Tug of war

Date: 08 July 2011
Authors: Richard Scorer
Issue: Vol 161, Issue 7473
Categories: Features, Personal injury, Damages

Richard Scorer on the battle to secure effective interim damages payments

In compensation claims for serious head and spinal injuries, the claimant’s solicitor will often try to secure an early interim payment of damages under CPR 25 to fund the costs of care and/or suitably adapted accommodation. Waiting several years until the end of the case before proper care is put in place can be very detrimental to the claimant.

Conversely, defendant insurers often want to resist making a substantial interim payment. Defendants argue that if the claimant secures a large interim payment and uses it to purchase a property and establish a care regime, it can be difficult at a subsequent trial for the defendant to effectively challenge the property and care package after the event.

Interim payments

CPR 25 empowers the court to award an interim payment where the claimant has obtained interlocutory judgment, or where the claimant would obtain judgment for a substantial sum from the defendant if the action went to trial. However, CPR 25.7 (4) provides that a court “must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment”. This rule aims to prevent a situation where the claimant’s final award at trial is less than the earlier interim payment. The position is further complicated by the Damages Act 1996. This requires the court, in assessing the final award of damages, to consider whether some part of the damages award in the claim should be awarded by way of a periodical payments order (PPO) rather than entirely in the form of a one-off capital sum. The court has to consider what form of award, or combination of capital sum and PPO, best meets the claimant’s needs.

Periodical payments orders

The PPO provisions of the DA 1996 have created a problem in regard to interim payments. The trial judge may decide to award some or all of the claimant’s future pecuniary losses by way of PPO. But in Eeles v Cobham Hire Services Ltd [2009] EWCA Civ 204, [2009] All ER (D) 144 (Mar) the Court of Appeal held that the words “the likely amount of the final judgment” in CPR 25 means only the capital sum likely to be awarded to the claimant at trial, ie the final award excluding any PPO element. If an interim payment were to exceed the capital sum element of the final award, the judge making the interim award would be restricting the discretion of the trial judge in relation to the award of a PPO.

The Eeles decision impacts a claimant’s ability to secure interim funding for adapted accommodation, because under the formula of Roberts v Johnstone [1989] QB 878, [1988] 3 WLR 1247 a claimant is not entitled to recover the full capital cost of accommodation from a defendant, and hence any interim payment for accommodation may well involve “borrowing” from other heads of loss; per Eeles this will only be permitted where the amount sought is reasonable and where there is a real need for new accommodation now.

Mabiriizi

The practical problems Eeles throws up for claimants are illustrated by the decision in Mabiriizi v HSBC Insurance (UK) Ltd [2011] EWHC 1280 (QB), [2011] All ER (D) 200 (May). The claimant was severely brain damaged following a car crash. On discharge from hospital he went to live with his family and required 24-hour care. His existing property was unsuitable for his needs. However, his application for an interim payment was refused on the Eeles logic. While it was likely that the claimant’s current accommodation was unsuitable, it was disputed as to whether the claimant should be in his own adapted accommodation or residential accommodation, and the court hearing his interim payment application was not prepared to determine that question in advance of trial. But, even if the claimant was justified in seeking his own adapted accommodation, the cost of such accommodation would, in any event, exceed a reasonable proportion of the likely amount of the capital sum element of any final award. Applying Eeles, the “likely amount of the final judgment” could not include notional capitalised value of any PPO the trial judge might award. Further, in assessing what the likely capital sum element of the final award might be, on a conservative basis as is required in interim payment applications, the court was not prepared to capitalise all the non-care heads of future loss, and even it had been, the resulting sum would still have been insufficient to justify the award of an interim payment of the size sought by the claimant. The result was that this seriously injured claimant was unable to secure the accommodation which his advisers believed was best for him: the judge commented in refusing his application that he was “troubled by the fact that the claimant will therefore be left in unsuitable accommodation for an uncertain period”.

Eeles continues to pose difficulties for some claimants in serious injury cases. The irony is that PPOs were introduced in part to promote more effective compensation for injured claimants. As recent case law confirms, Eeles has also made them, at least at an interim payment application, into an additional hurdle for claimants to overcome.

Richard Scorer is head of serious injury at Pannone LLP, Manchester.
E-mail: richard.scorer@pannone.co.uk
Website: www.pannone.co.uk

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