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The Law Commission |
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You are here: BAILII >> Databases >> The Law Commission >> Pre-Judgment Interest on Debts and Damages (Report) [2004] EWLC 287(10) (23 February 2004) URL: http://www.bailii.org/ew/other/EWLC/2004/287(10).html Cite as: [2004] EWLC 287(10) |
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LIST OF RECOMMENDATIONS10.1 We recommend that section 35A of the Supreme Court Act 1981 and section 69 of the County Courts Act 1984 should be amended to allow the Secretary of State for Constitutional Affairs to set a specified rate. (Paragraph 3.30)
10.2 The rate should be set with reference to the Bank of England base rate. It should run from on a fixed date each year (such as 1 April), and be set with reference to the base rate prevailing on a date in the previous two months (such as 15 February). (Paragraph 3.31)
10.3 The Secretary of State for Constitutional Affairs should have power to change the way the rate is set by secondary legislation. (Paragraph 3.32) 10.4 The courts should have discretion to depart from the rate where there is good reason to do so. (Paragraph 3.33)
10.5 The specified rate should be set at one percentage point over Bank of England base rate. (Paragraph 3.43)
10.6 The Civil Procedure Rule Committee should be given power to provide guidance to the courts on how to exercise their discretion on whether to depart from the specified rate. (Paragraph 3.44)
10.7 The Civil Procedure Rule Committee should have power to provide the courts with guidance on when to award compound interest. (Paragraph 5.38)
10.8 The rules should draw a distinction between awards or settlements of less than £15,000 and those of £15,000 or more. For the former, there should be a rebuttable presumption that interest will be simple; for the latter there should be a rebuttable presumption that it will be compound. (Paragraph 5.39)
10.9 The rules should exclude compound interest on any debts or damages that have been outstanding for less than a year, unless the claimant can show exceptional reasons why interest should be compounded. (Paragraph 5.40)
10.10 Claimants should be entitled to forego interest under the Late Payment of Commercial Debts (Interest) Act and instead claim interest under the courts' general statutory powers. (Paragraph 5.58)
10.11 Courts of record other than the High Court and County Court which do not have their own interest regime should possess the same powers to award interest as the High Court. (Paragraph 5.67)
10.12 The Court Service should produce a computer programme to calculate compound interest and make it readily accessible on its website. (Paragraph 6.8)
10.13 The Court Service should publish tables to allow the calculation of compound interest at the specified rate. (Paragraph 6.17)
10.14 Compound interest should be calculated using monthly rests. (Paragraph 6.24)
10.15 The compounding interval should be set by rules of court. All interest under the new statutory regime would then be calculated in accordance with the prescribed interval. (Paragraph 6.28)
10.16 The courts should not be allowed to award compound interest for part of the period of the debt, and simple interest for the rest. (Paragraph 6.32)
10.17 The "2% interest rate" applying to non-pecuniary personal injury damages from the date of service of the claim should continue to be simple, rather than compound. (Paragraph 7.12)
10.18 Past pecuniary losses should be subject to the general scheme for compound interest outlined in Part V. (Paragraph 7.22)
10.19 The Court Service's prescribed computer programme should be able to calculate compound interest on losses that occur evenly over time. It should also be able to deal with compound interest on one or more discrete items of expenditure, arising at different dates. (Paragraph 7.26)
10.20 The Court Service should consult practitioners on whether there is a demand for published tables to cover compound interest at the specified rate on continuing loss arising evenly over time. The Court Service should also consider whether there is a demand for simple interest tables to track the specified rate in past years. (Paragraph 7.28)
10.21 Civil Procedure Rule 36.21 should be amended to express the maximum cap as a compound rate of 10% above base. The prohibition on awarding interest on interest should also be removed, so as to allow the courts to award compound interest if this seems appropriate. (Paragraph 8.16)
10.22 The Rule Committee should consider
(1) amending rule 36.22(b). This would require that offers expressed as exclusive of interest should state the amount or amounts on which interest is offered, the rate or rates offered, the period or periods for which it is offered, and whether it was simple or compound; (Paragraph 8.22)
10.23 The specified rate should apply to all judgments or payments made after the commencement date. (Paragraph 9.17)(2) establishing presumptions to apply to offers expressed as exclusive of interest which state that interest is offered but which do not specify whether it is simple or compound. (Paragraph 8.24)
10.24 In most types of case, compound interest should apply to any case where proceedings were issued after the commencement date. (Paragraph 9.17)
10.25 The Secretary of State should have the power to make special provision for some classes of case, so that they are only subject to compound interest if the cause of action arose after the commencement day. (Paragraph 9.17).
(Signed) ROGER TOULSON, ChairmanSTEVE HUMPHREYS, Chief Executive
HUGH BEALE
STUART BRIDGE
MARTIN PARTINGTON
ALAN WILKIE
