There is a general provision under Order 42 (9) to allow the Courts, within their discretion, to award interest on general or special damages up to maximum rate of 8% per annum (applicable since April 1993). Over the last number of years the courts have conventionally awarded interest at 2% for general damages (from the date of service of the writ of summons) and 6% for special damages (from the date the loss incurred). This practice was affirmed by Mr Justice Shiel in McDowell –v- Smyth and MIB (1996).
In England and Wales the rate of interest awarded for special damages is generally set at half of the ‘Special Investment Account Rate’. In the last 12 months the Bank of England interest rate has fallen to the lowest level in its 315-year history. In this context the Special Investment Account Rate fell from 6% to 3% on 1st February 2009 and accordinglt in England and Wales generally the rate of interest awarded for special damages has fallen to 1 ½ %.
The Court of Appeal in Northern Ireland recently considered the issue of interest rates in the Robert Wilson v James Gilroy and MIB (2009) NICA 48. In this case, amongst other issues, the Plaintiff argued that he should have been awarded interest at a rate of 8% on his awards for general and special damages.
The Court of Appeal allowed interest on general damages at a rate of 2% from the date of service of the writ. The plaintiff also sought interest on special damages awarded in respect of loss of earnings from 18 December 2004 until 6 April 2008. The Court of Appeal noted that for some time there has been “a conventional rate of 6% for interest on outstanding amounts which takes into account that interest rates have varied significantly over the last number of years.” No doubt in consideration of the current economic climate the court considered that “at some stage it may be appropriate to reconsider the appropriate rate” but the necessary material was not available in this case to do so. The Court of Appeal did however go on to award interest at the rate of 3% per annum on the Plaintiff’s claim for loss of earnings.
The rate of interest awarded by the Court of Appeal is double that which is currently awarded in England and Wales however we must consider that the loss of earnings claimed arose between December 2004 and April 2008. Over this period interest rates undoubtedly fluctuated however the Bank of Interest base rate did not begin to plummet until October 2008. Therefore if we are dealing with special damages post October 2008 one could argue that the rate of interest awarded on this special loss should be significantly lower than the 3% awarded by the Court of Appeal.