Interim payments are far from straightforward in professional negligence claims

Published 24 mayo 2023

Kings v DWF LLP [2022] EWHC 3324 (Comm)

This judgment relates to an application for an interim payment under CPR r.25.7. The broader litigation involves an action brought by the Claimants (the Kings) against, their former legal representatives (DWF and counsel) over an alleged conspiracy to sabotage a 2017 trial in order to hide the fact that DWF and counsel had made a mistake. The Kings allege they were persuaded to discontinue the case by their legal representatives even though the claim was bound to succeed. These allegations are strenuously denied by the Defendants.

The applicable test for whether an interim payment is warranted under CPR 25.7(1)(c) is set out in that provision, that is, the claimant must prove that if the claim went to trial, the claimant ‘would obtain judgment’ for a ‘substantial amount of money’ from the defendant.  It is not enough if the Court were to be satisfied that those eventualities were 'likely'.

In this instance the Court concluded the Claimants had not reached the relevant threshold because, on the entirety of the material before the Court, there was no possible basis for the Court to be satisfied, in advance of a trial and cross-examination of the witnesses, that the Kings would succeed at trial against DWF. In this respect the Court relied on several factors including that:

• The reason for the discontinuance had been supported by detailed advice from counsel. On its face, it appeared to be competent advice that counsel was entitled to give and was justified in giving.

• The conspiracy alleged in the Kings’ primary and secondary cases would have involved four or five separate lawyers conspiring to act dishonestly – it was inherently improbable.

• The Defendants said that the mistake which was said to have been covered up by the conspiracy was a minor mistake, upon which little turned, and would not have had a material impact on the outcome of the 2017 trial in any event.

This case serves as useful reminder of the stringent test applied in relation to interim payment applications. The onus to prove that the Claimants ‘would’ succeed on the claim is a very high bar. The case also illustrates the approach the Court is likely to take in applications against professional defendants and the types of considerations which will be taken into account. These include the nature of the advice which was provided and the likelihood that professionals would conspire to cover up their own (alleged) mistakes.

The judgment also dealt with the test under CPR 25.7(1)(a), that is, whether an interim payment is warranted where the defendant has admitted liability to pay damages to the claimant. The Court concluded that DWF's pre-action payment to the Claimants did not amount to an admission of liability because it was offered on a without prejudice and (clearly and unequivocally) on a non-admission of liability basis. The payment was, in any event, made in relation to a very different case which was being run by the Claimants at that time so could not be said to amount to an admission in the current proceedings in any event.