When Does Interest Run?

Scotland’s appeal court, the Inner House of the Court of Session, recently issued a judgement in the case of Phee v Gordon and Niddry Castle Golf Club.

Perhaps only the keenest students of Scots civil practice will be interested, but for those who fall in that category, the judgement was important.

The court had to consider the circumstances in which the normal rule, that interest on an award of expenses (costs), would only be applied from the date the account was taxed (that is the amount of expenses finally determined), be deviated from. In this case, the Pursuers argued for an earlier date. The court held that such deviation from the normal practice would only be in exceptional circumstances.

In the current case, the Pursuer appeared to found upon the facts, that:  a) this was a high value claim; b) it had run to Proof; c) the agents had acted on a speculative (that is no-win, no-fee) basis; and d) the appeal both to the Inner House and to the Supreme Court (later abandoned by the Defenders) had had poor prospects of success.

The court did not agree all factors mentioned had been made out.  However, in the opinion of the court “those factors do not come anywhere near the nature of exceptional circumstances” that would be required to deviate from the normal rule.

In short, normal practice is therefore what would be expected and it has to be something exceptional (and there is a hint in the judgment where their Lordship’s quote Maclaren on expenses that it is only on outlays rather than on professional fees where the exceptional circumstances might mean an earlier award of interest) before there is different treatment.

Eric Baijal is BBM’s head of litigation: emb [AT] bbmsolicitors [DOT] co [DOT] uk