#10455 - Special Damages - Personal Injury and Clinical Negligence

SPECIAL DAMAGES

INTERIM PAYMENTS

CPR Part 25

• If the defendant does not agree to make an interim payment voluntarily, the claimant can make a part 25 interim application if one of 3 conditions in CPR 25.7(1) are satisfied:

  • The defendant has admitted liability (a) OR

  • The claimant has already got judgment for damages against the defendant (b)

  • The court is satisfied that if the matter went to trial, the claimant would obtain judgment for a substantial amount (c)

• Although the claimant will normally set out in the application why the payment is required, he is NOT obliged to show that there is a NEED for the payment – Stringman v McCardle [1994]

• Interim payments cannot be made on the small claims track and unlikely on fast track

Procedure

• CPR 25.1(k) and 25.6 and PD 25B para 2.1 and 2.2

• Before making an application, the claimant’s solicitors should contact the defendant’s solicitors and request that the defendant make a voluntary interim payment

• Where the claimant is a child/protected party, permission of the court is required before the interim payment is made

• The claimant may not seek an interim payment until after time for acknowledging service has expired

• Issue and serve notice (Form N244) supported by evidence

  • Para 20.1 of PD 24B states that evidence must deal with the following:

    • The sum of money sought by way of an interim payment

    • The items or matters in respect of which the interim payment is sought

    • The sum of money for which final judgment is likely to be given

    • The reasons for believing that the conditions set out in rule 25.7 are satisfied

    • Any other relevant matters

    • In claims for personal injuries, details of special damages and past and future loss and

    • Include exhibits

    • In a claim under the Fatal Accidents Act 1976, details of the person(s) on whose behalf the claim is made and the nature of the claim

• The application notice and witness statement in support must be served at least 14 days before the return date for the application (ie. the hearing)

  • Give indication of what money is needed for, the amount the claimant believes would be awarded at trial and details of special damage and future loss

• The defendant serves evidence in response at least 7 days before hearing

• If the claimant serves further witness statement in reply, must do so at least 3 days before the hearing

• Where the claimant has been in receipt of recoverable benefits which will fall to be repaid by the defendant to the Compensation Recovery Unit, the defendant should obtain a certificate of recoverable benefits and file this with the court

  • This tells you how much the defendant must pay to the CRU

• Hearing

Amount of payment

• If interim payment is awarded, it should be for no more than a reasonable proportion of the likely judgment – CPR 24.7(4) and (5)

  • Going by decided cases, this is usually a maximum of 75%

• Where there is a large discrepancy between what the claimant and defendant believe will be awarded ultimately, the court will look at:

  • Amount of special damages which have already accrued and

  • Amount of special damages which will arise prior to trial (large degree of certainty here)

  • What the court is likely to award in respect of pain, suffering and loss of amenity and future loss of earnings and cost of care (more speculative)

• Where recoverable benefits have been received by the claimant, he will receive the interim payment net of the amount of benefits

Other provisions

• Court can order payments by instalments rather than lump sum

• Court can order payments to be adjusted e.g. if claim shown later to be less strong

• If a trial does subsequently take place, any interim payment must not be disclosed to trial judge – secrecy rule CPR 25.9

• Court may order that all or part of the interim payment be repaid by claimant, or that defendant is reimbursed by another defendant

• In addition, where the defendant makes interim payment which exceeds his eventual liability under the final judgment, the court may award interest on the overpaid amount form the date the interim payment was made

• CPR 25.6 – 25.9

• CPR PD 25B

What would happen if the claimant was to lose at trial following an interim payment?

• The defendant could order a repayment

• CPR 25.8(2)

• This is unlikely, however would be bad publicity to do so for the defendant

• Court may also view a repayment as inequitable

What should the defendant check before agreeing to make an interim payment, and/or before any court hearing where there is an application for a payment?

• Check whether they have been in receipt of recoverable benefit

• To do so, apply to CRU for a certificate of total benefit to predict value of interim payment

• The defendant is liable to recompense the state for benefits the claimant has received as a result of the defendant’s negligence

• So the defendant agrees a sum of damages to pay the claimant, but must keep back the amount to pay the CRU for benefits

PERIODICAL PAYMENTS

CPR Part 41

• Sometimes parties find periodical payments more convenient than lump sum

• S. 2 of the Damages Act 1996 requires the court to consider making periodical payments where there is an order for future pecuniary loss, e.g. continuing care

• CPR 41.5(1) – parties can say in their statements of case if they think periodical payments are an appropriate way of dealing with compensation

  • This will probably be in the Particulars of Claim

  • Has this been complied with?

  • If not, amend it (would need written consent of the other party to do so)

• PD 41B para 1 means we need advice from actuary and up to date medical evidence

• CPR 41.8

• Such payments usually confined to higher value claims for severe injury, where the claimant needs care for long periods of time

• There must be clear court agreement

  • Court to be satisfied as to amounts and may specify amounts/how to be made/intervals

  • Annual increases

  • Method of funding

• The court can make an order without the consent of the parties

• s. 2(2) – the court can make a periodical payments order in respect of other damages (e.g. past pecuniary loss and pain, suffering and loss of amenity) only where both parties consent

• s. 2(3) – the court can make such an order only where it is satisfied that the continuity of payment is reasonably secure

• s. 2(4) states that a payment is ‘reasonably secure’ where:

  • It is protected by a guarantee given under s. 6 or the Schedule to the Act

  • It is protected by a scheme under s. 213 of the Financial Services and Markets Act 2000 or

  • The source of payment is a government or health service body

The Order

• CPR 41.8(1) – where the court awards damages in the form of periodical payments, it must specify:

  • The annual amount awarded

  • How each payment is to be made during the year

  • At what intervals

  • The amount awarded for future

    • Loss of earnings and other income AND

    • Care and medical costs and other recurring or capital costs

  • That the claimant’s annual future pecuniary losses, as assessed by the court, are to be paid for the duration of the claimant’s life or such other period as the court orders and

  • That the amount of the payments shall vary annually by reference to the retail prices index, unless the court orders otherwise under s. 2(9) of the 1996 Act

Procedure

• CPR 41.5 – the party should address whether periodical payments are appropriate in the particulars of claim or defence

  • If they do not, the court may order the party to rectify the situation

• CPR 41.7 – when considering whether to make a periodical payments order, the court must have regard to all the circumstances of the case, and in particular the form of award which best meets the claimant’s needs, having regard to the factors set out in PD 41B para 1:

  • The scale of the annual payments taking into account any deductions for contributory negligence

  • The form of the award preferred by the claimant including

    • The reasons for the claimant’s preference and

    • The nature of any financial advice received by the claimant when considering the form of the award and

  • The form of the award preferred by the defendant including the reasons for the defendant’s preference

Advantages

• Tax advantages for both claimant and defendant

• Certainty for claimant

• Bottom line savings for defendant

• A mix of both a lump sum and periodical payments is allowed and considered sensible and flexible

Disadvantages

• Claimant – lump sum may give them more than they would get in the long-run from periodical payments

• The claimant could die after a short time

• Independent financial advice should be sought to comply with financial services and markets legislation

Claimant’s change in circumstances – variation

• Either party can return to court to request a variation due to a change in circumstances

• Serious disease/deterioration – increase requested by Claimant

• Significant improvement – decrease requested by Defendant

• Under Damages (Variation of Periodical Payments) Order 2005, where the court is satisfied that at some time in the future, the claimant will suffer serious deterioration, or significantly improve, the court can include in the order a statement that they may be varied

• The consent of the parties is not required

Annuities

• Where none of the above applies, the defendant may be able to prove it is reasonably secure by purchasing a life annuity for the claimant’s benefit, which would be protected by the Financial Services Compensation Scheme

• This normally occurs when a claimant is awarded a sum of damages which are sufficiently large – typically 500,000 or above

• The lump sum can be paid to an insurer and an annuity is purchased which gives regular periodical payments to the claimant for...