Periodical Payment Orders (Northern Ireland)
19 August 2014
Periodical Payment Orders (“PPOs”) are becoming an increasingly popular method of addressing a Plaintiff’s ongoing care needs in high value claims for personal injury compensation in Northern Ireland.
The Courts Act 2003, amending section 2 of the Damages Act 1996 brought in a new regime in which the Court is required to consider whether, or not, to make a PPO rather than a lump sum award in every claim for damages for future pecuniary loss in respect of personal injury or death.
Order 37 of Rules of the Court of Judicature (Northern Ireland) 1980, as amended by the Supreme Court (Northern Ireland)(Amendment No.3) 2006, states:-
Rule 13: “The court shall consider and indicate to the parties as soon as is practicable whether periodical payments or a lump sum is likely to be the more appropriate form for all or part of an award of damages”
Rule 14: “Factors to be taken into account when considering
(a) Its indication as to whether periodical payments or a lump sum is likely to be the more appropriate form for all or part of an award of damages under rule 3;or
(b) whether to make an order under section 2(1)(a) of the 1996 Act,
the court shall have regard to all the circumstances of the cases and in particular the form of award which best meets the plaintiff’s needs, having regard to [the following factors]:-
(a) The scale of the annual payments, taking into account any deduction for contributory negligence;
(b) The form of award preferred by the plaintiff including:
(i) the reason for his preference; and
(ii) the nature of any financial advice he received when considering the form of the award;
(c) The form of award preferred by the defendant including the reasons for the defendant’s preference.
The main advantage of a PPO is that it is seen to be a more accurate way to assess future loss, and subject to the limited power to make a variable PPO under the Damages (Variation of Periodical Payments) Order 2005, a PPO is set at Trial in the same way as a lump sum. The main disadvantage, for defendants, is seen to be the unpredictability of the need for a variation.
In KD (a minor) by DK, his mother and next friend v Belfast Health and Social Care Trust  NIQB 78, Mr Justice Gillen provided useful guidance on assessing a plaintiff’s care needs as part of a PPO. He summarised his method as a three stage approach:-
1. What are the plaintiff’s needs?
2. Is the model of care chosen by the plaintiff reasonable?
3. What are the reasonable costs of meeting the plaintiff’s needs?
In the recent case of Janine Gilliland (a person under a disability) by Robert George Gilliland next friend v Jemma McManus & Another  NIQB 127, Mr Justice Gillen emphasised that the Court can impose a PPO on the parties without the parties’ consent, provided it satisfies itself that it has the right to do so. Mr Justice Gillen was of the view that such a power could not be exercised by the Court where the parties are of full age, have legal capacity and have consented to a settlement (as opposed to the Court making or approving an award).
Mr Justice Gillen sets out general guidance (including considering the advantages and disadvantages of PPOs) in the Gilliland case, which may be of assistance in future cases involving PPOs, inter alia:-
- Solicitors and barristers should incline to caution and carefully consider obtaining financial or actuarial advice, since they are neither permitted nor (usually) qualified to give such advice themselves;
- The smaller the award (allowing for contributory negligence) the less persuasive the case for a PPO, depending on the circumstances of each case;
- The test for the Court (in considering what Order best meets the Plaintiff’s need) is an objective one;
- The practice in (England and) Northern Ireland is for the parties to draw up an Order of the Court which will make provision for all aspects of the settlement including payment of the lump sum, the form and content of the periodical payments and terms necessary in respect of indemnities or reverse indemnities in respect of public funding; and
- A plaintiff may ordinarily stand to gain a great deal more than he risks losing by entering into a PPO unless there is any significant element of contributory negligence. In that case, he or she may need to spend more than he or she would be entitled to receive annually if the order was made for life and therefore they may prefer a lump sum.
These recent cases confirm that, in any personal injury claim, where there is a large claim for future pecuniary loss, a PPO will be considered by the Court in making an award. It follows that the parties ought to consider this at an early stage, particularly in claims involving minors or persons under a disability, so that they can set out their position at as early a stage as possible.