Trebor Bassett Holdings Ltd & Anor v ADT Fire and Security Plc (No 2)

On an interim payment application, the court must be satisfied on the balance of probabilities that the claimant would actually succeed at trial and obtain a substantial sum. A broad percentage of the pleaded claim is insufficient. The court should examine the disputed heads of loss and identify an irreducible minimum that is sufficiently substantial to justify the application.

The court may assess that minimum using the defendant’s own figures where the claimant’s preferred measure of loss remains arguable. Uncertainty about which claimant ultimately holds the cause of action does not necessarily prevent payment where the claims remain extant and there is no demonstrated repayment risk.

The claimants sought an interim payment of £15 million under CPR Part 25.7 in litigation arising from the destruction by fire of a manufacturing unit. Liability had already been established, subject to a 75% reduction for contributory negligence, and the Court of Appeal had dismissed the claimants’ appeal against that finding at [2012] EWCA Civ 1158. Quantum and title to sue remained in issue.

The defendant argued that no irreducible minimum could be identified and challenged both the claimants’ title to sue and their proposed cost-of-reinstatement measure. The central issue was whether the court could be satisfied that a substantial sum would actually be recovered at trial.

1. Approach to CPR Part 25.7. The claimants’ broad-brush approach, based on halving the maximum possible recovery, was rejected. Applying Chiron Corporation v Murex Diagnostics Limited [1996] F.S.R. 578 and the Court of Appeal’s guidance in Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2012] EWCA Civ 57, the court had to consider the issues individually and be satisfied, on the material available, that the claimants would actually succeed and obtain a substantial sum at trial. The application was not to become a mini-trial, but substantial material could not be ignored merely because the case was complex.
2. Title to sue. The accrued contractual and tortious causes of action had not been sold to Tangerine under the Business Purchase Agreement. The transfer provisions concerned current contracts and assets used exclusively in the continuing confectionery business; the completed ADT contract and its accrued causes of action did not fall within them. The later transfer to Kraft was arguable and required further evidence, but the claims had not disappeared into a legal vacuum. The uncertainty as to the correct claimant did not defeat interim relief, particularly in the absence of evidence of repayment risk.
3. Measure of loss. The defendant’s diminution-in-value argument was arguable, so the court used the defendant’s valuation range to calculate the irreducible minimum. After the contributory-negligence reduction, the diminution case produced £3.25 million. A substantial loss-of-profit recovery and the value of destroyed stock were also sufficiently apparent. The court therefore assessed the minimum at £4 million.
4. Order. An interim payment of £4 million was ordered to be paid to Kraft, repayable after the quantum trial if necessary. Costs were expressly excluded from the judgment.

The judgment records that liability was determined by the High Court in [2011] EWHC 1936 (TCC), with a 75% reduction for contributory negligence. The Court of Appeal dismissed the claimants’ appeal on 23 August 2012 at [2012] EWCA Civ 1158. The present judgment determined the interim payment application while quantum and residual title-to-sue issues remained unresolved.