H. W. B. Page, Q.C., Commissioner and Jurats Fisher and Nicolle
The Estate of Y (Deceased)
Axa Insurance UK plc
Advocate D. J. Benest for the Plaintiff.
Advocate L. A. Ingram for the First and Second Defendants.
1. This appears to be the first occasion on which the making, by consent, of a periodical payments order in respect of damages in a personal injury case has arisen for consideration in Jersey. We emphasise by consent because the relevant parties here are agreed not just in their wish that such an order should be made, if it properly can be, but also on the exact terms of the proposed order. Our role in the present case has, accordingly, been limited to deciding whether, notwithstanding the absence of legislative authority, the Royal Court has jurisdiction to make such an order and whether in the circumstances of the present case it is right to do so. Whether the Court also has jurisdiction to impose such an order on parties against the will of one or both is a matter for another day.
2. The case concerns a young man of foreign nationality who sustained catastrophic injuries as a passenger in a car accident in Jersey in 2010. He was 22 at the time and had only been in the Island for a matter of days. His injuries included severe traumatic brain injury, possible hypoxic brain injury, fractures of the sternum and two ribs, two pelvic fractures with haematoma in the left sciatic notch, and lung contusions with pleural effusions. The driver of the car was killed.
3. Four and a half years on from the accident, while the plaintiff has made a substantial recovery from his physical injuries, he has been left with significant functional deficits as a result of the brain injuries that he sustained and, given that his life expectancy may not have been greatly shortened, the probability is that he will require constant care and attention for many years to come. He now lives in his home country with his mother who is also his legal guardian pursuant to an order of the courts in that country made on 25th January, 2012.
4. In April 2013 a claim for damages on behalf of the plaintiff against the estate of the deceased driver of the vehicle was instituted in the Royal Court in the form of an Order of Justice. Liability on the part of the defendant was admitted at an early stage, but until settlement towards the end of April this year, substantial differences between the parties remained on the quantum of damages, particularly as regards the measure of future losses, the sums claimed by the plaintiff on a conventional lump sum basis being very substantial: some £393,500 for past losses and some £22.4 million for future loss of earnings, care and case management, medical expenses, accommodation and so on.
5. The essential terms of the settlement eventually negotiated, as recorded in a Memorandum of Agreement dated 29th April, 2014, were (1) that the plaintiff would be paid a capital sum of £1.6 million less such amount as might already have been paid on an interim basis; (2) that he would be paid annually on 15th May sums of £55,000 per year until the age of 40 (with a pro rata payment for the initial period up to 15th May, 2015), £75,000 per year from the age of 40 until the age of 67, and £68,500 per year thereafter, subject to a revision of such sums on 15th May each year by reference to "the appropriate occupational classification of ASHE" (the Annual Survey of Hours and Earnings) as regards payments to be made in sterling and "the index of average monthly gross wages and salaries reported in the Employment, Wages and Salaries in the National Economy Statistics within the [local] Labour Force Survey" published by the Central Office in the plaintiff's home country as regards sums to be paid in the currency of that country; and (3) that the plaintiff's costs of the action would be paid by the defendant, subject to a detailed assessment on the standard basis if not agreed.
6. These terms were expressed to be conditional on the successful completion of a number of steps:- (1) obtaining confirmation from the tax authorities of the plaintiff's home country that sums received by the plaintiff would be free of any tax liability; (2) obtaining approval of the settlement from the courts of that country; (3) the plaintiff specifying the amounts that he wished to receive in, respectively, sterling and foreign currency (provided that at least £10,000 per year of the annual payments would be made in sterling); (4) the parties agreeing an appropriate ASHE occupational classification for the adjustment of the sterling component of the annual payments; (5) the parties seeking to agree the further terms necessary to obtain an order from the Royal Court giving effect to the proposed terms of settlement.
7. Although not stated in terms, the understanding was that in practice payments to be received by the plaintiff would be made by the deceased driver's insurers, AXA Insurance UK plc ("AXA UK").
8. By the time the matter came before this Court on an application by the parties for a consent order giving effect to the agreed terms of settlement the first, second, third and fourth pre-conditions had been satisfied and the detailed terms of the proposed order had been agreed. As regards the pre-conditions, the tax-free status of payments was confirmed in a written 'Opinion' issued by the Ministry of Finance in the plaintiff's home country dated 17th July, 2014; approval of the settlement on the terms of the Memorandum of Agreement dated 29th April, 2014, was given in the form of a ruling by the Family and Minors Division of the country in question dated 16th June, 2014; agreement had been reached for the greater part by far of the annual payments to be paid in the currency of the plaintiff's home country (on the basis that that is where the bulk of the costs of care, accommodation and so on will be incurred) with a relatively small proportion being paid in sterling (representing the anticipated costs of case management services which will be provided by an English company); and ASHE 222 had been agreed as the appropriate reference point for adjustment of the sterling component of the annual payments. As regards the proposed consent order, this substantially followed a pattern now commonly adopted in orders in similar cases in the English courts.
9. Until now awards of damages in personal injury cases in Jersey have invariably taken the form of a once-and-for-all lump sum, in the same way that they did in cases in England prior to the Damages Act of 1996, Jersey having no equivalent legislative provision for awarding damages in the form of a periodic payments order. That lump sum would normally include, as regards the prospective long-term costs of care and case management, an amount arrived at by taking an annual amount judged appropriate to meet the plaintiff's needs (the multiplicand) and applying to it a multiplier reflecting the number of years for which such care and case management was likely to be required adjusted ("discounted") to take account of projected investment income that might reasonably be expected to accrue from time to time on the outstanding balance of that lump sum.
10. Lord Hope of Craighead, giving the lead opinion in Simon v Helmot  UKPC 5, an appeal to the Privy Council from the decision of the Court of Appeal of Guernsey concerning the appropriate multiplier to be used in such cases in Guernsey, reviewed the historical position in England and, having observed that the aim "is to award such a sum of money as will amount to no more, and at the same time no less, than the net loss: Wells v Wells  1 AC 345, 390", continued:-
"14. It has been assumed until very recently that it will be possible to achieve a rate of return on capital which will more than offset the effects of inflation on the amount of the award. This has led to the assumption that the choice of interest rate will always take the form of a discount for the accelerated receipt of the lump sum. One of the issues in this case is whether the law allows the court to adjust the lump sum in the other direction if the evidence shows that the rate of inflation will outpace the rate of return on capital, as the Court of Appeal did in this case in regard to the losses that must keep pace with the rate of inflation for earnings in Guernsey if the respondent is to be fully compensated. The effect of such an adjustment is to increase, rather than reduce, the number of years used as the multiplier. The use of the word "discount" is not an apt way of describing that exercise. But in principle there can be no objection to such an adjustment if the evidence shows that it is needed to ensure that the lump sum will continue to be large enough to meet losses to be incurred in the future. Otherwise the effects of accelerated receipt, which are inevitable where the award is by means of a lump sum, will not be properly recognised."
11. In that case the Royal Court had arrived at a lump sum award of damages of some £9.3 million using a single discount rate of 1% in respect of all future losses, but on appeal the Court of Appeal had substituted a rate of -1.5% for earnings related losses and 0.5% for other losses, an approach that was unanimously approved by the members of the Judicial Committee of the Privy Council. The case is starkly illustrative of the impact that variations in such rates can have on calculations of damages, the outcome being that the total award in that case was increased by some £4.5 million.
12. That was not, of course, a case in which a periodic payment order was sought. Guernsey had, at that time - and as far as we are aware still has - no legislative provision for such orders and no such order was sought on a consensual basis. But in the course of their respective opinions four of the five members of the Board, as we shall see, touched on the subject of periodic payments to a greater or lesser extent.
13. The legislative history of the power for courts in England to make awards of damages in the form of periodic payment orders was described by Lord Hope in Simon v Helmot as follows:-
"8. Section 2(1) of the Damages Act 1996 provides that a court awarding damages in an action for personal injury may, with the consent of the parties, make an order under which the damages are wholly or partly to take the form of periodical payments. It gave effect to a recommendation by the Law Commission in its report on Structured Settlements and Interim and Provisional Damages (1994) (Law Com No 224) (Cm 2646). Among its recommendations was that there should be no judicial power to impose a structured settlement on the parties: see paras 3.37-3.53. But a power to do this was introduced by section 100(1) of the Courts Act 2003. In place of the requirement for consent it substituted a new section 2, which provides that the court may order that the damages are wholly or partly to take the form of periodical payments. Power to increase or reduce these payments was conferred by the Damages (Variation of Periodical Payments) Order 2005 (SI 2005/841). The new section 2 applies to England and Wales and Northern Ireland: see section 100(4) of the 2003 Act. It does not apply to Scotland, but in D's Parent and Guardian v Greater Glasgow Health Board  CSOH 99, 2011 SLT 1137, para 52 Lord Stewart suggested that it would be helpful to have the same provision in Scotland too. Section 2 of the 1996 Act, as originally enacted, extended to the whole of the United Kingdom: see section 8(2) of that Act. But like the rest of the statute law of the United Kingdom it has no direct application in Guernsey."
14. As Lord Hope emphasised, adopting observations of Waller LJ in Thompson v Tameside and Glossop Acute Services Trust NHS  EWCA Civ 5, where a periodical payments order is made it is, moreover, no longer appropriate to talk of a "multiplicand" and a "multiplier":-
"There is an annual sum which is to be indexed each year under section 2(8) by reference either to the retail prices index or as modified under section 2(9) for so long as the claimant lives or reaches a particular age. The annual figure forms the base of a periodical payment which is infinitely variable to keep pace with the effects of inflation."
15. At this point it is convenient to jump ahead to the opinion delivered by Lord Clarke of Stone-cum-Ebony in Simon-v-Helmot as certain observations made by him of relevance to the present case were the subject of specific comment by Lord Hope, Lady Hale and Lord Dyson. In a passage beginning at paragraph 86 and running through to paragraph 96, Lord Clarke spoke powerfully of how "a consideration of the development of the approach of the measure of damages in this class of case vividly demonstrates the flexibility of the common law" and how, for example, the House of Lords in Wells v Wells had abandoned the approach which had previously been adopted as regards discount rates. He continued:-
"88. It was not suggested in the course of argument in Wells v Wells or in this case that it would be open to the courts to develop the correct approach to the assessment of damages in this class of case by permitting the making of a PPO in an appropriate case. However, it appears to me that, if perchance Guernsey should not legislate as suggested above, it might be open to the courts to permit such a step, by way of development of the common law. As Lady Hale puts it at para 60, the only principle of law is that the claimant should receive full compensation for the loss which he has suffered as a result of the defendant's tort, not a penny more but not a penny less. She adds that, allied to that is the principle that damages must be expressed as a lump sum, payable now. That is indeed the approach which has been adopted to date, and, as she says, the question in this case (as in previous cases) has been accepted to be how to arrive at a lump sum which will provide "full compensation" in the face of an uncertain future.
89. It appears to me that in every case of this kind the true question is how, in all the circumstances of the case, to arrive at full compensation. In my opinion, if full compensation can be better achieved by a different approach, there is no reason in principle why the common law should not adopt it. It would simply be a different (and perhaps better) way of achieving the same end. It is surely a question of fact, and therefore evidence, what is the better way of doing so in the circumstances of a particular case. PPOs have been introduced for the very good reason that they are perceived to produce a more just result, at any rate in many cases. If that is so, the principle of full compensation would support the conclusion that a PPO should be made and not a lump sum award."
16. Having referred to the decision of the House of Lords in Lim Poh Choo and Islington Area Health Authority  AC 174, in which the House declined to permit an interim award of damages on the basis that this was a matter more appropriate for Parliament, he went on:-
"91. Lord Dyson makes what is I think a very similar point in para 105, where he notes that periodical payments are obviously the most accurate (and therefore the fairest) way of taking inflation into account in the assessment of damages but he adds that it would be a step too far to say that such an innovation should be made by the courts in the exercise of their inherent power to develop the common law. In my opinion that is to take too pessimistic a view. I agree with him that the introduction of such a power and the regulation of its exercise are better done through the legislative process (after proper consultation of interested parties) than, as he puts it, by court diktat.
92. However, historically the courts have been willing to develop new remedies to meet the requirements of justice in particular cases. Take, for example, the equitable remedies of rescission, rectification, lien and specific performance, all of which were judicial creations. More recently, freezing and search orders were introduced in order to deliver justice in circumstances where existing remedies would have been inadequate. As J H Baker says in An Introduction to English Legal History, 4th ed (2007), at p 204,
"both ... were new procedures devised by judicial discretion, without precedent, to make the regular law function more effectively ... and they have both now been subsumed in procedural legislation."
93. To my mind there is no reason of principle that prevents the Guernsey courts from introducing PPOs at common law in an appropriate case. This would not herald a dramatic change in the law or involve the creation of a new species of remedy. It would simply involve the courts adapting an existing remedy, namely the award of damages by way of a lump sum, by making an award of damages by way of a PPO in an appropriate case. As Lord Dyson says, such an order is the most accurate (and therefore the fairest) way of taking inflation into account in the assessment of damages. It seems to me to follow, if that is so, that the principle of full compensation would be best met in many cases by the making of such an order. [Our emphasis.]
94. For my part I would not regard that as any greater development of the common law than the change made by the House of Lords in Wells v Wells [sanctioning a radical departure from previous practice regarding the appropriate 'discount rate' in the case of lump sum awards]. This is not to say that legislation would not be better. But, as the Law Commission noted in para 3.1 of its 1992 Consultation Paper No 125 on "Structured Settlements and Interim and Provisional Damages", "structured settlements have developed in the United Kingdom without legislative assistance". Para 3.22 included this:
"We believe that the availability of structured settlements as a remedy in personal injury cases in the United Kingdom should not now be seriously questioned. Though it has been said that their development has been somewhat 'in the shadow of the law', we believe that the advantages clearly outweigh any disadvantages, and that the availability of structuring is a useful option which can benefit plaintiffs, particularly given the high incidence of cases that are settled."
95. Thus, as I understand it, parties regularly reached structured settlements in cases of this kind before the passing of the 1996 Act. Such settlements provided an initial lump sum for past pain and suffering and costs already incurred and an annuity or series of annuities from a life insurance company for the future. The settlements were agreed without the benefit of detailed rules of court; so I do not regard the absence of such rules as an impediment. Moreover, given the introduction of PPOs in England, it does not seem to me that the absence of further consultation in Guernsey is a good reason for the courts to refuse to countenance such a development.
96. The above views are expressed without the benefit of argument and, would of course be open to revision in the light of submissions in a particular case. In the meantime they represent my current views, for what they may be worth."
17. None of the other members of the Board felt able to go quite as far as Lord Clarke, but three of them touched on, directly or indirectly, the latitude available to parties where they are ad idem as to the appropriate form of award:-
"While I would endorse the Court of Appeal's observations in paras 50-52 of its judgment as to how cases of this kind should be handled in the future, I should also like to express the hope that legislation might be introduced in Guernsey to enable the court to order the payment of damages by means of periodical payments in line with the systems that are now available in the United Kingdom. I share Lord Clarke's admiration for the ability of the common law to develop new remedies. But it is one thing to approve a structured settlement which the parties have agreed to, as Lord Stewart did in D's Parent and Guardian v Greater Glasgow Health Board 2011 SLT 1137. To impose such a settlement on parties who were unwilling or unable to reach such an agreement is another. Like Lord Dyson, I think that a change of that nature is best left to the legislative process." (Lord Hope at paragraph 57). [Our emphasis again, as also in the next two passages.]
"For a while during the hearing of this case, I was attracted by the notion that it might be open to the common law of Guernsey to develop such a system for itself, especially now that the practical issues have been addressed in the Damages Act as amended in England and Wales, but that possibility was not explored in the argument before us. There is of course absolutely nothing to prevent the parties' agreeing such a settlement should they so wish and it is something of a mystery why this has not been explored in this case, which is the most serious ever encountered in the Bailiwick. Even after our decision, it might be of benefit to both sides to do so. In common with Lord Clarke, I would not rule out the possibility of developing the common law of Guernsey to allow the court to impose such a solution in a future case, although it is interesting that the possibility was not seriously considered by the Law Commission of which I was a member when Consultation Paper No 125 on "Structured Settlements and Interim and Provisional Damages" was published. I hope, of course, that there is never another case of such catastrophic injuries on the Island, but it might be prudent for the States of Guernsey (and the other Islands) to legislate for the possibility before the next case arises." (Lady Hale of Richmond at paragraph 72).
"...................The assessment of damages for future losses is determined in Guernsey by the application of common law principles. It has not been submitted that there is power at common law to make orders for periodical payments. In my view, periodical payments are obviously the most accurate (and therefore the fairest) way of taking future inflation into account in the assessment of damages. But I think that it would be a step too far to say that such an innovation should be made by the courts in the exercise of its inherent power to develop the common law. The introduction of the power to make orders for periodical payments in England and Wales without the consent of the parties was accompanied by detailed procedural rules (CPR 41.4 to 41.10 and PD41B). These govern the way in which the court should exercise its discretion to make such orders. The introduction of such a power and the regulation of its exercise are better done through the legislative process (after proper consultation of interested parties) than by court diktat." (Lord Dyson at paragraph 105).
18. For his part, Lord Brown of Eaton-under-Heywood did not mention periodic payments specifically, saying that he had little to add usefully to the reasons given by Lord Hope, Lady Hale, Lord Clarke and Lord Dyson . He did however add a comment which, for reasons we come to shortly, is not without relevance to what we are called upon to decide in the present case:-
"76. The real question in the appeal must therefore be this: which approach is preferable: one which ignores the established trend showing an increase in real earnings and so produces an award almost certainly less than will be sufficient to meet the claimant's likely future care costs, or one which uses the best available evidence to predict the future relationship between earnings and living costs and attempts, therefore, to arrive at an award which satisfies the claimant's undoubted entitlement to full compensation for his injuries?
77. The answer must therefore be obvious. Only if we were unwise enough to introduce into Guernsey compensation law a new principle to the effect that economic theory is just too imprecise a tool by which to seek to gauge likely future trends (and were therefore to bar, or simply ignore, evidence substantially based upon it) could the Jurats' approach in this case properly be upheld."
19. Against this background it seems to us that the following propositions may safely and properly be stated. First, had the issue in Simon v Helmot been the same as that which falls to us to consider in the present case, it is highly unlikely that the Privy Council would have declined to give its approval to a consent order giving effect to a periodic payments order in terms agreed by the parties. On the basis of their several observations, that would certainly appear to have been so in the case of Lord Hope, Lady Hale and Lord Clarke and very probably in the case of Lord Dyson (his objection to the introduction of periodic payments orders without legislation being limited, it seems, to non-consensual situations.) And there is nothing in the opinion of Lord Brown to suggest otherwise.
20. Secondly, there is no obvious reason why, whether for reasons of principle or of practice, the same position should not obtain in Jersey notwithstanding the absence of a statutory framework; especially so when the parties have readily accepted that the making of such an order should be subject to safeguards equivalent to those stipulated by the (English) Damages Act 1996 and where there is now a well tried and tested model for such orders in the form of many hundreds of orders made by the English Courts.
21. Thirdly, such a position would be in line with that taken, evidently quite readily, by the Court of Session in Scotland in D's Parent, Guardian (AP) v Greater Glasgow Health Board  CSOH 99, 2011 SLT 1137 as noted by Lord Hope in the passage from his opinion reproduced above and also by the High Court of Justice of the Isle of Man in Walmsley v Lowey, in May 2013 (ORD 10/0057).
22. Fourthly, the making of such an order by consent is in our judgment well within the scope of this Court's inherent jurisdiction. It does not involve the creation of any new substantive right, only - as Lord Clarke said in Simon v Helmot (at paragraphs 92 & 93) - a different form of remedy from those traditionally employed in this area. It has been said that the scope of the Court's inherent jurisdiction in any particular case must be tested by reference to the criterion of necessity and not just reasonableness or the interests of justice: Mayo v Cantrade  JLR 173 and Crociani v. Crociani  JCA 095 (recently applied by Clyde-Smith, Commissioner in V v The Minister for Health and Social Services  JRC 137 in a slightly different context but for the same purpose of giving effect to an agreed settlement of a personal injuries claim). If so, it appears to us that that test is more than satisfied if the courts in this jurisdiction are to keep abreast of a form of remedy described by Lord Dyson in Simon v Helmot as "the most accurate (and therefore the fairest) way of taking future inflation into account in the assessment of damages" (at paragraph 105) - certainly, at least, where
(i) after careful negotiation, the parties have agreed both the principle and the detailed terms of a periodic payments order;
(ii) the form of proposed order follows a pattern that has been widely adopted in England (albeit within a legislative framework) and has also found favour in the courts of Scotland and the Isle of Man notwithstanding the absence of any legislative framework;
(iii) without the Royal Court conferring its imprimatur in the form of a consent order settlement on the terms contemplated will simply not happen.
For this Court, in those circumstances, to set its face against the grant of such a remedy simply because to do so would be breaking new ground is, to our mind, as unthinkable as Lord Brown, in the passage from his opinion in Simon v Helmot referred to earlier, considered it would have been unthinkable to have ignored the economic realities around long-term costs of care in personal injury cases that led the Board in that case to reach the unanimous conclusion that it did.
23. For these reasons we hold that, where the parties are agreed that a periodical payments order by way of damages for personal injury is desirable and are agreed upon its terms, this Court has jurisdiction to make a consent order comparable to those made under the Damages Act 1996 by the High Court of England and Wales provided that (a) the Court is satisfied of the conditions precedent to making such an order as would have been required in England and Wales under that Act, and (b) the parties submit to directions made by it of the kind contemplated by that Act and Rules of Court made thereunder when ordering future payments of sums due (an essential provision in order to permit the Court not just to make the order in the first place but also to police it during the plaintiff's lifetime).
24. Potentially the most problematic consideration is the condition stipulated by section 2(3) of the Damages Act (as amended by the Courts Act 2003) and adopted by the parties in the present case that damages in the form of periodical payments may not be ordered "unless satisfied that the continuity of payment under the order is reasonably secure".
25. Subsections 2(4), (5) and (7) of that Act provide:-
"(4) For the purposes of sub-section (3) the continuity of payment under an order is reasonably secure if -
(a) it is protected by a guarantee given under section 6 of the Schedule to this Act,
(b) it is guaranteed by a scheme under section 213 of the Financial Services and Markets Act 2000 ........................, or
(c) the source of payment is a government or health service body.
(5) An order for periodical payments may include provision -
(a) requiring the party responsible for the payments to use a method (selected or to be selected by him) under which the continuity of payment is reasonably secure by virtue of subsection (4);
(b) about how payments are to be made, if not by a method under which the continuity of payment is reasonably secure by virtue of subsection (4);
(c) requiring the party responsible for the payments to take specified action to secure continuity of payment, where continuity is not reasonably secure by virtue of subsection (4);
(d) enabling a party to apply for a variation of provision included under paragraph (a),(b) or (c).....................
(7) Where an order is made for periodical payments, an alteration of the method by which the payments are made shall be treated as a breach of the order (whether or not the method was specified under subsection (5)(b)) unless-
(a) the court which made the order declares its satisfaction that the continuity of payment under the new method is reasonably secure,
(b) the new method is protected by a guarantee given under section 6 of or the Schedule to this Act,
(c) the new method is protected by a scheme under section 213 of the Financial Services and Markets Act 2000 ............., or
(d) the source of payment under the new method is a government or health service body."
The terms of subsection (4), while expressly declaring that certain arrangements are automatically to be regarded as conferring the requisite degree of security, are not, therefore, exclusive of other arrangements (or "methods", in the rather awkward language of the Act) sanctioned by the court.
26. In this connection our attention was drawn by Counsel (Advocate Benest appearing on behalf of the plaintiff and Advocate Ingram for the defendant and Axa Insurance UK plc) to the decision of Mackay J. in the case of Bennett v Stephens  EWHC 2194 (QB) and the subsequent decision, in the same matter, of Tugendhat J.  EWHC 1 (QB). In that case the parties were agreed that it would be desirable for provision for future care costs to be made by means of periodical payments by Faraday Underwriting Limited ("Faraday"), a Lloyd's syndicate which, by a contract of reinsurance, had effectively assumed the relevant liabilities of the defendant's original insurers so that the primary obligation to fund any periodical payments order would fall on Faraday. By any ordinary standards Faraday was a major reinsurer of repute doing very substantial business in the Lloyd's market, regulated by the FSA, contributing to the Lloyd's central Fund Protection Scheme and holding capital funds at Lloyd's; it was, moreover, a wholly owned subsidiary of Berkshire Hathaway Inc. and was fully reinsured by Munich Re and other following reinsurers.
27. However, "If matters rested there", said Mackay J., "I would be reluctant to pronounce myself satisfied under 2.(3). Without in any way denigrating the current status or stability of Faraday as a going concern, taller trees than it have fallen in the financial forest before now and unless it could claim the backing of 2(4), which it cannot as I am presently invited to assume, I would hesitate to say that I could sufficiently discount the risk that it might fail sometime in the next 50 years or so, which is the period I have to consider covered by the proposed order in this case." Earlier he had expressed the view that, while he was only required by statute to consider whether the proposed order was reasonably secure and not that it was entirely free of all risk, "my satisfaction has to reach a high level, given what is involved, and I must finish up satisfied on something higher than a mere balance of probabilities" (paragraph 8).
28. Being unpersuaded (for reasons that it is unnecessary to go into here) that either Faraday's own reinsurance cover or Lloyd's Central Fund could be regarded as supplying the necessary degree of security, the learned judge continued:-
"So, the focus of the submissions to me realistically concentrated on what might be called the last line of defence, the Motor Insurers' Bureau, or MIB. Where the MIB has in the past unequivocally accepted responsibility for funding a periodical payments order, a good example of which is Thacker v. Steeples, Cox J's decision on 16th May 2005, a case in which it was a Defendant at its own insistence [sic], it was held, notwithstanding that it was not a body falling within s.2(4) of the Act, that continuity of payment by it was reasonably secure under s.2(3). Her decision has been followed in numerous subsequent cases, including settlement approval, some of which I believe I may have made myself since that time" (paragraph 14);
and then, a little later,
"Since the case of Thacker the MIB has apparently followed a policy of declining to offer any commitment to acknowledge potential future obligations under orders of this type. To an extent that is understandable. I, however, am required nevertheless to consider its potential role as a long-stop security and specifically whether I can, in reliance on it, say that the proposed order is reasonably secure."
29. The MIB is a company limited by guarantee. Underwriters who are approved under the Road Traffic Act 1988 to write motor policies are required to be members of the MIB. The MIB is party to an agreement with the Secretary of State for the Environment, Transport and the Regions made on 13th August, 1999, ("the 1999 Agreement") under which the MIB pays or causes to be paid unsatisfied judgment debts entered against drivers who are uninsured. Having considered the nature of the MIB, the current agreement governing its obligations, and whether the particular circumstances of that case might give rise to any defence that would relieve MIB of liability, Mackay J. concluded that counsel (for both parties) were justified in submitting that recourse to the MIB would be available if necessary. Conscious, however, that he had not heard argument from the MIB itself, he suggested that a solution might be for an order to be made in the form employed by Swift J. in Harpin v Walsall Hospital NHS Trust (unreported, it seems), giving the MIB a time-limited opportunity to intervene were it to wish to challenge his conclusion. Following the hearing, Mackay J. accordingly made two orders in terms drawn up and submitted to him by counsel: one, an order providing for periodical payments, the other (the "Security Order"), providing for service on the MIB of the periodical payments order and a window of opportunity for the MIB to intervene. It is unnecessary for present purposes to reproduce the terms of those orders beyond the fact that the Security Order contained a recital in the following terms:-
"AND UPON the Court concluding (subject to review following such hearing as may be provoked by notice being given under paragraph 2(a) below) that pursuant to paragraphs 5(1) and (2) of the Uninsured Drivers Agreement dated [13th ] day of August 1999, the [MIB] would be obliged to pay to the Claimant any sum payable or remaining unpaid if any judgment sum in this claim were to remain unsatisfied for a period of 7 days from the date upon which the Claimant became entitled to the same".
30. In the event, the MIB did intervene because of concerns on its part that the wording of the Security Order overstated the position as regards potential liability of the MIB, particularly in suggesting - according to the MIB - that it would be liable irrespective of the fact that, by the time that the MIB was called upon, the 1999 Agreement might have been replaced by a different agreement involving different wording and different obligations. But, on a subsequent hearing before Tugendhat J, that judge took the view that there was nothing fundamentally wrong with the form of order made by Mackay J., saying:-
"31. Mackay J. was satisfied that the continuity of payment under the PP order is reasonably secure. He made the order subject to the suspensive condition which permitted MIB to make an objection and to attend to make submissions in support of the objection. Having heard the submissions of the MIB and of the parties to the action, it would be open to me to find that I was not satisfied that the continuity of payment under the PP Order is reasonably secure. If I was not so satisfied, the Order could not be made, and the parties would either have to make a new agreement or the litigation would have to be pursued to trial.
32. However, neither of the parties to the action, nor the MIB, is submitting that I should not be satisfied that the continuity of payment under the Order is reasonably secure. They are all submitting that I should be so satisfied. And in so far as it may be material, I state now that I am so satisfied.
33. In my Judgment Mackay J. did not accept that MIB would remain liable to the Claimant whatever might happen in the future. What he decided was that having heard the submission of Mr Westcott, and having read the relevant provisions, he was in no doubt that continuity of payment is reasonably secure as a result of any future deprivation, itself unlikely, of the right of the Claimant to have recourse to the MIB or any equivalent body.
34. In my judgment it was not necessary for Mackay J. to accept that MIB would remain liable to the Claimant whatever might happen in the future in order to reach the conclusion that continuity of payment is reasonably secure.
35. For my part I am not able to accept Mr Westcott's submission that accrued claims against MIB will be protected in respect of accidents occurring while the 1999 agreement is in force whatever subsequent arrangements may be put in place.................................
36. I stress that I regard the risk of the Claimant having no legally enforceable claim against either MIB, or an equivalent institution or body, as so remote as to be capable of being discounted entirely for present purposes. In that respect I agree with Mackay J. In my judgment that is all he decided. In my judgment when he made the PP Order and the Security Order that is all he intended those orders to mean."
31. He concluded:-
"For the reasons given above, in my judgment the PP Order, para 1, is not to be read as an order of the court binding upon MIB. 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."
32. Turning, then, to the present case, the position can be summarised as follows:-
(i) In the insurance industry AXA is a something of a 'household' name. According to an affidavit by Mr Russell Whitehouse, Head of Risk and Compliance for AXA CLPI, the operating division of AXA UK (the Defendant's motor insurer in the present case), retains 100% of the liability up to £5 million but, for any part of liability between £5 million and £10 million, it retains 67.5% of the liability and reinsures the remaining 32.5% to AXA Global P&C ("AXA Global"), a subsidiary of AXA Group whose responsibilities include management of the property and casualty lines of business of group companies on both a pooled basis among other group companies and by placing reinsurance externally with market reinsurers. Information deposed to by Mr Whitehouse concerning the financial standing of AXA UK and AXA Global includes the fact that, the statutory accounts of AXA UK for the year ended 31st December, 2013, show assets of £7,147.3 million, liabilities of £5,352.6 million and, accordingly, net equity of £1,794.7 million together with a net operating profit for the year of £94.8 million; and that AXA UK's return to the Prudential Regulation Authority show available capital resources of £798.5 million, exceeding EU 'Solvency 1' required capital resources by some £256.1 million. As to AXA Global, its financial resources are, plainly much more modest, but it has a 'Solvency 1' ratio of some 150% and a Fitch rating of A+. And when it comes to AXA Group, a French public Company, statutory accounts to 31st December, 2013, show E50.8 billion capital reserves, a surplus of some E26.1 billion over required capital resources; and agency ratings were A+ (outlook stable) by Standard & Poor's as at 26th May 2014, Aa3 (outlook stable) by Moody's as at 9th May 2014 and AA- (outlook stable) by Fitch as 11th March, 2014.
(ii) These figures plainly afford a substantial degree of comfort as to the probability of AXA UK being able to meet its obligations under the proposed periodic payments order in the foreseeable future; but Mackay J.'s words of caution in Bennett are as apposite as ever today and we would not feel able, on the basis of information about AXA UK's current standing and prospects alone, to say that we are satisfied for present purposes that continuity of payment under the proposed order is "reasonably secure", given the extended period of time contemplated by that order.
(iii) As in Bennett, however, it appears to us that the requisite level of comfort may properly be regarded as supplied by AXA UK's membership of the MIB and, in the case of Jersey, the provisions of an agreement executed on 20th September, 2000, between the Home Affairs Committee of The States of Jersey and the MIB which applies to accidents occurring on or after 7th September, 2000. Clause 5 of that agreement appears to be to substantially the same effect as the corresponding clause examined by Mackay J. in Bennett; we were assured by Advocate Ingram that to the best of AXA UK's knowledge and belief none of the exceptions contemplated by Clause 6 applies; the requisite notice under Clause 9 appears to have been duly given; and there is no other obvious reason why recovery from MIB should not be possible in the event of a default by AXA UK.
(iv) On this basis, we are satisfied, that continuity of payment under the proposed order is reasonably secure.
(v) However, at the time of the hearing, the MIB had still to respond to enquiries from the parties concerning its stance in the present matter and a Harpin-type order appeared to be the appropriate course to take. It was agreed by the parties that the window of opportunity for intervention by the MIB should extend to 7th November, 2014; but, as will by now have been made known to those representing the MIB, the Court expressed the hope that a response by the MIB would be forthcoming at the earliest possible opportunity, either in the form of confirmation that no objection is taken to the Court's conclusion concerning the MIB's obligations or, if objection is taken, notice of such objection and the reasons therefore, so that steps can be taken to fix a date for any further hearing that may be necessary.
33. It remains to consider the other condition precedent (apart from security of payment) to the making of a periodical payment order. At heart, as one would expect, this is no more than a caveat that in deciding whether to make such an order a court should be satisfied that it is the right thing to do in all the circumstances of the case. The Damages Act 1996 expresses the point in a circuitous way, providing in section 2(1)(b) that the court "shall consider whether to make the order" and in section 2A(1) "Civil Procedure Rules may require a court to take specified matters into account in considering (a) whether to order periodical payments". CPR 41.7 then requires the court to "have regard to all the circumstances of the case and in particular the form of award which best meets the claimant's needs, having regard to the factors set out in Practice Direction 41.B" (largely irrelevant whereas here, the terms of the order are agreed); and it is only when one gets to CPR 41.8 that matters of detail are spelt out, such as the annual amount awarded, how each payment is to be made and at what intervals; the amounts awarded (i) for future loss of earnings and (ii) future care and medical costs; that payments are to vary annually by references to the retail prices index unless the court orders otherwise; and so on.
34. These provisions having no direct application in Jersey, it may be that in future cases the Royal Court will not always feel obliged to follow them slavishly; but in the present case it is common ground that we should look to these provisions for guidance, and so we do. As it is we have been greatly assisted in addressing each of these considerations by reports from Mr Richard Cropper dated 26th June, 2014, and Dr Victoria Wass dated 8th May, 2014. Mr Cropper is an Independent Financial Adviser who has made a specialisation of providing advice to recipients of personal injury and fatal accident damages and, clearly, has become a leading expert in the field of periodic payment orders. His report takes each of the elements requiring consideration and explains how they are addressed in the provisions of the proposed order. Dr Wass, for her part, explains the respective bases on which it is proposed that payments will be adjusted annually. We are wholly satisfied that a periodic payments order would be desirable in the circumstances; that both reports represent the outcome of careful review and consideration of the best way of giving effect to the settlement reached between the parties in April 2014; and that the terms of the periodic payments order as jointly proposed by the parties are appropriate.
35. For these reasons, we considered it right to make the two consent orders that we did on 3rd October in the terms proposed by the parties: first, an order providing for periodical a payments to the plaintiff by AXA UK during his lifetime and, secondly, an order providing for AXA UK to be added as a party to the proceedings, for the first order to be served on the MIB by 10th October and to take effect as a final order on 7th November unless by then the MIB has served notice of objection to the Court's conclusion as to the MIB's liability were AXA to default on any payment due to the plaintiff.
36. We add the following by way of footnote. The schedule to the periodic payment order, which contains the detailed provisions concerning among other things the formulae for annual adjustment of payments (according to whether they are due in sterling or in foreign currency), follows what in England has become a 'model form' that has been developed by the courts in recent years with the assistance of experts in this complex field such as Mr Cropper and has been employed in many hundreds of cases. There are obvious advantages to parties, practitioners and judges in making use of such a tried and tested precedent. At the same time there is a risk that automatic adoption of such standard forms means that they cease to attract fresh critical scrutiny: scrutiny that might well result, from time to time, in improvement of form or content. In the present case, because the proposed periodic payments order and attendant schedule was clearly the result of detailed negotiation and agreement, we refrained from requiring or proposing any but the most minimal changes to the drafts with which we were originally presented. With due respect, however, to those thus involved, parts of the orders do not make easy reading and, in this and other respects, could benefit from fresh consideration by practitioners in future cases in the Royal Court, bearing in mind that these are documents which may well become the subject of detailed attention and contention in ten or twenty years' time in circumstances where the consensus that exists today no longer exists to the same extent. Anything and everything that helps to express the original intention with clarity and facilitate reading is self-evidently more than desirable.
Damages Act of 1996.
Walmsley v Lowey, in May 2013 (ORD 10/0057.
Bennett v Stephens  EWHC 2194 (QB).
Road Traffic Act 1988.
Harpin v Walsall Hospital NHS Trust (unreported).