Egger (Barony) & Co Ltd ("Egger") and Skanska Construction UK Ltd ("Skanska") entered into a contract in April 1997. Skanska was to procure and achieve the design and construction of a factory for a guaranteed maximum price of £12m. Skanska agreed to perform the design, development, management, construction, procurement, and construction functions. Egger was to supply and install the specialist plant and equipment necessary for the production of finished chipboard from the basic raw material.

Among other claims, Skanska claimed compound interest on the difference between the interim valuations prepared by Skanska each month between May 1997 and June 1998 and the amounts paid by Egger on the following alternative basses: (1) a claim for expense pursuant to their contract; (2) damages for breach of contract; (3) pursuant to the Supreme Court Act. The trial Judge found that Skanska was entitled to interest as an expense and as damages for breach of contract.

Egger appealed from the judge's award of £196,985.70 awarded for interest on underpayments by Egger on interim payment applications made by Skanska. Egger appealed this point on the basis of a new argument raised at a hearing after the judge's finding that Skanska was entitled to interest.