Rattle Plant Hire Ltd v Secretary of State for the Environment Food and Rural Affairs (No. 2)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Jacob,Lord Justice Lloyd,Lord Justice Sedley
Judgment Date27 February 2009
Neutral Citation[2009] EWCA Civ 97
Date27 February 2009
Docket NumberCase No: A1/2008/0948

[2009] EWCA Civ 97

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION (TECHNOLOGY &

CONSTRUCTION COURT)

Before:

The RT Hon Lord Justice Sedley

The RT Hon Lord Justice Jacob and

The RT Hon Lord Justice Lloyd

The Hon Mr Justice Coulson

Case No: A1/2008/0948

HT-06–22

Between
Ruttle Plant Hire Limited
Claimant/Appellant
and
Secretary of State for Environment Food & Rural Affairs
Defendant/Respondent

Andrew Spink QC and Robert-Jan Temmink (instructed by Yates Barnes) for the Claimant/Appellant

Jonathan Acton Davis QC and Fiona Banks (instructed by Eversheds LLP) for the Defendant/Respondent

Hearing date: 23 January 2009

Lord Justice Jacob

Lord Justice Jacob:

1

This appeal is from some of the decisions about interest of Coulson J in his judgment of March last year, [2008] EWHC 730 (TCC). The dispute is between the claimant (“Ruttle”) and the government department now going by the acronym DEFRA, formerly MAFF. What we have to decide is principally about the construction of the Late Payment of Commercial Debts (Interest) Act 1998 (“the 1998 Act”). The general purpose of the Act is to provide for a high rate of interest to run on commercial debts which are not paid on time. Ruttle says it should receive such interest and that the Judge in some cases wrongly refused to award it and in others awarded it but at a wrongly reduced rate. As a fall-back Ruttle says it should receive interest under s.35A of the Supreme Court Act 1981 (the “1981 Act”), that the Judge wrongly held that the Act did not apply until a correct invoice was presented or that if it did apply he wrongly would have refused to exercise his discretion by not allowing interest for the period before then. So we have to consider that Act too.

2

Permission to appeal was refused by the Judge. I granted permission on the papers in respect of some but not all issues. Permission in respect of certain other issues was granted by Rix and Carnwath LJJ on the renewed oral application. In the event not all issues in respect of which permission was granted were pursued.

The Primary Facts

3

In August 2000 there was an outbreak of classical swine fever (“CSF”) in Bury St. Edmunds. DEFRA contracted with Ruttle for it to provide cleansing and decontamination work. The work continued until June 2001. The appeal is about the rates of interest to be paid on the sums due for this work.

4

The contract for the work was arranged in such a hurry that its terms were not settled with precision. The resulting uncertainty ultimately had to be resolved by Jackson J in a judgment of 19 th December 2006, [2006] EWHC 3426 (TCC). He dealt with a host of preliminary points. At this point it is only necessary to mention one of them.

5

It arose in this way. In February 2001, whilst the CSF work was ongoing although near complete, there was a near nationwide outbreak of foot and mouth disease (“FMD”). Ruttle were one of the companies engaged by DEFRA to help with that. Ruttle had so much work on for FMD that its invoicing for its CSF work was put on hold, though some invoices (“the first tranche”) had been sent by then.

6

The issues before Jackson J included the question of what the contractual rates for the CSF work, particularly the plant hire rates, actually were. He held (as contended by DEFRA) they were as set out in certain letters from Ruttle to DEFRA. These rates were somewhat lower than the rates agreed for the FMD work.

7

Ruttle sent three tranches of invoices to DEFRA before a Final Account was issued in the Spring of 2007:

a. “The first tranche” between August 2000 and February 2001;

b. “The second tranche” sent in March 2002;

c. What were called the “Revision A invoices” sent in December 2004 and January 2005.

8

The Final Account used the correct rates and was, so far as we are concerned, correct (the point about undercharges having gone).

9

Each tranche was supported by the underlying documentation (as to hours worked, plant used and so on). So, by applying what it considered the correct plant hire rates were (correctly, as found by Jackson J) DEFRA could not only have checked what was claimed but worked out what it thought it owed.

10

The first tranche was calculated at the correct plant hire rates but had a peculiarity: that the amount claimed for plant hire was discounted by 35%. It is not necessary to understand why – it was said to be for “cash flow purposes” (see the judgment of Jackson J at §287) whatever that means. DEFRA knew about the discount at the time.

11

The second tranche and Revision A invoices were based on the wrong, FMD, rates and so claimed rather more than Ruttle was entitled to. Again DEFRA could have worked out what it considered to be the correct amount from the underlying documentation sent with the invoices.

12

The Revision A invoices also included charges for some items of plant that had been missed out in previous invoices and underlying documentation.

13

There were also some “underclaims”. These were items where Ruttle had miscalculated what work had been done and so got the wrong and too low amount in the various invoices. An example would be where 10 hours labour was charged but the supporting timesheets showed 12 hours.

14

The final fact I should mention is what was called the “labour rate.” The first tranche of invoices charged labour at £14.35 per hour plus overtime. An argument blew up about overtime (the details do not matter). In May 2005 the parties resolved this by agreeing an overall rate, overtime or not, of £17.70. This was the rate applied in the Final Account.

Coulson J's findings as to interest.

15

Coulson J's findings (I set them out with my own numbering which is more convenient for the purposes of identifying our issues) were as follows:

(1) Ruttle were not entitled to interest under either Act until 11 th May 2007 on the 35% which had been discounted in the first tranche and for which, until the Final Account, there never had been an invoice.

(2) Nor was it entitled to interest under either Act for the underclaims until 30 days after notice of the claim was first made at the correct rate.

(3) Ruttle was entitled to interest under the 1998 Act from the outset as if its labour rate had been the £17.70 per hour agreed in May 2005.

(4) Even if there was a prima facie entitlement to interest under either Act from the time of the earlier invoices, in the exercise of his discretion he would have refused that interest until after 11 th May 2007.

(5) The rate of interest so far as it was allowed was to be 2% over base rate under either Act.

The points live on this appeal

16

Ruttle no longer challenges findings (1) and (2), even though the permission to appeal originally given covered them. I am bound to say that sounds wise. To suggest that a man is liable to pay interest on a debt where the creditor has never asked for the money or, as in the case of the discounted first tranche, positively indicated that he is not asking for the money, would be pushing the boat out too far. Even if the case fell under the 1989 Act or the 1981 Act, the court would surely exercise its discretion under the relevant Act to refuse interest. Coulson J understandably said he would have so exercised his discretion if it had come to that.

17

Unfortunately the fact that interest was claimed on the unasked for 35% and the underclaims caused quite a lot of confusion and is evidently in part responsible for the errors which I hold were made by the learned Judge.

18

What Ruttle do challenge are the findings as to the dates from which interest is to run and rates of interest awarded. Specifically the points we must decide are as follows:

(1) Whether the fact that the second tranche and Revision A invoices were calculated using the wrong rates for plant hire precludes the application of the 1998 Act. The Judge so held.

(2) If the 1998 Act does apply to these invoices, should Ruttle nonetheless be deprived of all interest until May 11 2007 by an exercise of discretion under the power contained in that Act (what the Act calls “remission”)? The parties are agreed that by implication the Judge made a hypothetical exercise of discretion to that effect.

(3) Should the 1998 Act rate of interest (8% simple above Bank of England base rate) apply after the 11 th May 2007 or should it be remitted? The Judge held that it should be remitted to 2% above Bank of England base rate.

(4) If the 1998 Act does not apply to the second tranche and Revision A invoices (challenged as issue (1) above) does the 1981 Act apply to these? That turns on when Ruttle's causes of action in respect of the debts to which those invoices relate begin for the purposes of that Act. The Judge held that these causes of action did not arise until correct invoices were sent in the Final Account and so there could be no interest for the earlier periods.

(5) If the 1981 Act does apply to the second tranche and Revision A invoices, should interest under the 1981 Act be withheld until 11 th May 2007 in the exercise of the Court's discretion? As in the case of the discretion under the 1998 Act, it is agreed that by implication the Judge made a hypothetical exercise of discretion to that effect.

Issue (1): Whether the fact that that the second and Revision A invoices were calculated using the wrong rates precludes the application of the 1998 Act.

19

As I have said, the general purpose of the Act is to provide for a high rate of interest to run on commercial debts which are not paid on time. Section 1 provides:

1. Statutory interest

...

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