Long v Norwich Union Insurance Ltd

Where a periodical payment order is silent about the cost of complying with an administrative obligation, the cost is not recoverable from the paying party unless the parties agree otherwise or the order expressly provides for it. The model order does not place every cost of execution on the insurer. A professional Deputy’s globally assessed annual management fees ordinarily include reasonable work involved in providing proof of life. If such costs are significant, they may instead be addressed expressly in the settlement or included in the damages assessment.

The claimant suffered catastrophic consequences following a road traffic accident. The parties agreed the terms of a settlement involving a lump sum and periodical payments, subject to one issue concerning the form of the proposed consent order.

The order required annual proof that the claimant remained alive before payment of the April instalment. The claimant sought an additional provision requiring the defendant insurer to reimburse the reasonable costs of providing that documentation. The defendant argued that those costs fell within the professional Deputy’s estimated annual management fees and that the model order contained no provision for reimbursement.

1. The court approved the proposed consent order without the additional reimbursement sentence. The issue was decided in favour of the defendant.
2. The periodical payment mechanism involved a balance of benefits and burdens. The insurer bore the substantial burden of funding, recalculating and administering the payments. The claimant received protection against inflation and uncertainty about life expectancy, while accepting some loss of financial autonomy.
3. Paragraphs 5 and 6 of Part 1 of the Schedule were necessary parts of that mechanism but were silent about who should bear the cost of compliance. The same was true of paragraph 12, concerning notification of changes of address. That silence did not justify imposing the relevant costs on the paying party.
4. The costs incurred by the Deputy in providing proof of life were within the scope of the Deputy’s professional functions. The Deputy’s annual fees had been estimated and assessed globally and should include that activity. The model order therefore did not make those costs recoverable from the insurer.
5. The court accepted that requiring a separate reimbursement could create disproportionate administrative work, including registration, checking, verification and possible assessment of each claim. Parties remained free to provide expressly for reimbursement in another case, or to include significant costs in the damages or other appropriate provision.