Long v Norwich Union Insurance Ltd [2009] EWHC 715 (QB)

[2009] EWHC 715 (QB)Case No HQ07X00425
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 06/04/2009
Before
THE HON MR JUSTICE MACKAY
Between
Bruna Long (A Protected Party who proceeds by her Litigation Friend Christopher Stanley Long)ClaimantNorwich Union Insurance LtdDefendant
Mr R. Weir (instructed by Kester Cunningham John) for ClaimantMr R. Pershad (instructed by Greenwoods) for DefendantHearing Hearing dates: 30 March 2009
Judgment
[1]On 30th March 2009 I approved the terms of a proposed Consent Order settling Mrs Long’s claim in respect of injuries she received in a road traffic accident on 14th February 2004. Though her physical injuries had been relatively modest she suffered a stroke with catastrophic consequences for her mobility, speech and cognitive ability.[2]Mrs Long had been cared for by her husband, who is now 62, since the accident and the proposal is that that arrangement should continue for as long as he can provide it, when it would be replaced by professionally provided carers. I had the benefit of a lengthy and helpful advice from Mr Weir, counsel for the claimant, which set out the possible parameters of the claim.[3]In the event after certain negotiations the parties were able to reach agreement on all terms, with one exception, with which I will deal below. The shape of the order is that the defendant pay a lump sum of £900,000 to the claimant with credit for interim payments already made and that in addition it will be pay periodical payments at the rate of £25,000 per annum recalculated each year by reference to ASHE 6115 75th centile.[4]The form of the proposed consent order was that which I had approved in the RH case and which was later modified in accordance with a subsequent judgment of Sir Christopher Holland sitting as a Deputy High Court Judge. Both he and I recommended its future use in cases of this nature, whether involving the National Health Service Litigation Authority as the indemnifying party or commercial insurers, as is the position in the instant case.[5]The form of the order is now tolerably familiar and I will not repeat it here. Broadly speaking it puts an obligation on the defendant insurer to pay the annual amount by equal quarterly instalments in advance on 20th April, July, October and January of each year and that each year the amount to be paid should be recalculated in accordance with a stipulated formula linked to the ASHE measure of carers’ earnings known as SOC 6115 75th centile.[6]The general provisions attaching to the payment of periodical payments appear in Part 1 of the Schedule to the order. Paragraph 1 stipulates that the obligation to pay continues during the lifetime of the claimant; paragraph 2 says that there is to be no minimum number of instalments paid; and paragraph 3 that the payment of instalments will cease on the death of the claimant. There then follow 2 provisions which I must set out which enable this scheme to be achieved.[7]Paragraph 5 reads:
“The defendant shall be entitled to require the claimant to produce evidence in a form reasonably satisfactory to it that the claimant remains alive before making the instalment due on 20th April each year.”

The claimant seeks to add to paragraph 5 the following sentence:

“The defendant shall reimburse the claimant in respect of the reasonable costs (if any) of providing such documentation.”
The claimant seeks to add to paragraph 5 the following sentence:[8]Paragraph 6 reads:
“Those acting on behalf of the claimant shall immediately notify the defendant upon her death.”
[9]The parties are unable to agree whether the additional sentence should be included in paragraph 5 or not and have made submissions to me in support of their respective positions. They ask that I decide the point on the basis of their submissions and both are content that the proposed agreement should be modified or not in accordance with my decision.[10]For the claimant, Mr Weir argues that the whole system of periodical payment orders places the administrative burden on the defendant and leaves the cost of discharging that burden on the defendant’s shoulders. Paragraph 5 is a safeguard inserted to protect the defendant’s interests in addition to the obligation on the claimant in paragraph 6. If the defendant is not content with the paragraph 6 obligations, and requires additional proof of life, that cost should not fall on the claimant’s shoulders. In the instant case proof of life would be accepted, I am told, in the form of a letter from the claimant’s Deputy (in the current case a partner in the firm of solicitors acting for her), the cost of providing which will be at current prices £18.50 plus VAT. While this is a very modest sum in the context of damages of this order Mr Weir argues that there are circumstances in which a defendant might reasonably require more elaborate forms of proof such as a medical certificate which would, as I accept, cost considerably more. In any event he has the “100% principle” on his side.[11]The estimated future costs of the professional Deputy are claimed as part of the claimant’s damages on pages 12 and 13 of the revised schedule of loss dated 4th March 2009. There are set out there certain disbursements which will necessarily be involved inter alia in the Deputy’s dealings with the Court of Protection, the Supreme Court Courts Office and the Office of the Public Guardian together with the provision by him of an annual security bond.[12]In addition however there are claimed what are called “general management costs” of the Deputy on an annual basis, estimated at £6,750 in the first year, £5,000 a year for future years while Mr Long remains the sole carer and £6,125 once a full time care team is in place.[13]The parties instructed experts on the likely costs that the Deputy would charge and incur and they were some way apart in their annual figures. For the purposes of the compromise settlement in effect the difference was split. But Mr Weir accepted that these annual management costs were claimed as the best estimate that could be made for all the duties carried out by the Deputy, calculated at so many hours per week or month at so much per hour. As I understand it no express reference was made in the joint report to the cost of providing proof of life.[14]Opposing the addition to paragraph 5 Mr Pershad, for the defendant, says that these claimed costs are substantial and ought to cover all the duties a Deputy might reasonably be expected to have to perform including the obligation to provide proof of life if asked. He points out that in cash flow terms the claimant will receive her recalculated periodical payments quarterly in advance of each quarter’s expenditure, which is again a substantial benefit.[15]He also argues that the model order contains no provision for recovery of these costs. He argues that this model agreement is the product of many hours and days of negotiation between insurers and indemnifiers and experienced lawyers acting for claimants, something which I can readily accept having been involved at various stages in its evolution. At no stage has its inclusion been sought.[16]He argues that while the sum involved may seem small there will be a disproportionate administrative burden in complying with the proposed addition. The cost of making a separate payment each year, will exceed very considerably the amount of the payment. That is because implementation of agreements of this nature can be and is very largely automated by the defendant who will have programs and systems in place to do the necessary calculations on the relevant dates; but an annual request for a separate cheque, so to speak, will place a burden on the insurers which when multiplied across a number of cases will amount to a considerable additional burden.

Conclusions

[17]In one sense it is surprising to encounter this dispute in a claim of this size, but I do accept there is a principle involved for both sides worthy of a decision. In these forms of settlement which comprise of or include periodical payment orders there is a balance of benefits and burdens for both sides. The paying party bears a very substantial burden of funding the periodical payments and administering their recalculation and payment on the specified dates, but at least has no minimum obligation, should death occur earlier than predicted, unlike with the ancestor of this type of order, the structured settlement. The claimant loses a degree of autonomy, and the ability to control her own financial future but receives in return the very considerable benefit of being relieved against the future effects of inflation and any uncertainties as to her expectation of life.[18]A necessary part of the mechanism is whereby such payments are made is paragraph 5 and paragraph 6 of part 1 of the schedule. Both of these are silent as to where the cost of compliance should fall. The same can be said of paragraph 12 of part 1 of the schedule whereby both parties have an obligation to give the other party written notification of changes of address at which notice is required under the schedule are to be given. Again there is no provision in either case for payment of the cost of this exercise.[19]In my judgment the action taken by the Deputy (in this case) or the claimant who is sui juris, are not recoverable under the terms of the current draft model order and ought not to be recoverable in this case. Of course in other cases litigants are free to add the requirement if they wish. But in this case there being no agreement to its inclusion I rule that it be not included.[20]I consider that these costs at least in the current case are plainly within the province of the professional Deputy, whose fees have been estimated and assessed on a global basis in each year and must include such activity as the provision of proof of life. It is impossible to say that the model order imposes all the obligations of execution of it on the paying party, even if the balance of benefit is in favour of a claimant and the higher burden on the defendant. I can see practical reasons why its inclusion might be a disproportionate provision from the defendant’s point of view, the claim for cost of provision of proof having to be registered, checked, verified and if necessary assessed before a separate payment requisition is raised and met. These costs if they are a significant feature should therefore be included within the Deputy’s costs in each case or elsewhere as appropriate in the damages if it is thought worth while to do so.[21]I therefore rule in favour of the defendant’s arguments on this issue and approve the Consent Order without the addition to paragraph 5 which the claimant invites me to impose.

Cited in 1 later judgment