INTEREST ON AWARD NOT AUTOMATIC: A DECISION WHERE NO INTEREST WAS AWARDED

The question of when, and whether, interest should be awarded is one of these issues in litigation that receives little coverage.  In Pinfold -v- Ansell [2017] EWHC 889 (Ch) HHJ David Cooke decided not to award interest at all. It highlights the fact that interest is discretionary.

THE CASE

The case was a fairly acrimonious unfair prejudice petition. The applicant succeeded and the respondents were awarded to purchase his shares.

INTEREST

The judge considered the question of whether interest should be awarded on the sum that the respondents had been ordered to pay.

1. 1. Mr Gunstone submits that if the Respondents had acted fairly towards Mr Pinfold they would have made a fair offer to purchase his shares at the time of his expulsion and terms could have been swiftly agreed, so avoiding the present dispute. Mr Pinfold should be compensated for the delay by payment of a sum equivalent to interest, at a suggested rate of 6% simple.

   2. It is accepted that the court has no power to award interest prior to judgment per se in the exercise of the s994 jurisdiction; see Re Bird Precision Bellows Ltd [1986] Ch 658. But the Court of Appeal recognised in Profinance a power in the exercise of the court’s wide discretion in that jurisdiction to order a supplemental payment equivalent to interest in a case where the circumstances made it appropriate to select an early valuation date. It was, the court said, a power to be exercised with great caution (see the judgment of the court at para 32) and normally only where such a claim is clearly pleaded.

   3. In the present case, a claim for interest is made, but not in my view particularly clearly. The petition seeks an order for sale “at a price to be determined by the court in such manner as it thinks fit” with interest “at 8% pursuant to s35A Senior Courts Act 1981 … from the date of valuation or alternatively the date of judgment…”. Alternatively interest was sought as a “due allowance for the unfairly prejudicial conduct of the Company’s affairs…”. The reference to interest on judgment debts was clearly inappropriate, and it was not until the Reply that the case was clearly made that the petition sought a valuation at the date of expulsion.

   4. Bearing that in mind, and also that

i) Responsibility for creating the dispute will be primarily reflected in the order for costs,

ii) The interest Mr Pinfold could have earned on deposit, even over a period since 2012, would be modest in a time of very low rates, and

iii) The effect of having selected an early valuation date, which was by no means inevitable, is a substantial benefit to Mr Pinfold

I have come to the conclusion that fairness does not in this case require that he receive an extra allowance for delay.

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