Interest
You would be wrong in thinking that interest on damages and judgments in personal injury claims was a simple issue. Lawyers regularly get it wrong, never mind their clients.
Interest is calculated on the basis of simple interest on a daily basis with 365 days in a year, irrespective of whether it is a leap year or not. You are not entitled to interest on interest. However, once a judgment is entered then any interest which forms part of the judgment gives rise to interest in the same way as damages and/or costs.
Where you have suffered out of pocket losses (known as special damages) then you are entitled to claim interest at the Court "special account rate". Where the loss is ongoing interest is payable at half the rate from date of injury to trial/settlement. Opinions differ about whether ongoing losses which have lasted only a finite period should receive interest at half the rate from date of injury to trial/settlement or the full rate from the period of the loss.
The rate has varied as follows:
- 1 August 1999 to 31 January 2002 = 7%
- 1 February 2002 to 31 January 2009 = 6%
- 1 February 2009 to 31 May 2009 = 3%
- 1 June 2009 to 30 June 2009 = 1.5%
- 1 July 2009 to date = 0.5%
Interest is payable on damages for injury (pain, suffering and loss of amenity) at the rate of 2% from the date of issue of Court proceedings. This rate has been fixed since 1982. No interest is payable before proceedings are issued.
No interest is payable on future losses.
Interest is only payable on judgment debts which are £5,000 or more. The rate of interest has been 8% since 1 April 1993. Interest is only payable on the amount outstanding at any given time. Judgments are usually payable within 14 days of the judgment unless stated otherwise. Where payment is Ordered by instalments no interest accrues as long as the instalments are paid on time. Any payment which is made reduces the debt first and pays interest second.
