Buttar Construction Ltd v Arshdeep: Interim Payments And Insurance

• Published date: 20 January 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Personal Injury
• Law Firm: Gatehouse Chambers
• Author: Miguel Henderson and Amy Held

Buttar Construction Ltd v Arshdeep [2021] EWCA Civ 1408

Background

The recent case of Buttar Construction Ltd v Arshdeep [2021] EWCA Civ 1408 considered the issue of whether an insured Defendant ceases to be "insured in respect of a claim" for the purpose of CPR r 25.7(1)(e) if the insurer reserves its position, or it is unclear if the insurer will pay out under the policy or decline cover. HHJ Bird (whose decision was affirmed by the Court of Appeal) held that, notwithstanding that the insurers had reserved their position, and it was not yet clear whether the Defendants would be entitled to an indemnity, the Defendants were "insured in respect of the claim" for the purposes of CPR r. 25.7 (1)(e). One matter that HHJ Bird identified as material to his exercise of the discretion to order an interim payment was that, in accordance with the provisions of CPR 25.8, the court could at trial order repayment of any payment ordered now if it was appropriate to do so.

In our case comment, we noted one of the practical implications of the case to be that insured parties may find themselves liable to make interim payments without yet knowing if their insurer will confirm cover. This then raised a further question as to which party will bear the burden of the losses in the event that the insured defendant complies with an order to make an interim payment, but the insurers subsequently repudiate. Will the claimant be ordered to repay the part or the full amount under CPR r. 25.8(2)(a)? And, more broadly, if the prospect of an insurer actually paying out is not key to obtaining an order for an interim payment, what is the purpose of the insurance requirement anyway?

This article considers what might happen if the conditions set out in CPR r. 25.7(1)(e)(ii)(a) are subsequently found to be missing.

General Principles I: Interim Payments

CPR 25.7(1)(e) provides:

"(1) The court may only make an order for an interim payment where any of the following conditions are satisfied -

[...]

(e) in a claim in which there are two or more defendants and the order is sought against any one or more of those defendants, the following conditions are satisfied -

(i) the court is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against at least one of the defendants (but the court cannot determine which); and

(ii) all the defendants are either -

(a) a defendant that is insured in respect of the claim;

(b) a defendant whose liability will be met by an insurer under section 151 of the Road Traffic Act 1988 or an insurer acting under the Motor Insurers Bureau Agreement, or the Motor...