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

Section 5 of the 1998 Act provides that statutory interest shall not run for a period where, by reason of the conduct of the supplier, the interests of justice require that the supplier should receive no statutory interest for that period. As developed in oral submissions, Mr Croall contended that the interests of justice required that TCS should receive no statutory interest, by reason of the conduct of the supplier, where:

Mr Croall acknowledged that this was akin to an estoppel, in circumstances where (against the existence of Clause 16.3, valid or invalid), both parties appeared to be operating after the exchange of letters on the basis that the relevant parts of the invoices were validly ‘disputed’ in accordance with the contractual procedure, and were not therefore ‘undisputed’ for the purposes of the application of the statutory interest. In line with the fact that no claim was advanced under the 1998 Act for the duration of the litigation (and over six years from the correspondence referred to above) and on the basis of the very limited evidence before the Court on this application, that is not, in my judgment, an improbable proposition of fact.

Mr Croall also submitted that, had TCS not intimated that its claim for statutory interest related to undisputed invoices (as opposed to unpaid invoices, whether disputed or not), DBS may have decided to pay the disputed invoices without prejudice to their legal rights so that they were not in danger, if the dispute was resolved against them on the proper meaning of the contract, of paying a penal interest rate.

Mr Cogley complains that this is speculation or hypothesis. He is obviously right that there is no direct witness evidence before the Court about whether DBS were in fact operating on this basis, or what they would have done differently, if anything, had they not been.

However, in the context of an application to amend after trial in relation to a matter in which, had it been pleaded, DBS would have been entitled to invoke a defence which involved a factual investigation, the absence of evidence from DBS does not assist Mr Cogley. Instead, it demonstrates the potential for prejudice by allowing the amendment at this stage. Against any claim for statutory interest under the 1998 Act, the defending party would plainly be entitled to raise the issue of remission under Section 5. In this case, even on the basis of the limited correspondence before the Court, I consider that DBS would have been entitled to plead and explore in evidence questions which could properly impact what ‘the conduct of the supplier’ amounted to and how, in light of that, the interests of justice would properly be served for the purposes of remitting statutory interest.

Taking into account the potential prejudice in allowing the amendment at this stage, together with the timing of the application and the absence of good reason for the very late amendment, I would – even without consideration of the prospects of success considered above – have declined to exercise my discretion to permit the amendment.