Interest-ing Time Warp? High Court Considers Link Between Conduct And Conventional Interest Rate

• Published date: 11 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Personal Injury, Libel & Defamation
• Law Firm: Gatehouse Chambers
• Author: Ms Charlotte Wilk

In case, like many of us, you cannot keep up with the spate of changes to the special account rate, the below grid summarises the latest changes, the most recent of which seems to have gone largely unnoticed:

This grid provides context to understanding the reasoning behind the recent case of Phillip Smout v Wulfrun Hotels Limited [2023] EWHC 1128 (KB) ("Smout"). In Smout, Mr Justice Ritchie considered whether the conventional interest rate on awards on pain, suffering, and loss of amenity could be increased by a judge at trial as a result of the conduct of the Defendant.

01/06/20	29/4/22	5/7/22	2/9/22	25/10/22	18/11/22	16/1/23	13/2/23	21/4/23	13/6/23
0.1%	0.645%	1.25%	1.75%	2.25%	3%	3.5%	4%	4.25%	4.50%

The Factual Background

On 10^th October 2018 the Claimant was injured when he tripped outside the First Defendant's barbershop. He brought a claim against the First Defendant, initially in the portal and then via a claim form. Mr Parvinder Jit Singh (PJ Shawker), company secretary, who represented the First Defendant throughout, drafted a defence and wrote several abusive messages to the Claimant's Solicitor.

At First Instance

Recorder Wilson KC ("the Recorder") found for the Claimant on liability and awarded '4,000 for PSLA and special damages totalling '125.

The Claimant submitted that as a result of the First Defendant's abusive correspondence and pleading, the Recorder should award interest on pain, suffering, and loss of amenity at a rate higher than the normal rate of 2% per annum from the date of service of the proceedings. The Recorder accepted this submission and awarded interest at 6%. The Recorder went on to calculate interest, reaching an award of '673.03. This resulted in a total award of '4,798.03, and consequently, that sum was greater than the Claimant's Part 36 offer which the First Defendant had rejected. The Recorder therefore also awarded a 10% additional liability on damages and interest at 10% on costs.

The Appeal

It was the Appellant's case that the Recorder should have followed the standard rule and awarded 2% on the damages for PSLA and all or one half of the special investment account rate from the date of the accident to the date of trial on the special damages award. The Appellant also sought to challenge the additional liabilities consequent to the Claimant beating his own CPR Part 36 offer.

The Judge considered a range of case law. In Cookson v Knowles [1979] AC 556 the House of Lords had ruled that judges had a broad...