PROVING THINGS 240: PROVING THE “EELES” CRITERIA ON AN APPLICATION FOR AN INTERIM PAYMENT: GAPS IN THE EVIDENCE PREVENT A FINAL DETERMINATION BEING MADE

In XS1 (A Child) v West Hertfordshire Hospitals NHS Trust [2024] EWHC 1865 (KB) Master Stevens adjourned a claimant’s application for a substantial interim payment.  The primary ground for this was that there was insufficient evidence before the court to establish the the relevant criteria in Cobham Hire Services v Eeles [2009] EWCA Civ 204.  Here we look, primarily, at the Master’s observations in relation to evidence.

“Whilst the hearing and materials produced for it have produced much helpful material, this judgment has identified several crucial gaps before a final determination can be made.”

WEBINAR ON MAKING APPLICATIONS TO THE COURT: A PRACTITIONER’S GUIDE: WEBINAR 10th SEPTEMBER 2024

Interim payments are one of the specific types of applications considered in the webinar on the 10th September 2024.

This webinar looks in detail at the rules relating to making applications in civil cases. Booking details are available here. 

It looks in detail at:

• The rules and practice directions relating to making applications
• The importance of compliance
• A checklist to make sure you comply
• The importance of time estimates
• The Schedule of Costs

It then looks at these principles relating to two key areas of practice.

• Applications to extend time
• Applications for interim payments
• Applications for interim orders as to costs.

THE CASE

The claimant is a 10 year old child. She suffers from dystonic cerebral palsy at the the most severe level. She brings an action for clinical negligence.  Liability had been compromised and approved with a 70% split in the claimant’s favour.

INTERIM PAYMENTS

The claimant sought an interim payment of  £1.65 million to purchase a specific property that was suitable for her needs.  There had been earlier voluntary interim payments.

THE TEST

Applicants for interim payments in these cases are constrained by the decision in Cobham Hire Services v Eeles [2009] EWCA Civ 204 (“Eeles“) where the Court of Appeal set out a number of tests, basically designed to ensure that an interim payment would not constrain the ability of a trial judge to make an award for periodical payments.   The first issue requires the court to consider what the likely lump sum award is likely to be.

EVIDENTIAL ISSUES

The defendant contended that the application should be dismissed or adjourned. That was initially not accepted by the Master. However, that is what ultimately happened.

1. 1. The Defendant contended the application should be dismissed or adjourned, to an unspecified date, but I rejected those submissions at the outset of the hearing, as there was significant relevant expert and other evidence before the Court upon which a determination might be possible, as in some other previous cases. I indicated that even if a complete determination could not be reached on the application, I considered progress could be made. There was no authority before the Court that a judge hearing applications of this nature should have expert evidence available from the Defendant before reaching a decision. Sweeney J in Sellar-Elliott v Howling [2016] EWHC 443(QB) held the contrary in refusing permission to appeal a decision from a Master to grant an interim payment in those circumstances. The Claimant had served their evidence in accordance with the timescales permitted under CPR 25.6, save for the latest paediatric neurology report, and an extremely brief supplemental witness statement from the Litigation Friend. The Court was also mindful that it should not withhold damages from a Claimant provided the threshold tests for eligibility for such a payment have been satisfied. However the Court should guard against the risk of overpayment.

1. 1. It was confirmed at the hearing that credit was given for a voluntary interim payment of £250,000, paid after the application was first indicated, such that the sum sought at the hearing was the balance of the original request, being £2.15M.

1. There was no indication within the bundle of documents or submissions, as to what the remaining unspent balance is from earlier interim payments and, because the Schedule of Loss is pleaded through to trial, expenditure to date for some heads of loss could not be readily extracted from the detailed information available in the Schedule.

ABSENCE OF EVIDENCE FROM THE DEFENDANT

The Master was not sympathetic in relation to the defendant’s contention that it did not have evidence of its own.

1. 1. Despite the Claimant having served a fully pleaded Schedule of Loss through to known date of trial, calculated with the benefit of CPR Part 35 compliant expert reporting, and unlike previous similar applications which I have heard, and many of the reported authorities, there was no real forensic attempt by the Defendant to persuade me of the invalidity of the numbers contended for. I do not know the reason for this. Certainly Counsel representing the party at the hearing tried to assist within the constraints that had arisen for whatever reason. Overall the Defendant’s approach was rather broad brush, contending a conservative valuation of not more than 66% of the claimed past losses, against a backdrop of their submission that the application should be dismissed or adjourned to which I have already alluded.

1. 1. I note that Yip J had little sympathy for a Defendant who complained they had no expert evidence to assist them on an interim payment application and less than 3 weeks to respond in PAL v Davison [2021] 1108(QB), (“PAL”). She held [at 15] “it was their right not to seek expert evidence at an early stage but they cannot then complain about being required to respond quickly to an application that was readily foreseeable”.

1. 1. In written submissions Claimant’s counsel confirmed that past losses totalled £1,622,416.31 but that the Claimant would accept £1.5M as a conservative estimate which is a little over 92%. The Defendant contended for a 34% reduction on pleaded losses to reach a figure of £1,070,795. This contrasts with the assistance given to the Court in, for example, TTT v Kingston Hospital NHS Trust [2011] EWHC 3917 (QB) (“TTT“) which was in my bundle where Owen J noted (at [6]) that Counsel instructed at short notice had managed to provide a comprehensive analysis heads of heads of loss; in that case the Defendant also did not have a care expert report. Similarly in PZC v Gloucestershire Hospitals NHS Trust [2011] EWHC 1775 (QB) Mr Justice Leighton Williams QC had detailed estimates of all heads of loss by counsel despite the Defendant not having yet served their counter-schedule or being in receipt of their expert care report.

1. In all of these circumstances I would have been reluctant to work from the Defendant’s conservative estimates at this stage, if I could confidently but conservatively, reach a different valuation. However, having studied the figures further following the shorter than usual listing (which had an original listing request of just 30 minutes), I came to the conclusion that this was a) not possible and b) undesirable. I will now explain why.

ABSENCE OF EVIDENCE

The most telling feature, however, was the absence of evidence from the claimant on key elements of loss.

1. 1. Within the broad sweep of criticism of the Claimant’s figures by the Defendant, there was contention about the way in which the Claimant had claimed past losses through to trial in their Schedule, a principle which has been considered very recently by the High Court in at least 2 other cases to which I was taken by the Claimant. Yip J in PAL v Davison [2021] 1108(QB) held (at [26]), (“PAL“), that the “starting point” is to consider the valuation of damages to the date of the application, but that “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”. She explained that the decision of the judge hearing the application will be fact sensitive, taking account of the degree of confidence that special damages “yet to accrue will form part of the likely amount of the lump sum” (at [27]). Yip J also referenced the length of time to trial as being significant, and the undesirability of forcing a Claimant to make further interim payment applications. The Claimant argued that as trial is just one year away the same issues do not arise as in Salwin v Shahed [2022] EWHC 1440 (QB), where losses were claimed for a duration of 2 years’ pre-trial. The Defendant however submitted that this case is markedly dissimilar to the decision in PAL because they believe there is no really urgent need for alternative accommodation now, asserting that factually the claim resembles the position more closely in Eeles.

1. 1. I note that in PAL Yip J proceeded on the basis that she would leave out of account special damages likely to accrue between the time of the application and trial which were unrelated to accommodation, because the purpose of the application was to consider capitalisation of an award for accommodation and she did not want to risk “taking out of the “pot” required to be allocated for those needs in order to fund the accommodation now“. She emphasised 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 is a case of acknowledging that the same sums cannot be spent twice .If they are brought in at this stage and 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” (at [31]).

1. 1. I find myself in a similar position to Mrs Justice Yip, although that aspect of PAL was not specifically argued before me. As I have set out earlier I was not provided with evidence of the remaining balance of past interim payments with which the Claimant’s needs were to be met for the remaining year before trial. There was no indication that a further interim payment application would be made (as in PAL). Even if I had been given the remaining Deputyship balance of account, it was not clear to me, due to the time periods adopted in the Schedule of Loss, precisely what the expense rate is likely to be through to trial. There was no witness statement from the Deputy, nor from the conducting solicitor, albeit he had provided evidence of need, as he saw it, on form N244 applying for an interim payment to allow the purchase of an identified property.

1. Another difference to PAL is that in the present case liability has been approved at 70%, not 100%, which adds to the level of caution I should have in reaching valuations for interim payment purposes as the Claimant will only ever recover a proportion of their needs leaving a shortfall to be “mopped up” elsewhere.

CONCLUSION ON PAST LOSSES

1. I am confident that care and case management, therapies and other miscellaneous expenses will continue to be incurred through to trial, and for which I would approve a further interim payment under Eeles 1. I accept that it is not my task to take account of what the monies will be spent on. However, in the absence of any information about the remaining balance on the Deputy account current balance from past interim payments, and following the line of reasoning in PAL (at [31]), I do not currently have a breakdown sufficient to enable me to move with confidence to assess a specific sum for this time period. It became clear during the course of submissions that some sums claimed in the Schedule of Loss require offsetting as well.

EVIDENTIAL ISSUES IN RELATION TO ACCOMMODATION

1. 1. The Schedule of Loss pleads an overall future accommodation claim of £2,235,891.72 including future rental of 2 years until a suitable property is available to move in to, but life expectancy calculations are an integral part of the valuation of the reversionary interest included within the overall sum.

1. 1. The Defendant robustly questioned the value of the accommodation claim as sought. Objection was raised to double-counting of rent, and high running costs, stating that it was difficult to see this accommodation head of loss ever being more than £1,250,000. This was before a liability deduction or assessment of a reasonable proportion. I found the Defendant’s suggestion that accommodation running costs should be part of a periodical payment order surprising, given the decision in Eeles where it was held that it would usually be appropriate to allow these in the capital award.

1. 1. Counsel for the Claimant accepted that there was an error in the Schedule with regards to rent and contended for a conservative figure of around £1,900,000, for the future accommodation claim being 82% of the pleaded sum. This would naturally be subject to a liability deduction of 30% and then only a reasonable proportion of the remaining balance being awarded.

1. I am distinctly uncomfortable with the figures put to me by both parties. The Claimant’s figures contain errors and the Defendant’s figures are broad brush. I do not know the range of opinion over life expectancy. The need to be more precise is even more acute as it is a 70% liability claim, rather than a 100% one. I could certainly not allow a figure any higher than that put forward by the Defendant without better information.

EVIDENTIAL ISSUES IN RELATION TO “EELES TWO”

The second limb of the Eeles test allows the judge to take into account elements of future loss in the assessment of an interim payment (a) if the judge has a high degree of confidence that the trial judge will award them by way of a capital sum (b) there is a real need for the interim payment in advance of trial.  In this case the Master was not satisfied in relation to either.

1. 1. “Overall it was the Claimant’s contention that if the interim payment was awarded as sought, the total amount awarded would not exceed a reasonable proportion of the lump sum likely to be awarded at trial.

1. 1. The Defendant submitted the Court could not be satisfied that the Claimant has a real need for new accommodation now, rather than at trial. They pointed to the fact her own accommodation expert had considered the current property did not meet longer term needs but was not critical of the short to medium term provision after adaptations have been made. They argued that she would have to remain at the current property in any event whilst other adaptations were undertaken at any new property. They could not foresee a situation where conveyancing would be sufficiently well advanced by the time of their current rental break clause to enable it to be exercised in the autumn of this year; thus the Claimant was committed to the current rental until after the trial in any event.

1. 1. They further submitted that “the desire not to miss what is thought to be a good opportunity is not a need that requires additional indulgence of an interlocutory court“. They went further to suggest that the delay in progressing planned adaptations may have created a false sense of need which could be averted by getting those works back on track.”

1. On the question of the likely confidence that I could have regarding a trial judge’s wish to award more by capital lump sum than PSLA, past losses and accommodation costs alone, they submitted this Court could not make any such prediction, let alone with any confidence.

THE DECISION ON EELES TWO

1. 1. On the question of whether there is a “real need” for alternative accommodation now I am not satisfied that the well-established test is currently satisfied.

1. 1. I do not have enough information about the reasonableness of the intended property itself, but having reached my decision above on one of the essential threshold tests, there is no need to consider the other relevant thresholds under Eeles 2. I will however state that I accept in a partial liability case a trial judge is much more likely to award more heads of loss by way of capital sum than in a 100% liability case.

1. I have sympathy for the Litigation Friend wishing to progress a move to a long term suitable home for the Claimant’s family and recognise the Claimant’s experts pay tribute to the extraordinary levels of family care that have been provided to date to support the Claimant. It is regrettable that on the current position, a deferral of the decision on true accommodation needs may result in some additional expenses being sought, as set out in the Schedule of Loss, for longer rental periods, extra adaptation and re-instatement costs, property search fees etc as claimed, if the intended purchase is lost. However, the appropriate assessment for the baseline accommodation cost of the alternative property is incomplete and cannot be progressed immediately due to the difficulties already set out in this judgment. Therefore I cannot currently assess whether the accommodation costs overall are reasonable on a conservative valuation.

THE RESULT: APPLICATION ADJOURNED

1. 1. Whilst the hearing and materials produced for it have produced much helpful material, this judgment has identified several crucial gaps before a final determination can be made. It is regrettable that this will cause some further delay but the Court’s discretion is considerably fettered by authorities as to the thresholds which must be met.

1. 1. If the Claimant still wishes to proceed with the application, after taking account of the missing information which the Court has identified as relevant, an early return date will be provided during vacation.

1. 1. I do not consider it necessary to await the Defendant’s service deadline for their expert reports and Counter-Schedule before they could be in a position to respond to the application in less of a broad brush manner. I have already made it plain that I consider it curious given the reporting already in train from experts in care and accommodation that more meaningful figures could not have been produced on 15^th July.

1. 1. The Court would be greatly assisted if those instructed by the parties’ could liaise further as to suitable consequential directions for my consideration. If the application is to proceed further at this time, the Court would be greatly assisted if a joint schedule, in Word format, could be compiled, comparing their respective positions on each head of loss claimed with a column left for completion by the Court.