Interim Payments – Life After Eeles

CPR Part 25 provides that interim payments may be awarded where the claimant can show that he has obtained judgment or would, at trial, obtain judgment for a substantial amount of money against an insured defendant or public body. The rules provide that the court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.

In Eeles v Cobham Hire Services Ltd CA 13/3/09, the question arose whether an interim payment should be a reasonable proportion of the overall lump sum value of the claim or, alternatively, of only the capital sum that the claimant is likely to be awarded by the trial judge. The court determined that, "In a case in which a periodical payments order is made, the amount of the final judgment is the actual capital sum awarded. It does not include the notional capitalised value of the periodical payments order, which sum is irrelevant for the purposes of determining an interim payment in a case of this kind." The court then gave guidance as to the approach that should be adopted when interim payment applications are made in cases where a PPO may be awarded at trial, which can be summarised as follows:

1. Assess, on a conservative basis, what is likely to be awarded for the heads of damage which are bound to be ordered as lump sums
2. The court may award a reasonable proportion of that lump sum figure, and the court may allow a high proportion, provided that the estimate has been a conservative one
3. Where the judge is able to predict with a high level of confidence that the trial judge will capitalise additional elements of the future loss to produce a greater lump sum award, he may then make a larger interim payment. These will be cases where the claimant can clearly demonstrate the need for an immediate capital payment, probably to fund the purchase of accommodation
4. The judge need have no regard as to what the claimant will actually do with the interim payment
5. Where the interim payment is requested to purchase a house, the judge must be satisfied that there is a real need for accommodation now (as opposed to after the trial) and that the amount of money requested is reasonable. He does not need to decide whether the particular house proposed is suitable but he must not make an interim payment order without first deciding whether expenditure of approximately the amount he proposes to award is reasonably necessary.

That approach has since been argued before, and adopted by, the courts, most recently in the matters of Crispin v Webster 4/11/11 and TTT v Kingston Hospital NHS Trust 25/11/11, both High Court decisions.

In Crispin, the judge refused the claimant's application for an interim payment of £1 million which was sought to enable her to purchase a character property in the heart of Winchester at a cost of £750,000 plus a further £250,000 for general expenses up to trial. Whilst the payment in respect of general expenses of £250,000 was granted, there was an issue between the parties as to whether the property identified by the claimant was reasonably necessary to meet her needs when assessed on a conservative basis. The court was not satisfied that the trial judge would hold that the purchase was reasonably necessary when there was evidence of other housing available to the claimant on the market at a lower value. It was not an issue for determination on an interim payment application as the court did not wish to fetter the trial judge's discretion – this part of the claimant's application accordingly failed.

In TTT, the claimant had greater success. Interim payments of a total of £1.1 million had already been made and a suitable property purchased for the claimant. A further interim payment of £280,000 was sought to adapt and extend the new property and £120,000 to cover the cost of the claimant's care and therapy regime until a case management conference fixed for October 2014. The defendant argued that the interim payment sought was disproportionate, and that payment of the building costs would render the playing field unlevel because there was no reasonable immediate need for all the building works proposed by the claimant. The court held that, on a conservative approach, the total of the interim payments (received and applied for) would not exceed 90% of the capital sum likely to be awarded at trial, and the interim payments were awarded.

The decision in Berry (A Protected Party by his Wife & Litigation Friend Carol Berry) v Ashtead Plant Hire Company Ltd & Others CA10/11/11 provides a fresh reminder that a claimant must be able to show that he will secure judgment from the defendant against whom an interim payment is sought. The claimant was unsuccessful in his application against three of the four defendants to the proceedings (the fourth being uninsured and not joined to the application). The case on liability against the key defendants was not clear cut and a fact sensitive enquiry would be required at trial to determine the issues – thus the court could not award the interim payment sought.

Key points for defendants

• The claimant must be able to establish liability against the specific defendant (or defendants) against whom the application for an interim payment is made
• In any case where there is a claim for significant future losses and thus the trial judge may wish to make a PPO, applications will be assessed by reference to the guidance set out in Eeles

• In significant claims the court now has to consider the reason for interim payments to enable an assessment to be made pursuant to Eeles
• With large interim payment awards now less likely, there may be a greater incentive for claimants to move towards earlier settlement or trial, potentially leading to overall savings in the cost of claims

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.