Case Nos: CL-2022-000294; CL-2022-000557; - [2025] EWHC 2529 (Comm)

Simple or Compound?

The final area of dispute in relation to interest was as to whether any award should be of simple or compound interest. This arose only in relation to AerCap. Genesis did not seek compound interest.

For AerCap it was submitted that interest awarded to it should be compounded annually. This was because compound interest reflected what AerCap’s actual borrowing costs would have been, had it borrowed the sum to which it was found to be entitled. Reliance was placed on what was said in Equitas Ltd v Walsham [2014] Lloyd’s Rep IR 398 at [123], and in particular Males J’s statements that ‘… it is impossible to borrow commercially on simple interest terms…’, and that ‘the law must recognise and give effect to this reality if it is to achieve a fair and just outcome when assessing financial loss.’ In line with that approach, AerCap should be able to recover, as damages, interest on a compound basis.

War Risks Insurers submitted that Males J’s approach had not been adopted in subsequent cases, and that in Sagicor Bank Jamaica Ltd v Seaton [2022] UKPC 48 the Privy Council had stated that the common law had not gone so far as to recognise that a claimant or plaintiff kept out of his or her money in a commercial context is as a norm entitled to claim and receive as damages for breach of contract interest on the withheld sums calculated by reference to the cost of borrowing such sums at a conventional rate without evidence from which such a loss can be inferred. They relied on the statement of the Board, at [34], that ‘there is no general practice that follows the approach in Equitas’, and that that approach is ‘not consistent with principle or with the speeches of the House of Lords in Sempra Metals.’

I accept that it is not the practice of the court, even in a commercial context, to award pre-judgment interest on a compound basis as damages without that being pleaded and proved. In my judgment, there was no adequate plea or proof by AerCap that its losses should be calculated by reference to the cost of borrowing on the basis of compound interest. Accordingly, I consider that the appropriate award of interest is of simple interest under s. 35A Senior Courts Act 1981.

I need add only this. If there is any force in War Risks Insurers’ complaint that US Prime may be too high a rate at which to award interest because of AerCap’s size and commercial position, then that would be counteracted by any under-compensation which might have arisen by reason of interest being only simple and not compound. As a matter of my discretion as to interest, an award of Prime on a simple basis appears to me to be just.

Genesis