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Supreme Court finds harmony with German law in fatal accident claim

Katerina Cox (Appellant) v Ergo Versicherung AG (formerly known as Victoria - Respondent)
Supreme Court Judgment
2 April 2014

This unanimous decision of the Supreme Court clarifies the law in relation to claims for wrongful death which occur in other jurisdictions and are pursued in England and Wales. The decision will be a comfort to Insurers, particularly foreign Insurers, as the Fatal Accidents Act 1976 will not apply in cases where a foreign law is applicable and this will, in most cases, prevent a windfall to English claimants in fatal accident claims.

Sara-Jane Eaton, a Partner at DWF Fishburns, draws out the key findings and comments on the effects for Insurers.

Facts

The proceedings arise out of a fatal accident in Germany in 2004. The Appellant’s husband was hit by a car whilst riding his bike, causing injuries from which he died. The driver of the car was a German national, resident and domiciled in Germany, and was insured by the Respondent, a company registered in Germany. The Appellant, Major Cox’s widow, was also living in Germany at the time of the accident. After the accident, she returned to England, where she had at all relevant times been domiciled. She later entered into a new relationship, having two children with her new partner.

There was no dispute as to the liability of the driver, or that his liability should be determined by German law. Neither was there any dispute that the Appellant had a direct right of action against the Respondent. There were however a number of issues relating to damages and their resolution depended on whether they were governed by German or English law, and, if by English law, whether by the provisions of the Fatal Accidents Act 1976 (‘the 1976 Act’) or on some other basis.

The Court was asked to consider whether the Appellant was entitled to rely on the provisions of Sections 3 and 4 of the 1976 Act which provides for a measure of damages substantially more favourable to her than the corresponding provisions under German law, mainly because of the more favourable rule which excludes her current partner’s maintenance payments. This issue depends on whether the damages rules in the 1976 Act fall to be applied (i) on ordinary principles of private international law as procedural rules of forum, or (ii) as rules applicable irrespective of the ordinary principles of private international law.

The Respondent argued that the principles for quantifying the damages were those applicable under Section 844 of the German Civil Code (Bürgerliches Gesetzbuch) (‘BGB’)

The question of which law was applicable was tried as a preliminary issue.

At First Instance, Sir Christopher Holland held that German law governed the assessment of damages and that the Appellant could not therefore rely on the 1976 Act. At the subsequent appeal the Court of Appeal, unanimously held that the Judge had erred in his finding that German law governed the assessment of damages, holding instead that the heads of damage had to be quantified under the law of the forum, namely English law. However, by a majority, they went on to find that the Appellant could not rely on the provisions of the 1976 Act and her damages should be assessed, as a matter of English law, on principles and in a manner analogous to that applicable to a claim under s.844 of the BGB. The Appellant subsequently appealed to the Supreme Court.

Supreme Court judgment

The Supreme Court unanimously dismissed the appeal, finding that English law does provide a remedy which harmonises with the German law right to maintenance, namely common law damages. Lord Sumption gave the leading Judgment on behalf of Lords Neuberger, Toulson and Hodge, with Lord Mance providing his own concurring reasoning. The salient points arising from the Judgment are as follows:

  • The relevant sections of the 1976 Act do not apply and it does not have extra-territorial effect. Furthermore, nor do the principles enacted in the 1976 Act represent ‘mandatory rules’ of English law, applicable irrespective of ordinary rules of private international law. An action to enforce a liability whose applicable substantive law is German law is not an action under Section 1 of the 1976 Act.

  • The Law Lords highlight the anomalous nature of the 1976 Act and quote Lord Diplock in the case of Cookson v Knowles [1979] where the calculation of damages under sections 3 and 4 of the 1976 Act are referred to as an ‘artificial and conjectural exercise’ whose ‘purpose is no longer to put the dependants, particularly widows, in the same economic position as they would have been in had their late husbands lived.

  • The Law Lords criticised the reasoning of the leading case of Harding v Wealands [2006] in the field of private international law, particularly in relation to what constitute substantive and procedural issues, it being made clear that issues such as causation and mitigation are questions of substantive law.

  • The Law Lords found that English law could easily be applied procedurally to this action, not in a statutory form under the 1976 Act, but simply in the form of damages akin to those in personal injury claims. The relevant English law principles of assessment, which apply in the absence of any statute to the contrary, are that the Appellant must be put in the same financial position, neither better or worse, as she would have been had her husband not been fatally injured.

  • Under English common law (disregarding the statute) damages are assessed on the footing that credit must be given for any maintenance received as a result of the co-habitation and / or re-marriage of a claimant.

Comment

The Supreme Court Judgment provides clarity in wrongful death claims arising abroad. The 1976 Act has been given neither mandatory nor extra-territorial status in respect of such claims which arise and are pursued in the English and Welsh courts. It cannot be argued by claimants that the 1976 Act has universal application irrespective of where the fatal claim may arise. The 1976 Act does not therefore displace Regulation EC No. 864/2007 (‘Rome II’), thereby preventing claimants from obtaining an unfair windfall in damages for wrongful deaths arising in foreign jurisdictions.

The Respondent Insurer was represented by Sara-Jane Eaton of DWF Fishburns who instructed Hugh Mercer QC of Essex Court Chambers and Sarah Crowther, Counsel of 3 Hare Court.

Contact

For further information please contact Sara-Jane Eaton, Partner, on 020 7280 8827

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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