In Premia Marketing Ltd v Regis Mutual Management Ltd (Costs and Consequential Matters) [2021] EWHC 2968 (QB), the court examined whether interest could be awarded in respect of a commercial debt, despite the absence of an invoice with an expressly agreed payment date.
Under section 4 of the Late Payment of Commercial Debts (Interest) Act 1998 (LPCD(I)A):
Prior to the Costs and Consequential Matters judgment, it was first disputed whether there was an outstanding commercial debt owed to Premia Marketing Ltd, the claimant. They had successfully referred Regis Mutual Management Ltd, the defendant, to The Caravan Club for the purposes of managing a four-year mutual insurance scheme. Despite the defendant’s policy not to pay introduction fees, the defendant failed to mention this when the claimant requested remuneration for their services.
The matter came before Roger ter Haar QC, sitting as a Deputy High Court Judge, on 18 August 2021. The judge found that “there was a sufficient meeting of minds between the parties to constitute a contract” insofar that the claimant was entitled to a reasonable sum for the introduction. Pursuant to section 15 of the Supply of Goods and Services Act 1982, a clause was implied that the defendant would pay a reasonable charge in exchange for the claimant’s services. The claimant was awarded £212,294, representing 10% of the defendant’s net profit from the agreement with the Caravan Club and the percentage that the defendant previously offered.
The 18 August 2021 judgment prompted further questions. The subsequent judgment on 5 November 2021 addressed these.
The issue of ‘interest’ stood as the main matter of contention. The claimant sought statutory interest on the £212,294 award in accordance with section 1 of the LPCD(I)A. Meanwhile, the defendant opposed this on the basis that an order to pay interest would be ‘grossly unfair’, amounting to grounds for remission of interest under LPCD(I)A.
The judge was also obliged to consider whether, if interest on £212,294 should be awarded, from what date interest runs under section 4 of the LPCD(I)A.
Decision
The judge determined that the claimant’s £212,294 award was a ‘qualifying debt’, namely the price set through a contractual obligation. Here, the contractual obligation was the supply of introductory services.
In his judgment, Roger ter Haar QC:
The decision foregrounds the tools used to calculate interest for commercial debts and serves as an important reminder that ‘notice means notice’. Unless agreed otherwise, interest on debt sums will begin 30 days after notice is provided. It is irrelevant whether a debt sum is changed or withdrawn at a later date. In some cases, service of the debt claim on a defendant may constitute the first point of notice.
When requesting remuneration, businesses should plainly highlight the sum they wish to achieve from their relationship. When faced with a commercial debt, without express late payment interest or terms, a business should seek legal advice on whether LPCD(I)A can apply, check the current interest rates, and ensure proper notice is given, in order to minimise the risk that a customer disputes such claims for interest on late payments.
For further information on the article above, please contact Holly Ransley or another member of our Restructuring & Insolvency team.
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