Interim solution

Picture this: the claimant seeks damages for personal injuries. Liability has been admitted, or determined by the court in the claimant's favour as a preliminary issue. What steps should the claimant's solicitor take to get the damages assessed?

In most cases, the court will set a timetable leading to an assessment hearing within no more than 12 months. However, there are cases where there is likely to be some delay before an accurate assessment can be made of the claimant's loss. Most commonly, this will be because no firm prognosis can yet be given by the medical experts as to the extent of the claimant's recovery, especially if the claimant is young.

Although in such cases the court may be willing to stay the proceedings for a period, or give a generous timetable to allow time for full evaluation of the injuries, the claimant's solicitor should always have in mind the possibility of seeking an interim payment on account of damages from the defendant. Given the very low level of interest currently awarded on special damages, solicitors should seek payment of as much of those as possible so that the claimant has the use of the money and may be able to invest it at a higher rate.

Frequently, the defendant will agree to make an interim payment voluntarily. Remember that if the claimant is a child or protected party, court approval will still be required.

If a voluntary payment is not forthcoming, an application can be made under CPR part 25. Careful note must be taken of the specific requirements in part 25.6, which sets out the procedure for making an application.

If the application can not be agreed, the matter will come before the court for determination. The judge dealing with the application will have to have in mind CPR 25.7. The prerequisites, contained in 25.7(1), are that there should be an admission of liability or a judgment; the court is satisfied that at a trial the claimant would obtain judgment for a substantial sum; and the defendant is insured, or a public body.

New considerations

Assuming the claimant can satisfy the strict requirements of 25.7(1), there is still another hurdle to overcome. Under CPR 25.7(4), the court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.

Until recently, this test had not proved too much of an obstacle for judges. Damages for personal injuries were conventionally awarded as a lump sum, including capitalised and discounted sums for future losses, such as the cost of future care. In the most serious cases, these future losses can amount to millions of pounds on a capitalised basis.

However, since the amendments made to the Damages Act 1996 by the Courts Act 2003, the trial judge is now required to consider whether some of the damages for future losses should be paid by periodical payments, rather than as a lump sum. The judge must consider this even if the parties do not seek it.

Following the amendment to the Damages Act, defendants began to oppose interim payment applications on the ground that payment of too great a capital sum as an interim payment might, in effect, fetter the ability of the trial judge to award periodical payments for as much as would be desirable, because too large a proportion of the overall capitalised value of the case had been paid out. At first, courts were reluctant to agree with that contention if it was clear that a substantial interim payment was required.

However, in Cobham Hire Services v Eeles [2009] EWCA Civ 204, the Court of Appeal gave clear guidance as to how judges hearing these applications should normally approach them (see Solicitors Journal 153/11, 24 March 2009). In essence, the judge must take a conservative approach. When assessing the overall amount of damages, and deciding on a reasonable proportion of that sum to be paid as an interim payment, the judge should normally only take into account damages for pain, suffering and loss of amenity, past losses, and, because it is a figure conventionally awarded as a lump sum, accommodation costs. Normally, costs of future care, aids and equipment and the like should not be taken into account because the judge may wish to deal with those heads of loss by periodical payments.

Applying the guidelines

Two recent decisions by High Court judges show that the court will still try to apply the Eeles guidelines in a way which is appropriate for the particular facts of a case.

In FP v Taunton & Somerset NHS Trust [2009] EWHC 1965 (QB), Blair J included within his assessment of the likely final award all heads of future loss except care, and awarded 90 per cent of the total capital to enable the claimant to obtain more suitable accommodation. The claimant was 'at breaking point' in the existing accommodation. By contrast, in Johnson v Compton-Cooke [2009] EWHC 2582 (QB), MacDuff J stuck to the Eeles guidance, perhaps to limit the availability of funds in a case where there had been previous interim payments.

The message from these cases seems to be that every case will depend on its own facts, but the Court of Appeal has given clear guidance. The most common reason for an application for a substantial interim payment is to enable a claimant to buy and, if necessary, adapt more suitable accommodation. Inevitably, the cost will vary around the country. Having arrived at a capital sum, the judge may then award anything from 70 to 90 per cent, and this may be a reasonable proportion of that sum. However, defendants may be opposing these applications more vigorously in the larger cases.