The Gazette 1982

GAZETTE

JULY/AUGUS T 1982

companies, a similar rule here would be beneficial and would lead to more efficient litigation and more expeditious settlements. A fairly obvious weakness of the new Irish interest provisions is where a debtor settles his debt prior to judgment or to an order for payment. In such a situation he cannot be ordered to pay interest to his creditor as there is no order for payment. Furthermore, where money is paid on account, even after proceedings have commenced, the Plaintiff must credit the payment against the debt and may only obtain judgment for the balance {Hughes -v- Justin [1894] 1 Q.B. 667). As interest may only be awarded in respect of the sum for which judgment is given, the debtor who has the means to pay his debt may obtain a period of interest-free credit by delaying payment until the last moment before judgment. Even if he does not pay it all before judgment he can only be ordered to pay interest in respect of the balance left outstanding for which actual judgment is given. A surprising oversight by the drafters of the Irish interest provisions is the complete vacuum in regard to arbitration. Section 22 is not specifically extended to arbitrators. Yet at the same time as the Oireachtas was considering the concept of judicial discretion to award interest, the English Court of Appeal was casting grave doubt on the powers of arbitrators to award interest by way of analogy with the English 1934 Act. This was in Tehno-Inpex -v- Gebr. Van Weelde Scheepvaarkantoor B.V. [1981] 2 W.L.R. 821. Even more judicially alarming in that latter case Lord Denning M.R. in a dissenting judgment on the point sought to reverse the House of Lords 1893 decision in the London, Chatham and Dover Railway Company case (supra.) and argued that arbitrators had power to award interest at common law. Whereas the other two judges in the Court of Appeal disagreed with Lord Denning, the resulting uncertainty from the Techno-Inpex case should make prudent solicitors advise clients entering into contracts with astute debtors to ensure provision for late payment and for interest. The 1981 Act has undoubtedly improved the law on interest and was certainly long overdue. It is frustrating that the Oireachtas did not fully learn from the English experience when modelling our legislation on their 1934 Act. New anomalies have been created which will await reform. Hopefully the pace of change will not be as slow as the centuries it has taken us in this jurisdiction to change the structure of the common law. •

were much higher than the 11% provided for in the Debtors (Ireland) Act 1840, as amended by the 1981 Act. The granting of interest in this case did not mean that the recovery of interest on arrears in any claim by way of liquidated demand should be automatic. Per Finlay P.: "The Court must exercise a discretion and it may well be that Plaintiffs seeking an order for such interest, and, unless and until the legislation is amended, having to come to the Court for that purpose, may well be advised to amplify the effects and consequences of the failure or refusal of the Defendant to pay so as to justify a claim for interest." Lastly, the learned President ruled that it was not necessary to explicitly mention the claim for interest on the summons. Since the Mellowhide Products case the practice has been developing in the High Court of transferring fy undefended cases to the judge's list for ruling on claims for interest. It is to be hoped that the Oireachtas will listen to the suggestion that the Master should also have this jurisdiction so that unnecessary expense can be avoided. Another difference from the English section is that the Irish Court is compelled to give interest at the rate specified for the time being in the Debtors (Ireland) Act 1840, (as amended by the 1981 Act) that is, 11% at the present time. The judge's discretion to award interest as he thinks fit is qualified by Section 22 (2) (a) which pro- vides that the Section shall not "authorise the giving of interest on interest". Thus compound interest is not possible and where the creditor has a contractual right to interest on his debt the judge has no jurisdiction to award interest on the interest element in the claim. In England, it has been decided, however, that interest may be awarded on damages even where the damages are assessed by reference to interest which the plaintiff has had to pay, Bushwall Properties Limited -v- Vortex Properties Limited [1975] 1 WLR 1649). A further limitation on the judicial discretion to award interest is the preservation by Section (2) (b) of the 1981 Act of the common law rules on interest due by right on a debt as described earlier; and likewise, the position on bills of exchange is unchanged. A restriction on the power of the Irish judge which does not exist in the English section in their 1934 Act is contained in Section 22 (2) (e) of the 1981 Act. Interest may not be given on damages for personal injuries, or in respect of a person's death, in so far as the damages are in respect of any loss occurring after the date of the judgment for the damages, or any loss other than pecuniary loss occurring between the date of accrual of the damages and the date of judgment. Since 1969, the English Administration of Justice Act provides that in every case of personal injury or wrongful death where the damages exceed £200 an award of interest should be made unless there are special reasons for refusing it. The reasoning behind this is to encourage claims to be brought before the courts with greater speed. It is submitted that, despite the objections of the Irish insurance

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