Judgment

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1. This judgment arises out of a trial in which I handed down judgment on 23 August 2017. As set out in that judgment, the litigation arose out of the performance and termination of a contract between the parties for a Commodity Trading and Risk Management system. In summary, the claimant, TPT, was unsuccessful in its claims. The defendant, PTT, successfully defended the claims against it and succeeded in its counterclaim in a total sum of over US$ 4 million. By consent all consequential matters were reserved and a hearing to deal with those outstanding matters was held on 4 October 2017.

2. By the time of that hearing, apart from the Claimant, TPT's, application for permission to appeal which I dealt with orally, there were 4 contentious matters, which I take in the order in which they were addressed by PTT:

3. I had before me on the application 3 statements of Mr Robert Fidoe of Watson Farley & Williams LLP, PTT's solicitors and 2 statements of Alexander Shirtcliff of Kobre & Kim (UK) LLP, TPT's solicitors.

4. The background to these issues is the Part 36 offer made by PTT dated 31 May 2016. In that letter PTT offered to accept the sum of US$2,091,075.76 in settlement of both claim and counterclaim. That offer expired on 21 June 2016. Obviously, therefore, PTT has done better than that offer and there is no dispute that the provisions of CPR Part 36.17(4) are engaged.

5. That Part provides as follows:

The rate of interest

6. It is common ground that PTT is entitled to interest on damages from the date of termination of the CTRM Contract, 23 March 2015, to 21 June 2016 and to interest at an enhanced rate thereafter. The period over which that enhanced rate should apply is, however, in issue.

7. So far as the rate of interest to 21 June 2016 is concerned, it is PTT's case that it should have interest at a rate of 6.5% which, as set out in Mr Fidoe's statement, is a rate that has been derived from lending rates in Thailand.

8. PTT's argument is that PTT is a Thai company; the contract was made and performed in Thailand; and its losses were felt in Thailand. Further Mr Fidoe's evidence is both that that rate compares favourably with the statutory rate of interest in the Thai courts pursuant to the Civil and Commercial Code of the Kingdom of Thailand and that it is below PTT's own cost of capital and financing which is calculated based on a Weighted Average Cost of Capital.

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9. TPT argue that the rate should be US Prime Rate which, accordingly to the Appendix to Mr Shirtcliff's statement, has varied over the relevant period between 3.25% and 3.50%.

10. I trust that I do no injustice to TPT's argument by putting it simply as that the currency of the contract and the judgment is US dollars and that it is, therefore, appropriate for the rate of interest to be US prime rate. In my judgment that submission is well made.

11. Although the contract was concluded in Thailand and largely performed in Thailand for a Thai company, the parties in at least two important respects divorced this contract from Thailand: firstly, they chose to make the contract subject to the law of England and chose the jurisdiction of the courts of England and Wales; secondly, they chose the currency of the contract as US dollars. Given the choice of law and jurisdiction, a comparison with the rate that would have been applied in the Thai courts seems to me irrelevant. Given the choice of currency, and as I consider further below, the company's general costs of financing are also of little, if any, relevance and there was no evidence of the cost of borrowing US dollars.

12. On this issue, Mr Stafford QC, on behalf of TPT, referred me to McGregor on Damages, 19th ed., para. 18–120 for a summary of the position. I quote from this paragraph:

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13. This summary, and the authorities it refers to, indicate that it is common to award interest at US Prime Rate as the cost of borrowing US dollars, where the currency of loss and damage is US dollars. But that is not necessarily the case, particularly where there is evidence of a more appropriate rate of borrowing that currency.

14. In this case, the currency of the contract was US dollars; the contractual cap on liability was, by definition, in US dollars; and liquidated damages for delay were expressed in US dollars. PTT's counterclaim was in US dollars. As I said in my judgment, the evidence in support of that counterclaim was broad brush, although not challenged, but there was therefore no evidence as to the currency in which that loss was felt or how it was funded.

15. In my view, in these circumstances, I should adopt the common approach and interest should be payable up to 21 June 2016 at US prime rate.

16. So far as the enhanced rate of interest is concerned, PTT argue that it should be at 4% over the basic rate of 6.5%, subject to the cap in rule 36.17(4)(a). TPT argue for a figure of 5.5% which appears to be based on an uplift of 4% over what would have been payable if interest had been payable at a percentage over base rate.

17. The effect of PTT's case is that I am invited to award the maximum rate allowed under the CPR. Mr Stafford QC says that that is wrong because the maximum is not the starting point and should only be awarded where it reflects seriously poor conduct of the litigation, or even misconduct of the litigation. Mr Howells QC, for PTT, submits that that approach is wrong in principle – if a reasonable enhancement brings the Court to the maximum rate, then so be it.

18. Mr Stafford QC referred me to the recent decision of the Court of Appeal in OMV Petrom SA v Glencore [2017] EWCA Civ 195. In that case, the appellant succeeded in its argument that the trial judge ought to have allowed the maximum 10% enhancement under (the previous) CPR Part 36.14(3)(a) and (c). Firstly, the Chancellor emphasised that the rate of 10% was not a starting point and was the maximum possible enhancement. Secondly, he emphasised that the objective of the rule was to encourage good practice. Against that background, he recognised that the award of an enhanced rate of interest was not entirely intended to be compensatory:

19. In that case, Glencore's conduct had been “deplorable, if not outrageous”: it was guilty of lying, it had ignored the Part 36 offer made and it had shunned any mediated solution.

20. The present case is wholly different. There is no particular criticism to be made of TPT's conduct of the case, other than, as Mr Stafford QC put it, the sort of grumbles which occur in hard fought litigation and, in my view, Mr Stafford QC is right in his submission that it would be wrong in principle to award the maximum rate of enhanced interest because it would leave nowhere to go.

21. That said, the litigation itself must inevitably have caused some disruption to PTT – I can infer that employees were diverted from their normal roles to the giving of instructions and giving of evidence in litigation in London. As I have said, TPT accepts that there should be an enhanced rate of interest applied and that seems to me properly to recognise, whether one calls it compensatory or penal, the disruption that litigation causes, and that here has been caused, after the making of a reasonable offer to settle.

22. The rate contended for PTT cannot be right both because it represents the maximum that can be awarded and because it is based on the assumption that the rate of interest otherwise applied is 6.5%, a submission which I reject.

23. The rate of 5.5% contended for by TPT makes little sense because it assumes that the unenhanced rate of interest is related to UK base rate, which it is not. On TPT's own case that that rate should be the US prime rate, the proposed enhanced rate represents a small uplift only over US prime rate. It is not entirely clear from Mr Shirtcliff's statement, in which the Appendix appears, in error, to refer to interest rate changes in 2015, but the US prime rate would seem to have varied between 3.50% and 4.25% in the period after June 2016.

24. In my judgment, and in the exercise of my discretion, an appropriate uplift is 4% over the US prime rate. What that rate is over the relevant period will need to be calculated.

The period of enhanced interest

25. PTT's case is that the enhanced rate of interest should apply from 21 June 2016 until the date of the hearing on 4 October 2017, alternatively the date of judgment. TPT argue that it should only apply until the last day of trial, namely 31 January 2017.

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26. Mr Stafford QC was at pains to emphasise that no criticism was being made of the time that had elapsed between the conclusion of the hearing and the provision of a draft judgment or handing down of the finalised judgment. He fairly and rightly recognised that that this was a case of considerable complexity with copious documentation and evidence (in electronic form) and raising a multitude of issues both factual and legal. In any such case, there is no realistic expectation that judgment will be given on the last day of trial and there is, on the contrary, an expectation that there will be a period (of weeks or months) before judgment is handed down. As Mr Howells QC put it, it is simply an incident of litigation. This is also a matter of which Civil Procedure Rules committee must, I think, be taken to have been well aware, yet no provision is made in the rules for the enhanced rate of interest to cease to apply on the last day of trial.

27. Mr Stafford QC reminded me that the Court nonetheless still has considerable discretion as to the period over which enhanced interest should apply: Petrotrade Inc v Texaco Ltd. [2000] EWCA Civ 512. Whilst that is so, there is no rule or general practice that enhanced interest should only be payable up to the last day of trial and, if there were, it would fail to recognise the time needed to give judgment in any case of any complexity.

28. I will, therefore, award enhanced interest up to the date of the hearing on 4 October 2017. TPT drew to my attention the decision in Barnett v Creggy [2015] EWHC 1316 (Ch) to the effect that judgment was not “entered” until the court made the order that followed from reasons handed down and thus appeared to accept that, if I was against them on the period of enhanced interest, it should continue until the date of any order for payment of the judgment sum. In this case, the date of the hearing of consequential matters was one convenient to both parties and there is no reason why the enhanced rate should not continue until that date.

29. TPT's submissions went further and they argued that the Judgments Act rate should not apply thereafter, in any event, the Court having discretion to vary the rate applicable to a judgment not made in sterling (under s.44A of the Administration of Justice Act 1970). Mr Stafford QC relied on the decision of Hamblen J (as he then was) in Standard Chartered Bank v Ceylon Petroleum [2011] EWHC 2094. Hamblen J set out that the amendment which had effected s.44A had been intended to deal with the discrepancy between the Judgments Act rate (which reflected UK interest rates) and the rate of interest that might be applicable to an award in a foreign currency and he observed that the Judgments Act rate no longer reflected UK interest rates. He then said this [at paragraphs 21 and 22]:

30. I consider that I should take the same approach as Hamblen J. The project and the dispute did not involve sterling at all. I repeat that the currency of the contract was US dollars and the loss was claimed in US dollars. I, therefore, exercise my discretion to depart from the Judgments Act rate and interest from 4 October 2017 will be payable at the applicable US prime rate.

Costs

31. The following is uncontroversial between the parties:

32. So far as the interim payment is concerned, PTT seeks a payment on account of costs in the sum of £2,147,094.22 which is the amount of PTT's approved Costs Budget. PTT's evidence is that its costs have, in fact, been significantly greater and that it has incurred a further £494,716 in costs, the majority of which was incurred after 21 June 2016. TPT accepted, subject to the issue that I refer to below, that the interim payment should be in the full amount of PTT's approved costs budget.

33. There was considerable argument at the hearing, however, as to the amount of any interim payment because TPT argued that I could not be satisfied as to what amount would be recoverable by PTT. That argument arose because TPT argued that PTT might not be entitled to recover costs paid not to its solicitors, Watson Farley & Williams in London but to Watson Farley & Williams (Thailand) Ltd. (“WFW Thailand”) in Thailand, which did not appear to be a regulated law practice. Mr Stafford QC's skeleton argument was prefaced with a series of issues that might arise in these circumstances and he invited the court to adjourn the hearing fixed for 4 October 2017.

34. Once that issue had been raised in the skeleton argument, Mr Fidoe provided a third witness statement on 3 October 2017, in which he promptly confirmed (i) that WFW Thailand was registered with the Solicitors Regulation Authority and complied with the SRA Overseas Rules 2013 and (ii) that WFW was not a regulated entity but was authorised, in accordance with the Overseas Rules, to conduct reserved legal activities and employed regulated individuals (ie English solicitors).

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35. That did not satisfy TPT who continued to pursue the issue at the hearing and, to my mind, derailed the hearing to a considerable extent in doing so. TPT maintained at the hearing that there was no insinuation of improper conduct on the part of Watson, Farley & Williams and that they, TPT, were entitled to ask questions about the costs bill. It seems to me that once Mr Fidoe had explained the position and his explanation was not accepted, there was inevitably such an insinuation, despite TPT's assertion to the contrary.

36. I did not adjourn the hearing, not least because I wished to hear the submissions as to the point being taken. In essence the point appeared to be that if WFW Thailand was not a regulated entity it could not conduct litigation in England and Wales and its costs could not be recovered; on the other hand, if WFW Thailand was acting as agent for the English regulated entity, its costs could not be recovered as disbursements because the work it was doing could have been, and would normally have been, carried out by English solicitors. I express no view as to the merits of that argument.

37. At the conclusion of the hearing, I invited the parties to try to confirm the position and inform me whether any issue, in fact, arose. So far as I am aware, TPT took no steps to do so. Watson Farley & Williams did, however, provide a detailed 4 page response by letter dated 6 October 2017. On 10 October 2017, Kobre & Kim responded by a brief e-mail stating that in the light of the letter, Mr Fidoe's third statement and their own inquiries (as to which no further detail was given), the issue they had raised was no longer one that I needed to address. It seems to me unfortunate that there was no recognition of the disruption that this issue had caused and no apology to Watson Farley & Williams for the implicit criticism of them.

38. It follows, in any event, that I will order an interim payment on account of costs to be made by TPT to PTT in the sum of £2,147,094.22.

Interest on costs

39. PTT seeks an order that TPT pay interest on PTT's costs incurred and paid after June 2016. These costs are all expressed in Thai Baht but Mr Fidoe's statement provides a conversion to sterling. Mr Fidoe explains that (i) WFW Thailand had overall conduct of the matter with the London office assisting where a presence in England was required and (ii) the legal fees and disbursements summarised in the appendix to his first statement were billed by WFW in Thailand in Baht and paid by PTT in Baht. PTT seeks a rate of interest of 10% over base rate, being 4% over the claimed rate of 6.5%.

40. TPT's position is that, since the costs are expressed in sterling, an appropriate rate is 2% above base rate applied to costs incurred after the expiry of the relevant period. No greater rate is warranted because there had been nothing unreasonable in TPT's conduct of the litigation.

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41. On this issue, I prefer TPT's submissions. Firstly, any criticism of TPT's conduct is the grumbling, as Mr Stafford QC put it, of big litigation. There is nothing that requires a greater rate of interest to mark the disapproval of the court. Whilst the costs may have been incurred in Thai Baht, that is because services have been provided in Thailand in connection with litigation in the English courts. The evidence of fees and disbursements consists only of figures. The costs incurred after 21 June 2016 must include counsel's brief fees and payments to Watson, Farley & Williams in London, which could reasonably be expected to have been in sterling. In respect of costs claimed in sterling in litigation in the English courts, it seem to me appropriate to award interest based on UK interest rates.

The additional amount

42. PTT asks for an additional amount of £75,000 pursuant to CPR Par 36.17(4)(d). TPT accepts that the Court is likely to wish to award that amount and makes no submissions to the contrary. I, therefore, award that additional amount to PTT.

Conclusions

43. I, therefore, order the following: