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Cite as: [2016] EWHC 1497 (QB)

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Neutral Citation Number: [2016] EWHC 1497 (QB)
Case No: HQ16P00355

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
24 June 2016

B e f o r e :

HIS HONOUR JUDGE REDDIHOUGH
(Sitting as a Judge of the High Court)

____________________

Between:
KLM
(A protected party
by her father and litigation friend HJM)
Claimant
- and -

EUI Limited
Defendant

____________________

Mr Richard Cartwright (instructed by Irwin Mitchell LLP) for the Claimant
Mr Benjamin Browne QC (instructed by Horwich Farelly) for the Defendant
Hearing date: 15 June 2016

____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

Crown Copyright ©

    H.H. Judge Reddihough :

  1. This is an application on behalf of the claimant under CPR 25.7 for an interim payment in respect of her claim for damages for personal injuries, loss and damage arising out of a road traffic accident which occurred on 24th October, 2014. She was a passenger in a car driven by her boyfriend, who was insured by the defendant. On 6th May, 2015, the driver's liability for the accident was admitted in full by the defendant and on 9th May, 2016, it was ordered that judgment be entered for the claimant for damages to be assessed. An order was made by the Court of Protection on 11th April, 2016, appointing a Deputy for the claimant.
  2. The claimant is now 18 years of age, having been born on 22nd January, 1998. In the accident, she suffered serious multiple injuries which included facial and frontal bone fractures, orbital and retro-orbital damage, T5-7 transverse process fractures, rib fractures with bilateral pneumothoraces, skull fractures and very severe brain injury. The claimant's injuries, treatment, progress, prognosis and likely future needs are set out in a detailed report dated 11th November, 2015, from Dr. Clarence Liu, a consultant neurologist, instructed on behalf of the claimant.
  3. At the time of Dr. Liu's report, the claimant was in a minimally conscious state. Whilst she had become medically more stable and had some improved awareness and physical abilities, there remained ongoing significant sequelae of her brain injury, with various physical, communicative, cognitive and behavioural disabilities. She had poor insight and was not consistent with her responses. She had tetraparesis but had been able to participate in facilitated standing, stepping, land and water based therapy sessions. She was tolerating seating up to four hours at a time in a tilt in space wheelchair. She had some upper limb movement, particularly on the left. She had managed oral tasters, but otherwise continued to rely on tube feeding for her nutrition, hydration and medications. She remained doubly incontinent. Her communication was very impaired and she vocalised rarely and at single word level. Although there had been improvement in her awareness, she still had severe deficits likely to involve all cognitive domains such as orientation, memory, processing, executive functions, problem solving, high level cognition, visuospacial abilities and mental fatigue.
  4. Dr. Liu said that, despite the improvements which the claimant had made by the time of his report, she will always have complex disabilities with a combination of severe physical, communicative, cognitive and behavioural difficulties, necessitating ongoing therapy and specialised medical and care input. It was too early to say whether the claimant would emerge from a minimally conscious state. It was noted by Dr. Liu that a study of very young children showed that nearly 40% of them had emerged from such a state after three years, but similar data series are not available for teenagers. The claimant has a significantly elevated risk of post-traumatic epilepsy. Dr. Liu considered that her life expectancy has been significantly diminished, but that life expectancy is better ascertained when at least three years from the accident.
  5. So far as prognosis was concerned, Dr. Liu said the tetraparesis would be permanent, although there had been significant improvements in the claimant's mobility. She had the potential to improve her mobility with facilitated standing/stepping but was unlikely to carry out any significant degree of walking. Her cognitive processing will always be significantly affected. She was always likely to rely on tube feeding. She is unlikely to have any useful verbal communication. She is unlikely to gain independence and will require significant support for all her personal, domestic, community and leisure activities for life and will need specialist day and night carers.
  6. After her hospital treatment following the accident, the claimant was transferred to Chailey Heritage Foundation (Chailey) near Lewes on 28th January, 2015, and remains an inpatient there. At the rehabilitation unit at Chailey, the claimant is the subject of an intensive neuro-rehabilitation programme with input from a variety of therapists. Her mother visits her every day and she receives regular visits from other family members and her boyfriend.
  7. At the time of the accident, the claimant, who had passed several GCSEs, was enrolled on a NVQ Level III course in horse management at Plumpton Agricultural College. Her mother has said that the claimant's career plan was to run her own livery yard or join the mounted police. Before the accident, the claimant was living at home with her parents and younger brother in a terraced three bedroomed two storey house in Brighton. A Housing Needs Report by Brighton & Hove City Council (the Council) dated 30th March, 2015, concluded that that home is unsuitable for the claimant's present needs. It is also not considered suitable for adaptation.
  8. The claimant's placement at Chailey is currently funded by the Council and the funding is guaranteed until 31st July, 2016, but with the possibility of it being extended to the maximum period of two years from the date of the accident, namely October 2016. The cost at Chailey is approximately 900 per day.
  9. A Progress Report on the claimant from Chailey dated 15th March, 2016, indicated that she had made a number of improvements since the time of Dr. Liu's medical report. She was showing a lot of consistent non-verbal communication and her mobility had improved. On a visit to her former college, she was very vocal and was trying to engage with her friends there.
  10. It is proposed that, once the claimant's inpatient rehabilitation is complete, she should move into a suitable property with her family and be looked after there by an appropriate skilled care team and with ongoing necessary therapies. In his report of 11th November, 2015, Dr. Liu said that after a further 6-12 months inpatient rehabilitation, the plan should be for the claimant to be discharged to the community to live with her family in an appropriate disability adapted property. In a letter from Dr. Liu dated 16th May, 2016, he noted the significant progress which the claimant had made as detailed in the Progress Report of March 2016. He therefore considered that there should be a further period of rehabilitation at Chailey for twelve months. He said the discharge planning for her move into suitable accommodation and the setting up of a care regime should be considered as early as possible.
  11. Professor Christine Collin, a consultant in neurological disability medicine, had examined the claimant on behalf of the defendant on 10th December, 2015, although her report was not before me. She stated in a letter dated 2nd May, 2016, that she thought the progress which the claimant had made was not consistent or reliable. She said that she and Dr. Liu agreed that the claimant remained in a minimally conscious state. She recommended that the claimant should remain at Chailey for further rehabilitation until it is shown she is no longer benefitting from it, or at least until a further year has elapsed with no significant change.
  12. Dr. Liu and Professor Collin have expressed provisional views regarding the claimant's life expectancy, although they will not be able to express a final view until about three years after the accident, by which time it is likely that the claimant's final condition after rehabilitation and recovery will be clearer. In a letter dated 25th January, 2016, Dr. Liu, by reference to studies by Shavelle and Strauss, stated that the claimant's life expectancy lay between 13 and 31 years, but was likely to be close to the higher figure in the range.
  13. In a letter dated 3rd May, 2016, Professor Collin estimated the life expectancy, if the claimant remained in a minimally conscious state, as 12 to 16 years. If she emerged from that state but was not walking and was fed by others, by reference to Professor Strauss's study a life expectancy of 24 to 25 years would be predicted. She had also sought comments from Professor Strauss, who referred to his more recent studies (and the slightly higher UK life expectancy over the USA). Her conclusion was that the claimant's life expectancy would be in the range of 17-25 years, but at the lower end if she remained in a minimally conscious state. In his letter dated 16th May, 2016, Dr. Liu commented on Professor Collin's views and agreed that 28% to 41% of normal life expectancy was the range (20-30 years), but the lower end of the range was too pessimistic as voluntary motor function had to be considered even if the claimant remained in a minimally conscious state, which would increase the life expectancy to half way up the range.
  14. It appears that it is agreed by Dr. Liu and Professor Collin that the claimant should remain at Chailey probably for at least the next twelve months. To meet the concerns raised by Ms. Hurney, the claimant's solicitor, in her witness statement in support of the interim payment application, regarding funding at Chailey, the defendant has given an undertaking that it will fund the claimant's placement at Chailey if and when the Council ceases to fund it.
  15. As set out in Ms. Hurney's witness statement, the basis for this application for an interim payment is that a property should now be purchased and adapted for the claimant so that it will be ready for a gradual transition from her placement at Chailey in about twelve months' time. It is said that it is likely to take that period of time to purchase a suitable property and adapt it to meet the claimant's needs.
  16. In relation to past and future care and future rehabilitation, the claimant relies upon the report from Caroline Hughes-Lewis dated 21st March, 2016. She has recommended and assessed the costs of a specialist care team to care for the claimant in a home to be shared with her family. In a letter dated 18th May, 2016, Ms. Hughes-Lewis has stated that it can take 9-12 months to organise complex care in the community in a case such as this, and that in her opinion it is appropriate to start the process of purchasing a property for the claimant approximately twelve months before her likely discharge from Chailey.
  17. The claimant instructed James Nocker of William Martin, property and construction consultants, to investigate and report upon the likely costs associated with purchasing and subsequently adapting a suitable bungalow for the claimant. His preliminary report is dated April 2016. He shortlisted a number of potentially suitable properties in the Horsham area, where the claimant's family would be content to live, ranging in price from 600,000 to 965,000. One property which would have been suitable, Willmhurst, at 600,000 had been sold. Mr. Nocker concluded that Upper Westbrook Farm at Broadbridge Heath, with an asking price of 965,000, was the most suitable and thought that a purchase price of 940,000 could be negotiated. This bungalow is in 2 acres of land and has a number of outbuildings. Mr. Nocker said that the bungalow had a shortfall in net internal floor area of 58.3m when compared with his assessment of the claimant's accommodation needs. Thus he said that adaptation and extension of the property (which it appears would include the demolition of some of the outbuildings) was necessary. The overall cost of adaptation and extension will be in the region of 500,000. Ancillary costs of the purchase will be around 50,000.
  18. On the basis that this property should be purchased for the claimant and extended and adapted as advised by Mr. Nocker, the claimant applies for an interim payment of 1.5 million to enable this to be done. The claimant has already received voluntary interim payments in the total sum of 85,000, the last being 35,000 for the purchase of a wheelchair adapted vehicle.
  19. In a witness statement from Simon Curtis, the solicitor on behalf of the defendant, an interim payment in the amount sought is opposed. He points out that a Best Interests Review has not yet been carried out to determine the claimant's future, and says that there is no certainty that she will be discharged into the community. Relying on a report from the defendant's instructed accommodation expert, Mr. Smallwood, dated May 2016, he submitted that the claimant's proposed property and adaptation was unnecessarily large and expensive and had more land than was reasonably required. Mr. Smallwood had identified a suitable property at a price of 629,000 with ancillary costs of about 25,000 and adaptation costs of approximately 134,000.
  20. A further report was obtained by the claimant dated May 2016 from Mr. Nocker which, in robust terms, defended his choice of property and proposed adaptation and extension, and criticised as unsuitable the property selected by Mr. Smallwood, describing his proposed adaptation as fundamentally flawed.
  21. In my judgment, on the basis of the medical and other evidence before me, it is very likely that the trial judge will decide that it is appropriate for the claimant, once her rehabilitation at Chailey is complete, to move with her family into a purchased home suitably adapted and with an appropriate care regime. However, at the present time, there is a very real issue as to the appropriate amount to be expended upon such a property and the necessary adaptations.
  22. The claimant clearly satisfies one of the conditions entitling her to an interim payment under CPR 25.7 in that judgment has been entered for damages to be assessed. However, under 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".
  23. The parties are agreed, and I hold, that it is very likely indeed that, by reason of the nature of the claimant's injuries and future needs, and uncertainties about her life expectancy, the trial judge will make a periodical payment order (PPO) in relation to a number of the future loss claims. Thus, as confirmed by the Court of Appeal in Eeles -v- Cobham Hire Services Limited [2010] 1 WLR 409, for the purposes of 25.7(4) in a case in which a PPO is made the amount of the final judgment is the actual capital sum awarded. In Eeles, the Court of Appeal set out the relevant principles which should guide the making of an order for an interim payment in such a case. In Smith -v- Bailey [2014] EWHC 2569 (QB), Popplewell, J. (at Paragraph 19) set out the following helpful summary of the principles contained in Eeles.
  24. "(1) CPR r25.7(4) places a cap on the maximum amount which it is open to the Court to order by way of interim payment, being no more than a reasonable proportion of the likely amount of the final judgment.

    (2) In determining the likely amount of the final judgment, the Court should make its assessment on a conservative basis; having done so, the reasonable proportion awarded may be a high proportion of that figure.

    (3) This reflects the objective of an award of an interim payment, which is to ensure that the claimant is not kept out of money to which he is entitled, whilst avoiding any risk of an overpayment.

    (4) The likely amount of a final judgment is that which will be awarded as a capital sum, not the capitalised value of a periodical payment order (PPO).

    (5) The Court must be careful not to fetter the discretion of the trial judge to deal with future losses by way of periodical payments rather than a capital award.

    (6) The Court must also be careful not to establish a status quo in the claimant's way of life which might have the effect of inhibiting the trial judge's freedom of decision, a danger described in Campbell -v- Mylchreest as creating "an unlevel playing field".

    (7) Accordingly, the first stage is to make the assessment in relation to heads of loss which the trial judge is bound to award as a capital sum, leaving out of account heads of future loss which the trial judge might wish to deal with by a PPO. These are, strictly speaking: (a) general damages for pain suffering and loss of amenity; (b) past losses (taken at the predicted date of the trial rather than the interim payment hearing); (c) interest on these sums.

    (8) For this part of the process the Court need not normally have regard to what the claimant intends to do with the money. If he is of full age and capacity, he may spend it as he will; if not, expenditure will be controlled by the Court of Protection. Nevertheless, if the use to which the interim payment is to be put would or might have the effect of inhibiting the trial judge's freedom of decision by creating an unlevel playing field, that remains a relevant consideration. It is not, however, a conclusive consideration: it is a factor in the discretion, and may be outweighed by the consideration that the claimant is free to spend his damages awarded at trial as he wishes, and the amount here being considered is simply payment at the earliest reasonable opportunity of damages to which the claimant is entitled: Campbell -v- Mylchreest [1999] PIQR Q17.

    (9) The Court may in addition include elements of future loss in its assessment of the likely amount of the final judgment if but only if (a) it has a high degree of confidence that the trial judge will award them by way of a capital sum and (b) there is a real need for the interim payment requested in advance of trial.

    (10) Accommodation costs are "usually" to be included within the assessment at Stage 1 because it is "very common indeed" for accommodation costs to be awarded as a lump sum, even including those elements which relate to future running costs."

    The guidance set out in points (1) to (8) are sometimes referred to as "Eeles Stage 1" and in the remaining points as "Eeles Stage 2".

  25. In my judgment, in the present case the Court can have a high degree of confidence that accommodation costs will be awarded as a capital sum, as indeed is the usual approach. Thus, in Eeles Stage 1, it is appropriate to consider on a conservative basis the likely awards for general damages for pain, suffering and loss of amenity, special damages (being past losses to the date of assessment), interest on those sums and accommodation costs.
  26. In their respective witness statements on behalf of the claimant and the defendant, Ms. Hurney and Mr. Curtis set out their suggested figures for the various items which would be included in those capital awards. At the hearing before me, there were written and oral submissions from counsel on the likely awards and a short schedule containing the respective figures put forward by the claimant and the defendant. At this stage, there is not a full Schedule of Losses prepared by the claimant or a Counter Schedule by the defendant. It has been assumed that the assessment of damages will take place in January 2018. Submissions were also made regarding the claimant's life expectancy which will be relevant to a multiplier for the Roberts -v- Johnstone [1989] QB 878 calculation regarding accommodation costs.
  27. I therefore consider on a conservative basis the likely capital awards under the heads of damage referred to above.
  28. General Damages for pain, suffering and loss of amenity

  29. By reference to the Judicial College Guidance for the Assessment of General Damages for very severe brain damage, and including the 10% uplift under the Legal Aid, Sentencing and Punishment of Offenders Act, 2012, the claimant contends for an award of 300,000 and the defendant of 262,500. To some extent, the award made within the bracket in question will be dependent upon the claimant's degree of insight and her life expectancy at the time of the assessment of damages. In my judgment, a conservative estimate of general damages would be 285,000 inclusive of the 10% uplift and interest to January 2018.
  30. Past losses

  31. Family care: In respect of care provided by family members, assuming the claimant's discharge from Chailey in January 2017, the claimant suggested 43,200. The defendant suggests a figure of 25,000 bearing in mind that, whilst there has been a considerable attendance at the hospitals where the claimant was treated and at Chailey by family members, and particularly her mother, much of her care and treatment has been supplied by the medical and care staff. I consider the defendant's figure more appropriate, but I increase it to 30,000 to allow for the fact that the claimant is unlikely to be discharged from Chailey until about July 2017.
  32. Paid care and case management: Based on Ms. Hughes-Lewis's report, the claimant suggests 380,000 for the first year's care at home, assuming discharge from Chailey in January 2017, and 31,000 for case management. The defendant suggests 300,000 to include both. Taking account of the fact that, as the claimant is not likely to be discharged from Chailey until about July 2017, there will only be six months paid care at home up to the assessment date of January 2018, the defendant's figure of 300,000 may be on the generous side, but I will take it as appropriate for present purposes.
  33. Travel and vehicle purchase: 35,000 is likely to be allowed for the purchase of a wheelchair adapted vehicle and a reasonable figure for the family's travel costs would be 12,000, making a total of 47,000.
  34. Therapies: The claimant suggests 50,000 for the cost of therapies from the date of discharge from Chailey to January 2018. However, this is based on a discharge in January 2017, whereas it is likely to be in July 2017. I therefore take the defendant's figure of 25,000.
  35. Accommodation costs

  36. As I have indicated above, this is a most contentious issue. At this stage of the proceedings, it is not for me to determine which accommodation expert's evidence is to be preferred or to determine which property should be purchased and adapted for the claimant. These are matters for the trial judge and/or the claimant's Deputy. Equally, it is not for me to determine what the claimant's life expectancy will be as at the date of assessment, but merely to take a likely period based on the present evidence.
  37. Whilst I can see why Mr. Nocker argues so strongly for his choice of property for the claimant, I am bound to say that, in the light of the evidence from Mr. Smallwood as to other suitable properties and the amount of space required for the claimant, I consider it unlikely that the trial judge would be prepared to conclude that as much as almost 1 million for the purchase and ancillary costs of a home, together with approximately million on top of that for adaptations and extensions, is appropriate.
  38. Doing the best I can at this stage, and allowing for some of the criticisms by Mr. Nocker of Mr. Smallwood's approach, in my judgment an appropriate purchase price for a home for the claimant would be 700,000 and 200,000 for adaptations. In reaching those figures, I also have regard to the fact that Mr. Nocker did find a suitable bungalow for 600,000 which unfortunately had been sold. I also bear in mind that there will be further suitable properties coming onto the market between now and the claimant's discharge from Chailey.
  39. So far as life expectancy is concerned (which is relevant to the multiplier for the Roberts -v- Johnstone accommodation calculation), bearing in mind the provisional opinions of the medical experts, to which I have already referred, I consider for present purposes a life expectancy of 20 years should be taken. This would give a multiplier of, say, 15.75.
  40. This would give rise to the following Roberts -v- Johnstone calculation:
  41. 700,000 x 2.5% x 15.75 = 275,625

    Taking account of the respective figures supplied by the parties, I would then add on the following costs:

    Ancillary costs of purchase: 30,000
    Additional running costs: 8,500 x 15.75: 133,875
    Adaptations: 200,000
    Total: 639,500

  42. Having considered the parties' respective figures for what would have been the claimant's accommodation costs but for the accident, I take a figure of 45,000 overall:
  43. 45,000
    Total: 584,500
  44. All of the above figures therefore give, on a conservative basis, for general damages, past losses and accommodation costs, a total capital award of 1,281,500. I ignore any interest which may be awarded on any past losses as it is likely to be relatively modest, particularly if the claimant does obtain a substantial interim payment at this stage.
  45. It follows that that Eeles Stage 1 total is less than the amount now sought by way of an interim payment of 1.5 million (in addition to the 85,000 already paid). The question then arises as to whether, under Eeles Stage 2, I can include elements of future loss in assessing the likely capital amount of the final judgment so as to bring the total figure above the amount sought by way of an interim payment. An obvious candidate for a further award by way of a capital sum would be future loss of earnings. However, even if one took a likely net annual income for the claimant of 20,000 with the multiplier referred to above (on the basis of the presumed life expectancy of 20 years), plus a modest lost years claim, the capital value of the future loss of earnings is unlikely to be more than, say, 400,000. If that were to be awarded together with the 1,281,500 referred to above, the total capital award would be 1,681,500, only 96,500 above the 1.5 million interim payment sought plus the 85,000 interim payment already paid. Thus, such interim payments would amount to nearly 95% of the capital award, including the capitalisation of the future loss of earnings. In my judgment, such proportion would clearly be more than a reasonable proportion of the award. In any event, I do not have, as would be required under Eeles Stage 2, a high degree of confidence that the trial judge would award future loss of earnings or any other future losses by way of a capital sum, or that there is a real need for an interim payment in the amount sought.
  46. Accordingly, the claimant's application for a further interim payment in the sum of 1.5 million is refused. The parties indicated to me that they would be content for me to state the amount of an interim payment I would be prepared to order at this stage. I am satisfied that it would be appropriate to order a substantial sum to enable the claimant to purchase and adapt a suitable property to which she can move with her family when she leaves Chailey. I have indicated what I consider would be an appropriate purchase price for such a property and reasonable costs of adaptation. I bear in mind that, in some cases, a percentage of as much as 90% of the capital award has been ordered by way of an interim payment (see e.g. Mrs. Justice Whipple in AC -v- St. George's Healthcare NHS Trust [2015] EWHC 3644 (QB)). In the present case, I consider it would be appropriate to make a further interim payment (in addition to the 85,000 already paid) of 900,000. Thus, the total interim payment of 985,000 would be some 77% of the likely total award of 1,281,500. I do not consider that such interim payment would fetter the discretion of the trial judge or inhibit his freedom of decision so as to create an unlevel playing field.


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