Civil procedure – Damages – Periodical payments orders

Cobham Hire Services Ltd v Benjamin Eeles (by his mother & litigation friend Julie Eeles): CA (Civ Div) (Lords Justice Dyson, Thomas, Lady Justice Smith): 13 March 2009

The appellant (C) appealed against an interim payment order for £1.2m made against it in relation to a personal injury claim brought by the respondent (E).

E, who was 11 years of age, had suffered a serious head injury in a car accident when he was only nine months old. E’s main difficulties were with cognition and intellect but his life expectancy was found not to be reduced. Liability was not disputed and judgment for damages to be assessed was entered. Thereafter, E received interim payments amounting to £450,000. His legal team took the view that it was not possible to quantify his claim until about 2010. E’s parents, who decided to buy a family home to meet his needs, subsequently requested an interim payment of £1.2m to pay for the purchase price and refurbishment costs. The judge made a conservative valuation of the overall capital value of the claim at £3.5m, basing it upon a previous offer by C of £3.25m to settle the claim, and applying a modest increase. He observed that the application for a further £1.2m would, if granted, bring the total interim payments to just less than one half of the full value of the claim and that would not exceed a reasonable proportion of the likely final award for the purposes of rule 25.7(4) of the Civil Procedure Rules. The judge rejected C’s argument that such an interim award might tie the hands of the trial judge who might want to make a substantial periodical payments order. C submitted that the judge had made an order which was beyond his jurisdiction.

Held: (1) The discretionary power to order an interim payment was limited by rule 25.7(4) so that the court had no power to make an order for more than a reasonable proportion of the likely amount of the final judgment. The judge appeared to have taken the, conservatively estimated, full capital value of the claim as the basis for his consideration of an interim payment. In a case in which a periodical payments order might be made that was not the correct approach, Braithwaite v Homerton University Hospitals NHS Foundation Trust [2008] EWHC 353 (QB), [2008] LS Law Medical 261 approving. The judge had also misunderstood and underestimated the importance of not fettering the trial judge’s freedom to allocate the heads of future loss and had not carried out the essential task of estimating the likely amount of the final judgment. Accordingly, his decision was set aside. As the instant court’s estimate of the likely amount of the capital award was only £590,000, there was very little room for a further interim payment.

(2) The approach a judge should take when considering whether to make an interim payment in a case in which the trial judge may wish to make a periodical payments order was as follows: (a) assess the likely amount of the final judgment, leaving out of account the heads of future loss which the trial judge might wish to deal with by a periodical payments order; (b) assessment should comprise only special damages to date and damages for pain, suffering and loss of amenity, with interest on both; (c) as the practice of awarding accommodation costs (including future running costs) as a lump sum was sufficiently well-established, it would usually be appropriate to include accommodation costs in the expected capital award; (d) the assessment should be carried out on a conservative basis; (e) save in certain circumstances, the interim payment would be a reasonable proportion of that assessment. A reasonable proportion may well be a high proportion, provided that the assessment had been conservative. The objective was not to keep the claimant out of his money but to avoid any risk of overpayment; (f) for that part of the process the judge need have no regard as to what the claimant intended to do with the money. If he was of full age and capacity, he may spend it as he wished and, if not, expenditure would be controlled by the Court of Protection; (g) additional elements of future loss could be included in the judge’s assessment of the likely amount of the final judgment when the judge could confidently predict that the trial judge would wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs alone; (h) before taking such a course, the judge had to be satisfied by evidence that there was a real need for the interim payment requested and if the judge was satisfied of that, to a high degree of confidence, then he would be justified in predicting that the trial judge would take the course indicated and he would be justified in assessing the likely amount of the final award at such a level as would permit the making of the necessary interim award.

Appeal allowed.

Simeon Maskrey QC, Julian Matthews (instructed by Berrymans Lace Mawer (Birmingham)) for the appellant; William Braithwaite QC, Catherine Howells (instructed by Ameer Meredith) for the respondent.