Conditions for and limit on an interim payment order (CPR 25.20 and 25.23)
Hollis Engineering Ltd claims £200,000 damages from Pryor Components Ltd for supplying defective gearboxes. Pryor's defence admits liability but disputes the amount of loss. Both parties' expert evidence suggests that Hollis is likely to recover between £120,000 and £150,000 at trial. Hollis is short of cash and applies for an interim payment of £140,000. Pryor is a solvent private company. The time for filing an acknowledgment of service has long passed.
Which of the following best describes the court's power to order an interim payment?
Choose one answer to see the reasoning.
Worked answer
Correct answer E: The court may order an interim payment, as Pryor has admitted liability, of no more than a reasonable proportion of the likely amount of the final judgment.
THE RULE TO REMEMBER
An interim payment may be ordered if a CPR 25.23 condition, such as an admission of liability, is met, but must not exceed a reasonable proportion of the likely final judgment.
Conditions for and limit on an interim payment order (CPR 25.20 and 25.23)
An interim payment is a payment on account of any sum (except costs) that the defendant may be held liable to pay (CPR 25.1(1)(l)). The claimant may apply once the period for filing an acknowledgment of service has ended (CPR 25.21(1)). Under CPR 25.23, the court may make an order only if one of the listed conditions is satisfied. These include that the defendant has admitted liability to pay damages or another sum (CPR 25.23(a)) and that the claimant would obtain judgment for a substantial amount if the claim went to trial (CPR 25.23(c)). Pryor has admitted liability, so the court has power to order a payment. However, CPR 25.20(1) provides that the court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment, taking into account any contributory negligence, set-off or counterclaim (CPR 25.20(2)). The likely award is £120,000 to £150,000, so any order must be a reasonable proportion of that, not the full sum claimed.
Why A is wrong: Judgment for damages to be assessed is only one of the alternative conditions; an admission of liability is enough under CPR 25.23(a).
Why B is wrong: The cap is a reasonable proportion of the likely final judgment, not the amount claimed (CPR 25.20(1)).
Why C is wrong: Financial need is not one of the CPR 25.23 conditions.
Why D is wrong: The insured or public body requirement applies only to the multiple-defendant condition in CPR 25.23(f).
A little more practice done.
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