Thu 20 Dec 2018

Sheridan v News Group Newspapers Limited: interest on awards of damages

What are the circumstances in which a court will award interest on damages where there has been a delay in payment of an award?

This is a relevant question for any pursuer who has to wait a significant period of time before receiving payment of an award made in their favour, for example, to allow the conclusion of appeal proceedings. The issue has been considered in the recent Inner House decision of Thomas Sheridan v News Group Newspapers Limited [2018] CSIH 76.

Background to the case

The case has a significant procedural history so it is helpful to set out the main points which relate to the question about interest on damages. On 4 August 2006 a jury verdict following proof went in the pursuer's favour and assessed the award of damages for him at £200,000. The pursuer was not able to take the steps necessary to seek payment of damages immediately following this because the defender enrolled a motion for a new trial and, for various reasons, this was only determined in August 2016. That decision was also challenged and it was only following this that the pursuer could take steps to have the jury's verdict applied. He sought interest on the £200,000 when doing so.

The principal sum of £200,000 was paid to the pursuer on 30 May 2017. The Lord Ordinary's decision on the pursuer's application was delivered on March 2018 and it refused any interest on the damages.  In doing so the Lord Ordinary had considered the provisions of the Interest on Damages (Scotland) Act 1958 which, under section 1(1), provides discretion to allow the making of an award of interest and order that it should run from an appropriate date prior to decree and section 1(1A) which contains special provisions for personal injury cases.

The decision was reclaimed to the Inner House.

The Inner House's opinion

The Inner House concluded that section 1(1A) was not relevant because a defamation action was not within the scope of a personal injury for the purpose of that section. Their opinion, delivered by the Lord President, contains an interesting discussion about the position regarding interest under common law and the effect of section 1(1). As to what should be taken into account when considering whether to award interest under section 1(1), the following comments were made:

"view the question of interest from the standpoint of it being compensation for the pursuer being "kept out of his money"…It is true there are references to the pursuer being deprived of his money "through no fault of his own" or through "normal delays", but fault or length of delay should seldom enter the equation when it is compensation for not having the money that is important, and not whose fault it might be."  [para 46]

It was their view that, where there had been a quantification of the level of damages that a pursuer would receive, there was very little room for a judge to exercise their discretion to avoid awarding interest where the basis for this was simply that a verdict has not been applied or an interlocutor has been suspended because of appellate proceedings. Instead it would almost inevitably be the case in situations like that that money had been wrongfully withheld from the time when a jury's verdict of damages could have been concluded or a judge's interlocutor awarding damages pronounced.

The Inner House also outlined some factors which the Lord Ordinary had considered which they thought were not relevant. These included:

  • It was not relevant that the defenders had arguable grounds to pursue in seeking a new trial. Rather the fact that they were unsuccessful should have been a central feature.
  • It was not the case that many would find it difficult to comprehend that the amount of interest to be awarded could have been close to or even greater that the sum of £200,000 awarded in damages. Where someone was defamed and had been awarded damages based on that level as to the effect on their reputation, they should be entitled to interest as compensation for the loss of use of that money.
  • Where there is a view that a pursuer's conduct was unreasonable or improper, that could be reflected in the award of expenses rather than interest on damages

The Lord Ordinary's refusal to award interest was overturned and interest was awarded at the judicial rate of 8% from 11 August 2016 (which was the date when the jury's verdict could have been applied) until 30 May 2017 when the defender paid the principal sum. The court refused a request to apply a lower rate of interest than the judicial rate.

This decision will, no doubt, be welcomed by pursuers in non-personal injury cases as a result of its focus on the importance of the fact that they have had to wait to receive compensation to which they are entitled and the approach in applying the judicial rate of interest.


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