Cobham Hire Services Ltd v Eeles
| Jurisdiction | England & Wales |
| Judge | Lady Justice Smith |
| Judgment Date | 13 March 2009 |
| Neutral Citation | [2009] EWCA Civ 204 |
| Docket Number | Case No: A2/2008/2506 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 March 2009 |
[2009] EWCA Civ 204
Lord Justice Dyson
Lady Justice Smith and
Lord Justice Thomas
Case No: A2/2008/2506
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
MR JUSTICE FOSKETT
HQ03X03749
ON APPEAL FROM QUEENS BENCH DIVISION
Mr Simeon Maskrey QC & Mr Julian Matthews (instructed by Berrymans Lace Mawer, Birmingham) for the Appellant
Mr William Braithwaite QC & Miss Catherine Howells (instructed by Ameer Meredith) for the Respondent
Hearing date: 4 March 2009
Lady Justice Smith: This is the judgment of the court.
Introduction
This appeal raises the question of what is the correct approach to the making of an interim payment in a heavy personal injury claim where the damages, when finally assessed, are likely to include one or more periodical payments orders pursuant to section 2 of the Damages Act 1996 as amended by the Courts Act 2003.
CPR Part 25.6 makes general provision for applications for interim payment orders and CPR Part 25.7 specifies the conditions to be satisfied and matters to be taken into account when the court is considering whether to make such an order. The claimant must show first that he has obtained judgment or would, at trial, obtain judgment for a substantial amount of money against an insured defendant or public body. Then, at CPR 25.7(4), comes the provision which is important in the context of this appeal:
“The court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.”
Prior to the amendment of the Damages Act, practice in this area of the law had become well-established. We can summarise the position by saying that the judge would usually make a conservative preliminary estimate of the likely final award. For that he would need both sides' schedules of loss, in so far as they could be provided at that stage. He would have to make a broad assessment of the merits of each side's contention and would err on the side of caution. He would order an interim payment which allowed a comfortable margin (or headroom) in case his preliminary estimate turned out to be too generous.
Before making an order, the court would not necessarily need to enquire as to what the claimant intended to do with the interim payment: Stringman v McArdle [1993] 1 WLR 1653. If of full age and capacity, the claimant would be entitled to do with it as he wished. If he was a minor or patient, control of the money would be exercised by the Court of Protection. Nonetheless, claimants often wished to explain why they wanted a particular sum at the time. Typically, a claimant might want to demonstrate the need to buy or adapt accommodation or to provide a care regime. He might wish to demonstrate the need for such a facility in order to show that the final award would be of sufficient size to warrant the making of an interim payment of the amount sought. Judges were warned against making an interim award which would have the effect of creating a status quo in the claimant's way of life which might have the effect of inhibiting the trial judge's freedom of decision; it was said that such an order might create 'an unlevel playing field': see Campbell v Mylchreest [1999] PIQR Q17.
With the rise in the value of claims for severe injuries, it has become quite common for very substantial interim payments to be made, based upon a reasonable proportion of the likely amount of the final capital award. However, under the amended Damages Act it became possible for a judge to make a periodical payments order (PPO) 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 the claimant's actual life. Since this Court in Tameside & Glossop Acute Services NHS Trust v Thompstone [2008] EWCA Civ 5 affirmed that, when making a PPO, the court had the power to apply whatever index was most appropriate to the head of loss concerned, the benefits of a PPO have been generally recognised and such orders are now routinely made.
When considering how to allocate the various heads of future loss between a capital award and one or more PPOs, the trial judge has to consider what allocation will best meet the claimant's needs: see CPR Part 41.7 and paragraph 107 of Thompstone. The trial judge's task is to weigh the various aspects of the claimant's needs, in the light of the sums which are to be awarded under each head of loss and in the light of the available financial advice.
If a PPO is made, the capital sum ordered at the final hearing will obviously be less (probably much less) than the capitalised full value of the claim. CPR 25.7(4) has not been amended in the light of the PPO provisions so, on applications for an interim payment, judges have been left to apply that provision to a case in which a PPO might be made.
In the present case, the claimant sought an interim payment order for £1.2 million. He had previously received interim payments of £450,000. Foskett J conservatively estimated the total capitalised value of the claim at £3.5 million. Notwithstanding his recognition that the trial judge might wish to make a PPO for some heads of damage, he made the order as requested. In this appeal the defendant submits that that approach was wrong in principle and also ran counter to such persuasive authority as was cited to the judge.
Judicial approaches prior to the present case.
It is convenient at this stage to consider the two authorities cited to Foskett J. The first reported case in which the effect of a PPO has on the jurisdiction to make an interim payment was Mealing v Chelsea v Westminster NHS Trust [2007] EWHC 3254 (QB). The claimant had already received over £773,000 in interim payments and now sought a further £1 million. The claimant valued her claim at about £17 million. The defendant claimed that this was grossly inflated. One of the arguments advanced by the defendant in opposing the application was that an interim payment of the magnitude sought would fetter the trial judge's freedom when deciding how to allocate the award between capital and PPO.
Swift J made a very broad estimate of the likely capital value of the claim at between £6 and £9 million. That sum, as she observed, would readily justify a further interim payment of £1 million. However, she considered that such a payment would or might fetter the freedom of the trial judge to allocate as large a proportion of the award to PPOs as he or she considered appropriate. However, because the claimant needed money to pay her carers, Swift J awarded a further £250,000 saying that she was satisfied that such a sum (taken with the earlier sums) would not unduly fetter the trial judge's freedom of allocation.
In Braithwaite v Homerton University Hospitals NHS Foundation Trust [2008] EWHC 353 (QB), Stanley Burnton J (as he then was) made an interim award of £850,000 to a badly injured claimant who urgently needed money to provide suitable accommodation. The full capitalised value of the claim was of the order of £3.6 million and, as Stanley Burnton J observed, if the final order were to be simply a lump sum, there would be no difficulty in ordering an interim payment of £850,000. However, it was clear that the trial judge might wish to make one or more PPOs. Stanley Burnton J's approach was to calculate which parts of the claim were bound to be awarded as a lump sum. These were past losses and damages for pain and suffering with interest on both. Prima facie, that was the sum which was available to him for consideration of CPR Part 25.7(4). He concluded that those heads might not even amount to £850,000 and, taken alone, were plainly not enough to permit an interim payment of £850,000.
However, he considered that, in deciding the likely amount of the final judgment, he was entitled to predict what allocation as between capital and PPO the trial judge would make. On the facts of that case, there was really no dispute that the claimant had an urgent need for accommodation. So, Stanley Burnton J concluded that he could confidently predict that the trial judge would eventually allocate a sufficient capital sum to enable the claimant to buy a suitable property. That sum would be significantly in excess of £850,000. Accordingly, he had jurisdiction to order an interim payment of that sum and he exercised his discretion so to do.
The factual background to the present appeal
The claimant, Benjamin Eeles, was born in November 1997 and suffered a serious head injury in a car accident in 1998 when he was only 9 months old. He is now 11. He has made a good physical recovery from the effects of the accident and now has reasonable motor coordination; he can walk independently although somewhat clumsily. His fine motor skills are impaired but he can dress himself and do most every day tasks. His main difficulties are with cognition and intellect. He has learning difficulties and attends a school for children with special needs. He has poor memory and concentration, difficulties with multi-tasking and information processing and an inability to organise himself without constant reminders. He also has some communication difficulties. He will never be able to lead a fully independent life but will require supervision and some care. He is very unlikely ever to be gainfully employed. He requires and will continue to require a wide range of therapies, including physiotherapy, occupational...
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