Wallace v Follett

In catastrophic injury settlements involving periodical payments, the court may resolve disputed terms after the parties have agreed the payment structure and other issues, provided the order gives the court continuing jurisdiction. A medical-examination term must balance the insurer’s legitimate need for current information against the claimant’s autonomy and the intrusion involved. Examination for annuity funding is permissible; examination for reserve review may also be permitted with reasonable limits and safeguards. An insurer may require annual confirmation that the claimant is alive and suspend instalments for non-compliance without first obtaining a further court order, subject to a reminder and prompt restoration after confirmation.

David Follett suffered catastrophic injuries in a road traffic accident. Judgment had been entered for damages subject to a 30% reduction for contributory negligence. The parties later agreed a lump sum and periodical payments, but disputed terms for the order embodying the compromise.

His Honour Judge McKenna, sitting as a High Court judge, decided in Follett’s favour on the defendant’s proposed power to require future medical examinations and on the consequences of failing to provide annual confirmation from a general practitioner that Follett remained alive. The defendant appealed. The central questions were whether the court had jurisdiction to determine the outstanding terms and what safeguards should govern them.

1. Disposition and jurisdiction. The appeal was allowed on both grounds. Agreement between the parties, or the fact that an issue was argued, did not itself create jurisdiction. However, partial settlement is commonplace and essential in personal injury claims. Section 2A of the Damages Act 1996, the overriding objective and the parties’ duties to narrow issues supported that approach. Because the parties had agreed an order for periodical payments, the court retained continuing jurisdiction to resolve the disputed terms.
2. Medical examination. The insurer’s need to maintain accurate reserves and obtain current life-expectancy information was legitimate, but the claimant’s autonomy and the intrusive nature of repeated examinations also required consideration. The court treated IB v CB [2010] EWHC 3815 as supporting examination for the possible purchase of an annuity. It accepted the possibility of examination for reserve review, but limited that to no more than once every seven years. The insurer had to give reasonable notice, pay examination costs and consequential loss, and the claimant could apply to the court concerning the nature or extent of an examination. Sufficient information short of examination could also be considered.
3. Confirmation of life. The insurer was entitled to annual confirmation that the claimant remained alive. There was no requirement to obtain a further court order before suspending payments for failure to provide it. The order should require a written reminder and confirmation by the specified date, with suspension ending seven days after compliant confirmation was supplied.
4. The court also approved a term requiring those acting for the claimant or his estate to notify the insurer on his death. Counsel were invited to agree an order reflecting the judgment.

1. High Court of Justice, Birmingham District Registry. His Honour Judge McKenna, sitting as a High Court judge, adjudicated on the disputed terms on 8 May 2012 and decided both issues in favour of the claimant.
2. Court of Appeal (Civil Division). The appeal was allowed on both grounds on 7 March 2013. The disputed provisions were modified in accordance with the Court of Appeal’s judgment: [2013] EWCA Civ 146.