Boreham v Burton

When approving a settlement for a protected party involving periodical payments, the court must be satisfied that continuity of payment is reasonably secure. Transitional arrangements may bring liability arising before the Financial Services and Markets Act 2000 within the Financial Services Compensation Scheme where the insurer and policy satisfy the applicable statutory and regulatory conditions.

The court may also approve a reasonable interim payment on account of costs where the sum sought is conservative in relation to the likely overall costs, even if a detailed costs breakdown has not yet been provided.

The claimant was a protected party whose claim arising from a 1998 road traffic accident had been settled at a roundtable meeting. Approval was required for the settlement, which included periodical payments for the claimant’s lifetime.

The court considered whether the continuity of those payments was reasonably secure because the accident pre-dated the Financial Services and Markets Act 2000. It also determined whether the order should include an interim payment on account of costs.

1. The settlement was formally approved. Under section 2(3) of the Damages Act 1996, the court had to be satisfied that continuity of the proposed periodical payments was reasonably secure.
2. The Financial Services and Markets Act 2000 established the Financial Services Compensation Scheme. Although the relevant liability arose in 1998, article 12 of the Financial Services and Markets Act 2000 (Transitional Provisions, Repeals and Savings) (Financial Services Compensation Scheme) Order 2001 permitted an application under the modified scheme in respect of an authorised insurer’s inability or likely inability to satisfy an insurance claim.
3. The defendant’s insurer had been authorised under the Insurance Companies Act 1982, and the relevant motor policy was a United Kingdom policy for the purposes of the Policy Holders Protection Act 1975. The policy therefore fell within the applicable protection for the purposes of the transitional scheme, notwithstanding that the liability pre-dated the scheme.
4. There was also a statutory requirement for the relevant rules to modify the scheme so that applications could be received, assessed and determined. That provided an additional basis for concluding that continuity of payment was reasonably secure.
5. The claimant’s application for an interim payment on account of costs was granted in the sum of £75,000. The figure was conservative compared with the stated likely costs, and there was no danger that the order would exceed a reasonable amount. The claimant’s solicitors should provide a more detailed costs schedule promptly.