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Cobham Hire Services v Eeles, Court of Appeal, 13 March 2009

7 April 2009
The issues

Periodical Payment Orders – interim payment – correct approach to the making of an interim payment in a personal injury claim where the damages were likely to include one or more Periodical Payments Orders – Damages Act 1996 Section 2.

The facts

The Claimant was born in 1997 and had suffered a serious head injury in a car accident in 1998, when he was 9 months old. He was 11 years old at the time of the Hearing before the Court of Appeal. Liability had never been disputed. The Claimant had made a good physical recovery and now had reasonable motor coordination. He could walk independently, though clumsily, his fine motor skills were impaired but he could dress himself and do most everyday tasks. He had difficulties with cognition and intellect. He had learning difficulties and attended a school for children with special needs, had poor memory and concentration, difficulties with multi tasking and information processing, and an inability to organise himself without constant reminders. He would never be able to lead a fully independent life but would require supervision and some care. He was unlikely to be gainfully employed.

The claim had not yet been properly quantified. At the start of the Hearing the Claimant had not prepared a Schedule of Estimated Loss. The Claimant’s solicitor’s witness statement estimated damages for pain, suffering and loss of amenity at £150,000.00, with past losses amounting to £158,000.00. Future loss of earnings would be at least £800,000.00 and a broad brush estimate of the total capital value at £5million. At the time of the Hearing the Defendant had put in a Schedule of Estimated loss, as far as it was able to on the available information, estimating damages for pain, suffering and loss of amenity at £100,000.00 and past losses at about £260,000.00. As to future losses, the Defendant contended that Periodical Payment Orders were likely in respect of care and case management and in respect of all other future losses, the Defendant advanced valuations on an annual basis, capitalised at what it said were the appropriate multipliers. If loss of earnings were excluded, on the basis that a Periodical Payments Order was likely, the capital sum likely to be awarded at Trial was of the order of £700,000.00. If loss of future earnings were to be included, the likely capital awarded at Trial would be about £1.1million.

The Claimant had sought an interim payment of £1.2million, having previously received interim payments of £450,000.00. The matter had come before the High Court Judge who had conservatively estimated the total capitalised value at £3.5million. The Judge made the Order as requested.

The Defendant Appealed.

The decision

The power to order an interim payment was a discretionary one but the discretion was not unfettered. The Court had not power to make an Order for more than a reasonable proportion of the likely amount of the final Judgment. There was clearly no jurisdiction to order an interim payment of more than the likely amount of the final Judgment. In a case where a Periodical Payment Order was made the amount of the final Judgment was the actual capital sum awarded and did not include the notionalised capitalised value of a Periodical Payment Order. The approach of Stanley Burnton, J, as he then was, in Braithwaite v Homerton University Hospitals NHS Foundation Trust [2008] EWHC 353 was correct. The proper approach was to calculate which parts of the claim were bound to be awarded as a lump sum. These were past losses and damages for pain and suffering, with interest on both. Prima facie, that would be the sum which was available to the Judge for consideration in respect of the reasonably proportionate amount of damages that could be awarded. In considering the likely amount of the final Judgment the Judge was also entitled to predict what allocation, as between capital and Periodical Payments Order, the Trial Judge would make. In this case the Judge had predicted that the Trial Judge would eventually allocate a sufficient capital sum to enable the Claimant to buy a suitable property. In this case the Judge had taken the conservatively estimated full capital value of the claim as the basis for his consideration of an interim payment. That was the correct approach before Periodical Payment Orders but in cases where a Periodical Payment Order might be made, it was no longer correct.

The Judge had misunderstood and underestimated the importance of not fettering the Trial Judge’s freedom to allocate the heads of future loss. The fact that the Capital sum ordered might be invested wisely and, might be realised later, missed the point about the importance of the Trial Judge’s freedom to make an appropriate Periodical Payments Order. A Periodical Payment Order had the potential to provide real security for a Claimant for the whole of his life. There was a tension between the Claimant’s need for an immediate capital sum and the desirability of the security of a substantial Periodical Payments Order. That tension could not usually be properly resolved until the Trial Judge knew what sums were actually be awarded under each head of damage and had financial advice available to him. At the interim payment stage the Judge did not have those materials. If the Judge made too large an interim payment, the sum was lost for all time for the purposes of founding a Periodical Payment Order.

The correct approach was as follows:-

The Judge’s first task was 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 Periodical Payment Order. The assessment should comprise only Special Damages to date and damages for pain, suffering and loss of amenity, with interest on both. The practice of awarding accommodation costs, including future running costs, as a lump sum was sufficiently well established that it would usually be appropriate to include accommodation costs in the expected capital award. The assessment should be carried out on a conservative basis. The interim payment would be a reasonable proportion of that assessment. The reasonable proportion might well be a high proportion provided that the assessment had been conservative. The Judge need have no regard as to what the Claimant intended to do with the money. If he was of full age and capacity he could spend it as he wished. If not, expenditure would be controlled by the Court of Protection. There would be circumstances in which the Judge would be entitled to include in his assessment of the likely amount of the final Judgment, additional elements of future loss and that could be done when the Judge could confidently predict that the Trial Judge would wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs alone. The approach of Stanley Burnton, J in Braithwaite had been correct. However, the Judge had to be satisfied by evidence that there was a real need for the interim payment requested before taking such a course.

The Judge’s Order would be set aside. On the facts of this case the Application for a further interim payment would be refused.

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The content on this page is provided for the purposes of general 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 not provide a substitute for it.

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