Interesting case on Interest

In a recent High Court case - Chedington Events Ltd v. Brake [2023] EWHC 2804 – the High Court made an unusual and interesting award in respect of pre-judgment interest, taking into account the poor behaviour of the defendants in the proceedings.

Facts

The facts can be described very briefly; the defendants ran a weddings and events business on behalf of the claimant at a farm in Dorset. As additional benefits of their employments, they were able to use equestrian facilities on the farm for stabling and exercising their horses. They could also stay in the main house when it was not required for an event. When there was an event, they stayed in a cottage on adjacent land, of which they were two of the three legal owners. They were dismissed from their positions towards the end of 2018. However, they refused to leave the house or to remove their horses from the equestrian facility. In particular, the defendants refused to move back to the cottage and did not move until so ordered in spring 2022. Proceedings were brought to obtain an order for possession of the house and arena and for damages for trespass. The defendants defended the proceedings all the way to trial but had they not done so, judgment/orders could have been obtained against them in January 2019.

Judgment

The Claimant was awarded damages for trespass of more than £230,000. The issue of what interest was to be awarded was considered and it is this aspect of the judgment that is interesting. Section 17 of the Judgments Act 1838 prescribes the rate of interest ordinarily payable on a judgment debt. The rate, currently 8%, is rarely changed. The courts also have jurisdiction to order interest pre-judgment under section 35A of the Senior Courts Act, the level of which is at the courts’ discretion, bearing in mind that the award of interest is intended to represent the additional loss caused by the time during which the claimant has been kept out of money compensation assessed for the loss suffered.

On the specific facts of the case the judge awarded pre-judgment interest on the damages. In exercising his discretion the judge took into account the fact that the defendants had the benefit of the use of the property from almost the end of 2018 to the spring of 2022, during which they had no need to pay for anywhere else to live. They also drove, walked and rode horses over it as they wished. The judge held that they had deliberately deprived the claimant of the use of the house and the arena during this period. The judge was particularly critical of the delays caused by the defendants in bringing the matter to trial, they having repeatedly requested adjournments of the trial. 

In exercising his discretion under section 3, he applied the 8% rate set under section 17(1) of the Judgements Act 1838 to the pre-judgment interest ie the interest to be awarded from the date on which the cause of action accrued up to the date of judgment. The judge accepted the claimant’s submission that the same rate should apply pre and post-judgment. His view was that had the defendants not put forward a false case the claimant would have had judgment in January 2019. Had that happened the judgment debt rate of 8% per annum would have started to run. He made a slight differentiation in respect of interests prior to that date where he applied a lower rate of 3% per annum.

Commentary

The decision is an interesting one as it provides authority for the point that a higher rate of interest may be available pre-judgment based upon the bad behaviour of the defendants. Where a resounding victory is obtained in any dispute to the extent that effectively a ‘false’ defence can be established, it may well be worthwhile seeking this level of enhanced interest from the court. The threat of seeking such interest may also be used as a means of bringing uncooperative defendants into line.

For further information on this topic, please contact Sharon Williamson.