INTERIM PAYMENTS, EVIDENCE AND THE BURDEN OF PROOF: OBSERVATIONS FROM THE HIGH COURT

In Sellar-Elliot -v- Howling [2016] EWHC 443 (QB) Mr Justice Sweeney considered some important issues in relation to interim payments. The case is somewhat unusual in that the judgment is one that refuses permission to appeal. However the judge recognised that the case gave rise to issues of general importance and gave a full judgment for that reason.

KEY POINTS

  • A judge must decide an interim payment on the basis of the evidence before them.
  • The burden was on the defendant to adduce evidence to displace the claimant’s case.
  • If the defendant failed to do so the judge was entitled to make the order.

THE CASE

The claimant brought an action for clinical negligence. The defendant admitted breach of duty prior to issue.  The defence, however, reserved the right to argue causation.

  • An initial interim payment was agreed at £17,500.
  • Following service of the defendant’s evidence on causation the claimant applied for a further interim payment in the sum of £100,000.
  • Master Cook ordered an interim payment of £100,000 and the defendant sought permission to appeal that decision.

THE EVIDENTIAL BURDEN ON THE DEFENDANT: THE DECISION OF MASTER COOK

  1. During the course of the hearing of the application on 29 October 2015 Master Cook drew the attention of the parties to the decision in Smith v Bailey [2014] EWHC 2569 (QB); [2015] R.T.R. 6 (“Smith“). In that case Popplewell J decided, amongst other things, that on an interim payment application there was an evidential burden on the Defendant to put before the court material raising an issue of contributory negligence, and that the task of the court was to apply the relevant legal test to the evidence before it.
  1. Master Cook variously observed that Miss Fox’s witness statements [the solicitor for the defendant] did no more than simply restate the position that was stated in the Defence; that Professor Price’s letter failed to address the issues (the rate of growth, the size of the tumour, and studies in relation to survival rates) relied upon by Professor Middleton; that the effect of Mr Bishop’s submissions was to assert that the court could be satisfied that, in due course, evidence to support the Defendant’s contentions would be forthcoming (which threw into sharp focus the test that the court had to apply on such an application); and that CPR 25.7-(4), permitted the payment of no more than a reasonable proportion of the likely amount (assessed on a conservative basis) of the final judgement. He then cited [8] of the judgment of Popplewell J in Smith (above), as follows:
“The legal and evidential burden of proving contributory negligence at trial is on the defendant. On an interim payment application there is an evidential burden on the defendant to put before the court material raising an issue of contributory negligence. The task of the court is to apply the relevant legal test to the evidence before it. There may be cases in which such material cannot reasonably be expected to be available to a defendant at the time of the application. This is not one of them. No suggestion of contributory negligence has been raised in the two years since the accident and prior to the service of the defence”
  1. Master Cook then continued:
“18) In that particular case the judge went on to hold that the Master was entitled, on the basis of the evidence before him, to discount the defendant’s argument that there was likely or might likely be a substantial reduction in damages due to contributory negligence, notwithstanding the fact that the contributory negligence had been pleaded in the defence.
19) It seems to me that approach of the judge in relation to arguments of causation is comparable. Whilst the Claimant must prove his case, to me there must be, at the stage of an interim payment application, an evidential burden on a defendant to raise matters, on the basis of evidence, which would justify the court in concluding that a Claimant would not succeed in obtaining substantial damages. In other words, in my judgment, a defendant must go further than simply saying: we have pleaded it, it is there in the pleading and verified by a statement of truth when faced with compelling evidence from the Claimant. In particular, I take into account the fact that the defendant has had a considerable period of time to consider the application that is put before me today.
20) The application was issued in May 2015, and I note the first witness statement from the defendant in response was in June 2015. Whether or not a defendant needs to serve its entire expert evidence or its expert reports in final form, it seems to me that a defendant who is maintaining a causation defence such as this should be in a position to provide particulars of that defence, and to counter any formidable argument that is made against them on an application such as this.
21) In my judgment the two arguments that have been raised by Professor Middleton are indeed formidable. In my judgment, such arguments require reasoned criticism before they can be rejected or discounted or before it can be assumed that such evidence might be forthcoming in the period up to trial. On the basis of the material before me, no such criticism has been put forward by the defendant.
22) What then is the position of the court? I have to judge these matters on the basis of the evidence as it is before me. Based on that evidence I must consider what a trial judge might do. If this is the state of the evidence before a trial judge, I think I can be satisfied that the claimant will succeed in obtaining a substantial award of damages. I fully appreciate that the defendant may well in due course serve expert evidence which goes to undermine the conclusions of Professor Middleton. But, it seems to me, if the defendant is in a position to do that, she is in a position today to put forward arguments either in summary form or supported by letter which would go to undermine the two very powerful pillars of Professor Middleton’s argument to which I have already referred.
23) In these circumstances, the amount of an interim payment not seriously being in dispute between the parties, I make an order for a payment on account of damages in the sum of £100,000. That is in addition to the £18,000 that has already been paid.
  1. In November 2015, against the background of the stay ordered by Singh J, and in order to assist the Claimant to deal with any immediate needs pending the determination of the application for permission to appeal, the Defendant made a further voluntary interim payment – in that instance of £20,000.

THE DECISION “ON APPEAL”

More accurately the judge refused permission to appeal but gave reasons for doing so.

  1. I had no doubt that the application for permission to appeal had to be decided upon the basis of the evidence that was before Master Cook and, accepting Mr Dyer’s arguments, that none of the Grounds of Appeal had any real prospect of success. That view has been since been fortified after reading Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs)(No 2) [2012] 1 WLR 2375;[2012] EWCA Civ 57, to which I was not referred – but which is mentioned at 15-104 of the White Book (to which Master Cook was referred).
  2. CPR 25.6 sets out the general procedure in relation to applications for interim payments. By virtue of CPR 25.6-(3)(b) such an application must be supported by evidence, whereas CPR 25.6-(4) & (5) make clear that there is no obligation on either the respondent or the applicant (in reply) to file evidence, there is simply the option in each case to do so. There may, of course, be cases in which a respondent chooses not to file any evidence at all, and simply relies upon argument to the effect that the evidence relied upon by the applicant does not meet the requisite test.
  3. As to the requisite test, in the Test Claimants case (above), the Court of Appeal decided that:
i) On an application for an interim payment the Claimant has to satisfy the court, upon the balance of probabilities, that the requisite conditions have been fulfilled [33].

ii) On an application under CPR 25.7-(1)(c) the Claimant must therefore satisfy the court, upon the balance of probabilities, that if the claim went to trial, the Claimant would obtain judgment for a substantial sum of money from the Defendant [36].

iii) That means that the court must be satisfied, upon the balance of probabilities, that if the claim were to go to trial then, on the material before the judge at the time of the application for an interim payment, the Claimant would actually succeed in her claim and furthermore that, as a result, she would actually obtain a substantial amount of money [38].

iv) It is not enough for the court to be satisfied, upon the balance of probabilities, that it is likely the Claimant would obtain judgment, or that it is likely that she would obtain a substantial amount of money [38].

  1. Whilst, no doubt, the court will always be alert to the possibility of an application being made for an improper purpose of the type feared by the Defendant, and to deal with it accordingly, that was certainly not the position in this case. The Letter of Claim was served in March 2014, the Claim Form was served in January 2015, the application for an interim payment was first made in May 2015, Professor Middleton’s report was served on 23 September 2015 and the hearing of the application finally took place on 29 October 2015. There was thus ample opportunity for the Defendant’s expert, Professor Price, to consider the issue of causation and to comment upon the main points relied upon by Professor Middleton. Indeed, as has now emerged, on 12 October 2015 Professor Price had considered and commented by letter upon Professor Middleton’s report, but the Defendant chose not to deploy that letter – rather she chose to rely on Ms Fox’s witness statement of 27 October 2015, the content of which is summarised in [18] above.
  2. Hence it was clear that, as required, the Claimant had served evidence in support of the application, and that the Defendant (as was her right) had chosen only to serve some limited evidence in response to the application. It was nothing to the point that the Defendant had not broken any rule or Court order, or that she was not under an obligation to disclose expert evidence until some six weeks later, or that Professor Middleton’s evidence had only been served on 23 September 2015.
  3. Equally, it seemed to me to be clear that Master Cook was right to conclude that he had to decide the application on the evidence before him. It was also clear that, on that evidence, he was entitled to conclude that, absent any evidence of reasons to the contrary, the evidence of Professor Middleton was compelling, and thus to conclude, as he did, that the Claimant had proved, to the requisite standard, that the conditions in CPR 25.7-(1)(c) were met.
  4. To the extent that Master Cook relied on the decision in Smith (above) to conclude that he had to decide the application upon the evidence before him, he was clearly right to do so. To the extent that he referred to there being an evidential burden on the Defendant he was doing no more, in the particular circumstances of this case, and given that he had to make a decision on the evidence before him, than recognising (as he was entitled to) the apparent strength of Professor Middleton’s reasoned points and the consequent need for at least some reasoning from Professor Price to result in him not being persuaded that, on the balance of probabilities, the requisite test was met. He was also, in my view, clearly entitled to proceed upon the basis, again in the particular circumstances of this case, that the mere fact that the Defendant’s causation case was supported by reputable expert opinion, and that the Defendant’s expert would dispute the Claimant’s expert evidence at trial, did not mean that, on the evidence, the Claimant had failed to persuade him that the requisite test was met.
  5. It was against that background that, in the particular circumstances of this case, I concluded that the proposed appeal had (and still has) no real prospect of success.

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