DPM Property Services Ltd & Ors v Kiani & Ors

An interim payment is discretionary, even where the claimant satisfies the threshold condition that judgment for a substantial sum would probably be obtained. The relevant assessment concerns the likely amount of the judgment, rather than the amount ultimately recoverable in cash. The court must also consider relevant set-offs or counterclaims and the practical effect of payment on other claims involving the defendant. Where payment could prejudice a derivative claim or frustrate an indemnity for the claimant’s costs, the court may limit the payment to preserve sufficient assets. The court should order no more than a reasonable proportion of the likely final judgment.

The second claimant sought an interim payment from the third defendant, a company through which the parties had conducted property-development joint ventures. The company held the net proceeds of sold developments. The claimant sought £180,000, said to represent part of his investment or a bridging loan.

The defendants disputed the calculation and relied on the company’s existing and potential obligation to indemnify the second defendant for costs incurred in pursuing a derivative claim on behalf of the company. The central issues were whether the statutory conditions for an interim payment were met and whether the payment should be limited to protect that potential liability.

1. Application granted in part. The claimant was likely to obtain judgment against the company for approximately £190,000, which was a substantial amount for the purposes of CPR 25.7(1)(c).
2. The power under CPR 25.7(1) is discretionary. The court must assess the likely judgment, not merely the amount that the claimant is likely to recover in cash. The court must also take into account any relevant set-off or counterclaim under CPR 25.7(5).
3. The court was inclined to regard the company’s obligation, or possible future obligation, to indemnify the derivative claimant for costs as capable of constituting a relevant counterclaim. It was unnecessary to decide the point because the court’s overall discretion was sufficient.
4. The company’s assets had to be assessed after allowing for costs already ordered in the derivative proceedings and a reasonable provision for future costs. An interim payment that depleted the company’s assets could prejudice the derivative claimant and frustrate the relief sought.
5. A payment of £90,000 would leave approximately £200,000 available to meet the company’s potential indemnity liability. That was an appropriate balance between the claimant’s probable judgment and the protection of the derivative claim.

The company was directed to pay £90,000 to the claimant’s solicitors within 21 days, subject to any later direction on timing, relief or costs.