on
a debt:
"The
ruling principle must be that, as interest assumes the existence of a principal
sum, interest falls to be awarded only where there is a principal sum, which,
but for the law's normal delays, the pursuer would have enjoyed. This is consonant with the accepted principle
that ordinarily interest is payable only where there is a principal debt
payment of which has been improperly or unjustifiably withheld."
Like Lord Justice-Clerk Thomson, Lord Patrick regarded the
Act as enabling the court to compensate the successful pursuer for delay in the
receipt of damages in respect of losses which he had sustained, stating (at
pages 76-77):
"The
cardinal rule in awards of damages has hitherto been that the tribunal which
tries the case should seek to put the injured party, so far as money can do so,
into the same position as he would have been if he had not been injured, and I
can see nothing in the statute to lead me to believe that that cardinal rule
has been departed from. On the contrary,
I think the purpose of the statute was to give the Court power to give fuller
effect to that cardinal rule, a power which it did not previously have. Thus, a case, such as this, might not come to trial, there being no undue
delay on the part of the pursuer in bringing his action, for a year or more
after the accident. In such a case, the
injured pursuer would commonly be losing wages week by week until the date of
the trial. The Court had no power to
compensate him except by awarding him his out-of-pocket loss established at the
date of the trial. It could not compensate
him for the fact that he should have had these wages in his pocket week by week
as time elapsed until the date of the trial.
Now, the Court has been given power to compensate him for that fact by
awarding him interest on his pecuniary loss before the trial at such rate and
from such date or dates as will in the Court's judgment adequately compensate
him in this matter."
Lord Mackintosh noted (at page 79) that the Act dealt only
with the interest, if any, which was to run on a sum of damages prior to the
date of the interlocutor decerning for payment of them, and had nothing to do
with interest payable on them from the date of the decree until payment:
"That
latter matter was already fully provided for under existing procedure whereby
interest, usually at five per centum, is
invariably payable on the whole sum of the damages from the date of decree, the
damages being then regarded as a debt already due and payable, and, as such,
interest runs on it ex lege. The purpose of the Act was, as its long title
shows, to amend our law and to make provision, where the circumstances of the
case warrant it, for interest being given on an award of damages from some date
earlier than the date of decree."
After referring to the general rule that interest was not given
on damages until they were liquidated, Lord Mackintosh suggested (at page 80)
that the intention of the Act was
"to
allow interest to run on a successful pursuer's damages, or on such part of
them as might be reasonably ascertainable before the date of the decree, so as
to compensate him for being kept out of his money and so deprived of its use
throughout the progress of a litigation through no fault of his own."
Finally, Lord Strachan observed (at page 85):
"In
my opinion, the distinction between principal and interest must be kept in
mind, and, primarily at all events, interest should be granted under section
1(1) only in circumstances which are generally recognised by law as giving rise
to a claim for interest."
In that regard, Lord Strachan cited the principle that, apart
from contract, interest was payable only by virtue of a principal sum having
been wrongfully withheld and not paid on the day when it ought to have been
paid, as stated by Lord Westbury in Carmichael
v Caledonian Railway Co and by Lord
Atkin in Kolbin & Sons v Kinnear & Co, and continued (at
pages 85-86):
"It
seems to me that it is some such principle which should govern the exercise of
the power conferred by section 1(1) of the Act of 1958."
[45] Following that
approach, it was not to be expected that the court would calculate the amount
of interest to the date of decree and decern for the payment of that amount,
since the interest was not itself a principal debt forming part of the
subject-matter of the action. Interest
would therefore run from the date of decree on the damages awarded, but not on
the interest awarded in respect of the earlier period.
[46] Reported
examples of practice under the 1958 Act appear to be consistent with that
approach. In Killah v Aberdeen and District
Milk Marketing Board 1961 SLT 232, for example, the court awarded interest
on elements of the damages from the date of citation until the date when the
jury's verdict would have been applied had not a motion for a new trial been
enrolled, and interest at the judicial rate on the total amount of damages from
the latter date until payment. In some
other cases (e.g. Fraser v J. Morton
Wilson Ltd 1966 SLT 22, Webster
v Simpson's Motors 1967 SLT
(Notes) 36 and Bell's Sports Centre
(Perth) Ltd v William Briggs &
Sons Ltd 1971 SLT (Notes) 48) the court awarded interest on elements of the
damages from the date of citation until the date of decree, saying nothing
about interest thereafter. In such a
case, interest would run on the damages from the date of decree until payment,
in accordance with the common law principle that "interest upon the principal
sum and expenses runs ex lege from
the date of decree": Maclaren, page 298.
The Administration of Justice Act 1969
[47] In order to
understand the next stage in the development of the Scots law, it is necessary
first to return to England.
The English Act of 1934 was amended with effect from 1
January 1970
by section 22 of the Administration of Justice Act 1969, so as to implement a
recommendation of the Report of the Winn Committee on Personal Injuries
Litigation (Cmnd 3691, 1968). It
inserted into section 3 of the 1934 Act a new subsection (1A):
"(1A) Where in any such proceedings as are
mentioned in subsection (1) of this section [section 3 of the Act of 1934],
judgment is given for a sum which (apart from interest on damages) exceeds £200
and represents or includes damages in respect of personal injuries to the
plaintiff or any other person, or in respect of a person's death, then (without
prejudice to the exercise of the power conferred by that subsection in relation
to any part of that sum which does not represent such damages) the court shall
exercise that power so as to include in that sum interest on those damages or
on such part of them as the court considers appropriate, unless the court is
satisfied that there are special reasons why no interest should be given in
respect of those damages."
The effect of the new provision was to make it compulsory for
the court to exercise its power under section 3(1) of the 1934 Act in personal
injury cases, unless there were special reasons not to do so. In requiring that the interest so awarded be
included in the sum for which judgment was given (and, therefore, in the sum
which then attracted interest as a judgment debt), section 3(1A) was consistent
with section 3(1). The only innovation
was to oblige the court, in personal injury cases, to apply the same principles
as under the 1934 Act (Jefford v Gee at page 143 per Lord Denning MR).
The Interest on Damages (Scotland) Act 1971
[48] The 1958 Act
was amended by the Interest on Damages (Scotland) Act 1971, which originated (like
the 1958 Act) in a Private Member's Bill.
The Member sponsoring the Bill explained that it was intended to address
two disadvantages from which the pursuer in Scotland suffered when compared with the
plaintiff in England:
"First,
because of these differences between Scotland and England [i.e. between section 1 of the 1958 Act and section 3
of the 1934 Act, as amended], a Scottish pursuer today can claim interest for a
shorter period, that is, from the date of the commencement of the court action,
and not from the date of the accident.
Secondly, there is no presumption that interest should be payable in the
personal injuries case"
(HC Deb. Vol. 810, cols. 1185-1186, 29 January 1971).
[49] According to
its long title, the 1971 Act was intended to amend the 1958 Act "by extending
the power of the courts to order payment of interest on damages". Section 1 of the 1971 Act substituted new
subsections for section 1(1) of the 1958 Act, the material provisions for
present purposes being subsections 1(1) and 1(1A):
"(1) Where a court pronounces an interlocutor
decerning for payment by any person of a sum of money as damages, the
interlocutor may include decree for payment by that person of interest, at such
rate or rates as may be specified in the interlocutor, on the whole or any part
of that sum for the whole or any part of the period between the date when the
right of action arose and the date of the interlocutor.
(1A) Where a court pronounces an interlocutor
decerning for payment of a sum which consists of or includes damages or
solatium in respect of personal injuries sustained by the pursuer or any other
person, then (without prejudice to the exercise of the power conferred by
subsection (1) of this section in relation to any part of that sum which does
not represent such damages or solatium) the court shall exercise that power so
as to include in that sum interest on those damages and on that solatium or on
such part of each as the court considers appropriate, unless the court is
satisfied that there are reasons special to the case why no interest should be
given in respect thereof."
[50] One difference
of substance between section 1(1) as originally enacted and as substituted by
the 1971 Act was that, whereas the former empowered the court to award interest
from "a date not earlier than the date on which the action was commenced", the
latter empowered the court to award interest from "the date when the right of
action arose.". A second difference was
that section 1(1) in its new form omitted the words "if the circumstances
warrant such a course", on which some stress had been laid in Macrae v Reed & Mallik Ltd. The
substituted section 1(1) was otherwise similar to its predecessor. In particular, it envisaged that the court
would pronounce an interlocutor "decerning for payment ... of a sum of money as
damages", and it enabled the court to include in that interlocutor
"decree
for payment ... of interest, at such rate or rates as may be specified in the
interlocutor, on the whole or any part of that sum".
The distinction between the sum awarded as damages, on the
one hand, and interest on that sum on the other hand, was maintained.
[51] Section 1(1A),
on the other hand, which related solely to awards of damages or solatium in
respect of personal injuries, was partly modelled on section 3(1A) of the 1934
Act (as inserted by the 1969 Act). The
first part of section 1(1A) was in similar terms to section 1(1): the provision was to apply where the court
decerned for "payment of a sum which consists of or includes damages or
solatium in respect of personal injuries".
The second part of section 1(1A), on the other hand (from "then" to the
end), closely followed the terms of section 3(1A) of the 1934 Act. It required, in particular, that the court
"exercise
that power [viz. 'the power conferred by subsection (1)'] so as to include in
that sum [viz. 'a sum which consists of or includes damages or solatium in
respect of personal injuries'] interest on those damages and on that solatium".
[52] These new
provisions were considered by Lord Emslie in Smith v Middleton 1972 SC
30. His Lordship began by considering
the common law approach to interest on damages, and its basis in the principle
laid down by Lord Westbury in Carmichael v Caledonian Railway Co His Lordship then considered (at pages 32-33)
section 1(1) of the 1958 Act, as interpreted in Macrae v Reed & Mallik Ltd:
"In
short, I understand the view of the court in Macrae to have been that the exercise of the power conferred by the
subsection had to be approached upon a discriminating and selective basis, and
that the ruling principle in the exercise of the power must be that, as
interest assumes the existence of a principal sum, interest falls to be awarded
only where there is a principal sum which, but for the law's normal delays, the
pursuer would, before the date of decree, have enjoyed. This ruling principle was seen to be
consistent with the accepted general principle of law that, ordinarily,
interest is payable only where there is a principal debt, payment of which has
been wrongly withheld."
His Lordship construed the new section 1(1), as substituted
by the 1971 Act, as proceeding on the same basis as section 1(1) of the 1958
Act in its original form, subject to the change in the base date from which
interest might run:
"I
am of opinion that the principle which should be followed should be that laid
down in Macrae, namely, that interest
should be awarded, in the exercise of the power, upon those parts of the whole
sum of damages payment of which to a pursuer has been withheld through the
particular litigation's normal delays.
As was explained in Macrae,
this is in consonance with the accepted general principle laid down in Carmichael, which I have set out earlier in this opinion. It is also the principle which appears to
have commended itself to the Court of Appeal in its consideration of the
somewhat similar English legislation [in Jefford
v Gee]. Like Lord Patrick in his consideration of the
old form of subsection (1), I can see nothing in the language of the new
subsection (1) to lead me to believe that the cardinal rule in awards of
damages is to be departed from, and by giving effect to to the principle which
I have just discussed the court will, it appears to me, be able to give even
fuller effect to the cardinal rule than was possible under the old subsection
(1)."
On that approach, the new section 1(1), like its predecessor,
enabled the court to treat the damages, or elements in the damages, as being
equivalent to a debt owed by the defender to the pursuer prior to the date of
decree. The principal difference between
the new provision and its predecessor was that, whereas the 1958 provision
enabled the court to treat damages as being wrongfully withheld (and,
therefore, as bearing interest) only as far back as the date of citation, the
new section 1(1) enabled interest to be awarded from an earlier date.
[53] In relation to
section 1(1A), Lord Emslie said (at page 39):
"Turning
to the new subsection (1A), I am satisfied as matter of construction that, in
the absence of special reasons why no interest should be given, the court is
being directed therein to exercise the power described in subsection (1) in the
case of all awards of damages in respect of personal injuries. It is 'that power' which is to be exercised,
and the words can only refer to the power mentioned in the bracketed passage in
subsection (1A), i.e., the power conferred by subsection (1). Further, not only is there no indication in
subsection (1A) that the power is to be exercised in a way different from the
power which may be exercised in the court's discretion, but there are, in my
opinion, clear indications in the subsection itself which indicate that it is
to be exercised in the same way. It is
to subsection (1) that one must look to find out about rates of interest, the
base date and the period of interest;
and I refer, further, in particular, to the words which I have already
quoted, viz, ' ... interest on those
damages and on that solatium or on such part of each as the court considers
appropriate ... ' A new and different
problem, however, is raised by what the subsection says as to the result to be achieved
by the exercise of the power. It is to
be exercised 'so as to include in that sum interest.' In my opinion effect must be given to these
words, but I do not consider that it is practicable to follow the direction
literally. What, in my opinion, should
be done, bearing in mind that any interest elements in an award may be subject
to tax, is to decern for payment of a sum of damages, assessed in accordance
with accepted principles, together with an additional sum derived from interest
at specified rates, for specified periods ending with the date of the
interlocutor, on those parts of the total sum of damages which should bear
interest. Damages would therefore
consist of the addition of two sums, and on the resulting sum interest would no
doubt run from the date of decree until payment."
His Lordship therefore awarded interest on the past pecuniary
losses, and on the past element of solatium, and granted decree for a global
sum which comprised both the damages and the awards of interest.
[54] That approach
to section 1(1A) has been followed in subsequent practice. In particular, it was held in Orr v Metcalfe 1973 SC 57 that the intention of section 1(1A) was
"to
require the Court to include relevant interest elements in every sum decerned
for in actions of damages for personal injuries unless there are special
reasons for not doing so"
(per Lord President Emslie at page 60). Accordingly, the appropriate form of
conclusion in an action of damages for personal injuries was for payment of a
specified sum with interest thereon at the judicial rate from the date of
decree until payment, since
"in
every conclusion or crave in the type of action with which section 1(1A) is
concerned the sum sued for must be deemed to cover all competent heads of
damages, including any interest components which may fall to be included in any
award in implement of the requirement of the subsection"
(per Lord President Emslie, ibid). In the same case,
Lord Cameron explained (at page 62) that a different form of conclusion
was appropriate in cases falling within the scope of section 1(1), since, under
that provision,
"the
interest which may be decerned for is additional to the sum awarded in name of
damages itself and therefore, does not form part of it."
His Lordship observed (ibid)
that section 1(1A) introduced "a new and different concept", namely that "the
interest found due forms part of the sum decerned for". As we have explained, the origin of that
concept lay in the English Act of 1934.
[55] It is
necessary to mention only two subsequent decisions. First, in Mouland
v Ferguson 1979 SLT (Notes) 85
Lord Stewart rejected a contention that for interest to run after the date of
decree on a sum awarded under section 1(1A) of the 1958 Act, which itself
included interest, would be contrary to section 1(2)(a). Lord Stewart interpreted section 1(2)(a) as
making it clear that section 1 did not authorise the awarding of compound
interest. That interpretation was
consistent with Lord Wright's interpretation of the corresponding English
provision, noted earlier, in Riches v
Westminster Bank Ltd. Secondly, in Boots the Chemist Ltd v G.A.
Estates Ltd 1992 SC 485 the principles on which the court might award
interest under section 1(1) of the 1958 Act (as amended by the 1971 Act) were
considered by the Inner House. Lord
Justice-Clerk Ross, with whose Opinion the other members of the court agreed,
said (at pages 495-496):
"I
agree with counsel for both parties that the Act of 1958 did not sweep away the
previous law relating to damages. As
Lord Mackintosh observed in Macrae v Reed & Mallik Ltd. at p. 80, the Act
did not profess to abrogate the general rule relating to damages nor to do away
with the former practice. Accordingly
the general principle laid down in Carmichael v Caledonian
Railway Co (1870) 8 Macph. (H.L.) 119 and Kolbin & Sons v Kinnear
& Co still applies, that is to say, that a pursuer may recover interest
by way of damages where he is deprived of an interest bearing security or a
profit producing chattel or where money has been wrongfully withheld. Where a delict has been committed, the
delinquent is liable to pay damages. In
the normal case, however, the amount of damages cannot be quantified there and
then, and damages cannot be regarded as being wrongfully withheld at a date
when they are incapable of quantification.
On the other hand, even though damages have not been quantified, if they
become capable of ascertainment then the injured party can properly be regarded
as standing out of his money, and the damages can be regarded as being
wrongfully withheld (Fraser v Morton Wilson and Bell's Sports Centre v Briggs
& Sons).
The
Act of 1958 empowered the court to award interest from a date not earlier than the date on which the action
was commenced against the defender, i.e. the date of citation. The Act of 1971 extended that power to an
earlier date by enabling the court to award interest for the whole or part of
the period between the date when the right of action arose and the interlocutor
awarding damages. The right of action may
well have arisen long before the pursuer has cited the defender in the action
of damages. I agree with Lord Maxwell in
Buchanan v Cameron 1973 S.C. 285 that the mere fact that a right of action
arose on a particular date does not per
se justify an award of interest from that date, but in my opinion interest
may properly be awarded from a date when the damage suffered was capable of
ascertainment (Bell's Sports Centre v
Briggs & Sons). This appears to me to be consistent with the
principle adverted to by Lord Keith of Avonholm in F.W. Green & Co Ltd v Brown
& Gracie Ltd 1960 S.L.T. (Notes) 43 where he observed of damages for
breach of contract that quantification would generally fix the earliest date
from which interest could reasonably be taken to run. In my opinion, however, even if damages have
not been quantified, interest may reasonably be held to run from a date when
the damages may reasonably be regarded as quantifiable or capable of
ascertainment. From that date the
wrongdoer can reasonably be regarded as wrongfully withholding the damages."
Following that approach, the court upheld the decision of the
Lord Ordinary to award interest under section 1 on certain elements of the
damages from a variety of dates until the date of decree. The interlocutor was silent as to interest
after the date of decree, which would therefore run at common law on the
damages for which the court had decerned.
The present case
[56] In the present
case, counsel's submissions focused on two matters in particular. First, it was argued on behalf of the
defenders that the judge's award of interest from the date of decree on
interest which he had awarded in respect of an earlier period had the effect of
awarding compound interest, without any basis for such an award either in the
common law (cf. Roxburgh Dinardo's
Judicial Factor v Dinardo 1992 SC
188) or in statute (having regard, in particular, to section 1(2)(a) of the
1958 Act). On behalf of the pursuer, on
the other hand, it was argued that the competency of such an award at common
law was demonstrated by the line of authority from Jolly v McNeill to Nash Dredging Ltd v Kestrel Marine Ltd, and that its competency under section 1 of the
1958 Act was demonstrated by the requirement, under section 1(1A), that the
power under section 1(1) must be exercised so as to include interest in the sum
awarded. Secondly, it was argued on
behalf of the defenders that the judge had mistakenly treated interest as if it
formed part of the damages awarded. On
behalf of the pursuer, on the other hand, it was argued that, since the
interest awarded in respect of the period prior to the date of decree was
compensatory in nature and formed part of the amount awarded to the pursuer in
order to compensate him for the loss which he had suffered, it should attract
interest from the date of decree in the same way as the principal sum of
damages.
[57] As we have
explained, the basis of an award of interest on damages under section 1(1) of
the 1958 Act, as under the common law, is the wrongful withholding of
payment. In the present case, the judge considered
that
"As
at 31 December 1996 ...
the pursuer was standing out of his money, and, in my opinion, the defenders as
the wrongdoers were wrongfully withholding money from him."
That conclusion is not challenged. The money which, as the judge found, was
wrongfully withheld was the sum of £66,400 at which he assessed the pursuer's
damages. Since that sum had been
wrongfully withheld since 31 December 1996, it was open to the judge, under
section 1(1) of the 1958 Act, not only to decern for payment of that sum of
money as damages, but also to include in the interlocutor decree for payment of
interest on that sum from 31 December 1996.
[58] The interest
itself, on the other hand, was not a principal debt forming part of the
subject-matter of the action, and could not therefore attract additional
interest. The present case is thus distinguishable
from Jolly v McNeill, Napier v Gordon, Maclean v Campbell and Nash Dredging Ltd v Kestrel Marine Ltd, in each of which the arrears of interest
constituted a principal debt forming part of the subject-matter of the action.
[59] It might be
argued (although this was not the argument in the present case) that the
interest awarded on damages in respect of the period prior to the date of
decree changes its character upon the granting of decree and becomes a debt, on
which interest should thereafter run, since any withholding of payment of the
past interest will be wrongful. Some
such idea may have been in the judge's mind when he remarked that, unless
further interest ran on the past interest, a defender could delay without
penalty the payment of that interest. We
can however find no support for that approach in any principle which we can
derive from the authorities cited.
Interest runs ex lege from the
date of a decree ordering payment of a sum of money because from that date, if
not earlier, it can be taken that any delay in payment amounts to wrongful
withholding, as Lord Justice-Clerk Thomson explained in Macrae v Reed & Mallik Ltd
at page 72. If wrongful withholding
occurred from an earlier point in time, however, then section 1(1) of the 1958
Act enables the court to award interest from that earlier date. In such a case, interest simply continues
after the date of decree, on the same principal sum, either at the same rate or
at a different rate.
[60] As we have
explained, interest awarded ex mora
has a compensatory character, and to that extent is analogous to damages: Riches v
Westminster Bank Ltd. Interest nevertheless remains interest: it is conceptually different from damages,
and it is governed by different principles.
The fact that an award of damages attracts interest from the date of
decree does not imply that an award of past interest on damages attracts
further interest in the same way. The
legal treatment of interest depends on the principles applicable to interest,
not on the principles applicable to damages.
[61] Nothing in
section 1(1A) of the 1958 Act alters this conclusion. As we have explained, the inclusion of
interest awarded under section 1(1A) in the sum for the payment of which the
court then decerns is the consequence of modelling the drafting of section
1(1A) on section 22 of the Administration of Justice Act 1969. The consequence of this importation from
English law is to create an exception, not to say an anomaly, in the context of
Scots law. It does not bear on section
1(1) of the 1958 Act, the terms of which are materially different, and do not
either authorise or require the court to include interest in the sum decerned
for. As we have explained, section 1(1)
enables the court to back-date the point in time from which interest would
otherwise run, but is otherwise consistent with the pre-existing principles of
Scots law, including the principle that interest is not included in the sum for
which the court decerns unless it is itself part of the principal sum due (for
example, as arrears due under contract, or as an element of the assessment of
damages).
Conclusion
[62] In these circumstances,
the appeal succeeds only insofar as it is directed against the award of
interest. We shall accordingly adhere to
the temporary judge's interlocutor of 11 July 2006 awarding damages of £66,400,
but recall his interlocutor of 11 December 2006 in so far as it deals with the
question of interest, and instead find the pursuer entitled to interest on the
sum of £66,400 at the rate of 8 per cent per annum from 31 December 1996 until
payment.
