Henderson & Jones Ltd v Salica Investments Ltd

Hearing date: 04 April 2025

Approved Judgment

This judgment was handed down remotely at 17:00pm on Monday 07 April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

INTRODUCTION

The Claimant is a litigation funder which, as assignee, brought a claim for breach of confidence against the First and Fourth Defendants (“the Defendants”). Following an eight-day trial from 22 January to 5 February 2025, the court entered judgment in favour of the Claimant on 3 March 2025, finding the Defendants jointly and severally liable to the Claimant. The court held as a result that the Claimant was entitled to recover compensation by way of negotiating damages in the sum of £2,154,285 (together with interest on that sum).

The parties were subsequently unable to agree all consequential orders, and so by an Order dated 6 March 2025 I directed that there should be a further hearing to deal with all consequential matters listed for 4 April 2025. This is the court's judgment following that hearing.

The parties agreed a list of eight issues for the hearing. Those issues are as follows:

a. Issue 1 – Interest on the judgment sum;

b. Issue 2 – The validity of the Claimant's Part 36 offer as set out in a letter dated 31 October 2023, and if it is valid, whether that offer has been beaten;

c. Issue 3 – Whether, in light of my conclusion on the validity of the Part 36 offer, the Defendants should be required to pay the Claimant an additional amount of £75,000 pursuant to CPR r. 36(17(4)(d);

d. Issue 4 – Whether the Claimant should be awarded indemnity costs, either on the basis of having beaten their Part 36 offer or by reason of the Defendants' conduct and this Court's findings in the case;

e. Issue 5 – The sum to be awarded to the Claimant on account of costs;

f. Issue 6 – The interest rate on costs to be paid up to the date of the Claimant's Part 36 offer; and

g. Issue 7 – In light of my conclusion on the validity of the Part 36 offer, what interest rate should apply to costs to be paid as a Part 36 consequence.

In addition, the Defendants seek permission to appeal against my judgment ( Issue 8).

It will be noted that issues 2, 3, 4 and 7 either directly concern or are related to the issue of the validity of the Claimant's Part 36 offer. Accordingly, I propose to deal with these issues together, after I first deal with the appropriate rate of interest on the judgment sum.

Issue 1 – Interest on the judgment sum

The Claimant seeks an order that the First and Fourth Defendants pay interest at a rate of 6% above the Bank of England base rate on the judgment sum of £2,154,285 for the period between 9 March 2016 to 21 November 2023 (being 21 days after the date of its claimed Part 36 offer). This would amount to a total of £1,165,081.59. The Defendants argue that the appropriate interest rate should be 1% above the Bank of England base rate, in line they say with the Commercial Court's usual practice.

The relevant principles concerning the exercise of this court's discretion in determining the interest rate were summarised by the Court of Appeal in Carrasco v Johnson [2018] EWCA Civ 87 at [17] as follows:

17. The guidance to be derived from these cases includes the following:

(1) Interest is awarded to compensate claimants for being kept out of money which ought to have been paid to them rather than as compensation for damage done or to deprive defendants of profit they may have made from the use of the money.

(2) This is a question to be approached broadly. The court will consider the position of persons with the claimants' general attributes, but will not have regard to claimants' particular attributes or any special position in which they may have been.

(3) In relation to commercial claimants the general presumption will be that they would have borrowed less and so the court will have regard to the rate at which persons with the general attributes of the claimant could have borrowed. This is likely to be a percentage over base rate and may be higher for small businesses than for first class borrowers.

(4) In relation to personal injury claimants the general presumption will be that the appropriate rate of interest is the investment rate.

(5) Many claimants will not fall clearly into a category of those who would have borrowed or those who would have put money on deposit and a fair rate for them may often fall somewhere between those two rates.

In Challinor v Bellis [2013] EWHC 620 (Ch) at [21], reciting the claimant's submissions, Hildyard J referred to the fact that:

“(2) … the Court adopts a broad brush. For practical reasons it will not make an enquiry into the claimant's actual loss; nor will it enquire or speculate as to what the claimant would have done with the money had he not been deprived of it. The Court almost invariably adopts as its measure what it would have cost a person in broadly the same position as the claimant to borrow the money of which he was deprived. Thus, to quote Steyn J in Banque Keyser Ullman again, the aim is to establish the rate(s) at which “a person in the position of the claimant would have had to pay to borrow the money” over the period for which interest is awarded…

…

(6) Moreover, there is also a consistent line of authority supporting rates above the Commercial Court rate where the claimant is a small business or (as in this case) a group of individuals. Thus:

(a) In Jaura v Ahmed [2002] EWCA Civ 210, the “real costs of borrowing incurred by…small businessmen” were fixed at 3% over base, Rix LJ observing (at paragraph 26) that “The law should be prepared to recognise, as I suspect evidence might well reveal, that the borrowing costs generally incurred by them are well removed from the conventional rate of 1% above base (and sometimes even less) available to first class borrowers”.

In Reinhard v Ondra [2015] EWHC 2943 (Ch), Warren J cited Andrew Smith J in Fiona Trust and Holding Corporation [2011] EWHC 664 at [9] where he said this:

“ The relevant principles are not contentious. The rate of interest is at the discretion of the court.

Secondly the purpose of an award of interest is fairly to compensate the recipient for being deprived of money that he should have received. Thirdly a “broad brush” approach is taken to determine what rate of interest is just and appropriate. As Andrew Smith J put it in Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2011] EWHC 664 (Com) at para. 16:

“… it would neither be practical nor proportionate (even in a case involving as large sums as these) to attempt a minute assessment of what will precisely compensate the recipient. In particular, the courts do not have regard to the rate at which a particular recipient of compensation might have borrowed funds. This policy is adopted in order to control the extent of the enquiry to ascertain an appropriate rate: see Banque Keyser … the court will, however, consider the general characteristics of the recipient in order to decide whether to assess interest at a rate that is higher or lower than is conventional. So, for example, in Jaura v Ahmed [2002] EWCA Civ 2010, Rix LJ awarded interest at the base rate plus 3% to reflect that “small businessmen” had been kept out of their money and in recognition of the “real cost of borrowing incurred by such a class of businessmen”. Thus, the court will examine what has been called “a question of categorisation of the plaintiff in an objective sense” (see the Banque case Allman case) … recognise relevant characteristics of the party who was awarded interest and reflect them when determining the fair and appropriate rate. …”

The Claimant also relies upon the case of Attrill v Dresdner Kleinwort & Commerzbank [2012] EWHC 1468 (QB), in which this Court awarded interest at 5% above base rate to the claimants based upon Bank of England effective interest rates on unsecured loans during the relevant period. As that case concerned a claim brought by private individuals against their former employer, there was nothing to suggest the claimants could have borrowed at the rates available to a commercial entity. Consequently, Owen J concluded that the appropriate interest rate was the cost of unsecured borrowing by individuals.

Mr. Hugh Sims KC (counsel for the Claimant with Jay Jagasia) submitted that the Claimant brings this claim as assignee of Mr. Gifford's claim against the Defendants, and so stands in the shoes of Mr. Gifford. The court should accordingly assess the appropriate rate of interest for a private individual or small businessman rather than a substantial commercial entity. I did not understand Mr. Brown KC for the Defendants to dispute that and I consider it to be the correct approach. Rather, the dispute centred upon the relevant rate for such a category of person.

The Claimant relies upon Bank of England data for the period February 2016 to February 2025 which sets out the monthly average of UK resident banks' sterling weighted average interest rate in the case of new and non-new loans...