Protect your interest.
Rolls-Royce Holdings Plc -v- Goodrich Corporation [2023] EWHC 2002 (Comm) – Commercial Solicitors preparing pleadings for a contractual case which includes terms for interest.
In the original Part 20 Claim, Goodrich sought an account of all amounts due in respect of Initial Provisioning, damages for breach of the Exclusivity Obligation, and statutory interest. The claim for an account was later deleted. In February 2023, a claim for damages for breach of clause 11 was introduced by amendment (the amendment having been trialled in December 2022). A claim for debt was introduced towards the end of the trial. No claim for contractual interest was advanced.
In the Defence to the Part 20 Claim, the Claimant noted the claim for statutory interest, but denied it on the basis that: i) there was a contractual provision addressing the entitlement to interest for sums unpaid under the ECSURS which Goodrich had not invoked and whose terms Goodrich had not satisfied, which precluded Goodrich from recovering interest under s.35A of the Senior Courts Act 1981.
ii) If statutory interest was to be awarded, the RR Entities argued that as a matter of discretion, the court should refuse to award Goodrich interest, or only award it reduced interest, for the period from 1 January 2018 to 28 February 2023.
No reference was made to any contractual interest provision.
After the Judgment was handed down, on 12 July 2023 Goodrich wrote to the RR Entities setting out the amount which they contended that they were entitled to by way of statutory interest, and enclosing calculations supporting a claim for interest in the sum of $23,240,028 to 3 July 2023, and increasing at the rate of $25,580 per day.
On 18 July, the RR Entities replied by pointing to clause 44 of the ECSURS (the first occasion, on which reference was made to this clause in the litigation), which addressed the position “if R-R does not make payment in accordance with this Agreement”. The RR Entities argued that clause 44 precluded the claim for statutory interest. If statutory interest was to be awarded, the RR Entities argued that the rate for the first three months should be Bank of England Base Rate plus 2%, but they accepted that US Prime was otherwise the appropriate rate. In response, Goodrich adhered to its claim to statutory interest.
The Court found that if parties have reached a contractual agreement as to when interest should be paid and at what rate, the court will not award interest under S.35A of the Senior Courts Act 1981, as this will be different to what the parties agreed.
If parties have reached a contractual agreement as to when interest should be paid and at what rate, the court will not award interest under S.35A of the Senior Courts Act 1981, as this will be different to what the parties agreed.
The judge stated that S.35A (4) of the Senior Courts Act 1981 meant that the Defendant was not entitled to statutory interest as there was already a contractual interest running on the sum which the Defendant did not invoke in their pleadings.
How can PIC help?
PIC are not experts on contract law, but having knowledge of these types of cases and the pitfalls involved improves our ability to advise on technical aspects of costs law.
Much like in the case management process, cost involvement at an early stage to assist with costs and directions can allow technical issues to be identified earlier and, where possible, rectified.
Ashley Squires, Costs Consultant
11.04.2024