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	Scottish Law Commission (Reports)
You are here: BAILII >> Databases >> Scottish Law Commission >> Scottish Law Commission (Reports) >> Interest on Debt & Damages (Report) [2006] SLC 203(11) (1 September 2006) URL: http://www.bailii.org/scot/other/SLC/Report/2006/203(11).html Cite as: [2006] SLC 203(11)

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Part 11: List of recommendations

1. There should be created a general statutory entitlement to interest on contractual debts except where an entitlement to interest is conferred or, alternatively, excluded either (a) by the terms of the contract itself or (b) by any other statutory provision.

(Paragraph 3.4)

2. A power should be reserved to the Scottish Ministers to exempt specified categories of debt from the general entitlement to statutory interest.

(Paragraph 3.9)

3. Interest on a debt arising under a contract should run from the date when payment is due by the debtor until payment.

(Paragraph 3.15)

4. Statutory interest should run on a debt due for the supply of goods or services from the following date:

(a) Where the parties agree a date for payment of the debt (whether fixed or dependent upon the happening or non-happening of an event), that date;

(b) In any other case, 30 days after the later of:

(i) the day on which the supplier's obligation is performed; or

(ii) the day on which the purchaser has notice of the amount of the debt or of the amount claimed by the supplier.

(Paragraph 3.18)

5. Statutory interest should run on a contractual debt even where the amount of the debt, if found to be due, remains unascertained pending determination by a third party.

(Paragraph 3.19)

6. Interest should run on payments due for the purchase or letting of heritable property as it runs on other sums which have fallen due for payment, subject to any exercise of the ministerial power to exempt a specific category of debt such as arrears of rent owed to a public sector landlord.

(Paragraph 3.23)

7. Interest on a sum payable under a contract of indemnity insurance, or other contract of indemnity, should begin to run from whichever is the later of:

(a) the date 30 days after the date when a claim in respect of the occurrence of the event insured against is intimated to the insurer and vouched in accordance with the conditions of the contract; and

(b) where the insured has sustained a loss as a consequence of the occurrence of the event insured against, the date when the loss was sustained.

(Paragraph 3.29)

8. Statutory interest should run on a sum paid by a cautioner in satisfaction of a debt due by the principal debtor from the date when payment by the cautioner was made.

(Paragraph 3.30)

9. In the absence of agreement to the contrary, statutory interest should run on a loan of money from the date on which the loan is made until the date of repayment.

(Paragraph 3.32)

10. (a) Statutory interest should run on sums due under a contract of employment or apprenticeship.

(b) Unless the contract contains a contrary provision, interest should begin to run 30 days after the end of the period in respect of which the service under the contract is remunerated.

(c) Entitlement to interest should not be deferred by virtue of there having been no agreement as to the amount due under the contract.

(Paragraph 3.34)

11. Statutory interest should run on funds held by one person on behalf of another from the date when the holder is in default in failing to make them over to the person entitled to them.

(Paragraph 3.36)

12. A debt shall not carry interest under the proposed new scheme if or to the extent that it consists of a sum in respect of which a creditor has elected to claim interest under the Late Payment of Commercial Debts (Interest) Act 1998.

(Paragraph 3.40)

13. Parties should be free to contract out of the creditor's entitlement to interest under the proposed new legislation.

(Paragraph 3.45)

14. There should be a general statutory entitlement to interest on non-contractual debts except where an entitlement to interest is conferred or, alternatively, excluded by another statutory provision.

(Paragraph 3.47)

15. Where a sum of money is due by way of redress for unjustified enrichment, interest should be payable, in accordance with the general rule, from the date when payment of the principal sum is due by the debtor to the creditor.

(Paragraph 3.54)

16. The new statutory scheme should not apply to interest on claims on limitation funds established under the Merchant Shipping Acts or similar legislation.

(Paragraph 3.56)

17. Where a claim is made for payment based upon a non-contractual obligation to account for funds, statutory interest should be payable from the date when the holder is in default in failing to make over the funds to the person entitled to them.

(Paragraph 3.58)

18. Where a claim is made for a sum due in respect of legal rights in a deceased person's estate, statutory interest should be payable from the date when the executor or trustee is in default in failing to make payment to the claimant.

(Paragraph 3.60)

19. Where an award of aliment has been backdated, statutory interest should be payable from the date or dates when the instalments ought to have been paid.

(Paragraph 3.63)

20. Where any enactment imposes a tax, fine or penalty but makes no provision for interest to run on the sum due, statutory interest should not run on that sum.

(Paragraph 3.67)

21. The legislation relating to interest on damages should be re-formulated.

(Paragraph 4.2)

22. In an action for damages, interest should run on each head of loss from the date on which the loss in question was sustained.

(Paragraph 4.6)

23. The existing practice whereby the court when awarding damages in relation to personal injury may treat a loss (including non-patrimonial loss) as having been sustained over a period of time should be preserved.

(Paragraph 4.14)

24. There should be a judicial discretion to remit interest in whole or in part in respect of a period for which it would otherwise run where the interests of justice so require, but only by reason of any conduct of the creditor.

(Paragraph 5.13)

25. The principle to which section 1(1B) of the Interest on Damages (Scotland) Act 1958 gives effect should be retained and extended to awards of interest on sums other than damages.

(Paragraph 6.3)

26. Where a party to litigation is found entitled to recover fees and outlays in judicial expenses from another party, statutory interest should be payable on such expenses from the dates when they were respectively paid.

(Paragraph 6.7)

27. There should be a prescribed fluctuating rate of interest which is a specified percentage above the official dealing rate of the Bank of England. The percentage above the Bank of England rate could be amended from time to time by statutory instrument.

(Paragraph 7.13)

28. A computer program for calculating interest according to the prescribed formula should be made available free of charge on a website which can be accessed by the general public. Printed tables for the calculation of interest could also be made available in appropriate places such as court buildings and public libraries.

(Paragraph 7.14)

29. There should be no judicial discretion to award statutory interest at a rate other than the prescribed rate.

(Paragraph 7.17)

30. (a) Where the court grants decree for payment in a currency other than sterling and the award includes an element of interest, such interest should run at the specified percentage above the currency's nearest equivalent to the Bank of England's official dealing rate.

(b) If the court is unable to identify such an equivalent, interest should be awarded at such rate as appears to the court to be fair and reasonable in the circumstances.

(Paragraph 7.20)

31. Interest after the date of decree should run on the same basis as it does prior to decree and the applicable rate pre- and post- decree should be calculated by the same method.

(Paragraph 7.23)

32. (a) The statutory provisions which we have identified above should be amended to provide for interest to run on any sum due by one person to another at the statutory rate instead of any other rate which may currently apply expressly or by implication.

(b) Ministers should be given a power to amend any enactment by statutory instrument to substitute the statutory rate for another rate (or vice versa).

(Paragraph 7.31)

33. Statutory interest should be simple interest.

(Paragraph 7.39)

34. Interest should run post-decree on the amount of interest accrued to the date of decree, as well as on the principal sum, until payment.

(Paragraph 7.45)

35. (a) Where a tribunal presently has power to award interest at the judicial rate, this should be replaced by a power to award interest at the rate prescribed by statute.

(b) Where a sum awarded by a tribunal carries statutory interest, the tribunal should have the same power as would a court to remit the interest in whole or in part.

(c) In all other respects, the powers of particular tribunals to award interest should remain unaffected by our recommendations.

(Paragraph 8.5)

36. The power of an arbiter to award interest should be co-extensive with the powers of the court in relation to interest (on the various categories of pecuniary claims) under the proposed new legislation.

(Paragraph 9.5)

37. There is no need to make specific legislative provision for entitlement to interest as regards any form of dispute resolution other than those already discussed in this Report.

(Paragraph 9.9)

38. The new legislation should apply to all pecuniary claims except those in respect of which an action has been raised prior to the commencement date.

(Paragraph 10.4)

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