Does “damage” go wider than injury? Supreme Court on jurisdiction

23 December 2017 by David Hart KC

Four Seasons Holdings v. Brownlie [2017] UKSC 80, 19 December 2017, read judgment

Professor Ian Brownlie Q.C., an eminent international lawyer, and members of his family were killed in a road accident in Egypt, when on their way to Al-Fayoum. His widow, also injured, had booked the driver through their hotel, the Four Seasons in Cairo.

The family wished to bring proceedings in the UK against the hotel in respect of the driver. However, the key defendant (Holdings) was incorporated in British Columbia, and the issue which got to the Supreme Court was the issue of jurisdiction.

The family said that there was a contract for the trip with Holdings, and further that Holdings were vicariously liable in tort for the negligence of the driver. Holdings had been less than transparent at earlier stages of the proceedings, but, after the Supreme Court required it to give a full account of itself, it emerged that it was as the name suggested – a non-trading holding company which had never operated the Cairo hotel, even though other companies in the group were involved with the hotel.

On that ground, Holdings’ appeal was allowed. The unanimous Court concluded that there was no claim in either contract or in tort. In simple terms, Holdings was nothing to do with the booking of the driver by the hotel.

But the lasting interest in the case lay in the question of whether you can establish qualifying “damage” in tort in the UK even if you are injured abroad, and on this the Court was split 3-2.

Let me set the scene for this, before telling you the result.

Jurisdiction

The question is whether a UK court can or should try the particular dispute because the defendant is not a UK national. With non-EU-domiciled defendants such as the Canadian Holdings, this turns on the UK Civil Procedure Rules, and in particular whether the court should order service of the proceedings on a defendant out of the jurisdiction. Before that can be done, and as Lord Sumption summarised it,

it is necessary for the claimant to establish (i) that the case falls within at least one of the jurisdictional gateways in CPR 6BPD, para 3.1, (ii) that she has a reasonable prospect of success, and (iii) that England and Wales is the proper place in which to bring the claim. The third of these conditions reflects the principle of forum conveniens, and there is no issue about it in this case. It is accepted that England is a proper place in which to bring the present claim if the first two conditions are satisfied. So far as the claim is founded on contract, Lady Brownlie’s application for permission to serve out was based on CPR 6BPD, para 3.1(6)(a) (“the contract … was made within the jurisdiction”). So far as it was founded on tort, it was based on CPR 6BPD, para 3.1(9)(a) (“damage was sustained … within the jurisdiction”).

The Court had held that the jurisdictional gateways were not satisfied. There was no contract with Holdings, and given that Holdings was not the owner, there could be no claim in tort for vicarious liability.

Proper law

One other preliminary, which may help those dipping their toes into these multi-national tort claims: it was common ground that, if there was a claim in tort, it would be governed by Egyptian law (under Art.4(1) of an EU provision known as Rome II); but the fact another country’s law applies to a case does not mean that the UK cannot try the case – if there is jurisdiction. As Lord Sumption put it

It is undoubtedly convenient for the country of the forum to correspond with that of the proper law. It is also true that both jurisdiction and choice of law can broadly be said to depend on how closely the dispute is connected with a particular country. But there is no necessary connection between the two.

The evidential standard

Lord Sumption clarified that, whilst a claimant need not satisfy the civil burden of proof on jurisdiction issues, he must show he has a better argument on the material available, or a good arguable case. A previous case (Canada Trust)  had said that the claimant must have “a much better argument” but Lord Sumption doubted the use of the word “much”. On this, there was, in effect, agreement.

Damage for the purposes of jurisdiction 

Now for the big question. Returning to the tort gateway, it reads

A claim is made in tort where –

(a)       damage was sustained…..within the jurisdiction; or

(b)       damage…… sustained results from an act committed … within the jurisdiction.”

(a) was the gateway candidate.

Lord Sumption (and Lord Hughes) said that once death or personal injury had been suffered (in Egypt) there was no room for further qualifying damage (continuing consequences and economic losses) to occur in the UK and thus establish alternative jurisdiction. Lord Sumption’s rationale was

There is a fundamental difference between the damage done to an interest protected by the law, and facts which are merely evidence of the financial value of that damage. Except in limited and carefully circumscribed cases, the law of tort does not protect pecuniary interests as such. It is in general concerned with non-pecuniary interests, such as bodily integrity, physical property and reputation which are inherently entitled to its protection

Lord Sumption also drew an analogy between this position and that under EU law involving a defendant domiciled in the EU. The latter arises under Article 5.3 of the Brussels Convention and Regulation, (now Art.7(2) of Brussels recast) which authorises proceedings in tort

in the courts for the place where the harmful event occurred or may occur

as an alternative to jurisdiction based on the defendant’s domicile. He tied this into the drafting of the CPR rules at issue. As interpreted by the CJEU, it is plain that this does not confer alternative jurisdiction in respect of the economic consequences of damage – it fastens on the “event”.

However, the other 3 justices disagreed, in 3 separate judgments. The nub was that they followed a consistent line of first instance decisions holding that, in a non-EU-defendant case, a claim in tort may be brought in England if damage is suffered here as a result of personal injuries inflicted abroad. By way of examples, in Booth v Phillips [2004] EWCA 1437 (Comm), Nigel Teare QC allowed a widow’s claim in negligence for her own loss of dependency and her husband’s funeral expenses – he had died while working as chief engineer on a vessel in Egypt. Or Cooley v Ramsay [2008] EWHC 129 (QB) , Tugendhat J, where a claimant who was severely disabled, with continuing needs for care, support and medical attention in this country as a result of a road accident in New South Wales, was permitted to bring his claim here. And in the most recent, Pike v Indian Hotels [2013] EWHC 4096 (QB), see Rosalind English’s post here, where the claimants had been injured trying to escape from the Taj Mahal Palace in Mumbai during the terrorist attack, Stewart J allowed the claim to proceed. Evidence before Stewart J was to the effect that it might take 15 to 20 years for a claim in India to get to court.

Lady Hale drew particular comfort from a decisions of the Court of Appeal in New South Wales, in Flaherty v Girgis (1985) 63 ALR 466. The Court, construing a similar jurisdictional rule, held that

damage, therefore, is to be contrasted with the element necessary to complete the cause of action; it includes all the detriment, physical, financial and social which the plaintiff suffers as a result of the tortious conduct of the defendant” (p 482).

Lord Sumption had been concerned about the possible width of such a ruling, offending against the precision of the gateway. But 3 other justices thought that other aspects of the jurisdictional rules (not least forum non conveniens or better forum elsewhere) would tend to mitigate this where the claimant was relying on an over-remote type of damage. Nor were they impressed with the analogy with Art.5(3) of Brussels, as interpreted by the CJEU subsequent to the wording of the gateway; the trigger there was “harmful event”, rather than “damage”.

The 3 justices attached importance to the fact that the gateway required “damage” to occur, rather than “the damage” to occur in the alternative jurisdiction, which had been the previous wording of the rule. This change had been a response to earlier case law emphasising that all that was required was “some significant damage” to confer jurisdiction.

All 3 were powerfully affected by the policy underlying such an interpretation, not least Lord Wilson at [65]

It would, to put it at its lowest, be legitimate to interpret the word “damage” as extending to the secondary damage which the claimant and her husband’s estate sustained in England and which flowed from the primary damage sustained in Egypt. Rule 1.2(b) of the CPR obliges a court which interprets another of its rules to seek to give effect to the overriding objective of enabling it to deal with cases justly. So, if an otherwise legitimate interpretation better serves the ends of justice, it ought in principle to be adopted.

Conclusion

It is plain from the judgments of all justices that their conclusions cannot be definitive when the next case raising a “damage” issue came along – as it surely will. That is because the issue did not arise directly on this appeal, and Lord Wilson hinted at [57] that there might have been less full argument on the point.

It is a question of huge importance and the cogent arguments of each side will bear ready repetition when the result determines the fate of an actual case. The minority (Sumption/Hughes) view has the cogency of austere legal theory; the majority, equally if no more cogent, fasten onto the choice of the word “damage” without the definite article, and the policy reasons which ought to mitigate that austerity in these personal injury cases.

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