Model Order for periodical payments in claims against NHS of Foundation Trusts

All practitioners should now be aware of the new forms of Orders for approval by the court in actions against NHS Trusts in cases involving children or patients.

The new Order arises out of the creation of Foundation Trusts which are theoretically [and practically!] capable of being wound up leaving a Claimant as an unsecured creditor. Under the old regime, it was mandatory for the Secretary of State to provide for the liabilities of NHS Trusts. With the creation of Foundation Trusts, this becomes permissive only. As all NHS Trusts can apply to become Foundation Trusts and as it is the intention of Government to ensure all Trusts become FTs within the next few years, every form of Order for periodical payments against an NHS Trust should follow the new wording.

In January of this year Forbes J approved the form of Order set out below in the case of Kanu and approved a similar Order in the case of YM v Gloucestershire Foundation Trust. Full judgement was handed down in April and can be found under neutral citation [2006] EWHC 820 QB.

The main feature of the Order is that the NHSLA become the effective source of the periodical payments and Orders can be enforced directly against this body if necessary.

22 June 2006
Susan Rodway Q.C.
39 Essex Street

ORDER APPROVED BY FORBES J IN KANU

IN THE HIGH COURT OF JUSTICE CLAIM NO

QUEEN’S BENCH DIVISION

Before the honourable mr justice forbes

BETWEEN

JOSEPH SAMUEL KANU

(A Patient suing by his Father and Litigation Friend, SAMUEL KANU)

Claimant

And

(1) KING’S COLLEGE HOSPITAL NHS TRUST

(2) SECRETARY OF STATE FOR HEALTH

Defendants

ORDER

BEFORE The Honourable Mr Justice Forbes sitting in the High Court of Justice, Royal Courts of Justice on 30^th January 2006.

UPON HEARING Susan Rodway one of Her Majesty’s Counsel and Timothy Petts of Counsel on behalf of the Claimant, and Paul Rees one of Her Majesty’s Counsel, on behalf of the First Defendant and Elisabeth Laing of Counsel on behalf of the Second Defendant.

WHEREAS the Claimant has made a claim (the “Claim”) against the First Defendant for personal injuries suffered by him arising out of the First Defendant’s negligence on or about 4^th and 5^th December 1996 and in respect of which proceedings were commenced by the Claimant against the First Defendant in the High Court of Justice on 14^th November 2002.

AND WHEREAS the Claimant is a Patient and brings the Claim by his Father and Litigation Friend, Mr Samuel Kanu.

AND WHEREAS the National Health Service Litigation Authority (“NHSLA”) shall be responsible for and make the payments set out in Paragraph 1 of this Order to and for the benefit of the Claimant (referred to below as “the periodical payments”).

AND WHEREAS the NHSLA has entered into an agreement with the First Defendant which permits the NHSLA to be responsible for and make the periodical payments under this Order.

AND WHEREAS the NHSLA is a special health authority within the meaning of the National Health Service (Residual Liabilities) Act 1996.

AND WHEREAS the First Defendant and the NHSLA agree with the Claimant that in the event of any failure to make the periodical payments or any alteration in the method or change in the identity of the source of the payment the same shall give rise to a direct right of the Claimant to enforce this order and all rights arising under it against the NHSLA in consideration of the Claimant agreeing to the terms of this Order.

AND UPON READING the Advice from Counsel for the Claimant dated 6^th October 2005 and the report of Mr Ian Gunn dated 26^th September 2005.

AND UPON the Claimant and the First Defendant having agreed in full and final settlement of the Claim the terms set forth herein.

AND UPON the Court being satisfied that:

(1) The continuity of payment under the Order is reasonably secure pursuant to section 2(3) of the Damages Act 1996 (as amended) and/or pursuant to section 2(4)(c) of the Damages Act 1996 (as amended) and under the terms of the Order as herein set out;

(2) The periodical payments are to be paid free of taxation under section 731 -734 of the Income Tax (Trading and Other Income) Act 2005;

(3) The Order set out below is agreed by the Claimant and the First Defendant as being the preferred Order that should apply.

AND UPON the Claimant having agreed to accept the sum of £-------- (inclusive of recoverable benefits) (which sum has already been received by way of interim payments) plus the periodical payments referred to in the attached Schedule.

AND UPON the Claimant having given the following undertakings to the Court

(1) A Receiver has been appointed for the Claimant.

(2) The Claimant whether acting by his Litigation Friend or his Receiver will take all necessary steps to seek to stay the claim and any proceedings which have begun or have been threatened against the First Defendant in connection with the Claim.

(3) The Claimant, his Litigation Friend and/or his Receiver will not institute any proceedings against the First Defendant or any other party or person whomsoever in connection with the Claim save by way of enforcement of this Order.

AND UPON the Court having approved the terms of this Order and the Schedule annexed to this Order:

BY CONSENT

(1) IT IS ORDERED that that the further sums as specified in the attached Schedule be paid as stipulated in the Schedule and be funded in accordance with section 2(4)(c) of the Damages Act 1996 as amended, such that the NHSLA shall be responsible to the Claimant for and make such payments to the Claimant, with the sums payable to comprise damages for future care and associated costs.

(2) AND IT IS FURTHER ORDERED that the First Defendant do pay the Claimant’s costs of this action on the standard basis such costs to be the subject of a detailed assessment, if not agreed and for the avoidance of doubt such costs to include those costs of the hearings of 4^th October 2005, 18^th October 2005, 21^st October 2005 and 30^th January 2006 and the Claimant’s costs of the issue of reasonable security of periodical payments.

(3) AND IT IS FURTHER ORDERED that there be a detailed assessment of the Claimant’s costs in accordance with Regulation 107 of the Civil Legal Aid (General) Regulations 1989 as amended, Article 5 of the Access to Justice Act 1999 (Commencement No. 3) Order 2000, Article 4 of the Community Legal Services (Funding) Order 2000 and the Civil Legal Aid (General) (Amendment) Regulations 2000 as amended, save that in the event that the Claimant’s solicitors waive any claim to any further costs beyond those referred to above, they have permission to dispense with any Legal Aid Assessment.

(4) AND IT IS FURTHER ORDERED that all further proceedings in this action be stayed except for the purpose of implementing the terms of this Order and the terms set out in the attached Schedule, for which purpose there be permission to apply to the Claimant, the First Defendant and the NHSLA, and if necessary to add the NHSLA as a party to enforce the terms of this Order.

(5) AND IT IS FURTHER ORDERED that there be no order as to the costs of the Second Defendant.

DATED this 30^th January 2006

SCHEDULE TO THE ORDER

The following sums shall be paid:

1. The sums of:

1.1 £------ recalculated in accordance with the formula in clause 8, payable on 17^th August in each year, with the first such payment to be made on 17^th August 2006

1.2 A further sum of £------ recalculated in accordance with the formula in clause 8, payable on 17^th August in each year, the first such payment to be made on 17^th August 2008

1.3 A further sum of £------ recalculated in accordance with the formula in clause 8, payable on 17^th August in each year, the first such payment to be made on 17^th August 2011

1.4 A further sum of £------ recalculated in accordance with the formula in clause 8, payable on 17^th August in each year, the first such payment to be made on 17^th August 2036

1.5 The sums in paragraphs 1.1 and 1.4 inclusive above shall be index-linked from 5 October 2005 in accordance with the provision set out below.

Each sum payable under paragraphs 1.1 to 1.4 is a “Periodical Payment” subject to the conditions set out at paragraphs 2-7 herein.

2. All the Periodical Payments will continue during the lifetime of the Claimant.

3. No minimum number of Periodical Payments shall be made.

4. Payment of any Periodical Payment will cease on the death of the Claimant.

5. The final payment will be pro-rata for so much of the final year that the Claimant had survived and any balance owing to the NHSLA or its successor will be repayable to it out of the Claimant’s estate.

6. The NHSLA shall be entitled to require the Claimant to produce evidence in a form reasonably satisfactory to the NHSLA that the Claimant remains alive before making any Periodical Payment.

7. The Periodical Payments all to be made by BACS to the Court of Protection (or its successor) for the benefit of the Claimant under reference ---------.

8. Each Periodical Payment shall be recalculated annually on 1^st July in each year from 17^th August 2006 in accordance with the following formula:

NF = OF x NIF

OIF

Where:

NF = the new Periodical Payment figure being calculated.

OF = the relevant Periodical Payment figure calculated on 1^st July in the year preceding the year in which the calculation is being carried out;

NIF = the Index applicable to 1^st July in the year in which the calculation is being carried out, the first NIF being in respect of 1^st July 2006;

OIF = the Index applicable to 1^st July in the year prior to the year in which the calculation is being carried out, save that in respect of the calculation carried out for the payment made on 17^th August 2006 only the OIF shall be the Index applicable to 1^st October 2005.

Index = the United Kingdom General Index of Retail Prices for all items published by the Central Statistical Office (January 1987 = 100) or any equivalent or comparable index which in the NHSLA’s reasonable opinion replaces such index from time to time.

IN THE HIGH COURT OF JUSTICE

CLAIM NO HQ02X03809