Cobham Hire Services Ltd v Eeles

Where a final damages award may include a periodical payments order, the likely amount of the final judgment for CPR 25.7(4) means the likely capital award. It excludes the notional capitalised value of sums that may be awarded by periodical payments.

The interim-payment judge should make a conservative assessment, ordinarily limited to past loss, general damages, interest and usually accommodation costs. Additional future loss may be included only where the judge has a high degree of confidence that it will be capitalised and the claimant has proved a real and immediate need for the proposed sum. The approach protects the trial judge’s freedom to allocate damages between capital and periodical payments.

The claimant, a child with serious cognitive injuries, had judgment for damages to be assessed and had received interim payments of £450,000. His litigation friend sought a further £1.2 million to acquire and refurbish a large property. The claim was not yet fully quantified and the final hearing was anticipated in 2010.

Foskett J estimated the full capitalised value of the claim at £3.5 million and ordered the further payment. He considered that investing the money in property would not materially impede a later periodical payments order.

The defendant appealed. The central issue was how CPR 25.7(4) should be applied where the trial judge might award some future losses by periodical payments.

1. Appeal allowed. The order for a further interim payment of £1.2 million was set aside and the application was refused.

2. CPR 25.7(4) limits the discretion to order an interim payment. In a case where a periodical payments order may be made under section 2 of the Damages Act 1996, the relevant final judgment is the actual capital sum likely to be awarded. It does not include the notional capitalised value of a possible periodical payments order. The judge below had instead used the full capitalised value of the claim and had therefore adopted the wrong approach.

3. An excessive interim payment prejudices the trial judge’s statutory task of allocating future loss between capital and periodical payments according to the claimant’s needs. Capital already paid cannot later be restored to fund a periodical payments order. Its possible investment or later realisation does not answer that difficulty.

4. The court endorsed the approach in Braithwaite v Homerton University Hospitals NHS Foundation Trust [2008] EWHC 353 (QB). The interim judge should conservatively assess the likely capital award, normally comprising past loss, general damages, interest and usually accommodation costs. A reasonable proportion may be high if that assessment is conservative. Future-loss elements may be added only where there is a high degree of confidence that the trial judge will capitalise them, supported by evidence of a real present need and of the reasonable amount required.

5. On the available material, the likely capital award was about £590,000. The claimant had not established a present need to buy the proposed property. The requested payment could not therefore be justified. The Court of Protection would decide the suitability of a particular proposed purchase, but the interim-payment judge had first to decide whether expenditure of approximately the proposed sum was reasonably necessary.

6. The court also refused to admit a new independent financial adviser’s report. It could have been obtained below and would not have had a significant effect on the appeal. Such reports will be appropriate on interim-payment applications only exceptionally.

• Court of Appeal (Civil Division): Allowed the appeal and set aside the further interim-payment order: [2009] EWCA Civ 204.

• Queen’s Bench Division: Foskett J ordered a further interim payment of £1.2 million after estimating the full capitalised value of the claim at £3.5 million. That order was set aside on appeal.