Interim Payments in Civil Proceedings

Defining interim payments 

It is very well known that the administration of justice takes time. It could on some occasions be inappropriate to make the innocent party wait for years to receive the compensation owed to them. Therefore, provisions have been designed to deal with those situations and provide for payments before final judgment is granted. However, it is important to note that such are not granted easily to everyone who files an application. There is certain criterion that needs to be met prior to interim payment order being made and those requirements are discussed below.

In which court are those made?

An application can be made to both County Court and High Court as both have powers to grant such injunctions. The difference depends largely on the value of the claim and the complexity of the issues involved.

The application

The applications are generally made on notice and therefore must be served at least 14 clear days prior to the hearing of the application.

Those applications require written evidence to be included in support. In particular, information needs to be provided regarding the amount sought, what the money are to be used for, what amount is likely to be awarded and which of the grounds below the party believes to be satisfied and why.

Circumstances for an order to be made  

The remedy is not based on judicial discretion. There are five conditions set out in rule 25.7 of the Civil Procedure Rules, one of which needs to be satisfied before the court can grant and interim payment: 

  1. Where the defendant in the claim has admitted liability to pay damages or some other sum of money
  2. Where the claimant has already obtained judgment against the defendant and therefore the defendant is liable for damages or for a sum of money to be assessed
  3. Where the court is satisfied that if the claim was to be determined at trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant
  4. Where the claimant is seeking order for possession of land and the court is satisfied that if the case went to trial, the defendant would be held liable to pay the claimant a sum of money for the defendant’s occupation and use of land while the claim for possession was pending 
  5. Where there are two or more defendants:
  • The court is satisfied that if the case went to trial, the claimant would obtain judgment for a substantial amount of money against at least one of the defendants (but the court cannot determine which) and
  • All the defendants are either- defendant that is insured in respect of the claim; a defendant whose liability will be met by an insurer under section 151 Road Traffic Act 1968; or a defendant that is a public body

The standard to which the court needs to be satisfied of the condition is the normal standard in civil proceedings – on balance of probabilities. However, the judicial consideration of the test has established that it is to a high standard within that range. 

The amount of the award and the relevant considerations

The court has to consider what is likely to be awarded at trial and set an amount for an interim payment accordingly. The rules restrict the general discretion of the court on the amount to a reasonable proportion of the figure for damages at trial.

Judicial consideration has shown that reasonable proportion may in some cases be a high proportion, provided that the assessment of the likely final award is made in a conservative manner. Therefore, emphasising the need for the courts to keep in mind the danger of overpayment and the possible hardship such could cause the defendant.

When assessing the amount of the order, the court needs to take account of any existing counter-claim or contributory negligence claim. 

The need for the interim payment to be made as specified by the applicant should not generally be taken into account when assessing the figure. Further, the judge should not be influenced by how the applicant is proposing to use the payment. However, one particular factor that may be relevant is whether the applicant wants to use the money in a way intended to prejudice any subsequent issue in the trial.

Also the respondent’s resources or lack of such could be an important consideration when fixing the amount.  

Interim payment orders could be, in theory, made in respect of any claim or counter-claim in the proceedings. Further, interest but not cost may be included in the order. 

What is the effect of the order at trial?

For the purposes of the main trial, as a general rule, the existence of interim payment as well as Part 36 offers to settle must not be disclosed to the trial judge until the issues of liability and quantum have been decided. In the exception, interim payments could be disclosed provided that the defendant agrees.

After the court is made aware of the interim payment, on making its final order, the court will make any necessary adjustments. In particular, the court may order repayment by the claimant or adjustment between the defendants.