KLM v EUI Ltd

When assessing an interim payment in a personal injury claim where a periodical payment order is likely, the court must assess the likely capital element of the final judgment conservatively. It must avoid capitalising future losses likely to be dealt with periodically unless there is a high degree of confidence that they will be awarded as capital and a real need for early payment.

Accommodation costs will ordinarily be considered at the first stage of the assessment. The payment must remain a reasonable proportion of the likely capital award and must not create an unlevel playing field by constraining the trial judge’s freedom of decision.

The claimant, who had suffered very severe brain injuries in a road traffic accident, applied under CPR 25.7 for a further interim payment of £1.5 million. Liability had been admitted and judgment entered for damages to be assessed.

The proposed payment was intended principally to purchase and adapt a property for the claimant’s future accommodation with her family. The parties agreed that a periodical payment order was very likely in respect of several future losses. The central issue was the reasonable proportion of the likely capital judgment which could safely be paid before trial.

1. Application and statutory cap. The claimant satisfied the condition in CPR 25.7 because judgment had been entered for damages to be assessed. Under CPR 25.7(4), however, an interim payment could not exceed a reasonable proportion of the likely final judgment.
2. Eeles assessment. Applying Eeles v Cobham Hire Services Ltd [2010] 1 WLR 409, the likely final judgment was the capital sum actually awarded, not the capitalised value of any periodical payment order. At Stage 1 the court should conservatively assess general damages, past losses, interest and accommodation costs. It should generally exclude future losses which might be dealt with by periodical payments.
3. Future loss could be included at Stage 2 only where there was a high degree of confidence that the trial judge would award it as a capital sum and a real need for payment before trial. The court also had to avoid creating a status quo which might inhibit the trial judge’s freedom of decision.
4. Accommodation costs were properly included at Stage 1. The court provisionally assessed the capital award at £1,281,500, including £584,500 for accommodation. Including possible future loss of earnings would not justify the requested payment because the resulting proportion would be excessive and the Stage 2 conditions were not met.
5. The requested further interim payment of £1.5 million was refused. The court indicated that a further payment of £900,000, in addition to £85,000 already paid, would be appropriate. The resulting total of £985,000 was approximately 77% of the conservatively assessed capital award and would not fetter the trial judge’s discretion.

Not stated in the judgment.