INTEREST ON DAMAGES (SCOTLAND) BILL (Hansard, 15 July 1958)

§ LORD GREENHILL
My Lords, this is a Private Member's Bill introduced by my honourable friend Mr. Willis, the Member for Edinburgh, East, whom I should like to congratulate on his success in getting this Bill through the other place unopposed. It is a non-contentious measure and applies to Scotland only. The matter with which the Bill deals arises from an invitation by the Lord Advocate to the Law Reform Committee for Scotland to consider the rules governing the date from which interest on an award of damages is or may be ordered by the court to run. The Law Reform Committee, under the chairmanship of the honourable Lord 1032 Walker, in their Third Report (Command No. 141) recommended that all courts having jurisdiction in questions of damages should be empowered to award interest from the date of citation. This Bill gives effect to that recommendation. Two considerations, among others, appear to have influenced the Law Reform Committee in arriving at their recommendations. One was that, owing to the congestion in the Scottish courts, there may be considerable delay between the bringing of an action and the ultimate decision—it is a common experience, they say, for eighteen months or two years to elapse between the bringing of an action and an ultimate decision—and, to a lesser extent, the possibility that some actions would be settled sooner if defenders knew that interest upon damages might be awarded from a date earlier than the award.
Since, as a layman, I am conscious of the pitfalls that lie ahead in attempting to deal in detail with great legal technicalities, perhaps your Lordships will permit me to refer a little more closely to the notes with which I have been supplied. Under the law of Scotland as it stands at present, interest runs automatically at 5 per cent. on damages from the date of the decree decerning for payment of the damages. This decree for payment is distinct from the fixing of the amount of the damages, which, in a jury case, may occur some time before the date of the decree. If asked, the court may back-date interest from an earlier date; but there has been no case in which interest has been so back-dated to a date earlier than the date on which the amount of the damages was fixed. It would probably be incompetent, as the law stands, to back-date further than this, because it is a general rule that interest runs only on a "liquid" debt, and damages do not become liquid until they are fixed.
Clause 1 (1) of the Bill, as read with the definitions in Clause 3 (2), provides that an interlocutor decerning for payment by any person (whether he is the defender in the action or, as may happen where there is a counterclaim by the defender, the pursuer) of a sum of money as damages may include interest on the sum or any part thereof at a specified rate from a date not earlier than the date on which the person (if he is the defender) was cited or (if he is a pursuer against 1033 whom a counterclaim has been made) the date on which the counterclaim was lodged in court; or, if the counterclaim has been made by way of adjustment to or amendment of the pleadings, the date on which the record was closed or, as the case may be, reclosed.
The date of citation "of a defender is the date on which he is" cited "or summoned to enter appearance in the action. The closing of the record in an action is the procedural point after which neither party can, without special permission, make any alteration to his written pleadings. Subsection (1) does not deal with the running of interest after the date of the interlocutor. Subsection (2) of Clause 1 does three things which are detailed in the Bill. Clause 2 provides, as respects jury cases in the sheriff court, for review of the decree of the sheriff so far as it includes an award of interest under this Bill. Clause 3 (1) contains the short title. Subsection (2) provides certain necessary definitions. Subsection (3) confines the Bill to Scotland and provides that it shall not apply to any action commenced by any person before May 1, 1958. I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2^a.—(Lord Greenhill.)

§ THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE)
My Lords, I am sure the House will be grateful to the noble Lord, Lord Greenhill, for the clear and concise manner in which he has explained to us the purposes of this Bill. As he has said, the Bill carries out the recommendations of the Third Report of the Law Reform Committee for Scotland. It remedies a defect in the law which has justifiably caused grievance to those awarded damages. I need say only that the Government support the Bill, and I therefore trust that your Lordships will give it a Second Reading.

LORD SALTOUN
My Lords, there is one point in the Bill about which I should like to ask the noble Lord opposite, which might possibly be provided for, if noble Lords think proper, by an Amendment on the next stage of the Bill. I see nothing in this Bill to affect the payment of interest on sums paid into court by the parties. If a man goes to 1034 court having paid into court a certain sum in respect of damages which is not accepted, I do not think that any provision of the law ought to compel him to pay interest on sums so paid into court. I hope that I have made that point clear to your Lordships, and unless my noble friend opposite can dispose of my criticism in his reply I think perhaps the point should be considered on the next Stage of the Bill.

§ LORD GREENHILL
My Lords, I have already hidden behind the fact that I am not a lawyer, and I cannot give the noble Lord the definite answer I should like. But as I read the report I gained the impression that this power to charge interest lies within the discretion of the judge, and therefore presumably he would take into consideration the points the noble Lord has raised.