England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 July 2014

HHJ Richard Parkes QC :

1. This is an application under CPR rule 25.7 for an interim payment of £1.6 million.
2. The claimant, Alanni Haynes, is an eight-year-old girl with profound disabilities. She has cerebral palsy, with cognitive impairment and impaired mobility; she has significant learning, behavioural and communication problems; and she is entirely dependent on others for her care, the activities of daily living, and safety. Her likely life expectancy is such that she may be expected to live until about the age of 74. Her injuries were caused by the defendants' admitted negligence in the management of her mother's labour and in her delivery. Judgment on liability was entered on 3 August 2012. The proceedings are now at an advanced stage, with service of a detailed schedule and counter schedule and the exchange of expert evidence from a variety of medical and non-medical experts. A settlement meeting took place on 13 May 2014 at which the issues were narrowed. The claims for general damages, past losses, and interest have since been agreed. Trial of the remaining issues is fixed for 20 October 2014.
3. The defendant has already made substantial interim payments in the total sum of £700,000. These have been used to meet the claimant's ongoing needs, including the appointment of a case manager, recruitment of professional carers, and provision of temporary accommodation and specialist equipment. A professional deputy (Julie Burton of Penningtons) has been appointed, and oversees expenditure. A total of some £328,000 remains on account, which is expected to be required to meet the claimant's continuing care and other needs until trial as well as to start the process of adapting the alternative property that is said to be urgently required. The sum now sought would take the total interim payments to £2,300,000. By CPR 25.7(4), the court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.
4. The interim payment now sought arises out of the claimant's requirement for suitable accommodation. The family used to live at 40 Tolworth Park Road, Surbiton, which, as the defendant accepts, was not suitable for the claimant's needs. They then moved to a rented property at 61 Ditton Road, where they now live. Unfortunately, the property has been put on the market by its owner at a recently reduced price, and two months' notice to quit will be given once an offer is accepted. So it is plain, and common ground between the parties, that there is an urgent need for the claimant's family to move from 61 Ditton Road. It is also clear, and common ground, that the family must live within the London Borough of Kingston upon Thames. That is because the claimant has been attending Dysart School in Surbiton since September 2012. This is a specialist school for children with learning difficulties, where the claimant receives individual support and where she is very happy. She is likely to stay there until the end of her education. Were she to reside outside the borough, there would be funding difficulties.
5. The claimant's family have identified what they regard as a suitable house to purchase. This is 13 Kingsdowne Road, for which their offer of £1.6 million has been accepted. The house has not been put on the open market, but it appears likely that it will be marketed if the claimant's family are unable to proceed with the purchase in the course of July 2014. It is with a view to the purchase of this house that the present application is made.
6. The approach to be taken by the court on applications such as this, where a large interim payment is sought but the trial judge is likely to wish to make a periodical payments order, has been explained by the Court of Appeal in the case of Eeles v Cobham Hire Services Ltd, [2009] EWCA Civ 204, [2010] 1 WLR 409. The first task of the judge is to assess the likely amount of the final judgment, leaving out of account the heads of future loss which the trial judge might wish to deal with by PPO. Although in strict terms that assessment would involve only special damages to date and damages for pain, suffering and loss of amenity, plus interest, the practice of awarding accommodation costs (including future running costs) as a lump sum is well-established, so that, as the Court of Appeal observed, it will usually be appropriate to include accommodation costs in the expected capital award. That assessment should be carried out on a conservative basis, and the interim payment should be a reasonable proportion of that assessment. A reasonable proportion may be a high proportion, as long as the assessment has been conservative. The judge need have no regard to what the claimant intends to do with the money, which in this case would be determined by the Court of Protection.
7. Where the judge can confidently predict that the trial judge will wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs, he will be entitled to include additional elements of future loss in his assessment of the likely amount of the final judgment. Before doing so, he must be satisfied by evidence that there is a real need for the interim payment requested. Where the request is for money to buy a house, the judge must be satisfied that there is a real need for accommodation now (as opposed to after the trial) and that the amount of money requested is reasonable. The judge does not need to decide whether the particular house proposed is suitable, since that is a matter for the Court of Protection. But he must not make an interim payment order without first deciding whether expenditure of approximately the amount he proposes to award is reasonably necessary. If the judge is satisfied of that, to a high degree of confidence, then he will be justified in predicting that the trial judge would take that course, and in assessing the likely amount of the final award at a level which will permit the making of the necessary interim payment.
8. The parties have reached agreement as to general damages in the sum of £304,000, and as to past losses in the sum of £420,000, in both cases including interest. There is of course a very substantial dispute in relation to future accommodation, where the claimant's pleaded figure in the schedule of loss and damage is £1,697,051, and the defendant's pleaded figure in the counter-schedule is £542,194. On the defendant's figures, that produces a likely capital award of £1,266,194; on the claimant's figures, the sum is £2,421,051. Given that interim payments in the sum of £700,000 have already been made, the total figure for interim payments if the current application is granted would be £2,300,000. Mr Readhead QC, for the defendant, suggests that I should select an accommodation figure at the lower end of the range which the trial judge will have to consider, and put forward £700,000, which produces a potential capital sum at Eeles stage 1 of £1,424,000: on that basis, he argues that there is scope at stage 1 to award a further £724,000. But whichever accommodation figure is selected, it is obvious that the interim award now sought would exceed a reasonable proportion of the likely final award. That is conceded by the claimant.
9. Mr McCullough QC, for the claimant, therefore takes his stand at the second part of the Eeles process. He submits that it is appropriate at this stage to take into account the parties' respective positions as to capitalisation of any award for future losses. The exercise which he advocates is not limited to the heads of loss which it is appropriate to take into account at Eeles stage 1. In the schedule, the claimant seeks a lump sum in respect of all future losses except for heads 7 (care), 8 (case management), 14 (extra costs), and 17 (management element of deputyship costs). In the counter schedule, the defendant agrees that heads 7 and 8 should be paid as periodical payments, but asserts that all other losses should be capitalised. Mr McCullough's submission is that the trial judge is highly unlikely to insist upon a structure which neither party seeks, in a case where both parties are represented by highly experienced specialist counsel. If that proposition is accepted, and I did not understand Mr Readhead QC to dissent from it, the parties' current pleaded contentions as to a likely lump sum award (leaving out the interim payments already made) range from £4,171,951 (the claimant's position if heads 14 and 17 are capitalised) through £3,232,530 (the claimant's position if heads 14 and 17 are the subject of a PPO) to £1,909,046 (the defendant's figure, capitalising heads 14 and 17 but at a much lower level than the claimant seeks). The defendant's figure, including the £724,000 already paid, produces a total sum of £2,633,046 by way of lump sum if both heads 14 and 17 are capitalised. If head 14 is capitalised (as seems to have been conceded during without prejudice discussions: see below) and head 17 made the subject of a PPO, the total lump sum contended for by the defendant becomes, on the defendant's pleaded figures, some £2,366,361.
10. Controversially, but in my view not improperly on an interim payment application, Mr McCullough buttressed his submission by reference to without prejudice discussions which took place on 13 May 2014. In those discussions, both parties were agreeable to a structure which provided for periodical payments for the management element of deputyship (head 17). The defendant was prepared to offer £3.5 million (a sum of over £1m more than its current pleaded figures), and the claimant to accept £4 million. I bear very much in mind Mr Readhead's warning that an offer at a settlement meeting, which takes into account risks at trial, should not be confused with a conservative valuation of the claim on the basis of the evidence now available, and I have no idea on what basis that offer was made. On the other hand, as Mr McCullough observes, defendants do not usually offer to over-compensate claimants. Mr McCullough's submission, founded on the without prejudice figures, is that even on a highly conservative view, taking either party's approach to the heads of loss to be capitalised, the total interim payments now sought (£2.3m) are no more than a reasonable proportion of the lump sum likely to be awarded at trial. I do not regard that as a highly conservative view, but I see the force of his contention that it would be unrealistic not to take some account of the parties' without prejudice positions.
11. The interim payment is sought, as I have said, for the purchase of a house. To make that order, I must be satisfied that there is a real need for accommodation now, in July 2014 (as opposed to after the trial in October) and that the amount of money requested is reasonable.
12. As I have said, the parties are in agreement that there is an urgent need for alternative accommodation, given that the landlady of 61 Ditton Road may at any time give two months' notice to quit. She has dropped the price of the house, and Mr Haynes fears that it will not be long before a buyer is found. The other factor said to make for urgency is the vendors' wish to proceed with the sale of 13 Kingsdowne Road. Mr Haynes, in his 16 June witness statement, exhibited a letter dated 12 June 2014 from the vendors, Mr & Mrs Kadmka, in which they explained that their offer for the house which they wish to buy had been accepted. Mr Haynes then spoke by telephone to Mrs Kadmka, who said that they wanted to complete their purchase by 6 August in order to be settled before their children started the new school year in September, and that their vendors were emigrating to Japan and required several weeks between exchange of contracts and completion in order to have time to plan removal and relocation arrangements. In short, Mrs Kadmka said, it was important to them to exchange contracts on the sale of 13 Kingsdowne Road by mid-July, failing which they would pull out of the purchase. Mr Readhead expressed scepticism about this. He suggested that even if the vendors did put 13 Kingsdowne Road on the open market, it was unlikely that an alternative buyer would be found before the trial date of 20 October 2014; and that in any case, the fact that the very experienced Deputy would be able to give the Kadmkas assurances about likelihood of a rapid exchange of contracts following trial would be likely to give them sufficient comfort to hold the property for the claimant's family. Plainly, I cannot reach a firm view one way or the other on either issue. The Haynes family might well still be living at 61 Ditton Road in October; and it is equally possible, despite Mrs Kadmka's suggestion to the contrary, that the Kadmkas might be persuaded to wait for a quick sale to the Haynes after trial rather than put the house on the market. Equally, notice to quit Ditton Road might be given tomorrow, leaving the claimant homeless in September; and 13 Kingsdowne Road might go under offer to a new purchaser in a matter of days. It seems to me that it is not desirable to take risks in a situation like this. It is clear, in my judgment, that the claimant's housing position is currently very insecure and that there is a real need to secure new accommodation for her and her family now, rather than in October or November of this year.
13. However, it is very much in contention whether the sum of money sought is reasonable. A breakdown of the sum sought is given in the Deputy's schedule headed 'Alanni Haynes – Financial Review', and at the core of it is the request for £1.6m to buy the house proposed.
14. The claimant's accommodation expert, Mr David Reynolds FRICS, in his report dated August 2013, considered the suitability of the family home at 40 Tolworth Park Road, which I believe is currently let to a tenant. He took the view that the house had been generally suitable for the claimant's needs, but fell short of her requirements in a number of ways, notably the lack of a suitably sized bathroom for the claimant, a ground floor bedroom, space for the necessary regime of care or therapy, space for a wheelchair, space for an overnight carer, and off-street parking. He envisaged that a suitable extension to provide appropriate ground floor facilities would have entailed an area of 73m². The actual heated space of the house seems to have been around c110m², which suggests that a total area of about 183m² might in principle have been sufficient, subject, of course, to the actual layout of an individual property. However, he appears to have concluded that 40 Tolworth Park Road could not be adapted to make it suitable. Given the claimant's future needs, in his opinion the property was likely to require extension to provide her with a suitable bedroom and bathroom on the ground floor, together with carer's accommodation, and to accommodate the claimant's therapy. Any property would also require modification to allow the use of a wheelchair. He estimated the likely total cost of alterations of the hypothetical property as being just under £283,000, which in his view would enhance the freehold value of the property by £50,000. His opinion was that a property similar to 40 Tolworth Park Rd, following adaptation (had that been feasible) would have been worth around £480,000 to £500,000. Sensibly, his approach was to consider the provision of housing of a similar standard to that which the family would have provided for themselves, but allowing for such enlarged or improved accommodation as was necessary to accommodate Alanni's disabilities.
15. As to the likely price of a new property, he stated very shortly that he had researched the area and took the view that a potentially suitable property 'offering the appropriate facilities, including space to accommodate a wheelchair and carer's accommodation', was likely to cost between £1.2 million and £1.5 million. The clause which I have apostrophised might be thought to suggest that the necessary facilities would already be present at that price, but in context (see paragraphs 41ff of his August 2013 report) it appears that he envisaged that alterations costing some £283,000 would be needed in addition. It would have been better had he spelled out the basis of his judgment as to likely cost. It is a very large leap from £500,000 to £1.2 or £1.5 million, given that in principle (even if not in practice) an altered and updated 40 Tolworth Park Road might have been capable of satisfying the needs of Alanni and her family, and it merited a fuller explanation.
16. Given recent increases in property values, his updated view of the current appropriate price band for the type of property which he envisaged was (as at 26 March 2014) between £1.35 million and £1.7 million.
17. On 21 March 2014, Mr Reynolds visited 13 Kingsdowne Road to consider its suitability. Its purchase price was (and remains) £1.6 million. His view was, in short, that the property offered reasonable and suitable accommodation, not least given that the vendors had obtained planning permission to construct an extension the work on which had begun. In his view the scheme could be altered to ensure that the claimant had appropriate ground floor accommodation. The cost of the work was likely to fall between £280,000 and £300,000, which was likely to produce an overall enhancement of the property's value of no more than £50,000.
18. The defendant's accommodation expert was Mr Robin Hill, a chartered architect. His original report, dated February 2014, identified three properties which he regarded as suitable, at prices between £759,950 and £1.1 million. He envisaged approximate extension and adaptation costs of about £85,000. However, two of the properties were outside the London Borough of Kingston upon Thames, and a third was located on the main A3 road, which made it unsuitable given the claimant's safety needs.
19. Mr Hill produced an addendum report dated May 2014. His assessment of the heated area required to accommodate the claimant and her family was 182m². He observed that the family's previous home at 40 Tolworth Park Road, taking into account the proposed extension of 73m², would have amounted to a total heated area of 175.5m² (I think that the correct figure is 183m²), and in his view the area of the proposed property at 13 Kingsdowne Road, namely 410m² including loft and garage, significantly exceeded the reasonable size of property already assessed as appropriate by both Mr Reynolds and himself. However, the actual internal heated space at 13 Kingsdowne Road, excluding the loft and garage, is approximately 243m², to which the proposed adaptations would add a further 41m². On any view, therefore, the area of the proposed property would appear to be substantially greater than that of 40 Tolworth Park Road. Mr Hill identified a further three properties within the borough, which he regarded as being suitable for the claimant's requirements, and which ranged in price from £525,000-£899,950. In his view they could all be adapted, at a cost in the region of £102,000.
20. John Haynes, Alanni's father, commented on Mr Hill's proposed properties in a late witness statement dated 16 June 2014, just two days before the hearing of the application. Mr Readhead QC, for the defendant, objected to its admission on the basis that it had not been served in accordance with CPR 25.6(5) and that much of what it contained, in particular concerning the difficulties with 61 Ditton Road, could have been included in Mr Haynes' May witness statement. He accepted, however, that Mr Haynes' assessment of the suitability of the three properties identified by Mr Hill could not have been done at that time. I have some sympathy with Mr Readhead's objection, and am conscious that he has had no opportunity to respond, but I have found it helpful to have a clearer picture of the potential problems with 61 Ditton Road, and to read Mr Haynes' comments on the three properties.
21. I am not strictly concerned with Mr Haynes' explanation of the space available at 13 Kingsdowne Road, since the question is not whether it would accommodate the family suitably but whether it is reasonably necessary to spend as much as is sought. However, I note that on his evidence, the planned adaptations would convert the garages into about 41m² of heated internal space for Alanni, and a further 49m² of existing internal heated space (the existing utility room, front reception room and study) would be altered to form part of Alanni's adapted part of the house, providing her and her carers with some 90m² of ground floor space, which would leave 74m² of ground floor space for the rest of the family, which was only 11m² more than they had enjoyed at 40 Tolworth Park Rd. Upstairs they would have three bedrooms, two bathrooms and a study/office. More pertinently, Mr Haynes also discussed in his evidence the suitability of the three houses identified by Mr Hill in his May 2014 addendum report. In his view, all were unsuitable for a variety of different reasons. Some of his reasons were perhaps better than others: for instance, he would 'simply not consider' moving to the area of Mr Hill's property D, and he regarded it as not unreasonable to live in an area from which the children can be walked to school, as in his view 'most children are'; and he 'could not consider' a semi-detached house such as Mr Hill's property E because of Alanni's challenging behaviour, even though the impact of her behaviour might be thought to depend less on whether or not a house was detached but on its build quality and its layout. More cogent, it might be thought, were his observations on the space available in properties D and E, which in reality was inadequate in each case. In his view Mr Hill's property F (at a cost of £899,950) had a very good location, but its garden was likely to be too small, and he thought (without, as he admits, any expertise) that there might be difficulties with planning permission. In any event, it was under offer so not available.
22. I note also Mr Haynes' evidence that since 61 Ditton Road was put on the market he and Alanni's mother have done everything that they can to find another home suitable for Alanni's needs, and that there has been extremely little on the market that would be suitable for her, even at Mr Reynolds' price range (let alone, I interpolate, at the sort of prices at which in Mr Hill's opinion a suitable house can be found). He states that with the exception of 13 Kingsdowne Road, none of the properties that he has viewed have been even potentially suitable for Alanni's needs. He is not an expert witness, but I infer that he has acquired considerable experience of the local property market and the constraints which his daughter's condition imposes, and his evidence deserves to be treated with respect.
23. Mr McCullough placed reliance on a letter from Mr Reynolds dated 18 June 2014, which analysed the suitability of Mr Hill's proposal for property F, in Mayfair Close, Surbiton and concluded that the proposed conversion of the property would be unsatisfactory and inadequate for Alanni and the Haynes family in a number of respects which I need not elaborate.
24. I should mention that there is a joint statement by Mr Reynolds and Mr Hill dated 10 June 2014. The two experts agree that there is an urgent need for the family to move from 61 Ditton Road, but they differ profoundly concerning the appropriateness of 13 Kingsdowne Road, which Mr Hill regards as unreasonable given its size and cost, which in his view significantly exceed those of potentially suitable properties.

CONCLUSION

25. I have found this application very difficult and troubling to resolve, perhaps particularly because of its combination of a potentially pressing need for accommodation in the near future, and a trial date which is only three months off. If it were not for what I find to be the urgent need to secure suitable accommodation, I would have wished to avoid making any kind of summary assessment of the evidence of Mr Reynolds, Mr Haynes and Mr Hill, which in principle would plainly be better left to the trial judge.
26. This is not a case, as I have explained above and as Mr McCullough concedes, at which an interim payment of the size sought could properly be made under Eeles stage 1. To make the award sought at Eeles stage 2, the court must be able to predict with confidence that the trial judge will wish to award a higher capital sum than that covered by general and special damages, interest and accommodation costs alone. I am persuaded by Mr McCullough that it is likely, in the circumstances of this case, that the trial judge would wish to follow the parties' preference for the capitalisation of all heads apart from 7, 8 and 14, which on the basis of their current open positions would suggest, at bottom, a capital sum of around £2.4m. I am also persuaded, in the light of the positions taken by the parties at the settlement meeting, that it would be wholly unrealistic not to take into account the sum offered by the defendant on a without prejudice basis (£3.5m). Taking that position into account, and doing the best that I can on the basis of the opposing contentions, it seems to me to be possible to say with a high degree of confidence that the likely capital award at trial will be at least £3 million.
27. It seems perfectly clear to me that there is a real and urgent need for accommodation now, in the light of the risk that 61 Ditton Road will be lost to the Haynes family in the course of September (on the assumption that notice to quit has not yet been given). The loss of opportunity to purchase 13 Kingsdowne Road may be less of an immediate threat, given that it has not yet even been put on the market, but it remains a very real risk.
28. There remains the question of the necessity of the expenditure sought. Although I would have been assisted by a fuller explanation of Mr Reynolds' briefly stated evidence that he has researched the area and is of opinion that a potentially suitable property is likely (on his latest valuation) to cost between £1.35 and £1.7 million, it does appear to me that Mr Hill has been unable, thus far, to produce any properties which are prima facie suitable for Alanni's requirements. I am fortified in my conclusion by Mr Haynes' evidence of the difficulties which he and Alanni's mother have had in finding a suitable house. I am very conscious that I am forming what amounts to a summary view which, as I say, would be much better left to the trial judge after hearing evidence, but in the urgent circumstances which attend this case (and which are to be distinguished from the facts of Eeles, where the claimant was securely accommodated on a long term basis) I cannot see that I have an alternative. In short, it is my conclusion, to a high degree of confidence, that the proposed expenditure is reasonably necessary and is urgently required. That being so, I feel justified in predicting that the trial judge would take the same course.
29. However, I am of course concerned that my decision should not unnecessarily create an uneven playing field, to use the Court of Appeal's metaphor. I have had to form a view on a summary basis, for the purposes of determining an interim award, without the benefit of hearing evidence. I have had to determine whether the proposed interim payment is a reasonable one, taking into account my own estimate of a likely capital sum at trial. My assessment of the likely size of that award does not, of course, usurp the functions of the trial judge, and the fact is that, as Mr McCullough willingly accepted, the claimant (who through her litigation friend has been very thoroughly and I do not doubt very well advised) makes this application and thereafter proceeds at her own risk.
30. I therefore order the further interim payment sought, namely £1.6 million. Counsel need not attend the handing down of this judgment, which will take place out of London.
31. I am grateful to counsel for their written submissions on costs. I have considered them carefully, but see no reason not to order that the claimant should have her reasonable costs of the application, to be subject to detailed assessment if not agreed, on the standard basis. In his draft order, although not in his written submissions, Mr Readhead seeks permission to appeal if so advised. It is difficult for me to consider an application for permission to appeal in the absence of reasoned submissions, but I refuse permission, since I do not consider that an appeal would have a real prospect of success, and I am aware of no other compelling reason why an appeal should be heard.