DHV (A Protected Party through his Litigation Friend, WTX) v Motor Insurer's Bureau

Under Spanish substantive law, an insurer acting as a guarantee fund which has defaulted under Article 20(9) must pay penalty interest unless the delay falls within the narrowly construed Article 20(8) exception.

The obligation within the three-month period is not necessarily to pay the finally quantified award. It is sufficient that the insurer makes a meaningful payment or offers adequate compensation based on the information reasonably available. Disputes about precise quantification, contributory negligence, damages, or the progress of foreign proceedings do not ordinarily justify paying nothing. The court must assess the insurer’s conduct in the round, including payments, offers, available information, liability, coverage, and the reason for delay.

The claimant sought Spanish penalty interest on compensation awarded following serious injuries caused by an uninsured vehicle in Mallorca. The defendant, the Motor Insurers’ Bureau, stood in the position of the Spanish guarantee fund.

The substantive claim had been determined in an earlier judgment, with the claimant’s contributory responsibility assessed at 65 per cent. The parties agreed that the defendant was in default under Article 20(9) from 19 December 2017, three months after notification of the claim. The issues were whether delay was justified or not attributable to the defendant under Article 20(8), and whether separate legal interest was payable before the penalty-interest period began.

1. Penalty interest. The defendant was in default under Article 20(9). The court had to decide whether the Article 20(8) exception applied. That exception was to be applied restrictively and only in special cases.
2. The obligation within three months was not necessarily payment of the whole sum ultimately awarded. It required some meaningful payment of compensation or an adequate offer. A derisory or token payment would not suffice. The information available in the notification form and Immediate Needs Assessment enabled a responsible insurer to assess and pay some compensation.
3. The defendant’s interim payments were returnable and made only after contested applications or court orders. They were relevant but attracted limited weight. The defendant had accepted primary liability in 2020, yet made no non-returnable payment or offer before trial.
4. Neither the late schedule of loss, uncertainty about precise quantification, disputes about contributory negligence or damages, nor procedural delays in the English proceedings justified paying nothing. There was no uncertainty about insurance coverage. The defendant’s conduct amounted to serious, substantial and unjustified delay and was not a special case within Article 20(8).
5. Penalty interest was therefore payable from 19 December 2017 to 28 April 2025, the agreed end date. The application for legal interest from notification until the end of the three-month period was refused because it was unpleaded and unsupported by evidence of Spanish law. Legal interest after 28 April 2025 was agreed to run until the further interim payment on 12 June 2025.
6. The amount of penalty interest and any exchange-rate issue were left for agreement or short written submissions.

First-instance application. The judgment followed an earlier substantive judgment in the same litigation, [2025] EWHC 2002 (KB), but no appeal was determined in this judgment.