Cox v Ergo Versicherung AG & Anor

The law governing an assignment is identified under the applicable conflict-of-laws rules. An express choice is unnecessary where the parties’ choice is demonstrated with reasonable certainty by the contract and its circumstances. In the absence of such a choice, the assignment is governed by the law of the country with which it is most closely connected. A broadly drafted assignment intended to enable a public body to recover accident-related outlays may extend to service pension payments, even if the drafting is poor and the instrument preserves the assignor’s personal claim. The assignor remains entitled to recover any balance of the underlying claim exceeding the sums assigned.

The appellant, the widow and sole dependant of Major Christopher Cedric Cox, appealed from the decision of Sir Christopher Holland, sitting as a Deputy Judge in the Queen’s Bench Division, concerning the meaning and effect of an assignment made in favour of the Ministry of Defence. The assignment covered claims connected with emergency services, medical treatment, repatriation costs and pensions, while preserving any personal claim of the appellant.

The Ministry had paid repatriation costs and a continuing widow’s pension, and the first respondent insurer had used a German procedure to meet subrogated claims for those outlays. The appellant argued that the assignment was governed by English law and did not transfer any part of her claim for loss of maintenance under section 844 of the BGB, particularly in respect of pension payments. The central issue was whether the assignment was valid and effective to that extent.

The appeal on the assignment issue was dismissed. The court also declared, on the first respondent’s notice, that the assignment was effective to assign to the Ministry of Defence the appellant’s claim under section 844 of the BGB to the extent necessary to recover pension payments made by the Ministry.

1. Applicable law. The assignment contained no express choice of law. Applying the Rome Convention as given effect in the Contracts (Applicable) Law Act 1990, any implicit choice under Article 3(1) was German law. The assignment concerned claims arising from an accident in Germany, governed by German law, and was intended to enable recovery from a German tortfeasor or insurer of the Ministry’s related outlays. Those factors outweighed the connections with England.
2. If no choice of law was established under Article 3, Article 4 nevertheless led to German law because Germany was the country with which the assignment was most closely connected. The Article 4(2) presumption, based on the appellant’s habitual residence in Germany, was not displaced under Article 4(5).
3. Construction and effectiveness. The court was to determine the meaning of the assignment by applying German principles of contractual interpretation. The words used were the starting point; where their literal meaning was unclear, the factual background was admissible to establish the parties’ intention. Read in context, the references to costs meant matters for which the Ministry had incurred costs on the appellant’s behalf. That included the service pension, which was an outlay known to both parties when the assignment was made.
4. The preservation of any personal claim did not prevent the assignment. It did not leave the appellant worse off because the insurer remained liable for any amount by which the section 844 maintenance claim exceeded the pension payments. The German experts agreed that the claim had been validly assigned to the extent of the Ministry’s pension payments. Article 12(2) also made German law relevant to assignability.
5. The Court of Appeal dismissed the appeal on this point and made the stated declaration. Dame Janet Smith and Lord Justice Maurice Kay agreed with Lord Justice Etherton.

• Court of Appeal (Civil Division) — The appeal from the Queen’s Bench Division decision was dismissed on the assignment issue. The court declared that the assignment was effective to assign the section 844 claim to the extent necessary to recover pension payments made by the Ministry of Defence.
• Queen’s Bench Division — Sir Christopher Holland, sitting as a Deputy Judge, treated the practical effect of the assignment as a factual matter and considered that payments made through the German procedure offset the insurer’s BGB obligations.