England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/01/2012

Mr Justice Tugendhat :

1. This judgment relates to an issue that has arisen out the judgment that I handed down on 18 January 2012 (Neutral Citation Number: [2012] EWHC 1 (QB)) ("my first judgment"). That judgment followed a hearing on 3 November 2011, and the hand down was delayed for this new issue to be considered. That judgment in turn arises out of a judgment of Mackay J dated 14 July 2010 Neutral Citation Number [2010] EWHC 2194 (QB). It is regrettable that three judgments should be required to address the issues arising in the attempt by the parties to settle the claim of the claimant who has been so gravely injured. All the issues that have arisen relate not to the issues in that action, but to whether there should be an order for periodical payments to the claimant.
2. In my first judgment I concluded at para [41] that:

"For the reasons given above, in my judgment the PP Order [dated 14 July 2010], para 1, is not to be read as an order of the court binding upon MIB [the Motor Insurance Bureau]. It is an order binding upon the Defence Insurer only, requiring in the first instance that it pay the Claimant, and in the alternative that it procure payment by the MIB. If it is unable to procure payment by the MIB, then it, not the MIB, will be in default."

3. The PP Order of 14 July 2010 is set out in para 15 of my first judgment. The circumstances in which it came to be made by Mackay J are set out in the earlier paragraphs of that judgment.
4. On 8 November 2010 the Defendants circulated a Note in response to the draft judgment which had by then been circulated to the parties in the normal way. The purpose of the Note was to state (and explain why):

"As a consequence of the interpretation of the Draft PP Order within the [draft] judgment the Defendants are no longer able to consent to the conditional PP Order as drafted…"

5. The Claimant contends that it is not now open to the Defendant to adopt this stance, and that the PP Order of 14 July 2010 is binding. That is the issue that I have now to decide. It was in order to arrange a further hearing to determine this issue that the handing down of my first judgment was deferred. It would otherwise have been handed down in mid November.
6. By the end of the hearing on 3 November 2011 I had not understood that the Defendants might consider themselves free to withhold consent to the PP Order, or that it was a draft Order in that sense. I had understood throughout that they had already consented to a periodical payments order, subject only to whether the court would state that it was satisfied that the continuity of payments under the order is reasonably secure, pursuant to the Damages Act 1996 s.2.
7. I understood the judgment of Mackay J to mean that he had proceeded on the same understanding as myself. He had stated the position as follows:

"1. The Claimant in this action is now 26 and on 25^th October 2003, was involved in a serious road traffic accident caused by the admitted negligence of the driver of the car, the First Defendant.

2. The Claimant is sui juris; he is not a protected person. His injuries are very serious, including paraplegia. If his claim fell to be valued on the conventional lump sum basis the figures are agreed firstly, that all claims, bar care and case management, total the sum of £2.25m and that indeed is a sum that has been paid, as I understand it, to him by way of an interim payment. Secondly, if the future claim for future care and case management were to be similarly calculated the multiplicands would be as follows: to the age of 27, £10,000 a year; from 27 to 45 £21,500; from 45 to 60 £60,000 a year and from 60 onwards £100,000 a year. If conventional multipliers calculated by reference to a 2.5 per cent discount rate were applied they are agreed and the net capital value of the future claim is therefore £1,322,270.

3. The Claimant's expectation of life is not thought to be more than marginally affected by his injuries and for that reason the Claimant would like his damages for care and case management for the future to be the subject of a periodical payments order. The Second Defendant is in the shoes of and is to be treated as the insurer of the First Defendant and it too is willing to agree to such an order. The advantages to both parties are plain. In the case of the Claimant all the risks of mortality and living longer than expected are borne by the paying party and not him. The fund will never run out and he has that reassurance. For the Defendant the advantages are commercial and legitimate."

8. The argument for the Defendants is that the PP Order of 14 July 2010 is subject to the terms of the Security Order ("AND UPON this order and the Schedule attached hereto only coming into effect pursuant to the terms of the [Security Order]"), and para 2 of the Security Order does not state in terms what is to happen in the event that the MIB make an application to the court, as it did. Therefore, so it is argued, there is no binding order, and no agreement between the parties which is binding on the Defendants.
9. My first judgment was upon the issue raised by the MIB when it made its application pursuant to para 2 of the Security Order. The two Orders of 14 July 2010, so far as material, are set out in paras [15] and [17] of my first judgment. In para [16] of my first judgment I wrote that: "It is pursuant to para 3 of the PP Order that this matter comes before me." That reflected my understanding that the PP Order was a binding order, subject only to whether the court could be satisfied in accordance with the Damages Act 1996 s.2. No point was raised by the Defendants on para [16] of my judgment when that judgment was circulated in draft.
10. The reasons why the Defence Insurers wish to withhold consent (if they are free to do so) are not relevant to the question whether they are free or not. But it is fair to state that they do have a reason. Their concern is that on the interpretation of the PP Order given in my first judgment a situation could arise in which their liability to the Claimant would be capitalised notwithstanding that they were regularly paying, and were able to continue paying, the periodical payments. This may not be very likely, but it could happen if the MIB were to cease to exist in its current form. They object to this uncertainty.
11. For the Claimant Mr Westcott accepts that the Security Order did not expressly provide what was to happen in the event that the MIB made an application, and the court, having heard the submissions for the MIB, remained satisfied, as Mackay J had been (subject to any application by the MIB) that the continuity of payments under the order was reasonably secure. He submitted that there was no need for the Security Order to contain such a provision: it was obvious, or implicit, that the PP Order of 14 July 2010 would be binding. It would only remain to make uncontroversial consequential amendments as to dates. He accepts that there is no other document setting out any agreement between the parties.
12. In my judgment the submissions of Mr Westcott are to be preferred and I accept them.
13. I would add the following. The Court does not give advisory opinions, or rulings on hypothetical questions. If parties apply to the court for a statement that the court is satisfied that the continuity of payment under an order is reasonably secure (pursuant to the Damages Act 1996 s.2), the court is entitled to assume that application to be made on the basis that the parties have consented to the making of such an order, subject only to whether the court is satisfied. As Mackay J had recorded in paras [2] and [3] of his judgment, the parties in this case had agreed the figures both on a lump sum basis, and on the basis that there would be a periodical payments order.

THE COSTS OF THE MIB

14. The MIB have incurred costs associated with the two orders of 14 July 2010 and the hearing on 3 November. It asks that these costs be paid to it, by one or other of the parties to the action. Which party should be ordered to pay is not a matter on which Mr Horlock makes submissions. Although it is not a party, nothing turns on that. If necessary it would apply to be made a party for the purposes of this application. In summary Mr Horlock submits that the position adopted by the MIB in correspondence and in argument has been vindicated in my first judgment.
15. Mr Browne and Mr Westcott submit that the MIB should bear its own costs. While the position adopted by the MIB was substantially vindicated, the MIB had in a letter of 22 December 2009 said that it would resist an order to join it in the proceedings.
16. There was more than one point upon which Mackay J had considered in his judgment that MIB might be interested, although in the event only one of those points was pursued.
17. In this litigation arising out of a road traffic accident where periodical payments are under consideration it was inevitable that the court would have to consider the position and potential liabilities of the MIB. There are likely to be other cases where the questions considered in this action will arise. The MIB plays a vital role in the scheme of motor insurance, and it does so for the benefit of the public at large. It is not in the position of a private litigant. In my judgment it is right that MIB should bear its own costs.