The Maira (No. 3) has now been considered by the House of Lords1 in relation to the question of the banker’s right to compound interest between the time of demand for repayment and judgment. The case was previously considered by the Court of Appeal2 and noted in this Quarterly 3 in relation to this question and the more general question of the implication of terms into the banker and customer relationship and when that relationship begins and ends. The Court of Appeal rejected the claim of the National Bank of Greece (“the Bank”) to compound interest from the date of its demand for repayment by Pinios Shipping (“Pinios”) until judgment. The Court of Appeal allowed only simple interest for that period. The House of Lords unanimously reversed that decision, allowing the claim for compound interest.

The facts relevant to this issue are that the Bank sued Pinios for the deficiency resulting from the issue of four promissory notes guaranteed by the Bank. The Bank obtained judgment against Pinios for U.S.$2,118,213 including compound interest. A number of counterclaims raised by Pinios failed.4 But Pinios’ successful challenge to the Bank’s claim for compound interest bought the case before the House of Lords. Pinios only raised a challenge to the Bank’s claim for compound interest after the Bank had closed its case at the trial. The trial judge gave leave for the issue to be argued so long as it was capable of being taken as a point of law and not dependent on evidence, and then upheld the Bank’s claim. At the trial, Pinios conceded the Bank’s right to compound interest up until the date of demand for repayment, although both the Court of Appeal and the House of Lords found this to have been a mistaken concession.