Is the Court's 8% interest rate fair?
The rate of interest set out in the 1838 Judgments Act is 8%, way higher than interest rates have been in this country for a good many years.
In a recent case, the Court has highlighted how applying this interest rate to sums claimed, could be unfair.
An NHS consultant brought an employment claim for monies outstanding to him. In their judgment, the Court of Appeal said it would be inappropriate to apply the 8% rate, in certain circumstances.
The general rule has been that this rate will be applied in the small claims track (on claims worth less than 10k). In commercial cases however, interest is usually awarded at 1% above base rate.
In this particular case, the claimant waited nearly six years to start the claim, and once it had been started, he allowed the claim to be dormant for a year. The judge therefore decided that interest should only be allowed for half of that time. The Court of Appeal hearing was also delayed for five years.
The final decision was that interest should be awarded on the sums due, for a period of 8 years, at a flat rate of 5%.
If you have a claim, this case highlights the importance of bringing it quickly, and also demonstrates how important it is to progress matters once the claim has been commenced.
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