Bennett v Stephens & Anor

Where parties apply for a periodical payments order on the basis that they have consented to it, the court may treat the application as consensual, subject only to its statutory assessment of whether continuity of payment is reasonably secure under the Damages Act 1996. The absence of an express provision dealing with an intervening application by the Motor Insurers’ Bureau does not necessarily prevent the order from being binding. The court does not give advisory opinions on hypothetical questions. A body performing a vital public role in the motor insurance scheme may properly be ordered to bear its own costs despite having substantially vindicated its position.

The claimant suffered very serious injuries in a road traffic accident caused by the admitted negligence of the first defendant. The defendants, including the relevant insurer, agreed the claimant’s damages on both a lump-sum basis and on the basis of future periodical payments. On 14 July 2010 Mackay J made a periodical payments order and a related security order.

After the Motor Insurers’ Bureau applied to the court, the court’s first judgment construed the order as binding the defence insurer, rather than the Bureau. The defendants then contended that the periodical payments order was not binding because the security order did not expressly address the Bureau’s application. The issues were whether the defendants remained bound by their consent and who should bear the Bureau’s costs.

1. Binding effect of the periodical payments order. The court preferred the claimant’s submissions. The periodical payments order was binding on the defence insurer, notwithstanding that the security order did not expressly state what would happen if the Motor Insurers’ Bureau applied to the court. The order was to be understood as requiring the defence insurer initially to pay the claimant and, alternatively, to procure payment by the Bureau. If it could not procure payment by the Bureau, the defence insurer, not the Bureau, would be in default.
2. Statutory security assessment. When parties apply for a statement that continuity of payment is reasonably secure pursuant to section 2 of the Damages Act 1996, the court is entitled to assume that the application is made on the basis that the parties have consented to the order, subject only to the court being satisfied as to security. The court does not give advisory opinions or rule on hypothetical questions.
3. The parties’ agreement was supported by the agreed figures on both a conventional lump-sum basis and a periodical-payments basis. The defendants’ later concern about a possible future capitalisation of liability did not determine whether their consent was binding.
4. Costs. The Motor Insurers’ Bureau was to bear its own costs. Although its position had been substantially vindicated, its involvement was an inevitable consequence of considering periodical payments in a road traffic accident claim. It was not in the position of a private litigant and performed a vital role in the motor insurance scheme for the benefit of the public.

The judgment arose from earlier decisions in the same litigation:

• High Court (Queen’s Bench Division) — Mackay J made the periodical payments and security orders on 14 July 2010, cited as [2010] EWHC 2194 (QB).
• High Court (Queen’s Bench Division) — Mr Justice Tugendhat gave a first judgment on the Motor Insurers’ Bureau’s application, cited as [2012] EWHC 1 (QB), and then determined the further issue in this judgment.