Stephanie Prior, Solicitor
Personal Injury Law Journal - May 2009
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When considering interim payments, the starting point is CPR 25.6, which makes general provision for applications for interim payments, and CPR 25.7, which sets out the conditions that must be satisfied and matters that have to be taken into account before the court will make an order for an interim payment.
In any event, the person making the application for an interim payment, namely the claimant, will have to show that they have obtained judgment, or will do so if the case proceeds to trial, and that judgment for a substantial amount of money would be obtained. Furthermore, the permission of the court must be obtained if making an application for interim payment on behalf of a minor or protected party.
An application for an interim payment must be supported by evidence that deals with the sum of money required by the claimant and, more importantly, the global value of the claim should the matter proceed to trial, including details of special damages and past and future losses claimed. Clear reasoning should be provided setting out why the claimant believes that all the conditions set out in CPR 25.7 are satisfied. If the claimant requires the interim payment to be paid in instalments, details of this should be clearly set out, stating the amount of each instalment and the number of instalments required.
Essentially, that is the basis on which an application is made. In the past, a judge would consider schedules of loss and damage submitted by both parties and make an assessment of the potential value of the claim from this information after reviewing the evidence. The judge would then make an order that an interim payment be made, which would allow for any revision of the final amount awarded.
Braithwaite
This process has now changed. A judge now also has the power to make a periodical payments order under the Damages Act 1996, and this complicates matters somewhat. The judge’s power is unfettered in this respect and is unaffected by objections from either party. Braithwaite v Homerton University Hospitals NHS Foundation Trust [2008] clearly sets out the approach the courts are willing to take when calculating which parts of the claimant’s damages can be used to determine the lump sum the claimant is likely to be awarded. In this case, the claimant, who was three years old, had severe quadraplegic cerebral palsy that had been caused at birth by the negligence of the respondent trust. She had obtained judgment for 100% of her loss and it was not disputed that she would always be dependent on others for all aspects of her daily life. The claimant required money to provide suitable accommodation for her and her mother, as they lived in local authority housing that was unsuitable for her needs. The full capitalised value of the claim was assessed in the order of £3.6 million, and if that was going to be a lump sum there would be no difficulty in agreeing that the interim payment should be £850,000. However, it was clear that the trial judge might wish to make one or more periodical payment orders. Burton J therefore came to the conclusion that the best way of dealing with this was to calculate the parts of the claim that were bound to be awarded as a lump sum. These were:
- Past losses
- Damages for pain, suffering and loss of amenity
- Interest
This was the sum available for consideration for interim payment. He concluded thereafter that those heads might not even amount to £850,000 and were not enough to permit an interim payment of £850,000. He considered that he was entitled to predict what sums were likely to be allocated between capital and the periodical payment order the trial judge would make. Furthermore, it was not disputed that the claimant’s accommodation needs were urgent and Burton J was confident that the trial judge would in the end allocate a sufficient capital sum to enable the claimant to buy a suitable property. Because that sum was likely to be £850,000 he had jurisdiction to order an interim payment of that sum.
As a result, the traditional formula for calculating interim payments had been dissipated. The difficulty for any judge is that if they award an interim payment that is too large then that sum is lost.
However, some courts have continued to award large interim payments on the basis that the money belongs to the claimant, who may prefer to have their money as a capital sum rather than as part of a periodical payment order that the judge may have made in any event. The court does not need to enquire what the claimant intends to do with the money.
Cobham v Eeles
In Cobham Hire Services Ltd v Eeles [2009] the Court of Appeal preferred the approach of Burnton J in Braithwaite and gave further guidance on what should be considered when applications for interim payments are made in these types of cases. Benjamin Eeles had suffered a serious head injury in a car accident when he was nine months old. He was 11 at the time of the hearing and although reasonably mobile his main problems are with cognition and intellect, and he attends a school for children with special needs because of his learning difficulties. Benjamin will never work and will require supervision and some care for the rest of his life. Judgment was entered in 2004 and the claimant has already received interim payments amounting to £450,000. A final hearing for quantification purposes is expected in 2010.
The application for an interim payment made by the claimant’s litigation friend (his mother, Julie Eeles) was on the basis that Benjamin’s parents required the sum of £1.2 million to purchase a property as a suitable home for Benjamin. However, at the time of the application the claim had not been properly quantified and although general damages had been assessed at £100,000 and past losses had been quantified at £260,000, future losses had not. Furthermore, the defendants had contended what periodical payment orders were likely in respect of care and case management.
At first instance the claimant’s application was granted on the basis that the judge made a conservative valuation of the overall capital value of the claim at £3.5 million, based on the defendant’s previous offer in 2007 of £3.25 million. The judge used his discretion. On appeal, however, the defendant’s valuation of the claim at £590,000 was preferred and the claimant’s application for interim payment for £1.2 million was refused.
Current situation
Cobham v Eeles has provided clarity for practitioners making interim payment applications in these complex cases where the claimant’s needs are often apparent and immediate. In the past month, one of my colleagues, Jenny Kennedy, made an application for an interim payment of £1.75m, believed to be the largest ever in a personal injury case. In Jenny’s claim, the claimant had suffered spinal injuries in a road traffic accident overseas. The claimant was injured while working in the Balkans and is now wheelchair-bound and requires a substantial amount of care and attendance. She has a young daughter and she needed a large house to accommodate carers, nannies and equipment for helping her cope with living at home. She also wanted to live in London to be near her family. The defendants challenged the size of the claimant’s accommodation and its London location. Jenny Kennedy argued in the High Court that it is not for defendants to say where a claimant should live and what size of property the claimant should buy. The court agreed, but because the accident happened in the Balkans and the claimant is suing insurers in Austria, the judge chose not to order periodical payments, on the grounds that the claimant could not be sure that the funding would continue.
This case is unusual when compared to the above case law, and I am sure that if the accident had happened in the UK rather than overseas, the judge would have declined to make an interim order of this size until the full extent of the compensation award was decided.
Crucially, most applications for interim payments are made by claimants who are severely injured and permanently disabled. These claimants require suitably adapted accommodation and often extensive aids and equipment, which they need as soon as they are discharged from rehabilitation. Many do not have the financial stability to purchase adapted accommodation and specialist equipment when they most need it. Applications for interim payments are a vehicle for these claimants to get what they need, when they need it, if the guidelines set out in Cobham v Eeles are followed.
Stephanie Prior is a solicitor at Anthony Gold. She specialises in complex personal injury and clinical negligence work, with a particular interest in birth injuries, child abuse claims and fatal accident cases. For further information email Stephanie Prior or call 020 7940 4000.
