Interim payments – Consideration of the application of the Eeles 2 Stage Test
May 26, 2021
PAL (A Child) v Davison & Ors  EWHC 1108 (QB)
In this recent case Mrs Justice Yip considered an application for an interim payment on behalf of a child who had suffered catastrophic injury which included a severe brain injury. The Claimant had already received payments totalling £1,025,000. She sought a further interim payment of £2 million in order that suitable accommodation could be purchased and adapted.
BACKGROUND TO THE APPLICATION
The claimant, a 13 year old girl, was walking along the pavement with her family on 27th December 2019 when a vehicle driven by the first defendant mounted the kerb and struck her. Liability was not in issue. There was no dispute that the conditions under r.25.7 of the Civil Procedure Rules were satisfied and that the court may order a further interim payment. The sole issue in dispute in the application was the appropriate amount of such a payment. The Defendants were willing to agree to a further payment of £1,250,000 while the Claimant sought £2 million.
The Claimant’s solicitors had obtained an initial report from a consultant paediatric neurologist, Dr Ram Kumar, who had advised that a definitive prognosis was unlikely to be possible before the fifth anniversary of the accident. The Defendants had not yet obtained any expert medical evidence. Mrs Justice Yip found it apparent from the initial medical evidence and the records that the Claimant had suffered very severe injuries that had impacted on every aspect of the Claimant’s life.
The Claimant’s former family home had been assessed as unsuitable prior to her discharge from hospital and initially alternative rental accommodation was secured and adapted. It was conceded by the Defendant’s accommodation expert that this rental property was not suitable for the Claimant in the longer term and supported a move to a more suitable property.
Whilst there was a difference in the respective accommodation experts predicted costings for suitable accommodation there was also a difference in the approach taken by the parties. The Claimant sought an interim payment now which was intended to be applied to the purchase and adaptation of a suitable property and allow the Claimant to relocate there. In offering £1,250,000 at this stage, the Defendants acknowledged that this would not be sufficient to allow the Claimant to purchase and adapt a suitable property, even on their own expert’s costings. The Defendant’s approach appeared to be, therefore, that the Claimant would have the funds to purchase a property but there would be a need for a further payment to be sought to complete the necessary works to allow the Claimant to move into the property.
Mrs Justice Yip considered the case on the basis of the guidance in Eeles v Cobham Hire Services Ltd  EWCA Civ 204. In that case the Court of Appeal gave guidance, set out in a two-stage test, as to how interim payment applications should be considered so as to avoid causing difficulties if the trial Judge’s view was that periodical payments were appropriate.
Mrs Justice Yip identified that the correct approach for the first stage of the Eeles test is summarised clearly and concisely at paragraphs 43 to 44 of the judgment of Smith LJ;
“43. The judge’s first task is to assess the likely amount of the final judgment, leaving out of account the heads of future loss which the trial judge might wish to deal with by PPO. Strictly speaking, the assessment should comprise only special damages to date and damages for pain, suffering and loss of amenity, with interest on both. However, we consider that the practice of awarding accommodation costs (including future running costs) as a lump sum is sufficiently well established that it will usually be appropriate to include accommodation costs in the expected capital award. The assessment should be carried out on a conservative basis. Save in the circumstances discussed below, the interim payment will be a reasonable proportion of that assessment. A reasonable proportion may well be a high proportion, provided that the assessment has been conservative. The objective is not to keep the claimant out of his money but to avoid any risk of over-payment.
44. For this part of the process, the judge need have no regard as to what the claimant intends to do with the money. If he is of full age and capacity, he may spend it as he will; if not, expenditure will be controlled by the Court of Protection.”
Mrs Justice Yip reaffirms that a Judge should not at the interim payment stage embark upon a mini-trial or seek to determine issues which are properly to be left to the Trial Judge. She goes onto state that making a conservative approach to the assessment does not necessarily mean adopting the Defendant’s figures (see Eeles ). However, the court must be alert to the possibility that the Defendant’s contentions will be accepted at trial and keep in mind the risk of allocating too much to the lump sum element so fettering the Trial Judge’s freedom to allocate damages as he or she thinks fit.
In dealing with the thorny issue as to whether the calculation at the first stage of Eeles involves assessing the likely special damages to trial or only to the date of the interim payment application Mrs Justice Yip adjudicated;
“26. It seems to me that the starting point remains as stated by Smith LJ that strictly speaking the court looks at special damages “to date”. However, there will be many instances where it is entirely appropriate in making the conservative assessment at the first stage to bring in special damages which have not yet accrued but will do so before trial. I consider this a question of fact which inevitably depends on the context of the application. What is essential, is to keep in mind the clear principles which underpin the approach at stage 1 of Eeles. The court’s task is to estimate the likely amount of the lump sum element of the final judgment. The objective is not to keep the claimant out of his or her money but to avoid the risk of overpayment. The court must avoid fettering the trial judge’s freedom to make an appropriate PPO.
27.It is easy to think of examples where the court can be confident that special damages yet to accrue will form part of the likely amount of the lump sum. In the case of an adult claimant, an ongoing claim for loss of earnings might fall into that category. The provision of gratuitous care on a basis which is expected to continue to trial might be another example. Even then, any advance payments in respect of special damages yet to accrue can give rise to some risk of over-payment. The longer the estimated period to trial, the greater the uncertainty and so the greater the risk.”
On the facts of this case Mrs Justice Yip rejected the Claimant’s invitation to include all the likely costs to trial in the stage 1 calculation. Instead she preferred the Defendant’s argument that the Court must guard against allocating large elements of other pre-trial expenditure into an interim payment for accommodation. She made it clear, however, that this was not to ignore the guidance at paragraph 44 of Eeles that the Judge need have no regard to what the Claimant intends to do with the money when addressing the first stage of Eeles. Rather, it was a case of acknowledging that the same sums could not be spent twice. If they are relied upon to found an interim payment which is then used to fund accommodation they will not later be available to fund care and other needs. Mrs Justice Yip concludes that;
“The heads of claim which can be safely brought into the first stage given the way in which the application is pursued are general damages for pain, suffering and loss of amenity and the capitalised accommodation claim. That leaves other special damages to be met through separate interim payments. The expense incurred to date has been met that way. The ongoing costs will be met from what remains. When that money runs out, as it will before trial, further sums will be required. By dealing with the pot available for accommodation separately, any further interim payment applications can be considered on their own merits by reference to ongoing needs without the need to revisit the accommodation issue each time.”
In summary, Mrs Justice Yip decided that the Defendant’s figures were based upon their preliminary expert evidence and she should allow for the possibility that this would be preferred at trial. Therefore, on the facts of this case, it followed that she did not consider that £2million was a reasonable proportion of a conservative assessment of the relevant heads of loss at stage 1
The Judge then considered the second stage of the criteria. Mrs Justice Yip referred to paragraph 45 of Eeles where Smith LJ explained the second stage of the process:
“We turn to the circumstances in which the judge will be entitled to include in his assessment of the likely amount of the final judgment additional elements of future loss. That can be done when the judge can confidently predict that the trial judge will wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs alone. We endorse the approach of Stanley Burnton J in the Braithwaite case  LS Law Medical 261. Before taking such a course, the judge must be satisfied by evidence that there is a real need for the interim payment requested. For example, where the request is for money to buy a house, he must be satisfied that there is a real need for accommodation now (as opposed to after the trial) and that the amount of money requested is reasonable. He does not need to decide whether the particular house proposed is suitable; that is a matter for the Court of Protection. But the judge must not make an interim payment order without first deciding whether expenditure of approximately the amount he proposes to award is reasonably necessary. If the judge is satisfied of that, to a high degree of confidence, then he will be justified in predicting that the trial judge would take that course and he will be justified in assessing the likely amount of the final award at such a level as will permit the making of the necessary interim award.”
Mrs Justice Yip was satisfied on the evidence before her that there was a real need for accommodation now as opposed to after trial. After a detailed review of the current situation and evidence, Mrs Justice Yip came to the conclusion that the only available option was the property identified by the Claimant. She considered that it was reasonably necessary to incur the expenditure proposed and found that it was sensible that the interim payment made is sufficient to meet the full cost of purchasing, adapting and moving into the property. At paragraph 45 and 46 she stated;
“45. It follows that once I have decided that it is necessary to purchase a property for the claimant now, the only available option is the property which has been identified and for which a purchase price of £1,190,000 has been agreed. That price is within the range originally identified as appropriate by Mr Wethers, albeit at the upper end of the range. I am not deciding that the claimant should purchase that property nor am I deciding that the claimant will ultimately be entitled to damages assessed on the basis of that property. I do though consider that looking at the viable options today, it is reasonably necessary to incur the expenditure proposed in order to secure what appears to be the only available property to meet the claimant’s needs.
46. It is sensible that the interim payment I award in respect of accommodation is sufficient to meet the full cost of purchasing, adapting and moving into the property. There is no benefit in leaving the job half done such that the claimant cannot take up occupation.”
Mrs Justice Yip made it clear that she was not deciding precisely how much will need to be spent in total on the accommodation but only that expenditure of approximately the amount she intended to award is reasonably required. Furthermore, that any surplus could be brought into the balance to meet other immediate needs which would become special damages before trial. On the facts of this case the Defendants conceded that if the Court reached the conclusion that the interim payment was reasonably necessary to meet the Claimant’s urgent accommodation needs, then there would be capitalised elements of future loss within the final award which would permit the making of this interim payment.
Proceeding on that basis and applying the second stage of Eeles, Mrs Justice Yip was satisfied to a high degree of confidence that sum of £2million was reasonably required and ordered the interim payment.
Following her Judgement, Mrs Justice Yip rejected the invitation by the Claimant to exercise the jurisdiction of the Court of Protection so as to allow the identified property to be purchased. She determined that it was preferable that the separation of responsibility is maintained and that the Court of Protection’s function is exercised by a nominated judge of that Court.
Mrs Justice Yip provides a very well-reasoned Judgment which:
- Clearly and helpfully re-states and applies the parameters of both stage 1 and 2 of the Eeles
- Clarifies the Courts approach in determining whether the calculation at the first stage of Eeles involves the likely special damages to trial or to the date of the application.
- Makes plain that it is sensible for interim payments to be sufficient to meet the full cost of purchase, adapting and moving into the property rather than having to return to the Court at a later date for further sums.
- Reaffirms the roles of the Judge and of the Court of Protection and their separation of responsibility.
The Judgment will be of interest to all those involved in cases where high value interim payments applications arise and provides very useful guidance as to the way in which the two-stage test is to be applied by the Courts.