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You are here: BAILII >> Databases >> Scottish Law Commission >> Scottish Law Commission (Discussion Papers) >> Interest on Debt & Damages [2005] SLC 127 (DP) (January 2005) URL: http://www.bailii.org/scot/other/SLC/DP/2005/127.html Cite as: [2005] SLC 127 (DP) |
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SCOTTISH LAW COMMISSION
Discussion Paper No 127
Discussion Paper on Interest on Debt and Damages
January 2005
This Discussion Paper is published for comment and criticism and does not represent the final views of the Scottish Law Commission
EDINBURGH: The Stationery Office
£xx.xx
This publication (excluding the Scottish Law Commission logo) may be re-used free of charge in any format or medium for research for non-commercial purposes, private study or for internal circulation within an organisation. This is subject to it being re-used accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the publication specified.
For any other use of this material please apply for a Click-Use Licence for core material at www.hmso.gov.uk/copyright/licences/core/core_licence.htm or by writing to: OQPS Licensing Division, St Clements House, 2-16 Colegate, Norwich, NR3 1BQ; Fax: 01603 723000; Email: [email protected].
The Scottish Law Commission was set up by section 2 of the Law Commissions Act 1965[1] for the purpose of promoting the reform of the law of Scotland. The Commissioners are:
The Honourable Lord Eassie, Chairman
Professor Gerard Maher, QC
Professor Kenneth G C Reid
Professor Joseph M Thomson
Mr Colin J Tyre, QC.
The Chief Executive of the Commission is Miss Jane L McLeod. Its offices are at 140 Causewayside, Edinburgh EH9 1PR.
The Commission would be grateful if comments on this Discussion Paper were submitted by 29 April 2005. Comments may be made on all or any of the matters raised in the paper. All correspondence should be addressed to:
Mr Alastair Clyde
Scottish Law Commission
140 Causewayside
Edinburgh EH9 1PR
Tel: 0131 668 2131
Fax: 0131 662 4900
Email: [email protected]
NOTES
Note 1 Amended by the Scotland Act 1998 (Consequential Modifications) (No 2) Order 1999 (SI 1999/1820). [Back]
Contents
| Paragraph | |
| PART 1 Introduction | |
| Terms of reference | 1.1 |
| Background to the reference | 1.2 |
| Scope of the Discussion Paper | 1.3 |
| Research: rates of interest claimed | 1.6 |
| Structure of the Discussion Paper and outline of our proposals | 1.7 |
| Legislative competence | 1.15 |
| PART 2 The Present Law | |
| Interest on debt | 2.1 |
| Historical background | 2.1 |
| Foundations of the modern law | 2.10 |
| Summary of the present law | 2.15 |
| (a) Interest due by agreement | 2.16 |
| (b) Interest due by statute | 2.17 |
| (c) Interest due by implication at common law | 2.19 |
| Loans | 2.20 |
| Possession of heritable property without payment | 2.21 |
| Use of funds belonging to another | 2.22 |
| (d) Interest due on money wrongfully withheld | 2.23 |
| Interest on damages | 2.24 |
| Historical background | 2.24 |
| Statutory interventions | 2.26 |
| Summary of the present law | 2.34 |
| Damages other than for personal injury | 2.34 |
| Damages for personal injury | 2.35 |
| Interest on sums other than debts or damages | 2.36 |
| Interest on sums due in order to reverse unjustified enrichment | 2.37 |
| Ship collisions and salvage | 2.38 |
| Legal rights in a deceased's estate | 2.39 |
| Aliment and financial provision on divorce | 2.40 |
| Awards by tribunals | 2.43 |
| Arbitration and adjudication | 2.44 |
| PART 3 The Case for Reform | |
| The purpose of an award of interest: our guiding principles | 3.1 |
| Criticisms of the present law | 3.7 |
| Inconsistent treatment of debt and damages | 3.8 |
| The wrongful withholding concept | 3.10 |
| Interest on damages | 3.15 |
| Interest in other circumstances | 3.18 |
| Rate of interest | 3.19 |
| PART 4 Interest on Contractual Debt | |
| Introduction | 4.1 |
| A statutory entitlement to interest? | 4.3 |
| Date from which interest runs | 4.10 |
| Supply of goods and services | 4.15 |
| Sale or lease of heritable property | 4.18 |
| Contractual debt where entitlement or quantification requires determination by a third party | 4.23 |
| Contracts of employment | 4.24 |
| Cautionary obligations: cautioner's right of relief | 4.26 |
| Insurance and other claims for indemnity | 4.27 |
| Interaction with the Late Payment of Commercial Debts (Interest) Act 1998 | 4.30 |
| Exception for interest due under other statutory provisions | 4.32 |
| Contracting out of the new scheme | 4.34 |
| Judicial discretion to remit interest | 4.39 |
| Interaction with claims for interest as a head of damages | 4.47 |
| Money held with the consent of the persons entitled to it | 4.50 |
| Loans | 4.51 |
| Obligations to account for money belonging to another | 4.53 |
| PART 5 Interest on Damages | |
| Introduction | 5.1 |
| Date for commencement of running of interest | 5.3 |
| Application of the general rule to particular types of loss | 5.9 |
| Pecuniary losses (including out-of-pocket expenses) | 5.9 |
| Solatium | 5.12 |
| Property lost or destroyed | 5.13 |
| Date for termination of running of interest | 5.19 |
| Judicial discretion to remit interest | 5.21 |
| PART 6 Interest in Other Circumstances | |
| Introduction | 6.1 |
| Unjustified enrichment | 6.4 |
| Repetition | 6.5 |
| Recompense | 6.6 |
| Salvage | 6.12 |
| Limitation funds | 6.14 |
| Obligations to account for money to which another person is entitled | 6.15 |
| Legal rights in a deceased's estate | 6.23 |
| Aliment and financial provision on divorce | 6.25 |
| PART 7 Rate of Interest | |
| Introduction | 7.1 |
| The judicial rate of interest | 7.5 |
| What does "interest" represent? | 7.12 |
| Fluctuation and base rate | 7.14 |
| Selection of base rate | 7.18 |
| Prescribed rate in other legal systems | 7.23 |
| Judicial discretion | 7.29 |
| Foreign currency awards | 7.33 |
| Changes to the prescribed rate | 7.36 |
| Method of calculation | 7.39 |
| Interest at half the prescribed rate | 7.40 |
| Post-decree interest | 7.43 |
| Interest under the Late Payment of Commercial Debts (Interest) Act 1998 | 7.53 |
| Rates of interest under other existing statutory provisions | 7.55 |
| Judicial rate specified | 7.56 |
| No rate specified | 7.59 |
| Rate other than the judicial rate specified | 7.60 |
| PART 8 Compounding of Interest | |
| Compound interest in Scots law | 8.1 |
| Law Commission proposals | 8.12 |
| Other jurisdictions | 8.19 |
| Should Scottish courts have the power to award compound interest? | 8.22 |
| The case against compound interest | 8.25 |
| The case for compound interest | 8.29 |
| Judicial discretion | 8.32 |
| Compounding of risk | 8.36 |
| Claiming simple interest | 8.37 |
| Proposals | 8.38 |
| How should compound interest be calculated and what should be the frequency of compounding? | 8.40 |
| PART 9 Tenders | Part 9 |
| PART 10 Tribunals | Part 10 |
| PART 11 Arbitration, Adjudication and other forms of Dispute Resolution | |
| Introduction | 11.1 |
| Arbitration | 11.2 |
| Adjudication | 11.10 |
| Other forms of dispute resolution | 11.11 |
| PART 12 Transition | |
| Introduction | 12.1 |
| Contractual debts | 12.2 |
| Non-contractual debts | 12.7 |
| Damages | 12.8 |
| Conclusion | 12.10 |
| PART 13 List of Proposals and Questions | Part 13 |
| Appendix A Current Statutory Provisions |
Appendix A |
| Appendix B Statutory Provisions Creating Entitlement to Interest |
Appendix B |
| Appendix C Research Project |
Appendix C |
| Appendix D Comparison of Interest Rates |
Appendix D |
| Appendix E Comparison of Simple and Compound Interest |
Appendix E |
| Appendix F Law Reform Projects in Other Jurisdictions |
Appendix F |
