Heidelberg Graphic Equipment Ltd.& Anor v Revenue & Customs

For an interim payment under CPR 25.7(1)(c), the claimant must show on the balance of probabilities that, if the claim went to trial, judgment for a substantial sum would be obtained. This is a high threshold: it is insufficient that success is merely likely. The court assesses the hypothetical trial by reference to the law at the date of the application, while taking a pending appeal into account without speculating about its eventual result. A first-instance decision remains the applicable law unless and until overturned. The court may order the full agreed quantum where repayment is adequately protected and the sum is a reasonable proportion of the likely final judgment.

The claimants sought an interim payment under CPR 25.7(1)(c) in proceedings concerning recovery of advance corporation tax. Their substantive claim was affected by an earlier limitation decision. The relevant section 320 issue had subsequently been decided in their favour at first instance, subject to appeal. Quantum was agreed, but liability remained contested. The central questions were whether the claimants would obtain judgment for a substantial amount if the claim went to trial, when the law should be assessed, and whether payment for the full agreed amount was appropriate.

1. The application succeeded. The court ordered an interim payment of approximately £505,000, being the full agreed quantum.

2. Under CPR 25.7(1)(c), the claimant bears the burden of proof and must satisfy the court on the balance of probabilities that judgment for a substantial amount would be obtained at trial. The threshold is high. Mere likelihood of success is insufficient. The approach in British and Commonwealth Holdings plc v Quadrex Holdings Inc [1989] 1 QB 842 was applied.

3. The hypothetical trial is assessed as at the application date. The court applies the law then in force, rather than speculating about the law at a future trial or the outcome of pending appeals.

4. The stay did not prevent the application. If necessary, it could be lifted to permit the application to proceed.

5. Where quantum is agreed and repayment is protected by the claimant’s ability to repay and undertakings, 100 per cent of the likely judgment may constitute a reasonable proportion under CPR 25.7(4).

First-instance decision. The judgment records that related limitation issues were subject to pending appeals, but this application was determined by the High Court on 8 April 2009.