As is fairly well known, the standard rate of interest that a Pursuer seeks in respect of a claim for money is 8% per annum. This rate is set by legislation: rule 7.7 of the Rules of the Court of Session, and the Sheriff Courts (Scotland) Act 1892 for the Sheriff Court. These rates are amended from time to time, and have been significantly higher in the past. For instance, in 1985 the Court of Session’s rate of interest was 15% per annum (Scottish Law Commission, Report 203, footnote 5).
Aside from the rate of interest, the other crucial component is when the interest is to start running from. Clearly a Pursuer will wish to have the interest running as early as possible, so as to maximise their claim. There are particular rules for the start date, depending upon the particular type of claim. For instance, some claims (such as personal injury) will usually attract interest as from the date of decree, whereas those claims that ‘crystallised’ at an earlier date (such as a proven loss of profit) can attract interest from the date of crystallisation.
The courts have discretion as to both the amount of interest, and when it should start from. In a damages claim, in particular, the court has a statutory entitlement to determine these matters (Interest on Damages (Scotland) Act 1958, s.1).
In National House-Building Council v Scott Hogarth Homes and Ors [2017] CSOH 7, the Court of Session noted that it had discretion as to the appropriate award of interest. In that case, the court awarded the sum of £1,328,554.71 to the Pursuer. The court did not, however, award interest at 8% per annum from the date of citation as the Pursuer requested. Instead, and expressly taking account of the currently low bank base rates, the court awarded 4% interest per annum from the date of citation, and the ‘traditional’ 8% per annum from the date of decree.
This case serves as a timely reminder that, whilst “8% from the date of citation” may be what the Pursuer requests in any given case, it is by no means a hard and fast rule. In today’s climate of incredibly low interest rates it would appear that there is scope for arguing for a lower sum.
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