Interim payments: what they are, when to apply and how much

An interim payment is a payment by a defendant on account of any damages, debt or other sum, except costs, that the court may later order the defendant to pay. It is commonly sought in personal injury and clinical negligence claims, where a claimant may need funds for care, rehabilitation or accommodation before trial, but it is equally available in commercial disputes.

Interim payments are governed by CPR Part 25 and its practice direction. The claimant applies with evidence, and the defendant has the opportunity to respond. Voluntary interim payments are also common and avoid the cost of an application.

The court may only order an interim payment if one of the conditions in the rules is met. In broad terms, these include that the defendant has admitted liability; that the claimant has obtained judgment for damages to be assessed or a sum to be determined; or that the court is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money. There are specific provisions for claims with multiple defendants.

Satisfying a condition does not oblige the court to order a payment. It retains discretion, and it must not order more than a reasonable proportion of the likely amount of the final judgment, taking into account contributory negligence and any relevant set-off or counterclaim.

Imagine a claimant in a road traffic claim where liability is admitted. Medical evidence suggests a likely award of around £400,000, but future losses are uncertain. The court will usually look at the elements of the claim it can value with reasonable confidence, such as general damages and past losses, and order a proportion of that figure, leaving a margin for uncertainty.

Where the court may make a periodical payments order for future losses, it will take particular care not to order a sum that could fetter the trial judge’s choice. Applicants should therefore explain clearly what the payment is needed for and why it is safe to make.

Interim payments are not payments on account of costs; those are dealt with separately under CPR 44.2(8). Even so, the two often run together. Obtaining an interim payment can fund disbursements, and the timing may influence Part 36 strategy, since interim payments must be taken into account when deciding whether a judgment is more advantageous than an offer.

If a final award turns out to be lower than the interim payment, the court can order repayment or make adjustments. Keeping a clear record of all interim sums received is essential when the final costs and damages position is calculated.