INTERIM PAYMENTS WHEN THERE ARE A NUMBER OF DEFENDANTS: THE PRINCIPLES CONSIDERED BY THE COURT OF APPEAL

I am grateful to barrister Michael Lemmy for sending me a copy of the Court of Appeal judgment today in Buttar Construction Ltd -v- Arshdeep [2021] EWCA Civ 1408.  The Court considered arguments about whether an interim payment should have been made against one of several defendants in a personal injury claim. The court upheld the decision of the judge to make an interim payment against that particular defendant in these circumstances.  A copy of the case is available here.  [2021] EWCA Civ 1408 – B3_2021_1147 – Buttar Construction Ltd v Arshdeep – Approved Final (1)

WEBINAR ON INTERIM PAYMENTS

There is a webinar on 30th September 2021 which deals with interim payments and looks at the rules in relation to eligibility in some detail.

Details of the webinar are available here. 

The webinar is broadcast at 12.00 30th September 2021.

THE CASE

The claimant was seriously injured in an accident on a building site, the joists and wall of a building collapsed as he was working near it. He brought proceedings against a number of defendants involved in the management of the site.  He made an application for an interim payment against two of those defendants.

THE JUDGMENT AT FIRST INSTANCE

At first instance the judge made an award for an interim payment against each defendant of £150,000 each.  One of those defendants, Bukkar, appealed.

THE GROUNDS OF THE APPEAL

The grounds as formulated by Buttar are:
i) Ground 1: The Judge erred in law in that he failed to consider whether the conditions specified by CPR 25.7(1)(c) were satisfied against the YKS, before dealing with the Claimant’s application against YKS and Buttar under CPR 25.7(1)(e).
ii) Ground 2: The Judge erred in law in that he was wrong to conclude that the conditions specified in CPR 25.7(1)(e) were satisfied, in particular: (a) he was wrong to conclude that if the claim went to trial the Claimant would obtain judgment for a substantial amount of money against the YKS or Buttar but he could not determine which; he should have concluded the Claimant would obtain judgment for a substantial amount of money against the YKS but could not determine whether the Claimant would obtain judgment for a substantial
amount of money against Buttar as well; (b) The Judge was wrong to conclude YKS and Buttar were insured in respect of the claim; he should have concluded that, due to the fact the insurers of the YKS and the insurers of the Buttar had reserved their rights neither Defendant was insured in respect of the claim, alternatively it was not appropriate to make an order for an interim payment applying the dictum of Griffiths LJ in O’Driscoll v Sleigh
iii) Ground 3: The Judge erred in law in deciding in the exercise of his discretion that Buttar should make an interim payment because of the substantial chance the Claimant’s claim against B uttar will fail and Buttar will not be able to recover the monies paid because the Claimant is impecunious and the solicitors acting for YKS’s insurers stated there is a very real prospect the YKS will not be indemnified in respect of the Claimant’s claim.

THE COURT OF APPEAL’S REJECTION OF THE DEFENDANT’S APPEAL

The Court of Appeal dismissed the Defendant’s appeal.

REJECTION OF GROUND 1

34. There is no substance in Ground 1. The claimant was entitled to bring the application under CPR 25.7(1)(e) and to have it decided under that ground. That is clear from the opening words of CPR 25.7(1), which permit the Court to make an order for an interim payment “where any of the following conditions are satisfied” and the absence of any words requiring a sequential approach to be adopted. Whether it was wise for the Claimant to do so and whether an application under that provision of the rule would succeed are different questions. Furthermore, the Judge was correct at [11] of the judgment when distinguishing between CPR 25.7(1)(c) and (1)(e) and recognising that
they cannot both be satisfied: “the first applies where there is clarity as to the identity of the party against whom judgment will be entered. The second applies where there is no clarity.” I would dismiss the appeal on Ground 1.

REJECTION OF GROUND 2

CPR 25.7 was amended to change the previous law to allow a claimant to obtain an interim payment against several defendants where a judge cannot readily determine which defendant is likely to be ordered to pay damages. The Court of Appeal held that the judge was entitled to make an interim payment against both defendants.
35. Ground 2(a) as formulated is more substantial. Mr McLaughlin argued trenchantly that the Judge should have concluded (adopting the HMRC approach) that, if the claim went to trial, the Claimant would obtain judgment for a substantial amount of money against YKS. On that basis, he submits that sup-paragraph (e) has no application, whatever the Judge’s view of the case against Buttar. His submission is that the court can determine against which defendant the Claimant would obtain judgment within the meaning of sub-paragraph (e)(i) because the case against YKS would satisfy the requirements of sub-paragraph (c). His alternative formulation of the same point of interpretation was that sub-paragraph (e) only applies to defendants who would not be caught by subparagraph (c) of which, in this case, there was only one. There are therefore two limbs to his submission, the first of which is evidential and the second of which raises a question of interpretation. I deal with them in that order.
36. Instinctively, the case against YKS appears to be strong because it owed the claimant the normal duties of an employer to their employee and resting bricks and blocks upon joists until the joists fail with the claimant standing below the stack is (at least) strongly
suggestive of the negligent adoption of an unsafe system of working. However, YKS asserts that the system being adopted was a safe and accepted method of temporary storage and that it was not responsible for the provision or fixing of the joists. There is reference to video evidence showing the quantity of bricks and blocks, but we have not seen it. The Judge was not in a position (and was not entitled) to conduct a mini-trial of whether storing bricks and blocks on joists was or was not an accepted method of temporary storage or whether the quantities being stacked were excessive so that the employee of YKS who was directing the claimant was negligent. Nor was he in a position to conduct a mini-trial of precisely why the joists failed and whether the apparently optimistic assertion that the accident was, from YKS’s perspective, unforeseeable had merit. Mr McLaughlin accepted (rightly, in my judgment) that if the joists were subject to a latent defect or had been inadequately fixed by an independent contractor, YKS could escape liability despite owing non-delegable duties as employer. I can readily conceive that some (and maybe most) judges might have taken a “robust” view of YKS’s position and may have been satisfied that, if the claim went to trial, the claimant would obtain judgment against YKS.  However, I consider that it was (just) open to the Judge to take the view that he could not be satisfied that would have been the outcome.
…  9. Given the clear and deliberate changes effected by CPR 25.7 to the previous regime under the RSC, I would merely note that this approach is consistent with the terms of RSC O. 29 r.(1)(c), which I have set out above. I would not base my decision on that consistency.”

 

REJECTION OF GROUND 3

The Court also rejected the argument that the risk that an indemnity may not be provided was a factor to consider.

I turn therefore to Ground 3. I would accept that the possibility that YKS’s insurers may not indemnify YKS in the event that it is held liable to the claimant is a material feature to be taken into account when the judge came to exercise his discretion. The Judge considered it. He considered that the material before the court in relation to the reservation of rights by YKS’s insurers was “very thin”. I agree. It was and is open to the insurers not to provide more information, but at present all the Court knows for sure is that Underwriters have issued a policy providing Employers’ Liability cover which remains in being despite the reservation of rights. Even less information has been provided in relation to Buttar’s insurance, and so the same conclusion applies. Buttar has not shown that the Judge’s balancing of factors that weighed in favour or against the exercising of his discretion was either wrong in principle, included immaterial features, excluded material features, or reached a conclusion that was outside the ambit available to him. I would therefore dismiss the appeal on Ground 3.

43. For these reasons, I would dismiss this appeal