Thursday, 20 February 2014
The facts: Philips admitted liability for exposing Mr Haxton to asbestos during the course of his employment as an electrician over many years. He died from mesothelioma within a year of diagnosis. Then, tragically, and before her Fatal Accident Act claim was settled, his wife also contracted the same fatal illness, from having hand washed her husband’s overalls. Her severely diminished life expectancy was known by the time her dependency claim was quantified. It was common ground that her dependency claim was properly reduced so as to take her reduced life expectancy into account. In her own personal injury claim, she sought to recover the loss in value of her dependency claim in the first claim, assessed at £200,000. The insurers disputed her right to recover in the second action what she was not entitled to in the first.
The decision: The Court of Appeal found in Mrs Haxton’s favour. An entitlement bestowed under a statutory right such as the Fatal Accident Act 1976 is a chose in action and as such any diminution in its value occasioned by the defendant’s negligence is actionable.
Comment: this decision could also be relevant in multi-casualty road traffic accident claims where more than one member of a family are injured and where a dependent dies shortly after the main breadwinner.
I provide a more detailed analysis of this case is published in the Journal of Personal Injury Law in issue 1 of 2014.
Tuesday, 18 February 2014
Coles and others v Hetherton and others EWCA Civ 1704
The facts: two insurers decided to challenge the level of accident damage incurred in 13 test cases. In each case the claimants’ were insured by Royal and Sun Alliance Insurance Plc (RSAI) and under the terms of their insurance policy, RSAI arranged for and indemnified the cost of repairing their vehicles. The repairs were undertaken by a wholly owned subsidiary of RSAI trading as MRNM. MRNM sub contracted some of its repairs to independent garages and due to the scale of this business it secured a discounted price from these businesses. The cost of repairs claimed by RSAI were higher than the actual amount invoiced to it by MRNM, producing a discrete profit. However the overall claim for repair costs were no higher what an individual claimants would have incurred had they instructed the garages themselves (without the bulk discount). D contended, inter alia, that RSAI’s mark up on their repair costs should not be recoverable as damages and that the proper rate should be the lower cost to RSAI of the repairs on the open market. The issue was referred for trial as a preliminary issue. Mr Justice Cooke found for the claimants and held that the charges were recoverable.
The decision: The Court of Appeal confirmed that the proper measure of compensation for tortious damage to property is the diminution in its market value. Where the property is repairable, this equates to the reasonable cost of repair. It matters not whether the repairs are actually undertaken or even paid for, nor whether they are undertaken free of charge: the damages are assessed by reference to the open market repair cost; be it for a car, house or a vessel. Accordingly, the doctrine of mitigation has no application to the assessment of this loss. The court is not concerned with whether the claimant’s insurers made a profit on the repairs.
Comment: It is worth noting that the Office of Fair Trading referred this practice to the Competition Commission last year and described this practice as ‘dysfunctional’ at a time of escalating insurance premiums. The Competition Commission then published an interim report in December 2013 that found various aspects of this practice anti-competitive and it is now in further discussions with the motor insurance industry.
The facts: A Somali national was racially abused and viciously attacked by a petrol station shop attendant. The claimant had recently checked his tyre pressures in the forecourt and then visited the shop to ask if it offered printing services. He was followed out and assaulted by the attendant. Could the attendant’s employer’s be held vicariously liable?
The decision: No. The attendants job description involved serving customers and the assault had nothing to do with that role. The Court applied the two stage test for determining vicarious liability, as formulated in Lister v Hesley Hall Limited  1 AC 215 and Dubai Aluminium Co Limited v Salaam  2 AC 366. Whilst the employment relationship was obviously capable of giving rise to vicarious liability, it failed the second stage in that there was no clear connection between the employment and the wrongdoing: the employment did not create the risk that materialised, it was merely incidental.
Monday, 17 February 2014
Kainz v Pantherwerke AG2014 C-45/13
The facts: An Austrian man bought a German manufactured bicycle in Austria but was injured whilst riding it in Germany due to a defect in its manufacture. Which country had jurisdiction in the product liability claim?
The decision: Germany. Brussels I applied. The place of the event giving rise to the damage is the place where the product in question was manufactured. This Regulation is not designed to offer the weaker party stronger protection
Friday, 14 February 2014
Petillo and another v Unipol Assicurazioni SpA C-371/12
The facts: on 21 September 2007 Carlo Petillo sustained minor injuries in a rear end collision in Italy by a car insured by Unipol; liability was not contested. He presented his claim against Unipol direct, which included a claim for non-material damage, which is a similar concept to general damages in the UK but which, as a unitary concept, cannot be divided into categories or headings. Under Italian law, the prescribed levels of compensation awarded for such loss where there are minor injuries differentiates between claims caused by the use of motor vehicles and waterborne craft, on the one hand, and claims based on other liability scenarios, on the other. Under this code the level of compensation prescribed for road accident injuries is considerably less than would otherwise the be case. The Italian court referred the issue as to whether this infringed the Second Directive to the CJEU.
The decision: No it did not. On the facts, the CJEU found that this legislation did not automatically exclude or disproportionally limit the victim’s right to compensation. It held that the directives do not preclude, in principle, either national legislation imposing binding criteria on national courts as to how the non-material damage should be compensated or specific schemes adapted to the particular circumstances of road traffic accidents, even if these schemes are less favourable to the victim than would be awarded to accidents other than road traffic accidents.
 The words in italics are taken from article 15 - Council Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (aka Rome II) dealing with the scope of the law applicable under article 4 ibid.
Wednesday, 12 February 2014
The facts: The claimant was a grievously injured young child and also his mother. They were British citizens, resident in the UK but injured abroad by an uninsured driver in Lithuania. Liability was conceded.
Due to special transitional provisions that no longer apply, the level of the Lithuanian MIB’s compensatory guarantee was probably less than 10% of the damages would be likely to be recoverable in the UK through the combined effect of our civil justice system and the Uninsured Drivers Agreement 1999. The MIB was concerned that it prospects of recovering the substantial difference in outlay was prevented by an intra-bureau agreement it had entered into that restricted its right to recoupment from its Lithuanian equivalent to the levels pertaining at the accident location. Accordingly it sought to revisit a challenge it had previously lost in Jacobs v Motor Insurers Bureau  EWHC 231; attempting to distinguish it and dressing up its earlier case in different rhetorical clothing. The issue was basically the same: the MIB argued that as the accident occurred abroad Rome II choice of law considerations applied with the effect that the MIB’s duty to compensate was limited to the paltry levels prescribed under Lithuanian law.
The decision: The MIB’s appeal against a first instance decision that applied Jacobs, was dismissed. It held that the Jacobs ratio did apply. The right of an injured person in these circumstances to make a claim against the MIB derives from the 2003 Regulations. This is domestic legislation. Rome II choice of law provisions simply did not arise. The victims’ extensive compensatory needs were to be quantified applying UK law and procedure. The MIB’s request to refer the issue to the Court of Justice of the European Union was refused.
Comment: the effect of regulation 13 (and arguably of a proper interpretation of article 25) is that UK residents injured abroad in an EEA country will often be better off, procedurally and financially, where the driver responsible is either uninsured or untraced, because the MIB must handle the claim in the UK under the 2002 Regulations and to UK standards. This creates something of an anomaly when one compares this approach to victims of identified and insured drivers abroad.
A more detailed commentary and analysis is published in BPILS Bulltin and in the March 2014 issue of the Journal of Personal Injury Law.
 Article 9 of the Sixth Motor Insurance Directive sets out the minimum amounts of compensatory guarantee required.
 Permitted under article 24 of the Directive.
 The Comité Européen Des Assurances Agreement, dated April 29, 2002.
 From which our national provision is derived, see above.
Tuesday, 11 February 2014
Nemeti and others v Sabre Insurance Co. Ltd EWCA Civ 1555
The facts: The claimants were Romanian nationals, presumably resident in the UK, and who were injured on 27 December 2007 in Romania. They were being driven by the insured vehicle owner’s son; apparently without the father’s knowledge or permission. The driver was killed and the claimant passengers were injured. The accident predated Rome II but it was common ground that Romanian law applied and, along with it, its non-extendable three year limitation period for bringing a claim.
Their solicitors issued claims against the vehicle owner’s Romanian insurer under regulation 3 of the European Community (Rights Against Insurers) Regulations 2002, close to the expiry of the limitation date and in the mistaken belief that the son was covered by his father’s policy; he wasn’t.
The original Claim Form gave brief details of the claims which were for ‘damages for personal injuries and losses’ arising from the accident and referred to the Respondents' ‘duty to indemnify their insured for negligent acts or omissions’ under regulation 3.
Only after the three year limitation had expired did the solicitors realise their error: not only had the accident occurred outside the UK (see the comment above under Spedition) but also the driver was not covered by his father’s insurance policy.
As this was a UK action, the claimants sought to amend the proceedings by substituting the father’s insurers with estate of the son / driver as defendant and by removing the reference to regulation 3.
The insurers appealed against a first instance decision granting the amendment under CPR Rule 19 and section 35 of the Limitation Act 1980.
- Did the court have the power to substitute a new party after the limitation period had expired (which was addressed by the court)
- Did a proper interpretation of the combined effect of articles 3, 13 and 18 of the Sixth Motor Insurance Directive, as interpreted by the Court of Justice, extend the direct right to embrace to a claim against an unauthorised driver of an otherwise insured vehicle where the accident occurred abroad but within another EEA member state? If so, did the UK national law provision fully transpose that Community law? If not, were the claimants entitled to damages against the Secretary of State under the Francovich principles? (These issues were not considered because the claimants proposed amendment sought to abandon the regulation 3 claim)
The decision: the defendant’s appeal was upheld and the amendment was refused.
The court made the following findings:
- (Obiter) that the statutory right of action conferred by regulation 3 did not apply as (i) the tortfeasor was deemed to be uninsured and (ii) the accident occurred outside the UK. So this was doomed to fail from the outset because these preconditions were not met.
- That the statutory conditions precedent imposed for the relief conferred by CPR 19.1 and section 35 combined were not met:
The relevant parts of CPR Rule 19.5 provide as follows:
‘(2) The court may add or substitute a party only if - (a) the relevant limitation period was current when the proceedings were started; and (b) the addition or substitution is necessary.
(3) The addition or substitution of a party is necessary only if the court is satisfied that - . . .
(b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as Claimant or Defendant . . . .’
Section 35 only conferres a discretion to substitute a party where that step is ‘necessary for the determination of the original action’.
The proposed substitution, although featuring the same basic case facts, amounted to a completely different cause of action. The claimant’s were seeking to abandon one claim by substituting it with another:
Regulation 3 confers a direct right of action against an insured tortfeasor’s insurers. It is effectively a claim for indemnity bestowed by statute.
Section 151 confers an indirect right of action (albeit against the same insurers) but it is one based on an entirely distinct civil law right of action against a different defendant (in this case the deceased tortfeasors’ estate). Section 151 is premised on the claimant establishing a common law right of action against the tortfeasor.
What the claimants’ amendment sought was to replace one action with another: not to continue with it.
There was no discretion in section 35 ‘to do justice to the situation’.
Section 35 is prescriptive in the way provides a statutory exception to a general rule. In the words of Hallet LJ, who delivered the only reasoned judgment, the limitation rules that are designed ‘to ensure that defendants and their insurers are put on notice within a reasonable time so that an effective investigation of the claim can take place and that books can be closed after a reasonable time’. The claimants were unable to satisfy the condition precedent for the exercise of the section 35 discretion.
Comment: This case is noteworthy for several reasons:
Firstly, it provides helpful clarification of the essential differences between the direct and indirect statutory remedies against motor insurers.
It also confirms that section 35 only permits an amendment outside the limitation period in certain specified circumstances and that the court will apply an objective and dispassionate approach to deciding whether those preconditions are met.
Thirdly, it appears to be the first instance that a senior appellate court has acknowledged, albeit obiter, that Regulation 3 does not appear to fully implement Community imposed direct right of action. This issue was considered in the writer’s series of four articles published in the New Law Journal last year under ‘On the Right Road’.
This case also neatly illustrates the dangers inherent in failing to fully appreciate the primacy and extent of Community law in this area of practice, a phenomenon that seems to be widespread.
The court also hinted at, but understandably decided to steer clear of, a host of unaddressed issues as to jurisdiction and applicable law that are raised by these cross border claims. However, in this case the liability of the driver responsible was conceded.
The case serves as a cautionary tale against putting all ones eggs in one same basket. Often it is safer to pursue both the civil law action against the responsible driver(s) and the direct right against the insurer concurrently; ‘belt and braces’ is often the wisest counsel even if this risks introduces further complications, such conflicts over jurisdiction for instance.
 Intriguingly, no one thought to apply a purposive interpretation of the scope of civil liability insurance cover required by what is now articles 3 and 13.1 (a) of the Sixth Motor Insurance Directive, nor was any mention made of the key CJEU ruling in Rafael Ruiz Bernáldez 1994 Case C-129/94. Nor did anyone think to argue a purposive interpretation of Regulation 3 such as to extend the geographic scope of this national law provision so that it was in keeping with the wider geographic scope required by article 18 of the Sixth Motor Insurance Directive and article 11 of the Brussels I convention. Arguably the latter exercise would have failed under the contra legem principle.
 See section 151 (3) Road Traffic Act 1988 which nullifies and exclusion based on unauthorised use in favour of a third party claimant. See also article 2 of the Second Motor Insurance Directive (84/5/EEC) from which s 151 (3) is derived.
 See section 35 (5) (b) Limitation Act 1980.
Monday, 10 February 2014
Spedition Welter GmbH v Avanssur SA Case C-306/12
The facts: A German owned vehicle was damaged in the outskirts of Paris by a vehicle insured by a company based in France. There was no injury, so article 18 of the Sixth Directive did not apply. However the role of the claims representatives, as set out in articles 21 and 24, encompass accident damage claims.
The German civil law code, unlike our 2002 Regulations, extends the direct right of action to accidents in foreign EEA member states.
The issue before the court (presumably based of the direct right against insurers conferred independently of the Sixth Motor Insurance Directive  by article 11 of the Brussels I convention) was whether the French insurer’s claim representative had authority to accept service of the proceedings that had been issued in Germany. The French insurers disputed this and insisted on being served in France. This usually involves translation and foreign service costs and delay in putting this into effect.
The decision: The Court of Justice ruled that article 21 (5) of the Sixth Motor Insurance Directive ‘must be interpreted as meaning that the claims representative’s sufficient powers must include authority validly to accept service of judicial documents necessary for proceedings for settlement of a claim to be brought before the court having jurisdiction’ – in other words: yes, they did have power to accept service of the claim form.
Comment: This important ruling appears to have escaped the notice of almost every legal commentator. It should expedite and simplify many foreign road accident claims within the EEA that are otherwise relatively straightforward on liability. Henceforth, proceedings can be issued in the UK courts in the usual way and served (without the extra translation costs) on the local claims representative for the foreign insurer or the MIB if the insurer has failed to respond to the claim within three months.
However, there are a number of caveats:
- The claims representative’s authority is restricted to accepting service of court documents. Article 21.6 of the Sixth Motor Insurance Directive expressly states that its presence in the claimant’s home jurisdiction does not signify that the insurer is domiciled there.
- If a settlement cannot be negotiated through the claims representative it may still be necessary to deal with the foreign insurers legal representative abroad, even if that may seem somewhat counter intuitive from an administrative viewpoint.
- In the UK the 2002 Regulations confine the direct right to (i) accidents, (ii) occurring in the United Kingdom and (iii) where the claimant has a cause of action against an insured person and (iv) only to the extent that the insurer is ‘liable to the insured person’.
- The 2002 Regulations are currently under investigation by the European Commission as they appear to breach the wider scope required under the Directives.
- For accidents that post date 11 January 2009, Rome II governs both the substantive law and procedural rules that are applicable to the accident – this will usually be the law of the place where the accident took occurred.
- If liability is contested then there may be only a modest practical benefit to be gained from issuing proceedings in the home court and the defendant may also argue for a different jurisdiction.
Given that liability is not contested in the overwhelming preponderance of motor accident claims, this ruling will benefit RTA practitioners handling claims featuring accidents abroad within the EEA. Such claims are not just the preserve of UK citizens abroad on holiday or business but, as the next case illustrates, they include a significant number of migrant workers resident (albeit temporarily) in the UK but travelling home or elsewhere in the EEA.
 i.e. independently of article 18 of the Sixth Motor Insurance Directive, op.cit.
 See article 24 of the Sixth Motor Insurance Directive.
 The 2002 Regulations do not attempt to nullify the effect of any contractual limitation in scope or exclusion clauses, confer s148 and s151 (2) Road Traffic Act 1988.
 See article 4.1 of Rome II: ...’ the law of the country in which the damage occurs...’
According to a European Commission report from 2010, more than 1.5m people are injured in road accidents within the European Union (EU) every year, 35,000 fatally. With its recently extended membership and the prospect of ever greater migration within the EU, accidents abroad are becoming an increasingly important staple of many RTA personal injury practices.
There have been a number of interesting developments over the past few months. Most of which appear to have escaped comment elsewhere and as they are important, I have decided to give them an emphasis this month in this blog, see my later entries. These cases are discussed at greater length in the March issue of BPILS Bulletin.