Sabic UK Petrochemicals Ltd (formerley Huntsman Petrochemicals (UK) Ltd) v Punj Lloyd Ltd (a company incorporated in India) (by original action)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 10 October 2013 |
| Neutral Citation | [2013] EWHC 3202 (TCC) |
| Date | 10 October 2013 |
| Docket Number | Case No: HT-11-311 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2013] EWHC 3202 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Stuart-Smith
Case No: HT-11-311
and
Piers Stansfield QC (instructed by Bond Dickinson LLP) for the Claimant
Nicholas Dennys QC and Steven Walker QC (instructed by Fenwick Elliott LLP) for the Defendant
Hearing dates: 10 October 2013
As set out in the main judgment at [2013] EWHC 2916 (TCC), SABIC now contends for statutory interest rather than attempting to calculate the cost of completing the works as part of its claim under Clause 30.9 of the EPC contract. PLL/SCL accepts the principle that interest is recoverable pursuant to statute, but issues have arisen on the correct approach to be adopted.
SABIC contends for interest at 2.5% up to today and, for the future, at the Judgments Act 1838 rate (8%) until payment. It has calculated a monthly profile of the costs it incurred to complete based upon the material in the quantum experts' reports and other evidence. That calculation has included SABIC's management costs, the costs attributable to Foster Wheeler, SABIC's scope completion costs and the main items of costs attributable to the repair of the EVS. Where the main judgment awards less than the amounts expended overall, SABIC has reduced its calculation pro rata to reflect the level of the awards made by the main judgment, the factor of reduction being based on the difference between £40,489,714 (the total of the costs expended by SABIC) and £39,117,514 (the amount established as costs to complete). Credit is given at the outset for the receipt of the bond monies, with the result that SABIC's calculation goes into net deficit in April 2009. Interest is calculated from then on at 2.5% on the basis that 2.5% is 2% over base and "the normal commercial rate of interest" throughout the period from April 2009 to date. SABIC's calculation, if accepted entirely, would lead to an award of interest of £1,271,640.
In response, PLL/SCL takes a number of points leading to the overall submission that no interest should be awarded:
i) First, PLL/SCL submits that interest should not run from a date before the relevant cause of action accrued. PLL/SCL submits on this basis that the earliest date from which SABIC could properly claim interest would be on or around 13 February 2009. Since SABIC does not claim interest before April 2009, it is not necessary to consider this point further;
ii) Second, PLL/SCL submits that the sum of £11,797,514 awarded by the main judgment includes £4,250,000 in respect of SABIC personnel who would have been employed by SABIC in any event. The submission is that, since SABIC would have incurred the cost of employing them in any event, no interest should be awarded in respect of the cost of their employment;
iii) Third, PLL/SCL points to the evidence that SABIC was funded by debt until 30 September 2009 but not thereafter. It submits that statutory interest is awarded to reflect the cost of borrowing money and that accordingly interest should not be awarded for the period from October 2009 by reference to a notional cost of borrowing since, on the evidence, SABIC was not borrowing. Instead, it submits that the appropriate rate from October 2000 would be 0.5% on the basis that such a rate reflects what SABIC would have earned if it had received the money on time and chosen to invest it in the markets;
iv) Fourth, PLL/SCL submits that interest should be contra-charged in its favour for the period from when the bonds were called until April 2009, when the account went into deficit from SABIC's perspective. This submission is made on the basis that, by virtue of the receipt of the bond monies, SABIC's interest bill during that period was reduced since its borrowings were reduced. Since SABIC was then borrowing from its parent at 7.22% in 2008 and 5.87% in 2009, PLL/SCL submits...
To continue reading
Request your trial
-
Table of cases
...II.11.35, II.11.36, II.11.56, II.12.59, II.13.217, II.13.219, III.22.39, III.26.141 Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd [2013] EWHC 3202 (TCC) III.26.311 Sable Contractors Ltd v Bluett Shipping Ltd [1979] 2 Lloyd’s Rep 33 III.26.172 Sable Ofshore Energy Inc v Ameron International C......
-
Litigation
...plc v Seagate Technology Inc (1997) 86 BLR 34 at 63–64, per Judge LLoyd QC. Compare Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd [2013] EWHC 3202 (TCC) at [6]–[11], per Stuart-Smith J. 1295 A “commercial rate” will usually be appropriate where the party to be awarded interest is a commercia......