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Why is no one claiming the contractual rate of interest???


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At 285% compounded interest, my claim would now come to £47k

 

1. Shall I go for it?

 

Not being funny, but i would assume the judge would NOT allow the claim to proceed at £47k ....

 

Back to the CI thing again ... if we cannot argue our way to a 29% rate with a bank where everything is in writing, how are we going to go for 285%? with a loan shark on a loan that is probably not regulated with little paperwork?

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1970

 

A couple of points:

 

1. A loan shark is a loan shark not a bank and therefore is different in the eyes of the law.

 

2. 47K takes you solidly into the multi-track and so big boys costs rules.

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Ok,

 

Loan shark is my term. The loan against the value of your car.

 

Fully regulated agreement and no different to other loan agreements I've seen apart from the interest rate.

 

Dad, in regard to point 2. Does this mean straight to high court or can I use the caveat covered in point 2 of my post number 1973?

 

Cheers,

 

1970.

It's going to be an interesting year...

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1970

 

To be a bank, and enjoy all the rights, you must operate current accounts and take deposits. Lending alone does not make a company a bank.

 

There are some House of Lords judgements in the last few years involving wilson v *** (sorry I cant remember) Depending on exactly how the loan came about you may be in a very different position to me.

 

As to the courts I would look up the court service web site

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If you found this post useful, please click on the "scales" icon in the bottom left of my post and say so!

 

The opinions of this post are those of monkey_uk and do not constitute sound legal advice. I am not a lawyer.

--

 

Halifax Unlawful Bank Charges: S.A.R - (Subject Access Request) Sent 28/02/07 - CC Statement's rcv'd 18/04/07 Bank a/c statements rcv'd 19/04/07

 

 

 

First Direct Unlawful Bank Charges: Settled in Full 12/05/06 | £2235.50

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I have a question about interest that I don't think anyone has answered yet...

 

Say one month I paid £1 interest on fees of say £50 (just making up these numbers)

Then the next month I would actually be paying approx £1.02 interest on the £51

Then the next it would be about £1.04 interest on the whole £52.02

 

and so on...

 

These little increments can add up over time - but more important is the fact that it is compound - we are payng interest on the previous months interest...

 

The spreadsheets I have seen so far just seem to calculate it on the fees, and not on the fees PLUS the previous interest.

 

Anyone help me with why or point out a flaw in my logic????

 

Thanks

 

Claire

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I have a question about interest that I don't think anyone has answered yet...

 

Say one month I paid £1 interest on fees of say £50 (just making up these numbers)

Then the next month I would actually be paying approx £1.02 interest on the £51

Then the next it would be about £1.04 interest on the whole £52.02

 

and so on...

 

These little increments can add up over time - but more important is the fact that it is compound - we are payng interest on the previous months interest...

 

The spreadsheets I have seen so far just seem to calculate it on the fees, and not on the fees PLUS the previous interest.

 

Anyone help me with why or point out a flaw in my logic????

 

Thanks

 

Claire

 

 

try this

http://www.zen122856.zen.co.uk/CompoundSheet_v1.9.xls

 

use the first tab to input info including interest on charges taken fron statments as well as charges etc.

On the notes page put your own info and the rate of interest you want to calculate at, then if you click on tab2 8% it gives stat interest etc. Click Tab3 it gives you CI at your chosen rate.

to summarise it gives:

Total charges

Total interest on chages

CI on charges

CI on interest charged on charges

 

Hope that helps

 

Celicaman

Templates Library

 

GE Capital Won

Capital 0ne Won

Northern rock Claim stayed working on negotiation

HSBC personal claim 1 ''WON''.

£1800 plus full stat interest plus costs.

Claim started 14/02/07 offer 3/07/07

 

Next:Coming soon to a thread near you! :)

HSBC personal Part 2 'return of the Celicaman'

HSBC business 1 ' my empire strikes back' N1 claim POC in progress after usual offensive offer from bank

HSBC business 2 'attack of the Celicaman'

HSBC business claim 3 'bank account menace'

HSBC business 4 'Revenge of the CAG Member' the final insult ....................... 'Maybe'

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I've got a quick question regarding interest.

My first charge was July 02, interest that month is 1.093 (13.11% Apr)

I carry on picking up charges here and there, interest stays the same til Sept 04, now it chages to Merchandise Interest 1.167% and Cash Interest 1.240% total 2.407% (Apr 28.884%). Stays at that til Mar 05 when it changes to Cash Interest 1.385% and merchandise interest 1.167% total 2.552% (Apr 30.624%) In August 05 it again changes to Cash Interest 1.385% and Merchandise Interest 1.240% totals 2.625% (Apr 31.5%). I finished the card apart £0.29 in October 05, account was finally closed in Mar 07 ( thought it was closed from 05)

So my question is, what rate do i put into the spreadsheet :D i did put 13.11% didnt realise it went higher.

I'm thinking of making it an average percentage as it doesn't seem right to put the highest figure in, even tho it was that for 2 months.

So im left with 27 months @ 13.11

5 Months @ 28.88%

5 Months @ 30.62%

2 Months @ 31.5%

Average Apr from July 02 to Oct 05 = 18.31% (Maybe :) )

Can i even include the cash interest?

Can i claim interest uptil today even if the account was closed?

Cheers for sticking with this post :D

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Hi wednesday,

JUst wondering what spreadsheet you are using and are you claiming for bank or credit card.

30-12-2006--Requested statements from Local Halifax.

02-02-2007--Statements Recieved.

18-04-2007--Prelim sent.

20-04-2007--Reply , Thanks , give us 8wks letter.

02-0502007--Sent L.B.A. & Schedule of Charges

11-05-2007--Recieved reply ,still investigating.

17-05-2007--Sent Amended L.B.A. for Contractual Interest this time.

14-06-2007--Received standard Bog Off letter.

13-06-2007--Took N1 to Local Courts.

26-06-2007--Copy of N1 from Court, issued 21-06-2007. to Halifax, Deemed Served 25-06-2007

Have till 09-07-2007 to file Defence.

05-07-2007--Note that Acknowledgment of Service been Filed on 29-06-2007.

Have 28 days from date of Service to File Defence.

07-07-2007--Offer from Halifax.

09-07-2007--Rejection letter sent to Halifax. Next day delivery.

10-07-2007--Money put in Account:mad:

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HI again

 

Not so sure if Ill be of any help but I can only go on what i think I would do.

 

Id go for the high rate ( they can only say no) do a couple of spreadsheets , different rates and then the judge can decide which one you can have.

 

I would still claim even if the account is closed after all its still your money they took and so I think it will still be accruing the interest, Not too sure about that one, but I think if anyone has better advice they will come to your help sooner rather than later.

i notice from your sig that your far more experienced than I am so perhaps you can help me too sometime eh!

 

Hope this helps in some miniscule way LOL:)

30-12-2006--Requested statements from Local Halifax.

02-02-2007--Statements Recieved.

18-04-2007--Prelim sent.

20-04-2007--Reply , Thanks , give us 8wks letter.

02-0502007--Sent L.B.A. & Schedule of Charges

11-05-2007--Recieved reply ,still investigating.

17-05-2007--Sent Amended L.B.A. for Contractual Interest this time.

14-06-2007--Received standard Bog Off letter.

13-06-2007--Took N1 to Local Courts.

26-06-2007--Copy of N1 from Court, issued 21-06-2007. to Halifax, Deemed Served 25-06-2007

Have till 09-07-2007 to file Defence.

05-07-2007--Note that Acknowledgment of Service been Filed on 29-06-2007.

Have 28 days from date of Service to File Defence.

07-07-2007--Offer from Halifax.

09-07-2007--Rejection letter sent to Halifax. Next day delivery.

10-07-2007--Money put in Account:mad:

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Wouldn't say expierenced, i'm a bit of an expert at waiting for a S.A.R - (Subject Access Request) to come and one not turn up :rolleyes::)

 

I've spent hours on here, reading threads about this and that and its amazing how much you pick up, how much you can relate to your situation, at the start, i was only going to do 2 charges, one for MBNA and the other being HSBC.

 

Since ive been reading, ive done them all, CCA'd them all and for some reason really enjoying it :cool: knowing that you can play the little man and take on the might of the banks and win, if you get stuck you can fall back on the great caggers and go from there. Thanks Cag :)

 

Feel free to ask, i will try my best to help and point in the right direction, im no whizz by anymeans, but could always point you in the right direction :)

 

Regarding the interest, think i might just go for 16% its their current rate.Feel guilty asking for 31.5% as it was only that for 2 months and it adds an extra £300 in interest to the claim :)

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  • 2 weeks later...

hi everyone, i posted this question (why is no one claiming the contractural rate of interest) some time ago. i have to admit i decided against it and went ahead with just claiming the charges intending to claim the 8% if it went to court. i got the usual fob off letters from the alliance and leicester and the usual stalling ones, eventually they made me an offer of approx 1/3 of my claim. at the time of this offer i heard from someone i work with that he was at that stage when he contacted the financial ombudsmen and the bank paid up in full. as i was at the stage of starting court proceedings i decided to contact the financial ombudsman. they were really helpful and immediately sent me a form to fill in. that was about 4 wks ago and today i got a letter from them stating that the bank had agreed to pay up in full!!!!!!!!! not only that they are paying me about £500 more than my claim, which i estimate to be about the amount the contractual interest would come to. needless to say i am thrilled to bits, and very grateful to this forum. i spent a long time reading all the posts i could and it really spurred me on. good luck to all you lot that are still going through the process. keep going, they will pay up,

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Another one bite's the dust: Well Done Allocator:D :D :D

 

and CONGRATULATIONS, seems like Lloyds are paying up lift right and centre at the moment.

:x if i have been off any help to you please click my scales

 

cases won

28th July Single Claim for bank charges against LTSB, £6,800 WON with CI to date of Judgement

 

18th July Joint Claime against LTSB £7,800 WON with CI to date of Judgement.

 

 

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MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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A new decision in the House of Lords may lead this question on a little

 

http://www.consumeractiongroup.co.uk/forum/bank-charges-media/106062-lords-award-compound-interest.html

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This doesn't according to that thread you post apply to credit card companies, only banks...?

 

FoxM - This is exactly the q. I asked in that thread (see post #9)

 

However it may be that my understanding of this thread is incorrect ! I had assumed this thread is discussing claiming back contractual interest in addition to interest on penalties ! :confused: This is what I am doing with Cap1 - I am already claiming back £450 plus £3xx interest and am adding to that my own CI of £3xx

 

I hope my understanding is correct and I don't have to sit in the corner wearing a hat with a big letter D on it !

 

The ruling BF refers to may mean county courts are more likely to accept CI as restitution for unjust enrichment provided it can be argued that they have profited from the penalty and the interest thereon ! - Which clearly they have ! (Is that right BF ?)

 

Rgds to all,

Tim aka Capitulator

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I had assumed this thread is discussing claiming back contractual interest in addition to interest on penalties ! :confused: This is what I am doing with Cap1 - I am already claiming back £450 plus £3xx interest and am adding to that my own CI of £3xx

 

I hope my understanding is correct

 

Don't worry - That is correct

 

I also claim (& have already won) ... Charges + interest charged on them + CI :)

links to my current claims ...

My claim - Yorkshire Bank Visa

chezt V RBS Mastercard

Chezt v RBS Joint Account

chezt v Abbey Credit Card

 

Settled ...

chezt V Duet Card/Creation Finance

chezt v's Studio Cards

chezt v's Littlewoods Catalogue

 

Next ...

Abbey Joint a/c & Single a/c

Barclaycard (Mine & Hubby's)

Anyone else I can think of ...! :rolleyes:

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  • 2 weeks later...

I am putting this on here as I have shown this in on another thread but I think it is more applicable hear. I used it at Redditch County Court on tuesday ( for my daughter) and although I got 7 years charges + interest thereon + 8% I reserved the right to use this after the OFT ruling and it was granted by Judge Nield

This a precis of course as the original is 90 pages.

Sempra Metals v HMC of Inland Revenue …………pertinent to claim for compound interest.

Opinions of the Lords of Appeal for Judgement 18/07/07

LORD HOPE OF CRAIGHEAD

Page 1

1. This is a case about the award of interest. Questions about interest

usually arise where the claim is presented as ancillary to a claim for a principal

sum for which the court is asked to give judgment for the recovery of a debt or

as damages. Less usually they can arise where interest is sought on a principal

sum which has been paid before judgment. But in this case interest is the

measure of the principal sum itself.

2. The question is how that sum should be measured. It is agreed that the

calculation of interest should be the method of measurement for the sum that

is to be awarded. But the parties are at issue as to how the interest should be

calculated. The choice is between simple interest and compound interest. If

simple interest is used, it is agreed that it should be at the rate that is

appropriate for the calculation of an award of interest under the statute. If

compound interest is used, various methods of calculation are available and

there is a dispute as to how it is to be calculated in this case. That issue,

however, is peripheral to the important question of principle which arises on

this appeal: is the claimant who seeks a remedy on the ground of unjust

enrichment entitled to an award for restitution of the value of money that is

measured by compound interest?

Page 3

7. The claim that is made in this case, however, is for restitution. It is

presented as a claim for the time value of money by which the defendant was

enriched unjustly. The claimant submits that the common law requires that it

be paid a sum which represents the value of the money over the period of that

enrichment, and that this sum falls to be calculated by compounding interest

over that period. It has been held that in an action for money had and received

the net sum only can be recovered: Moses v Macferlan (1760) 2 Burr 1005;

Fruhling v Schroeder (1835) 2 Bing (NC) 78 and Johnson v The King [1904]

AC 817, applying London, Chatham and Dover Railway Co v South Eastern

Railway Co [1893] AC 429. But interest has been awarded at common law

where restitution follows the reversal on appeal of a previously satisfied

judgment: Rodger v Comptior d’Escompte de Paris (1871) LR 3 PC 465.

Various other exceptions have been recognised: see Heydon v NRMA Ltd

No 2 (2001) 53 NSWLR 600, 603-606, per Mason P. Furthermore the claim

in this case is not for more than what was had and received by the defendant.

What was had and received was the enrichment. It is the enrichment itself that

is to be valued, not anything more than that.

Page 5

The issues

12. The question then is whether the calculation of the award that is

required by Community law in these circumstances should be effected on the

basis of compound interest as the appellants contend, or of simple interest as is

contended for by the Revenue. It should be appreciated that this is the only

point of substance that requires to be decided in this case. Given the decision

in Metallgesellschaft, the Revenue do not now dispute liability to pay interest

on the amounts paid prematurely, appropriately calculated. Moreover, for

reasons which I shall explain later, there is no challenge in principle to

Sempra’s decision to seek to obtain this award in restitution rather than as

damages.

13. As for the method of calculation, it was common ground before the

judge that if compound interest was to be awarded it should be calculated on a

conventional basis – the rate being derived from the rates of interest generally

prevailing on ordinary commercial borrowings during the relevant period.

But, for reasons that I shall mention later, it appears that the Revenue’s

statement of its position was based on a misunderstanding. Mr Glick QC

accepted that, if compound interest was to be used, the rate of interest on

ordinary commercial borrowings would be appropriate for an award of

damages. But he said that a different approach was needed if Sempra was to

be allowed to recover compound interest as a restitutionary award on the

ground of unjust enrichment measured by the time value of the money that

was paid prematurely.

Page 7

18. I wish to concentrate on the approach that should be taken to the

restitutionary cause of action on which Sempra prefers and is entitled to rely,

which is its claim that the money was paid under a mistake. The conclusion

that the court has jurisdiction to award compound interest as damages at

common law is, however, a valuable one. It provides us with a building block

which was missing when the House rejected the use of compound interest as a

possible solution in equity in Westdeutsche Landesbank Girozentrale v

Islington London Borough Council [1996] AC 669. Ancillary interest was

sought on a sum for which the court was to give judgment in satisfaction of

the council’s restitutionary claim against the bank. It was common ground

that there was no jurisdiction to award compound interest in such a case at

common law or by statute: per Lord Goff of Chieveley, p 690H.

The restitutionary claim

19. Four sample payments of ACT ha ve been agreed upon for the purposes

of this test case all of which were, sooner or later, set off against MCT. The

earliest ACT payment was made on 12 October 1981, and the latest was made

on 18 July 1994. The longest interval was almost ten years, and the shortest

was just under one year. Tax paid in response to an unlawful demand is

recoverable under the Woolwich principle: Woolwich Equitable Building

Society v Inland Revenue Commissioners [1993] AC 70. But the limitation

period of six years which applies to unlawful demands runs from the date of

payment. Sempra wish to take advantage of the extended limitation period

that is available under section 32(1)© of the Limitation Act 1980. It provides

that, where the action is for relief from the consequences of a mistake, the

period of limitation shall not begin to run until the claimant has discovered the

mistake or could with reasonable diligence have discovered it. As Park J

observed in para 11 of his judgment, one of the bases on which Sempra’s

claim is pleaded is for restitution by reason of the ACT having been paid

under a mistake of law. The effect of your Lordships’ decision in Deutsche

Morgan Grenfell Group plc v IRC [2007] 1 AC 558 is that it is open to

Sempra to base its claim on this ground, as the longer limitation period is in its

best interests: see para 51. If this is done, the claim for interest on none of the

sample payments will be statute-barred.

Page 8

21. There is no doubt that a compensatory remedy for breach of

Community law would look to what the taxpaying company had lost by reason

of having to pay the tax early. But that, from Sempra’s point of view, is not

the preferred remedy. If it is to escape from the six year limitation period it

must instead pursue the alternative argument that the payments were made

under a mistake. This is a restitutionary remedy. So it is necessary to look

more closely at the nature of this remedy, and at the basis on which a claim

under it falls to be calculated. It is only when this question has been addressed

and answered that it will be possible to answer with confidence the question

how, if Sempra is to be provided with the restitutionary remedy to which it is

entitled for its mistake as to its rights under Community law, the amount of the

principal sum due must be calculated.

Page 9

22. In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349,

372G-373B Lord Goff of Chieveley referred to the development of a coherent

law of restitution, a doctrine first recognised by this House in Lipkin Gorman v

Karpnale Ltd [1991] 2 AC 548, 577-578. He said there was a general right of

recovery of money paid under a mistake and that it was founded upon the

principle of unjust enrichment. At p 373C he said that a blanket rule of nonrecovery

on the ground of a mistake of law could not survive in a rubric of the

law based on that principle. This led him to conclude that there was “a general

right” to recover money paid under a mistake, whether of fact or law, subject

to the defences available in the law of restitution: p 375H. At p 377C he said

that the common law should now recognise that restitution may be granted in

respect of money paid under a mistake of law. At p 379H he said that, subject

to any applicable defences, the payer was “entitled” to recover the money paid

under a mistake. Throughout his speech he was addressing a common law

remedy, not one that was available in equity. I think that it can now be taken

as settled that, under the Kleinwort Benson principle, a cause of action at

common law is available for money paid under a mistake of law: Deutsche

Morgan Grenfell Group plc v IRC [2007] 1 AC 558, para 62. I also think that

the time has come to recognise that the court has jurisdiction at common law

to award compound interest where the claimant seeks a restitutionary remedy

for the time value of money paid under a mistake.

Page 10

The basis of the award

27. I turn then to the basis on which the restitutionary award should be

calculated. In Shilliday v Smith 1998 SC 725, 727 Lord President Rodger said

that anyone who wants to glimpse something of the underlying realities in the

law of unjust enrichment must start from the work of Professor Peter Birks. In

the essay which he contributed to Restitution, Past, Present and Future,

Essays in Honour of Gareth Jones (1998), Misnomer, p 1, Professor Birks said

that the whole thrust of the law of restitution is towards defining and analysing

the event which most commonly brings it about, which is unjust enrichment.

Restitution is the response to unjust enrichment, and unjust enrichment is the

event which triggers the response. The name of the event ought to

predominate over the response. So, he argued, the subject ought to be called

unjust enrichment. That is the starting point and, because the concept is one of

enrichment not of damages, it determines the nature of the response.

Page 12

31. I would apply the reasoning in these passages to the claim for interest

in this case. A remedy in unjust enrichment is not claim of damages. Nor is it

a contractual remedy, so there is no need to search for an express or an implied

term as the basis for recovery. The old rules which inhibited awards of

interest to ancillary interest on sums due on contractual debts or on claims for

money had and received do not apply. The essence of the claim is that the

Revenue was unjustly enriched because Sempra paid the tax when it did in the

mistaken belief that it was obliged to do so when in fact it was being levied

prematurely. So the Revenue must give back to Sempra the whole of the

benefit of the enrichment which it obtained. The process is one of subtraction,

not compensation. 33. In this case the enrichment consists, not of the payment of a sum of money as such, but of its payment prematurely. As Professor Birks pointed

out, the availability of money to use is not unequivocally enriching in the same

degree as the receipt of money: Unjust Enrichment, 2nd ed, p 53. But money

has a value, and in my opinion the measure of the right to subtraction of the

enrichment that resulted from its receipt does not depend on proof by Sempra

of what the Revenue actually did with it. It was the opportunity to turn the

money to account during the period of the enrichment that passed from

Sempra to the Revenue. This is the benefit which the defendant is presumed

to have derived from money in its hands, as Lord Walker puts it in para 180.

The Revenue accepts that the money it received prematurely had a value, but it

says that the restitutionary award should take the form of simple interest. I do

not think that such an award would be consistent with principle. Simple

interest is an artificial construct which has no relation to the way money is

obtained or turned to account in the real world. It is an imperfect way of

measuring the time value of what was received prematurely. Restitution

requires that the entirety of the time value of the money that was paid

prematurely be transferred back to Sempra by the Revenue.

Page 15.

Compound interest in domestic law

41. The fundamental point, however, is this. Compound interest is a

necessary, and very familiar, fact of commercial life. As the Law Commission

said in its Consultation Paper on “Compound Interest” (2002, No 167), para

4.1, the obvious reason for awarding compound interest is that it reflects

economic reality. In its “Discussion Paper on Interest on Debt and Damages”

(No 127, 2005), para 8.18 the Scottish Law Commission said that it endorsed

the view of the Law Society of England and Wales in their response to the

Law Commission’s Consultation Paper that “simple interest never provides a

full indemnity for the loss to the litigant.” In para 8.38 the Scottish Law

Commission said, having examined the arguments either way, that it was

inclined to the view that the case against the compounding of interest was

essentially a case against interest itself. Computation of the time value of the

enrichment on the basis of simple interest will inevitably fall short of its true

value. Such a result would conflict with the principle that applies in unjust

enrichment cases, that the enrichee must give up to the claimant the

enrichment with, as Professor Birks put it in Unjust Enrichment (2nd ed), p

167, no hint of a restriction to giving back. In my opinion the compounding of

interest is the basis on which the restitutionary award in this case should be

calculated.

Measurement

42. The virtue of simple interest is its simplicity. That cannot be said of

compound interest, which can be calculated in different ways leading to

different results. This creates the potential for dispute, which is one of the

more important objections to its use generally. Hence the Law Commission’s

recommendation that, if a power to award compound interest were to be

introduced, the Civil Procedure Rule Committee should have power to provide

the courts with guidance on when to award compound interest: “Pre-Judgment

Interest on Debts and Damages” (Law Com No 287), para 5.38. The evidence

for the Revenue in this case was that the nature of the financial relationship

between the Government and the Bank of England was such that it was

impossible to measure the amount of the interest earned or saved by the

Revenue, or by the government generally, on the ACT payments that were

made by Sempra. The effect of its evidence was that it was wrong to assume

that the Government invested the payments that it received on the basis that it

would receive a compound return for it in the commercial market. But the

judge did not, in the event, have to resolve this issue. It was common ground

before him that if compound interest was to be awarded it should be calculated

on a conventional basis – the rate being derived from the rates of interest

generally prevailing on borrowings during the relevant period.

LORD NICHOLLS OF BIRKENHEAD

Page 19

52. We live in a world where interest payments for the use of money are

calculated on a compound basis. Money is not available commercially on

simple interest terms. This is the daily experience of everyone, whether

borrowing money on overdrafts or credit cards or mortgages or shopping

around for the best rates when depositing savings with banks or building

societies. If the law is to achieve a fair and just outcome when assessing

financial loss it must recognise and give effect to this reality.

Page 20

59. In its decision the ECJ considered the remedial consequences of this

contravention of the Treaty. The court observed that in the ordinary course it

is for national law to settle ancillary questions relating to the reimbursement of

charges improperly levied, such as the payment of interest, including the rate

of interest (paragraph 86). But in the present cases the claim for payment of

interest covering the loss of use of the money paid by way of ACT was not

ancillary. It was the very objective sought by the claimants. Where the breach

of Community law arises, not from payment of the tax itself, but from its

being levied prematurely, the award of interest represents the reimbursement

of what was improperly paid. An award of interest is ‘essential’ in restoring

the equal treatment guaranteed by article 52 (paragraph 87).

Page 26.

House was concerned only with a claim for interest by way of general

damages. In a much-quoted passage he continued:

‘If a plaintiff pleads and can prove that he has suffered

special damage as a result of the defendant’s failure to perform

his obligation under a contract, and such damage is not too

remote on the principle of Hadley v Baxendale (1854) 9 Exch

341, I can see no logical reason why such special damage

should be irrecoverable merely because the obligation on which

the defendant defaulted was an obligation to pay money and not

some other type of obligation.’

Page 28 Sempra’s claim for damages

90. I have almost reached journey’s end on this issue. I pause to note one

point which is clear beyond a peradventure. In the present case Sempra is not

claiming damages for interest losses caused by late payment of a debt.

Sempra is claiming interest losses as damages for breach of a statutory duty.

As such Sempra’s claim does not fall within the exception to the general

common law rules. Accordingly Sempra’s damages claim is subject to the

same rules as apply generally to damages claims in tort. Subject to satisfying

those rules Sempra is entitled to recover damages in respect of the losses of

interest, whether simple or compound, it sustained by reason of the wrongful

levying of ACT.

Page 29.

The restrictive common law exception today

92. This conclusion suffices to dispose of the damages issue in the present

case. I go further, in view of the wide-ranging arguments presented to your

Lordships. The common law should sanction injustice no longer. The House

should recognise the remnant of the restrictive common law exception for

what it is: the unprincipled remnant of an unprincipled rule. The House

should erase the remains of this blot on English common law jurisprudence.

The House should do so by taking to its logical conclusion the step initiated by

the House in 1984 in the Pintada case. This would accord with an observation

of Lord Woolf in Westdeutsche Landesbank Girozentrale v Islington Borough

Council [1996] AC 669, 733. Lord Woolf noted that, despite the lapse of time

since the London, Chatham and Dover Railway case was decided in 1893, ‘the

courts will be prepared to limit the application of that decision where this can

be done in accordance with principle and it is appropriate to do so.’

95. In the nature of things the proof required to establish a claimed interest

loss will depend upon the nature of the loss and the circumstances of the case.

The loss may be the cost of borrowing money. That cost may include an

element of compound interest. Or the loss may be loss of an opportunity to

invest the promised money. Here again, where the circumstances require, the

investment loss may need to include a compound element if it is to be a fair

measure of what the plaintiff lost by the late payment. Or the loss flowing

from the late payment may take some other form. Whatever form the loss

takes the court will, here as elsewhere, draw from the proved or admitted facts

such inferences as are appropriate. That is a matter for the trial judge. There

are no special rules for the proof of facts in this area of the law.

Page 31

100. For these reasons I consider the court has a common law jurisdiction to

award interest, simple and compound, as damages on claims for non-payment

of debts as well as on other claims for breach of contract and in tort.

Interest benefits and restitution

101. Against this background I turn to the two restitutionary causes of

action asserted by Sempra. Sempra’s claim is that it paid ACT in response to

an unlawful demand and under a mistake of law. On both these bases the

Inland Revenue’s receipt of ACT comprised unjust enrichment at the expense

of Sempra. Of these two formulations Sempra much prefers the second

because of the extended limitation period applicable under the Limitation Act

1980, section 32(1)©. Sempra’s claim is that under both causes of action

restitution requires the Inland Revenue to pay Sempra the value of the benefit

the Inland Revenue obtained by having use of the money Sempra paid as

ACT.

102. In principle this claim is unanswerable. The benefits transferred by

Sempra to the Inland Revenue comprised, in short, (1) the amounts of tax paid

to the Inland Revenue and, consequentially, (2) the opportunity for the Inland

Revenue, or the Government of which the Inland Revenue is a department, to

use this money for the period of prematurity. The Inland Revenue was

enriched by the latter head in addition to the former. The payment of ACT

was the equivalent of a massive interest free loan. Restitution, if it is to be

complete, must encompass both heads. Restitution by the Revenue requires

(1) repayment of the amounts of tax paid prematurely (this claim became spent

once set off occurred) and (2) payment for having the use of the money for the

period of prematurity.

109. So it is perhaps not surprising that as recently as ten years ago the law

concerning interest in restitution cases was still generally understood to be as

enunciated by Lord Mansfield, Lord Ellenborough and Lord Tenterden.

Hence it came about that in 1996, in Westdeutsche Landesbank Girozentrale v

Islington London Borough Council [1996] AC 669, counsel opened an appeal

in your Lordships’ House on a claim for compound interest on money paid

under interest rate swaps held to be void with these words:

‘Both parties accept that compound, as opposed to

simple, interest is payable only if the council received the

money under the void interest rate swaps agreement as

fiduciary …’

The court has jurisdiction to award simple interest under section 35A of the

Supreme Court Act 1981, because ‘debt or damages’ in section 35A includes

any sum of money recoverable by one party from another: see BP Exploration

Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352. But no interest, whether

compound or simple, is recoverable at common law. Sometimes interest,

compound as well as simple, is recoverable in equity.

Page 34. 112. If the House takes this opportunity I venture to repeat there can only be

one answer on this important question of law. Nobody has suggested a good

reason why, in a case like the present, an award of compound interest should

be denied to a claimant. An award of compound interest is necessary to

achieve full restitution and, hence, a just result. I would hold that, in the

exercise of its common law restitutionary jurisdiction, the court has power to

make such an award. I agree with the thrust of Mummery LJ’s observations

on this point in NEC Semi-Conductors Ltd v Inland Revenue Commissioners

[2006] STC 606, 642-643, paras 172-175. To that extent I would depart from

the decision on the Westdeutsche appeal.

Page 124.

124. Here again this point has already been decided adversely to the Inland

Revenue. The effect of the decisions of this House in Kleinwort Benson Ltd v

Lincoln City Council [1999] 2 AC 349 and Deutsche Morgan Grenfell Group

Plc v Inland Revenue Commissioners [2006] 3 WLR 781 is that money paid

by mistake can be recovered, whether the mistake is of fact or law. Money

paid by way of tax does not stand on a different footing. In principle the

restitutionary consequences are the same for tax payments made by mistake as

they are for other payments made by mistake.

Leech

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There is a discussion of this judgement in this thread (from post 273 on) and on this one

Steven

 

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