The judgment of the Master of the Rolls (with which the other members of the Court of Appeal agreed) in Edmunds v. Lloyd’s Italico & l’Ancora Cia. di Assicurazione & Riassicurazione S.p.A.1 is of considerable importance in that it lays down how a plaintiff who is claiming damages may now recover interest in the not uncommon situation in which, after proceedings have been started but before judgment, the defendant pays him the full amount of the damages claimed. The judgment is of particular importance because the law on this subject has recently changed. Until 1 April 1983 the law on this subject was governed by s. 3 of the Law Reform (Miscellaneous Provisions) Act 1934. However, on 1 April 1983 there came into force2 Part III of the Administration of Justice Act 1982 which, in substitution for s. 3 of the 1934 Act, inserted a new s. 35A into the Supreme Court Act 1981. The relevant law is now contained in s. 35A and it was this section which was under consideration by Sir John Donaldson, M.R.

In Edmunds v. Lloyd’s Italico & l’Ancora Cia. di Assicurazione & Riassicurazione S.p.A. the plaintiff was a Lloyd’s underwriter whose syndicate reinsured certain risks with the defendants. In April and August 1979 the defendants became liable to pay the plaintiff’s syndicate under the reinsurance arrangements sums totalling £10,046.69 and U.S.$46,752.30. The defendants failed to pay these sums and in October 1982 the plaintiff issued a writ claiming both sums, together with interest. Thereafter the defendants continued with what the trial judge described as “a highly successful programme of prevarication” until on 25 March 1985, their solicitors sent the plaintiff’s solicitors two bankers’ drafts for the sums claimed. The letter said that the drafts were sent “in settlement of your client’s claims in the above action”. The plaintiff’s solicitors replied that the drafts were accepted “in settlement of the principal amounts claimed in relation to the above action” and they asked what proposals the defendants had to make in respect of the claim for interest and costs. The defendant’s solicitors replied that they had no instructions.

In due course the plaintiff applied for summary judgment claiming the two sums together with interest. The defendants resisted the claim on the ground that the whole amount payable had already been paid, otherwise than pursuant to a judgment in the action, and that the court had no power to give judgment for interest only. Leggatt, J., gave judgment for the full amounts claimed together with interest. The defendants appealed to the Court of Appeal.

It is well established in English law that a claim under a contract of insurance (or reinsurance) is a claim for damages for breach of contract and not a claim for a debt