Cobham v Eeles Update
In Cobham Hire Services Limited v Eeles 2009 (Eeles) the Court of Appeal set out a new two stage test for interim judges to consider when making a decision on applications for interim payments. Since then, there have been a number of cases showing how this works in practice.
Before the Eeles decision, the only issue a claimant had to consider when making an application for an interim payment was whether the amount requested was likely to exceed a reasonable proportion of the final judgment as stated in CPR 25.7(4). Therefore if the claimant could show that the figure requested did not exceed a reasonable amount of the final judgment, they would normally succeed with applications for the amount requested. This could include costs for future care and case management.
The Eeles two stage test changed the landscape completely. The first stage of the test requires the interim judge to assess the likely amount of the final judgment leaving out the heads of future loss which the trial judge might wish to deal with by way of periodical payments. Strictly speaking this assessment should only comprise of damages for pain suffering and loss of amenity (PSLA) and past financial expenses with interest on both. It was also accepted that accommodation costs, adaptation costs and removal costs would be awarded as a lump sum so these could be included in the first stage. The Court has to make a conservative assessment of that figure but can then award a high proportion of that amount.
The second stage of the test allows the Court to include in their assessment some elements of future loss but only when they can confidently predict that the trial judge will wish to award a larger capital sum than covered by for PSLA, past financial expenses, and accommodation costs. However the claimant also has to show that there was a real need for the payment now.
This test has left claimants with a problem especially in respect of accommodation due to the effects of Roberts v Johnstone where courts do not award the increased capital costs of a property but 2.5% of that sum on an annual multiplier. This meant that claimants have to often use damages intended for other heads of loss to enable them to buy a suitable property.
The following recent cases have highlighted the difficulty claimants face when making an application for an interim payment especially concerning accommodation:-
Mabiriizi v HSBC Insurance (UK) Limited 2010 This case involved a 21 year old male claimant who had suffered a severe head injury in a road traffic accident. The claimant made an application for an interim payment of £1.78 million to purchase new accommodation. At the time the claimant was being cared for by his mother at the family home with assistance from the local authority.
Whilst it was accepted that his current accommodation was completely unsuitable for his needs the defendant resisted the application. The defendants argument was that accommodation costs should not be included at all. They submitted there was an argument as to whether the claimant should receive care in a residential home rather than with his family. The defendants argued that if the judge included accommodation in the award under stage 1 then he would have effectively tied the trial judges hands on this issue.
The Court of Appeal accepted the defendants argument and did not include the accommodation costs in the stage 1 assessment. The claimants capitalised future losses under stage 2 did not meet the level of payment requested. The application was made on an all or nothing basis and therefore it failed.
PZC v Gloucestershire Hospitals NHS Trust 2011
This case involved a 9 year old claimant who has suffered cerebral palsy as a result of injuries at birth. The claimant made an application for substantial interim payment to purchase a new property. It was agreed between the parties that the claimants current accommodation was unsuitable.
The defendant resisted the application on the basis that the claimants proposed accommodation was not reasonable and exceeded their needs.
The claimant failed with the application. The Court decided that there was real doubt as to whether the proposed property was reasonable and may have exceeded the claimants needs. Also the Court held that the claimant had not proved a real need for the interim payment now rather than at trial as required under stage 2 of the test. The trial was only 5 months away and there was a settlement meeting scheduled in 4 months time.
Kirby v Ashford & St Peters Hospitals NHS Trust 2011 A severely disabled claimant made an application for a further interim payment of £250,000. The claimants representatives had already received interim payments to date of £1,000,000 which they had used to purchase and adapt a suitable property. The application was made on the basis that future losses would need to be capitalised in order to meet the outstanding expenses.
The question the Court considered is would the trial judge find some way to save those looking after the claimants interests from the consequences of their financial irresponsibility. The Court concluded yes. A judge would be imaginative and find some way of paying the debts. A further £150,000 was ordered.