Notes to My Story (Part 1)

We will take a short break from 'My Story'.

Here is some interesting find on one of the questions I had asked in ‘My Story Part 1’.

The question I asked is: Why is statutory interest calculated from the date of judgment and not from the date LAD is due?

I am not a lawyer and this is not legal advice. Please check with your lawyers.

Pre and post-judgment Interest

Pre-judgment interest is allowed under section 11 of the CLA (as amended by the Civil Law (Amendment) Act 2019) if the court thinks it fit and just to make such an award on the whole or part of the damages between the period when the cause of action arose and the date of judgment. Though the court has an unfettered discretion on the award of pre-judgment interest, the court must necessarily also take into consideration factors such as the nature of the claim, whether a party was guilty of delay, the conduct of parties as well as the reasonableness of the defence presented.

Post-judgment interest is provided for under the Schedule of the Courts of Judicature Act 1964 and this is further provided for under Order 42, rule 11 of the Rules of Court 2012, and this rate of interest is currently set at 5 per cent by the Chief Justice of Malaysia.

Below is an interesting argument from Singapore courts.

Whether pre-judgment interest ought to accrue on the Judgment Sum. You may read it here.

14 I turn then to whether pre-judgment interest ought to accrue on the Judgment Sum. I was first guided by the general principles relating to pre-judgment interest set out by the Court of Appeal in Grains and Industrial Products Trading Pte Ltd v Bank of India and another [2016] 3 SLR 1308

137 Pre-judgment interest connotes the compensation awarded to a successful claimant for the time value of money the use of which was lost between the date on which the claimant’s cause of action arose and the date of the judgment (Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2006] QB 37 at [46]). The basis for the award lies in the fact that the unsuccessful defendant had wrongfully kept the successful claimant out of moneys to which he has been shown to be entitled, during which time, the defendant instead had the use of it (Harbutt’s “Plasticine” Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447 at 468; see also Lee Soon Beng v Wee Tiam Sing [1985-1986] SLR(R) 799 at [7]).

Historically, the common law provided no remedy in damages for the late payment of a debt or damages (see Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd [1994] 1SLR(R) 669 at [10]; TKM (Singapore) Pte Ltd v Export Credit Insurance Corp of Singapore Ltd [1992] 2 SLR(R) 858 at [119]).

The court’s inherent power to award interest was traditionally confined to limited circumstances such as where interest is claimed as special damages or under the equitable or admiralty jurisdictions (UK Law Commission, Pre-judgment Interest on Debts and Damages, Item 4 of the Eighth Programme of the Law Reform: Compound Interest (23 February 2004) (“UKLC Report”)

at p 7). Recognising that this was often capable of working injustice against claimants, reform efforts were initiated and these culminated in legislation that gave the courts the power to award interest. The Law Reform (Miscellaneous Provisions) Act 1934 was the first statute in England that gave the courts a general power to award interest in all cases. In Singapore, the equivalent of this power was first introduced by the Civil Law (Amendment) Ordinance (No 30 of 1940) which today, is contained in s 12 of the Civil Law Act (Cap 43, 1999 Rev Ed) ...138 As a plain reading of the provision would suggest, interest is not awarded as of right. While the recoverability of interest is a matter of the court’s discretion, we held in Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623 ... at [100]-[103] that as a general rule, damages should commence from the date of accrual of loss. As a matter of principle, claimants who have been kept out of pocket without basis should be able to recover interest on money that is found to have been owed to them from the date of their entitlement until the date it is paid. The object of leaving it to judicial discretion as opposed to laying down a fixed rule making interest payable as of right is to enable the courts to achieve justice across the infinite range of factual permutations that may confront the court by tailoring the award to fit the unique circumstances of each case. Such discretion would extend to a determination of whether to award interest at all; what the relevant rate of interest should be; what proportion of the sum should bear interest; and the period for which interest should be awarded (Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at para 18-031). [original emphasis omitted; emphasis added in italics]

Notes: My readers would probably know by now that I write these posts for the benefit of my readers. I like to share whatever I have learnt so that this world will be a better place for us to live. As I have said many times let us not bring what we have learnt to the grave; the graveyard is full of ideas that had not been shared with others.

Knock (and keep knocking) and the door will be opened for you. For everyone who asks (and keeps on asking) receives. He who seeks (and keeps on seeking) finds. To him who knocks (and keeps on knocking) the door will be opened.