Cox v Ergo Versicherung AG (formerly known as Victoria)
| Jurisdiction | England & Wales |
| Judge | Lord Mance,Lord Neuberger,Lord Sumption,Lord Toulson,Lord Hodge |
| Judgment Date | 02 April 2014 |
| Neutral Citation | [2014] UKSC 22 |
| Date | 02 April 2014 |
| Court | Supreme Court |
[2014] UKSC 22
Lord Neuberger, President
Lord Mance
Lord Sumption
Lord Toulson
Lord Hodge
Appellant
Alexander Layton QC
Marie Louise Kinsler
Henry Morton Jack
(Instructed by Leigh Day & Co)
Respondent
Hugh Mercer QC
Sarah Crowther
(Instructed by DWF Fishburns)
Heard on 20 and 21 January 2014
Lord Sumption (with whom Lord Neuberger, Lord Toulson and Lord Hodge agree)
These proceedings arise out of a fatal accident in Germany. On 21 May 2004, Major Christopher Cox, an officer serving with H.M. Forces in Germany, was riding his bicycle on the verge of a road near his base when a car left the road and hit him, causing injuries from which he died. The driver was Mr Gunther Kretschmer, a German national resident and domiciled in Germany. He was insured by the respondent, a German insurance company, under a contract governed by German law. The appellant, Major Cox's widow Katerina, was living with him in Germany at the time of the accident. After the accident, she returned to England where she has at all relevant times been domiciled. Since then, she has entered into a new relationship and has had two children with her new partner.
It is common ground that the liabilities of Mr Kretschmer and his insurer are governed by German law. It is also common ground that under paragraph 3(1) of the Pflichtversicherungsgesetz, Mrs Cox had a direct right of action against Mr Kretschmer's insurer for such loss as she would have been entitled to recover from him. That being so, the combined effect of articles 9 and 11 of Regulation EC 44/2001 is that she is entitled to sue the insurer in the courts of the member state where she is domiciled. She has availed herself of that right by suing the insurers in England for bereavement and loss of dependency.
Liability is not in dispute, but there is a number of issues relating to damages. Their resolution depends on whether they are governed by German or English law, and if by English law, whether by the provisions of the Fatal Accidents Act 1976 or on some other basis. Mrs Cox relies on both English and German law. The question which law applies was ordered to be tried as a preliminary issue, together with other issues which are no longer in dispute.
In German law, the extent of Mrs Cox's recoverable loss is governed by section 844 of the Burgerliches Gezetzbuch (or "BGB"). Section 844(2) provides, so far as relevant:
"If the person killed, at the time of the injury, stood in a relationship to a third party on the basis of which he was obliged or might become obliged by operation of law to provide maintenance for that person and if the third party has as a result of the death been deprived of his right to maintenance, then the person liable in damages must give the third party damages by payment of an annuity to the extent that the person killed would have been obliged to provide maintenance for the presumed duration of his life."
Sir Christopher Holland, who decided the preliminary issues in the High Court, heard expert evidence about the effect of section 844(2) and made a number of findings: [2011] EWHC 2806 (QB). These findings have not themselves been appealed, and provide the point of departure for the questions before us. In summary, Sir Christopher held that the object of section 844 of the BGB was to restore the claimant to the financial position that she would have been in as a dependant of the deceased, but for his death, taking account of any subsequent benefits received which impact on the loss of dependancy, apart from insurance recoveries. These subsequent benefits may include the income that the claimant has made or would be likely to make by taking paid employment, together with any maintenance accruing to the claimant through her remarriage or through some other relationship following the birth of a child. "Fundamental to the foregoing," he found, at para 17, "is a substantive requirement of German law: the duty to mitigate, such justifying ongoing reference to her earning capacity and to benefits accruing from remarriage or from a similar relationship."
Broadly speaking, German law on the damages recoverable for a fatal accident corresponds to the general principles applied at common law to the recoverability of damages in tort, which require the claimant to be put into a financial position equivalent to that which she would have been in but for the wrong. To that end, account must be taken of avoided or reasonably avoidable loss. In England, however, the law relating to liability for fatal accidents is almost entirely statutory. Before 1846, English law did not permit actions in tort for the death of a human being. This was the combined result of two rules of common law. The first was that the right of action of a person who had been tortiously injured was a personal action, which did not survive for the benefit of his estate upon his death. This rule survived until 1934, when it was abolished by the Law Reform ( Miscellaneous Provisions) Act. The second rule was that "[i]n a civil court, the death of a human being could not be complained of as an injury" by dependants claiming in their own right: Baker v Bolton (1808) 1 Camp 493 (Lord Ellenborough). This is still the rule at common law, but it was largely superseded by the Fatal Accidents Act 1846 ("Lord Campbell's Act"), which created a new statutory cause of action in favour of certain categories of dependant, including widows. The 1846 Act was repeatedly amended, elaborated and re-enacted, and the statutory cause of action is now contained in section 1(1) and (2) of the Fatal Accidents Act 1976. These statutory provisions remain the sole legal basis on which a claim can be made for bereavement or loss of dependency in English law.
The common law background explains the rather tortured form of sections 1(1) and (2) of the Fatal Accidents Act 1976. They provide:
" Right of action for wrongful act causing death
(1) If death is caused by any wrongful act, neglect or default which is such as would (if death had not ensued) have entitled the person injured to maintain an action and recover damages in respect thereof, the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured.
(2) Subject to section 1A(2) below, every such action shall be for the benefit of the dependants of the person ('the deceased') whose death has been so caused."
For this purpose a "dependant" means someone falling within the categories defined in section 1(3), including the widow (or widower) of the deceased (section 1(3)(a)), a civil partner (section 1(3)(aa)), or a person who for at least two years before the death had been living with the deceased in the same household as the deceased's spouse or civil partner (section 1(3)(b)).
Lord Campbell's Act contained no provisions relating to damages, but over the years such provisions have been added in the course of successive amendments and re-enactments. In particular, substantial changes were made in 1976 and 1982. For present purposes, the relevant provisions relating to pecuniary loss are sections 3 and 4 of the Act of 1976, as amended by the Administration of Justice Act 1982. They provide:
"3. Assessment of damages.
(1) In the action such damages, other than damages for bereavement, may be awarded as are proportioned to the injury resulting from the death to the dependants respectively.
…
(3) In an action under this Act where there fall to be assessed damages payable to a widow in respect of the death of her husband there shall not be taken account the re-marriage of the widow or her prospects of re-marriage."
…
4. Assessment of damages: disregard of benefits.
In assessing damages in respect of a person's death in an action under this Act, benefits which have accrued or will or may accrue to any person from his estate or otherwise as a result of his death shall be disregarded."
Turning to non-pecuniary loss, section 1A of the Fatal Accidents Act provides that an action under section 1(1) "may consist of or include a claim for damages for bereavement" by certain categories of dependent defined by section 1A(2), including a widow. Damages for bereavement are expressly excluded from the general rule of damages in section 3(1). This is because they are awarded as a lump sum, effectively a solatium, fixed by section 1A(2) and (5).
These provisions are said to reflect a principle that the extent of any dependency is fixed at the moment of the death, and that anything which might otherwise be thought to affect it afterwards is legally irrelevant. For my part I would rather leave open the question whether that is a correct or helpful analysis of the Act. What is clear is that sections 3 and 4 mark a departure from the ordinary principles of assessment in English law, which can fairly be described as anomalous. They provide for what Lord Diplock in Cookson v Knowles [1979] AC 556, 568, called an "artificial and conjectural exercise" whose "purpose is no longer to put dependants, particularly widows, in the same economic position as they would have been in had their late husband lived." Others have gone further. Atiyah's Accidents, Compensation and the Law, 8 th ed (2013), described damages for bereavement as "highly objectionable" (p 89) and the exclusion of maintenance from a subsequent remarriage as "one of the most irrational pieces of law 'reform' ever passed by Parliament" (p 133).
There are two relevant respects in which an award under the Fatal Accidents Act may differ from an award under the BGB:
(1) Damages awarded to a widow under the BGB will take account of any legal...
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