Knight v Axa Assurances

In a direct claim against a foreign motor insurer, the applicable law depends on the particular issue rather than on characterising the entire claim as contractual or tortious. The contractual law governs whether the injured person may sue the insurer and any indemnity or coverage issue. Where liability and coverage are admitted, the quantification of damages for the underlying wrongdoing is a tortious issue and, under the applicable conflict rules, is assessed under the law of the forum. A right to recover pre-judgment interest as compensation is a substantive issue governed by the law applicable to the tort. The rate and assessment of recoverable interest are procedural matters governed by English law, including the court’s discretion under the Supreme Court Act 1981.

The claimant, domiciled in England, was injured in France by a French driver. He brought a direct personal-injury claim in England against the driver’s French insurer. Liability was admitted, and no issue arose concerning indemnity or policy coverage.

The court was asked to determine whether damages should be assessed under English or French law and which law governed pre-judgment interest. A third issue concerning inter partes costs was conceded to be procedural and governed by English law. The questions arose shortly after the materially identical decision in Maher and Maher v Groupama Grand Est [2009] EWHC 38 (QB).

1. Damages. The court followed Maher and Maher v Groupama Grand Est [2009] EWHC 38 (QB). Conflict-of-laws analysis requires the court to identify the particular issue in dispute, not merely characterise the claim as a whole. This approach was supported by Macmillan Inc v Bishopsgate Trust (No 3) [1996] 1 WLR 387.
2. The right to bring a direct action against the insurer was contractual and governed by the law applicable to the insurance contract. However, because liability, indemnity and coverage were not in issue, the question was the amount payable for the policyholder’s admitted tort. That quantification issue was tortious and procedural. English law therefore governed the assessment of damages. The European jurisdictional framework did not alter that conclusion.
3. Pre-judgment interest. The right to claim interest as compensation for being kept out of money due was a substantive issue in tort. Whether such a right existed therefore depended on French law. The agreed expert evidence established that French law recognised pre-judgment interest in the relevant circumstances as a head of substantive loss.
4. The rate and assessment of interest were procedural matters governed by English law as the law of the forum. The discretion under section 35A of the Supreme Court Act 1981 was sufficiently flexible to permit an appropriate English or French rate. Both French and English law were therefore potentially relevant to the award, depending on the facts.
5. The preliminary issues were answered accordingly: damages were to be assessed by reference to English law; French substantive law recognised a head of loss for pre-judgment interest; and its assessment was governed by English law.