Makdessi v Cavendish Square Holding BV & Ors

Under CPR 25.7(1)(c), an interim payment may be ordered where the claimant proves, on the balance of probabilities, that a trial would result in judgment for a substantial sum. The court need not identify the exact final judgment if it can estimate the likely amount sufficiently to assess a reasonable interim payment. “Substantial” means more than negligible, judged in the context of the total claim. The burden remains on the claimant. An interim payment must leave no realistic risk that the claimant will receive a final judgment for less than the amount paid.

The claimant sought an interim payment of US$6 million following a long-running dispute concerning the exercise of an option to purchase his shares. The Supreme Court had restored the Commercial Court’s conclusion that the option was not an unenforceable penalty. The claimant had transferred, or purported to transfer, the shares and sought payment pending final determination of the price.

The first defendant resisted the application because alleged wrongdoing by another shareholder might reduce the net asset value and therefore the price payable. The central issues were whether the claimant would obtain judgment for a substantial amount at trial and, if so, what proportion of the likely final judgment could reasonably be paid on account.

1. Threshold requirement. The claimant bore the burden of proving on the balance of probabilities that, if the claim went to trial, he would obtain judgment for a substantial amount of money. It was insufficient to show merely that judgment or a substantial judgment was likely. “Substantial” meant substantial as opposed to negligible, assessed in the context of the total claim.
2. Assessment where the precise sum is uncertain. Applying the approach in Test Claimants in FII Litigation v Revenue and Customs Commissioners (No.2) [2012] EWCA 57, the court could be satisfied that a substantial judgment would be obtained without being able to identify the precise sum. It then had to estimate the likely final judgment for the purpose of CPR 25.7(4).
3. The evidence concerning possible wrongdoing created uncertainty as to the final share price, but it was not fanciful to conclude that a substantial sum would remain payable. The court was entitled to take account of the absence of evidence that the recoverable amount would be negligible. That did not reverse the burden of proof.
4. The likely final judgment was about US$4.9 million, although it might be lower. A reasonable proportion was one which made any risk of the claimant ultimately recovering less than the interim payment unrealistic. US$3 million was therefore ordered as an interim payment, conditional on transfer of the shares and without prejudice to the claim for the full price at trial.

Not stated in the judgment.