“The bank undertakes to receive money and collect bills for its customer’s account. The proceeds so received are not held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch …”
“It was pleaded in the points of claim that, in breach of contract and their duty of care, BCCI had wrongly debited the company’s accounts with the amounts of the disputed transfers, and that the company had thereby suffered loss and damage. Strictly speaking it seems to me that those are unnecessary averments. If debits were made without authority they should be disregarded, and the company can claim as money owed to it by BCCI the credit balance remaining when those debits are left out of account. Or, if there would still be an overdraft, the company would be liable to BCCI only for such amount as the account was overdrawn after deletion of the disputed debits.”
“The same considerations will apply to the claim for the interest to which, as the plaintiff alleges, he would have been entitled had the debits not been made, if it be the case that, had those debits not been made, by agreement between the parties interest would have accrued from time to time and been brought into the general account between the parties so as to constitute part of the debt owed by the defendant to the plaintiff.”
“the House … should hold that at common law, subject to the ordinary rules of remoteness which apply to all claims of damages, the loss suffered as a result of the late payment of money is recoverable. This is already the law where the claim is for a debt incurred by a building contractor to raise the necessary capital which has interest charges as one of its constituents. … The reality is that every creditor who is deprived of funds to which he is entitled and which he needs to run his business will have to incur an interest-bearing loan or employ other funds which could themselves have earned interest. It is a short step to say that interest losses will arise ‘in the ordinary course of things’ in such circumstances.”
“I also agree with Lord Nicholls [of Birkenhead] that the loss on the late payment of a debt may include an element of compound interest. But the claimant must claim and prove his actual interest losses if he wishes to recover compound interest, as is the case where the claim is for a sum which includes interest charges. The claimant would have to show, if his claim is for ancillary interest, that his actual losses were more than he would recover by way of interest under the statute. In practice, especially where the period over which interest is sought is short or whether the claimant does not have to borrow money to replace the debt, simple interest undersection 35A of the Supreme Court Act 1981 [now the Senior Courts Act] is likely to be the more convenient remedy.”
“Loss of interest is recoverable as damages for breach of contract, if it was within the reasonable contemplation of the parties, in the sense explained in C Czarnikow Ltd v Koufos[1969] 1 AC 350 under either limb when the contract was made and is specifically pleaded and proved on that basis.”
“…what was reasonably contemplated depends upon the knowledge which the parties possessed at that time [ie the time when the contract was made] or, in any event, which the party, who later commits the breach, then possessed … [T]he test to be applied is an objective one. One asks what the defendant must be taken to have had in his or her contemplation rather than only what he or she actually contemplated. In other words, one assumes that the defendant at the time the contract was made had thought about the consequences of its breach.”
“In failing to pay to the plaintiff on demand the sums deposited with the defendant together with interest thereon at the rate of interest applicable on foreign accounts as set out in clause 4 hereof, the defendant committed a breach of its contract with the plaintiff and the defendant is indebted to the plaintiff for the said sums deposited by the plaintiff with the defendant and for said interest payable thereon.”
“[t]hat by failing to provide me with the funds requested the bank breached its contractual duty to me and as a result of the said non-payment of those sums I have suffered undue hardship and loss of business.”
“A. I was just saying that there was evidence that I wrote to the Bank asking them to release my funds. Q. To you? A. To me. Because I needed them to do my business, I was prevented from … Q. You were prevented from accessing your own money? A. My own money. Q. This applied to which accounts, foreign currency and local? A. Both, all of them.”
“Q. And you said by the failure of the Plaintiff to pay such sums on the demand that this is, is submitting here, Plaintiff has suffered loss of business and then you demand payment of all these sums plus interest as shown in the “A” account stated? A. Yes, ma’am.”
“i) First, it is clear that damages are in principle recoverable, subject to ordinary principles of remoteness and mitigation, for breach of an obligation to remit money, where the failure to remit has caused a loss. ii) Second, unless there is some positive reason to do otherwise, the law will proceed on the basis, at any rate in the commercial context, that the claimant kept out of his money has suffered loss as a result. That represents commercial reality and everyday experience. Specific evidence to that effect is not required and, if adduced, may well be somewhat hypothetical and thus of little assistance. For example, a business man may well be unable to say precisely what he would have done differently if a particular payment had been made to him when it ought to have been, especially if (as apparently in this case) he was unaware that the money was being withheld. Extensive disclosure, which would no doubt be demanded by the defendant, is unlikely to assist. But that does not mean that no loss has been suffered. In the present case the general evidence of the importance attached in the market to prompt remittance of funds is more than sufficient to justify the conclusion that the syndicates did suffer a loss by being kept out of their money. Accordingly the question in such a case is not whether a loss has been suffered, but how best that loss should be measured. iii) A solvent claimant who seeks to recover damages which exceed the cost of borrowing to replace the money of which it has been deprived is likely to be met with the defence that the claim is too remote or that it has failed to mitigate by borrowing in order to replace the money lost, in which case its recovery may be limited to that borrowing cost, which will include the need to pay compound interest, that being the only basis on which money can be borrowed commercially. The position may, however, be different if there is good reason why the claimant should not have gone into the market to borrow the missing money, for example if it did not know and should not reasonably have known that the money was missing. … iv) In other cases I consider that it is not necessary for the claimant to produce specific evidence of what it would have done with the money or what steps if any it took to borrow or otherwise to replace the money of which it was deprived. … Instead, at any rate in commercial cases and unless there is some positive reason to do otherwise, the law will proceed on the basis that the measure of the claimant’s loss is the cost of borrowing to replace the money of which the claimant has been deprived regardless of whether that is what the claimant actually did. A conventional rate will be used which represents the cost to commercial entities such as the claimant and is not necessarily the rate at which the claimant itself could have borrowed or did in fact borrow. This avoids the need for protracted investigation of the particular claimant’s financial affairs. As with other conventional measures … this approach has the advantage of certainty and predictability which is always important in the commercial context, as well as being broadly fair in the great majority of cases and avoiding expensive and often ultimately unproductive litigation. v) If a conventional borrowing cost is to be adopted in this way, the question whether interest should be simple or compound answers itself. … it is impossible to borrow commercially on simple interest terms. I respectfully agree with Lord Nicholls that the law must recognise and give effect to this reality if it is to achieve a fair and just outcome when assessing financial loss. To conclude that, at least in a typical commercial case, the normal and conventional measure of damages for breach of an obligation to remit funds consists of compound interest at a conventional rate is therefore both principled and predictable, as well as being in accordance with what was actually awarded in Sempra Metals.”
“[s]uch claims are for actual or real damages, not theoretical and non-existent loss.”
“If the claimant can establish that he has lost the opportunity to use the funds for a commercial purpose but he cannot establish the precise loss that arose or cannot readily quantify it, the claimant may then quantify the loss by reference to a reasonable rate of return that could have been achieved from the funds. It will of course have to be established what that rate might be. Obvious guidance would be obtained by ascertaining what rate of interest could have been obtained by depositing the funds so as to earn a commercial rate of interest or by lending the money on relatively short-term terms. Such an assessment is permitted because the law allows an approximation of the loss to be made where a claimant can prove that he had been prevented from using funds for a commercial purpose as a result of a defendant’s breach but where he cannot reasonably or readily identify the nature or extent of that loss.”