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GAZETTE
JULY/AUGUS
T 1982
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
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. •
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