Interim payment should be limited to reasonable proportion of likely capital award in cases where a periodical payments order is likely.
Benjamin Eeles suffered a serious head injury in a car accident when he was only 9 months old. Liability was not in dispute. An interim payment of £1.2m was sought to enable the family to move to a substantial new home. Benjamin had previously received interim payments of £450,000. The High Court judge considering the application conservatively estimated the total capitalised value of the claim at £3.5m. Although he recognised the trial judge might want to make a periodical payments order (PPO) for some heads of damage, he ordered an interim payment as requested.
Held: The Court of Appeal issued general guidance for use in cases such as this:
- When considering whether to order an interim payment, the judge’s first task is to 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 PPO.
- Strictly speaking, the assessment should comprise only special damages to date and damages for pain, suffering and loss of amenity, plus interest. However, the practice of awarding accommodation costs as a lump sum is sufficiently well established that it will usually be appropriate to include accommodation costs in the expected capital award.
- The assessment should be carried out on a conservative basis and, save in the circumstances set out below, the interim payment should be a reasonable proportion of that assessment.
- When the judge can confidently predict that the trial judge will wish to award a larger capital sum, the judge will be entitled to include additional elements of future loss in his assessment of the likely amount of the final judgment. However, before taking this course the judge must be satisfied that there is a real need for the interim payment and the amount of money requested is reasonable.
In this case, the Court of Appeal was not prepared to assume that the trial judge would hold that the purchase of the new home was reasonably necessary. In addition, as the Court of Appeal’s conservative estimate of the likely amount of the capital award was only £590,000, there was little scope for a further interim payment and the application was refused.
Comment: As the Court of Appeal noted, with the rise in the value of claims for severe injuries, it has become common for very substantial interim payments to be requested. However, it is now possible for a judge to make a periodical payments order in respect of some or all of the heads of future loss, index linked to reflect future changes in the value of money and continuing for the whole of a claimant’s life.
This decision is positive for defendants and their insurers as the Court of Appeal has confirmed that the discretion of the trial judge to make a PPO must not be fettered unless it can be shown that there is a real immediate need for an interim payment. This will be of particular relevance where interim payments are sought for accommodation. Unless a claimant can show that they have an immediate need for a property, defendants now have clear grounds on which to resist these applications.