In Anthony Nathaniel Bennett v. Leonard John Stephens and Zenith Insurance Company [2012] EWHC 1 (QB), the Court was asked to consider the effect of a consent order (the Consent Order) between the parties and the reinsurer of Zenith, Faraday Underwriting Ltd (Faraday).

In a previous decision of the Court ([2010] EWHC 2194 (QB)), Stephens had been ordered to pay Bennett damages in the form of continuing payments, as a result of Stephens’s negligence in causing a road traffic accident which left Bennett seriously injured. Stephens’s liability to pay the damages was covered under his insurance policy with Zenith. Faraday assumed liability for meeting the damages awarded to Bennett. Bennett sought security for the continuing payments which the parties thought had been provided by the Consent Order, which stated that in the event Faraday did not pay sums due to Bennett within 7 days of the due date, the Motor Insurers’ Bureau (MIB) would make payment. This provision was based on sections 5(1) and (2) of the Uninsured Drivers Agreement 1999 (the 1999 Agreement), which provided that the MIB would satisfy any unpaid judgment against a person in relation to a road traffic accident compensation claim.

On receiving notice of the Consent Order, the MIB objected to the provision that it would meet the continuing payments due to Bennett in the event of default by Faraday. Although the MIB accepted that the payments were reasonably secure in that they were likely to be either met by it or any equivalent body succeeding the MIB, it could not be certain that the payments would be met. The agreement in force at a future date might not be the 1999 Agreement and its terms might not be identical to those of the 1999 Agreement. The parties referred the MIB’s objections to the Court, which found that the Consent Order should not be read as being binding on the MIB, and that it was an Order binding on Faraday only.

This case shows the limitations of the MIB guaranteeing continuing payments of road traffic accident damages.