This article does not cover the usual s35 A Senior Courts Act 1981 or s69 County Courts Act 1984 awards nor does it deal with awards under the Late Payment of Commercial Debts (Interest) Act 1998.
Challinor provides a useful review of the law relating to the award of interest in commercial cases.
Whereas 1% over base rate used to be the norm, Challionor states that this is no longer to be the yardstick.
As Hildyard J made clear there are different bases upon which interest can be awarded
- the proxy borrowing cost basis – this is based on money lost.
The assumption here is that money lost would be replaced by money borrowed at interest. The court has to identify an appropriate interest rate taking a broad brush approach.
The court looks for a proxy rate based on the class of person in the claimant’s position but without the claimant’s personal attributes;
- the minimum investment basis – this is based on the accretion of funds.
So for example in personal injury cases the court identifies a minimum return to put the claimant back into the position in which he would have been;
- an alternative basis.
Where the claimant is not running a business but loses an opportunity to invest elsewhere the court can award such rate as it is reasonable to assume persons in the position of the claimant would have had to pay for borrowing.