healthcare update - issue five
The end of claims for excessive interim payments?
Cobham Hire Services Limited v Benjamin Eeles
The recent case of Cobham Hire Services Limited v Benjamin
Eeles (2009) has provided helpful clarification on what a
court must consider when assessing whether a request for an interim
payment of damages should be granted.
The rules
The court can order an interim payment where judgment with
damages to be assessed has been entered or liability has been
admitted, and where the defendant is a public body (such as an NHS
Trust) or is insured.
Any interim payment must be for no more than a reasonable
proportion of the likely final damages award. In determining such
an application, the court will take account of the trial judge’s
obligation to consider if payment of part of the final award should
be by way of ongoing annual payments (a Periodical Payments Order
or “PPO”). The court will not want to jeopardise the trial Judge’s
ability to award a PPO by ordering an interim payment which is much
larger than the likely capital element of that PPO.
Historically, judges have interpreted “reasonable proportion”
generously, leading to substantial interim payment awards. In early
2009 for example a claimant seriously injured in a road traffic
accident in the Balkans received a payment of £1.75million.
The facts
Benjamin Eeles was injured in a road traffic accident aged nine
months and as a result requires lifelong supervision and care. In
2008 (aged eight), his solicitors applied for an interim payment of
£1.2million in order to purchase and adapt Brightlingsea Hall, a
nine bedroomed property. He had previously received interim
payments of £450,000 which had been used to adapt a five bedroom
house in Brightlingsea. His application was initially granted but
that decision was overturned on appeal.
The judgment
The Court of Appeal confirmed that a judge’s first task in
considering an interim payment application is to assess the likely
level of the final damages award on a conservative basis, leaving
out those aspects of damages (notably care, case management, future
loss of earnings, therapies, equipment and Court of Protection
costs) which the future trial judge might wish to deal with by a
PPO. This leaves a capital sum normally comprised of past losses,
accommodation costs, damages for pain and suffering and interest to
date; a reasonable proportion of which can then be awarded as an
interim payment. Occasionally the Judge can also consider other
elements of future loss, such as loss of earnings, although he must
be confident that the Trial Judge will be content to award a larger
capital sum than that covered by the standard approach discussed
above. Having completed this exercise, he must then be satisfied
that there is a real need for the payment now, rather than awaiting
trial.
In Benjamin’s case it was calculated that the capital award was
likely to be £590,000, such that total interim payments of
£1.65million were not justified. There was also no immediate need
for a larger property.
What does the decision mean for healthcare bodies and
their insurers?
This is a welcome decision which we hope will halt the
inexorable rise in substantial interim payment awards in high value
clinical negligence and personal injury claims. Where a claimant is
awarded a large interim payment, there is always a danger that it
will be used to purchase an inappropriate property or initiate an
unnecessarily expensive care regime, which will then be difficult
to argue against at trial. This case reinforces the importance of
PPOs and the need to ensure that this option is available at trial,
giving the defendant more opportunity to prevent substantial costs
being incurred. This way, it is hoped that large amounts of NHS
money will not be tied up for a number of years before trial and
there should be a greater incentive for a claimant to quantify his
claim promptly and progress more swiftly to trial. Capital will
then be freed up to be used in PPOs which will aid cash flow within
the NHS.
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interest and information. It contains only brief summaries of
aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
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