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Background

The proceedings arose as a result of a fatal accident in Germany. On 21 May 2004 Major Cox, an officer servicing with H.M. Forces in Germany, was fatally hit by a car whilst riding his bicycle. stephanie_woods_phThe driver was a German national resident, domiciled in Germany and insured by a German insurance company (Ergo Versicherung AG) under a contract governed by German law.

The Appellant, Major Cox’s widow, was living in Germany at the time of the accident but subsequently returned to England where she was at all relevant times domiciled. Mrs Cox has since entered in to a new relationship and has two children with her new partner.

Mrs Cox commenced proceedings in England against Ergo. The question arose as to whether issues relating to damages were governed by English or German law and, if English law, whether by the provisions of the Fatal Accidents Act 1976 or on some other basis. Damages awarded under English law could differ from those provided under German law. Namely, under German law damages awarded to a widow may take account of any legal right to maintenance by virtue of re-marriage or the birth of a child. Conversely, under the 1976 Act, dependency for damages would be fixed at the time of death and any subsequent changes to Mrs Cox’s circumstances (including remarriage) were irrelevant in calculating damages.

Legal Issues

English rules of private international law distinguish between questions of procedure which are governed by the law of the forum, and questions of substance, governed by the lex causae.  In the current case the question was whether the Appellant could rely on the damages provisions under the 1976 Act which would provide a more favourable result than any damages awarded under German law. The key issue to be considered was whether the rules on damages in sections 1A and 3 of the 1976 Act fall to be applied (i) on the ordinary principles of private international law as procedural rules of the forum or (ii) as rules applicable irrespective of the ordinary principles of private international law.

As Mr Cox’s death arose prior to Rome II Regulation EC 864/2007 coming into force, any cause of action arising out of his death is governed by the provisions of the Private International Law (Miscellaneous Provisions) Act 1995 . In accordance with the 1995 Act, issues arising on a cause of action in respect of personal injury are to be determined according to the law of the place where the injury is suffered unless that law is displaced on the ground that the tort has substantially more significant connections with England. This is, however, caveated by section 14(3)(b) of the 1995 Act which provides that “any rules of evidence, pleading or practice or authorises questions of procedure in any proceedings … be determined otherwise in accordance with the law of the forum”. Consequently, questions of substance are to be determined in accordance with the place of injury (or England if there is a substantially more significant connection) whilst procedural issues are to be determined in accordance with the law of the forum (being England).

In Harding v Wealands [2006] 2 AC 1, the House of Lords held that procedural issues included issues in relation to the assessment of damages whilst the question of recoverability was an issue of substance.

Decision of the Court of Appeal

The Court of Appeal held that English law should adopt the German rules on damages as its own but apply them by analogy rather than directly as the conceptual differences between the English and German causes of action were too great. Mrs Cox appealed the decision to the Supreme Court.

Decision of the UK Supreme Court

Although reaching its conclusion on different grounds, the Supreme Court agreed with the Court of Appeal and unanimously dismissed the appeal. The leading judgment was given by Lord Sumption (with which Lord Neuberger, Lord Toulson and Lord Hodge agreed) and a separate supporting judgment was given by Lord Mance. The court held that the damages rules of the 1976 Act do not apply to a cause of action under German legislation. The 1976 Act did not lay down general rules of English law and its rules were only applicable to actions under the 1976 Act.

The Court held that whether the provisions were procedural or substantive was irrelevant. The substantive law was German law. With regard to procedure, the provisions do not provide general rules of English law relating to the assessment of damages and instead are rules that apply to actions under the 1976 Act itself. In the circumstances, an action to enforce a liability whose applicable substantive law is German law was not an action under Section 1 of the 1976 Act to which the damages provisions of the 1976 Act could apply.

Lord Mance confirmed that there was no basis on which an English procedural provision could expand on a defendant’s liability under the substantive principles of the relevant governing law.

The Supreme Court held that, instead, the general rules of assessment of damages under English law should be applied. Mrs Cox should be placed in the same position, as she would have been in had Mr Cox not been fatally injured. Credit must be given for any amounts received by Mrs Cox which are referable to, and mitigate, the loss.

The Supreme Court noted that the classification of damages regulating the receipts for which credit must be given in an award of damages is a difficult question for which there is no universal answer. However, in the current case and under German law, Mrs Cox was entitled to an award of damages for the loss of her legal right of maintenance from her late husband. German law required credit to be given so far as she had received corresponding benefits by virtue of an alternative legal right. Purely voluntary payments from someone with no legal obligation could not be regarded as an alternative to the loss of her legally entitled payments and consequently credit does not need to be given for them. In the circumstances, payments received by Mrs Cox from her current partner prior to them having a child, which he had no legal obligation to provide, were not an alternative to damages for the loss suffered and therefore “credit need not be given for [them]” (per Lord Sumption at paragraph 22).

Whether an English statute applies extra-territorially depends upon its construction. However, the presumption is that an English statute will not have extra-territorial effect. As a matter of construction, the 1976 Act does not have extra-territorial effect. Extra-territorial application was not an issue at the time the 1976 Act was enacted, the purpose of the 1976 Act was to correct an anomaly in tort and there is no reason why Parliament could have intended the 1976 Act to apply to foreign fatal accidents. Whilst the 1976 Act represents a mandatory rule in relation to the payment of damages, this is not a basis for extra-territorial application and the German rules are not unjust.

Comment

In most cases, the applicable law in relation to the existence, nature and assessment of damages will be established in accordance with Rome II. However, in circumstances where an accident occurs abroad and both parties are habitually resident in England and Wales or where the tort is more closely connected to England and Wales the 1976 Act may apply.  The current case clarifies the position in relation to choice of law in tort for such cases.

The case also confirms that where the damages provisions of a statute do not apply the Court should apply the general provisions on damages under English law.