LM-2024-000252 - [2025] EWHC 2704 (Comm)

The usual position, namely that interest ought to run from the date of loss, was stated by Robert Goff J in BP Exploration Co (Libya) v Hunt (No. 2) [1979] 1 WLR 783 at 847:

“The basic principle, is, however, that interest will be awarded from the date of loss. Furthermore, the mere fact that it is impossible for the defendant to quantify the sum due until judgment has been given will not generally preclude such an award. Thus, in Admiralty, in collision cases where the ship is totally lost, interest has been held to run from the date of the loss (see e.g. The Berwickshire [1950] P. 204 and Owners of Liesbosch Dredger v. Owners of S.S. Edison [1933] A.C. 449, 468), and in the case of a salvage award, from the date of the rendering of the salvage services: see The Aldora [1975] Q.B. 748. There must have been many cases in the commercial court in which, although the quantum of damages was in doubt until the date of judgment, interest was awarded from the date of loss. Similarly, the mere fact that it is doubtful whether the plaintiff's claim will succeed, and it is reasonable to contest his claim, will not generally require any departure from the general principle; nor generally will any doubt, however justified, as to the principles of law which will be applied.”

Mr Scorey relied, as being illustrative of an appropriate approach to the exercise of the court’s discretion, on the judgment of Thomas J in Quorum A.S. v Schramm (No. 2) [2002] 2 Lloyd’s Rep 72. In that case, the claimant, which had suffered loss in consequence of a fire, was awarded recovery under a policy of insurance. However, Thomas J did not award interest for the full period but only from the later date at which the underwriters had been able to come to an informed decision as to the value of the claim. He cited passages from the judgment of Robert Goff J in BP Exploration Co (Libya) v Hunt (No. 2), including the passage set out above, and continued:

“6.

I therefore turn to apply these principles to the present claim. The first question is to determine when the sum became due under the policy. As a matter of technical and legal analysis, I accept an insurer is in breach in failing to pay the assured the sum due under the policy at the date of the loss. I agree with the view of Mr. Justice Mance in InsuranceCorporation of the Channel Islands v. McHugh [1997] L.R.L.R 94 at p. 137, where he said that insurance contracts are treated in law as contracts to hold the insured harmless against liability or the loss insured against; therefore insurers are in the absence of contrary provision in breach of contract as soon as the insured liability or loss occurs.

7.

However, although the date of the loss is when the sum became due under the policy, it does not follow that the Court awards interest in every case from the date of the loss. For example in The Popi M, [1984] 2 Lloyd’s Rep. 555 the assured put forward a claim on a basis substantially different to that which proved successful at trial. The trial Judge (Mr. Justice Bingham) awarded interest from a period about four years and four months after the loss. The Court of Appeal awarded interest commencing two years after the date of the loss; Sir John Donaldson, M.R. (with whom Lord Justice O’Connor agreed) considered that the case was unusual and underwriters therefore needed time to make up their minds. Lord Justice May, though not differing from the other Judges in the result, expressed the view that although in most cases insurers would need to investigate claims, prima facie interest ought to be awarded from the date of the loss. Another example is McLean Enterprises Ltd. v. Ecclesiastical Insurance Office plc [1986] 2 Lloyd’s Rep. 216, where interest was awarded by the trial Judge (Mr. Justice Staughton) from a date some five weeks after the loss. In KuwaitAirways Corporation (to which I have referred) the loss occurred shortly after the invasion of Kuwait by Iraq on Aug. 2, 1990, but interest was only awarded from Dec. 5, 1990; the Judge found that it was not clear that until Nov. 12, 1990 that a claim in respect of loss of spares was being pursued and insurers needed a little time to appreciate that fact and consider the claim.

8.

The decisions to which I have referred are but examples common in the experience of the Commercial Court in relation to insurance claims in unusual cases or those that are not straightforward. In such cases, the Court usually exercises its discretion on the basis it is proper to allow insurers some time to consider the claim. The time varies accordingly to the nature of the loss, the way the claim is presented and the circumstances that require investigation. In many cases the time may be quite short. The Court will always have regard to the particular circumstances specific to that claim.

9.

In this particular case, the fact of the fire was known immediately to underwriters; loss adjusters were on the scene almost immediately (see par. 31 of the judgment). However it was not obvious what, if any, damage La Danse Grecque [a painting by Degas] had suffered. Discussions also took place with underwriters about the terms of the policy; on Jan. 17, 1992 the claimants’ brokers and underwriters agreed the partial loss clause (see par. 69 of the judgment). Furthermore at some stage prior to the trial, the parties agreed that the damaged value should be ‘after restoration but assessed as at immediately after the fire’ (see par. 93 of the judgment). As I held at pars. 94 and 95 of the judgment, I considered that it was not possible immediately after the fire to express a view on the extent of the damage and the risk of deterioration; that would only be possible after restoration was complete.

10.

In my view therefore, in this highly unusual case, it would be right to award interest only from a date at which restoration was complete and underwriters had had time to consider the matter.”

Thomas J cited the dictum of Colman J in The Athenian Harmony [1998] 2 Lloyd’s Rep 425, at 427:

“In cases where the delay and the degree of fault are so substantial that the predominant cause of the plaintiff being out of his money can be seen to be his own failure to prosecute the claim, rather that the defendant’s maintenance of his defence, it is not difficult to see that the policy should be that a successful plaintiff should not be compensated for loss of use of the money. However, in order for it to be said that the plaintiff’s fault has displaced the defendant’s fault as the predominant cause of the plaintiff being kept out of his money, the delay in question would have to be very substantial and not merely relatively short periods of weeks or months during which in commercial litigation lulls in activity inevitably occur and the plaintiff’s fault would have to be very substantial, as where an action has inexcusably been allowed to go to sleep for years.”

I also note the dictum of Aikens J in The ‘Vergina’ (No. 3) [2002] 1 Lloyd’s Rep 238, where he said at [33]:

“33.

The claimant submits that the Court will not disallow interest for a period unless there has been both very substantial delay and also very substantial fault on the part of the claimant. Mr. Kenny relied on statements to that effect made by Mr Justice Colman in Derby Resources A.G. v. Blue Corinth Marine Co. Ltd. (No. 2) (The Athenian Harmony). I respectfully agree with the approach of Mr Justice Colman in that case. In my view the Court should not disallow interest unless it can be shown that the ‘predominant cause’ of the claimant being kept out of money that the Court has held he is entitled to is the claimant’s own failure to prosecute the claim, as opposed to the defendant’s maintenance of its defence.”

In the present case, the earliest date of loss for the years 1981/1982, 1982/1983 and 1983/1984 was 12 June 2001, and the earliest date of loss for the year 1984/1985 was 28 February 2002.

The arithmetically agreed losses of £3,760,574.83, mentioned in paragraph 6 above, are, subject to some later modification, extrapolated from RSA’s Final Transaction List, which was finalised on or about 27 February 2024 and formed the basis of the amendment of the quantum of the claim in RSA’s response on that date to a Part 18 request for further information. On 20 June 2025 RSA produced an Updated Final Transaction List when it became apparent that twenty transactions relating to RSA’s own legal fees, which were not intended to be included in the transactional data, had been included by mistake. This resulted in a reduction of the claim by £22,500.44.

Mr Scorey submitted that no award of interest should run from a date earlier than the date on which RSA properly particularised the quantum of its claim, being either the date of the Updated Final Transaction List (20 June 2025) or, at the earliest, the date on which the Final Transaction List was produced (27 February 2024). He accepted the general principle that interest runs from the date of loss, but he submitted that “a more subtle discretionary approach” was appropriate in reinsurance cases, where a reinsurer—unlike, for example, a person responsible for causing damage to another’s vessel—might have no idea of the existence of any loss but is dependent on the presentation of a claim and the data relied on in support of it. In the alternative, Mr Scorey submitted that interest should be denied for three periods during which RSA did nothing to pursue its claim:

The following is a very short chronology of the main points in the progress of the claim.

Although I bear in mind the very protracted history of this matter as briefly outlined above, in the exercise of my discretion I shall not restrict the time for which interest runs but shall order it to run from the date of each respective loss. My reasons are as follows.