Farstad Supply AS v Enviroco Ltd [2013] ScotCS CSIH_9 (20 February 2013)

Farstad Supply AS v Enviroco Ltd [2013] ScotCS CSIH_9 (20 February 2013)

The court held that the established practice in Scotland is to award interest at the judicial rate, subject to discretion for special circumstances. There was no basis to retroactively adopt English practice or a market-based rate. The Lord Ordinary's division of periods and rates was within his discretion and not plainly wrong.

Citation
[2013] ScotCS CSIH_9
Parties
Pursuer and Respondent: Farstad Supply AS; Defender and Reclaimer: Enviroco Ltd
Jurisdiction
Scotland
Judgment Date
20 February 2013
Procedural Posture
Commercial Damages Action / Reclaiming Motion (appeal) Against Lord Ordinary's Decision on Interest Rate
Outcome
reclaiming motion refused; cross-appeal refused; Lord Ordinary's decision adhered to
Legal Topics
Pre Decree Interest, Compensatory Principle, Judicial Rate, Discretion in Awarding Interest
Commercial Law Damages Interest Pre Decree Interest Compensatory Principle Judicial Rate Discretion in Awarding Interest

Case Brief

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Parties

Farstad Supply AS

Pursuer and Respondent

Enviroco Ltd

Defender and Reclaimer

Procedural Posture

Commercial Damages Action / Reclaiming Motion (appeal) Against Lord Ordinary's Decision on Interest Rate

Legal Issues

  1. 1 What is the appropriate rate of interest to award on damages prior to decree?
  2. 2 Should the Scottish courts depart from the judicial rate in favour of a market-based rate or English practice?

Ratio Decidendi

The court held that the established practice in Scotland is to award interest at the judicial rate, subject to discretion for special circumstances. There was no basis to retroactively adopt English practice or a market-based rate. The Lord Ordinary's division of periods and rates was within his discretion and not plainly wrong.

Court Disposition

reclaiming motion refused; cross-appeal refused; Lord Ordinary's decision adhered to

Orders

  • Interest on £1,750,000 awarded at 8% per annum from 31 December 2002 to 4 December 2008
  • Interest at 4% per annum from 4 December 2008 onwards