Good news on interim payments

Good news on interim payments

We reported the Judgment in Eeles v Cobham Hire Services with some delight in the April 2009 edition of Claims-on-line promising an an ‘outbreak of common’.  Unfortunately that clear Court of Appeal guidance has not always been followed before now and very large interim payments have continued to be ordered, sometimes exceeding a reasonable proportion of what the final judgment is likely to be and tying the trial judge's hands over his award for future accommodation needs, for instance, or whether or not to determine that a periodical payments regime for future losses is in the Claimant's best interests.  This Judgment by MacDuff J dated 21 October 2009 is a worthy supplement to the above article as it shows how Eeles should be followed in future.

Chrissie Louise Johnson (by her mother and litigation friend Gina Smith) v  Serena Compton-Cooke.

The Court was required to determine the amount of interim damages payable to the Claimant, J who had suffered a severe brain injury in a road traffic accident caused by the negligence of C.  Liability was not in dispute.

 At the time of the application J was still making recovery and her rehabilitation was incomplete. She received round the clock care in the rented family home, which was large but not ideal considering her needs.  J sought an interim payment of £1.67 million to cover a period of approximately 12 months’ care and a lump sum of £1.1 million for accommodation. On behalf of J, it was submitted that if there was a periodical payments award for future care costs, that the final lump sum awarded at trial would be around £3.25 million as it was likely that the trial judge would capitalise the majority of the future loss claims. She argued that the current accommodation was unsuitable, that there was a clear need for funding the care regime and that the correct approach was to make a large interim award. C disputed the level of interim payment sought, arguing that the present home was not unsuitable and that J's care needs could be met by the contribution from the local authority that she was receiving already at the family home. C submitted that the claim was grossly exaggerated and that the final award was likely to be significantly less than £3.25 million. As a result, there was a very real risk that if J was awarded an interim payment of £1.67 million it would very likely exceed a reasonable proportion of the final award.

In a Judgment that will provide further comfort to defendants, MacDuff J held that the appropriate interim payment would be limited to £600,000. It was likely that the capitalised award at trial would amount to a lump sum of around £1.75m on a conservative estimate, taking into account that some of the claim could well be excessive and that it was not possible to predict that the trial judge would wish to capitalise all the various heads of claim. Whilst it was patent that J would require a high level of care for life, the amounts would need to be considered carefully and it was likely that the award would be significantly more than the level submitted by C but could be significantly less than predicted by J as well. As to accommodation, the rented accommodation was better than adequate and hence there was no need for an instant payment sufficient to purchase a new property.

Comment

The response to Eeles by some lawyers acting for Claimants has too often been production of very excessive Schedules of Loss for reliance at an interim payment application more so than at any trial and Defendants should continue to watch this space.  A bigger, more expensive property is not always in the Claimant’s best interests either although a family cannot be blamed if this is what they are being advised by lawyers or quantum experts.  Who would not want to live in a £1 million + house?  In one of the cases dealt with by this firm where the correct approach in Eeles was not adopted a property was purchased out of a very large interim payment requiring the majority of future losses to be capitalised.  The property has fallen in value since then by the order of around £400,000 and the family has been back seeking further interim payments as they cannot otherwise afford to continue the private care regime.  How will a PPO regime be possible after further interim payments but what is a judge to do now?    MacDuff J was right to follow the Court of Appeal guidance closely and it is clear that any judge hearing an application for substantial interim payments must consider the following questions:

• What is the likely amount of the final judgment leaving out of account those elements of the claim that the trial Judge might wish to deal with as a PPO? This assessment will usually extend no further than past special damages and PSLA and, usually, accommodation costs.
  
• Conservatively, and on a reasonable assessment, what will that final judgment figure be?
• Conservatively, what is a reasonable proportion of that final judgment?
• A judge can only include additional elements of future loss in his assessment of the final judgment if; he is able to confidently predict that the trial judge will want to award a larger capital sum, he is satisfied by evidence that there is a real need for the expenditure now, and, to a high degree of confidence he is satisfied that the expenditure is reasonably necessary.