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The entitlement to interim payments in court proceedings

  • United Kingdom
  • Construction and engineering
  • Litigation and dispute management

05-02-2018

This case addresses the issue of applications for interim payments in court proceedings and the importance of having a successful defence. It provides helpful guidelines for establishing an entitlement to an interim payment. 

Facts:

Galliford was retained to carry out the design and construction of a building including glass and aluminium curtain wall facades. Galliford subcontracted the design and installation of the curtain wall to Alumet Systems (UK) Limited (“Alumet”).

The property was completed in 2005. However, 7 years later, the property suffered from water ingress.  Triuva carried out remedial works and commenced proceedings to recover its costs arising out of alleged construction defects against Galliford.  As a result, an additional claim was sought by Galliford against Alumet. 

During the course of the proceedings, an application in respect of an interim payment was issued by Triuva. This application was a trigger for Galliford to issue an application for the same payment against Alumet.

Decision:

O’Farrell J granted the application for interim payment pursuant to CPR 25 and in the process identified the applicable principles to such applications as outlined below:

(1)  Whether the court is satisfied that the Claimant, on the balance of probabilities:

  1. “would obtain judgment on at least part of its claim for damages”?; and
  2. “would be awarded substantial damages in respect of the claim”?;

it is not sufficient that such claim is “likely” to be successful.

(2)  The court in considering whether the amount of money is “substantial” must have regard to the claim as a whole.

(3)  Interim payment applications are only appropriate in limited circumstances. For example, it will not be appropriate for a court to conduct a mini-trial on the issue. The Judge suggested that in this case, had Galliford and Alumet disputed each defect separately she might have taken a different approach. 

The findings were Triuva would obtain “substantial damages in respect of the parts of the claim to which there is no defence.”

In considering the requirements of defence to avoid an interim payment application, O’Farrell J stated that the defence should: (i) clearly define the defendant’s position; and (ii) provide an alternative approach that should be taken i.e. when Galliford disputed the quantum of the claim, an alternative resolution should have been presented. 

In addition, O’Farrell J held that the damages were “sufficiently serious” to justify the order.  Finally, it was found that Triuva had “established an irreducible minimum amount of damages to which it would be entitled” such that an entitlement to an interim payment can be established.

Lastly, O’Farrell J examined whether Alumet should be held responsible for the damages.  O’Farrell J held that the same order should be made against Alumet based on identical terms as the one made against Galliford. 

Practical Implications:

This case illustrates the conditions under which an order for an interim payment can be awarded and the guidance should be read in conjunction with the content of CPR 25. 

This case also serves as a helpful reminder of the importance of being able to present a clear defence in order to resist an interim payment application.

http://www.bailii.org/ew/cases/EWHC/TCC/2017/275.html

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