Cox v Ergo Versicherung AG

The Supreme Court held that the substantive law governing liability for the fatal road accident was German law (in particular section 844 BGB) and that the assessment of damages must follow the applicable German substantive rules. The court rejected the contention that the damages provisions of the Fatal Accidents Act 1976 (notably sections 1A, 3 and 4) applied regardless of the choice of law or had extraterritorial or mandatory effect to displace the lex causae. The court treated the German rule requiring credit for maintenance receivable as a matter of substantive law (mitigation/causation) and held that purely voluntary payments from a person under no legal obligation need not be credited.

Accordingly, the appellant’s claim to have English statutory rules of assessment applied was dismissed; damages were to be determined in accordance with the German substantive rules as articulated in section 844 BGB.

Background and facts:

• Major Christopher Cox, serving with H.M. Forces in Germany, was fatally injured on 21 May 2004 when a car driven by Mr Kretschmer left the road. The driver was insured under a German contract governed by German law. Mrs Katerina Cox, the widow, was then living in Germany and later returned to England where she is domiciled.
• Liability was not in dispute. Mrs Cox sued the German insurer in England for bereavement and loss of dependency, relying alternatively on English law (the Fatal Accidents Act 1976) and German law (section 844 BGB).

Procedural posture:

• The choice of law for damages and related issues was directed to be tried as a preliminary issue after trial judge Sir Christopher Holland made factual findings as to German law ([2011] EWHC 2806 (QB)). The Court of Appeal ([2012] EWCA Civ 854) reached a decision on those preliminary issues and the case proceeded to the Supreme Court on appeal.

Nature of the claim and issues:

• Mrs Cox sought damages for bereavement and loss of dependency. The principal legal issues were (i) whether damages were to be assessed under German substantive law (section 844 BGB) or under English law (the Fatal Accidents Act 1976), (ii) whether the Fatal Accidents Act applied extraterritorially or as a mandatory rule of English law notwithstanding ordinary choice of law rules, and (iii) whether English procedural assessment rules could displace German substantive mitigation rules (for example, credit for maintenance from a subsequent partner).

Court’s reasoning:

1. The court accepted that the lex causae under ordinary private international law (governed here by the Private International Law (Miscellaneous Provisions) Act 1995) was German law and that section 844 BGB governed the extent of recoverable loss.
2. It analysed the substance/procedure distinction as developed in Boys v Chaplin and Harding v Wealands. The court concluded that the German rules concerning the scope of recoverable loss, causation and mitigation (including the rule that credit be given only for maintenance received by legal right) are substantive. Where the lex causae is German, English statute-based rules applicable only to "an action under this Act" (the Fatal Accidents Act) do not apply to actions to enforce foreign substantive liabilities.
3. The court rejected arguments that the Fatal Accidents Act had an implied extraterritorial effect or that its damages rules were mandatory domestic rules of such importance that they must displace the lex causae. The court emphasised the presumption against extraterritorial effect and found no textual or policy basis for treating the Fatal Accidents Act as applying irrespective of the chosen substantive law.
4. Where English common law assessment principles were considered, the court noted that absent statute the general principle is to put the claimant back in the position she would have been in but for the wrong. In this case, however, the German substantive rule governing mitigation and credit applied.

Relief and outcome: The appellant’s appeal was dismissed and declarations were to be redrafted by agreement; damages were to be assessed according to German substantive law (section 844 BGB), including the rule on credit for maintenance only where there is a legal obligation.

The appeal is dismissed. The court held that German law (section 844 BGB) is the lex causae governing recoverable damages and that the damages provisions of the Fatal Accidents Act 1976 do not apply to a cause of action governed by foreign substantive law nor have extraterritorial or mandatory effect to displace the lex causae. The German rule requiring credit only for maintenance received by legal right is substantive and applies; voluntary payments from someone under no legal obligation need not be credited.

First instance: High Court (QB) decision on preliminary issues by Sir Christopher Holland [2011] EWHC 2806 (QB). Court of Appeal: [2012] EWCA Civ 854. Appeal to the Supreme Court: [2014] UKSC 22.