HT-2020-000448 - [2024] EWHC 2025 (TCC)

DBS’s position is that interest should run on the sum of £4,559,439, from 9 February 2016, which is the date which, on the parties became estopped from denying that TCS would pay DBS the sum on account of previous delays. Mr Croall contends that it follows that from around 9 February 2016, DBS was entitled to the benefit of the sum of £4,559,439 from TCS to compensate DBS for the previous delays. The alternative way of putting it is that DBS is entitled to interest from the dates of invoices against which credit should have been given by TCS.

Mr Cogley contends that the correct date for interest is that of the Judgment itself. He says that there was no debt (as found in the Judgment) and the sums were not claimed or proven as damages. Rather, in February 2016, TCS offered a compromise amount (on a commercial basis without admission of liability), subject to agreement of a CCN and the payment mechanism. As found in the Judgment, no such agreement was ever finalised. No credit notes were sought by DBS and it did not deduct any sums either. For a claim to be made pursuant to section 35A of the 1981 Act, there needed to be a cause of action in respect of these sums, and none was pleaded against TCS: instead, the entitlement to the sum by way of a credit was admitted by TCS within the pleadings.

I consider it would be inconsistent with my findings in the Judgment to permit DBS to claim interest on £4,559,439 in circumstances when there was, as I have found, no failure to pay the sum as at the date of the Amended Defence. I also accept that the DBS’s pleaded claim for damages at paragraph 65 to 67 does not, read fairly, in fact relate to damages arising from the underlying matters giving rise to the entitlement to compensation, but to the ‘failure to pay’ which I concluded did not exist. The pleaded damages claim does not therefore capture a basis upon which an entitlement to pre-judgment interest under Section 35A could attach.

However, it does not follow that I must ignore the fact that TCS has accepted that the sum of £4,559,439 was to be set off against its entitlements otherwise secured as owing to them in this litigation. By reference to its delay claims and to the VBSC, it has established an entitlement, on which it seeks payment of pre-judgment interest pursuant to section 35A of the 1981 Act. I have decided that the appropriate rate is 2%. However, it would be obviously unjust for interest to accrue in TCS’s favour prior to the sum which needs to be set off in DBS’s favour having effectively been ‘paid’. Thus, the £4,559,439 owed to DBS should be set against TCS’s accruing entitlement (whether in respect of delay related damages or the VBSC), and when the set off is exhausted, TCS will then be entitled to pre-judgment interest at 2% over base on the balance (or, if appropriate, on the balance as it further accrues) from that point only.