A Costly Choice (Of Law): Determining The Damages Available For An Extra-Territorial Tort

The recent UK Supreme Court decision in Cox v Ergo Versicherung AG, [2014] UKSC 22, provides helpful commentary and a potentially persuasive precedent for Canadian courts on issues of choice of law, the distinction between substance and procedure in the conflict of laws, and legislative extraterritoriality in circumstances where a cause of action is governed by a foreign law.

Consistent with Canadian law, the UK Supreme Court held in Cox that issues of substance are governed by the law of the place where the injury was sustained, but issues of procedure must be determined by the law of the forum where the case is tried.

While this rule is clear, its application in practice can be quite complex. The Court's decision in Cox should be interesting to Canadian lawyers because it demonstrates an application of this principle to questions of damages. The Court considered whether German laws excluding damages for bereavement and permitting consideration of subsequently-accrued rights in the damages calculation (both of which would substantially reduce the damages available to the plaintiff) were substantive or procedural. On the basis that these rules determined the scope of the defendant's liability and the plaintiff's enforceable rights, the Court held the German laws were substantive and governed the case at bar.

Background

The proceedings arose out of a fatal car accident in Germany, which killed Major Christopher Cox. The driver was a German national resident, domiciled in Germany, who was insured by a German insurance company. Major Cox's widow was living with him in Germany at the time of the accident, but shortly thereafter returned to England, where she was ordinarily domiciled. In the time between the accident and the hearing, Mrs. Cox entered into a new relationship and had two children with her new partner.

It was undisputed that pursuant to the law of the European Union, Mrs. Cox was entitled to sue the insurer in the courts of the state where she is domiciled. Mrs. Cox availed herself of that right, commencing litigation in England.

Although the forum was clearly appropriate, the damages available to Mrs. Cox varied significantly depending on whether the law of Germany or England was to be applied to assess the damages to which she may be entitled. In both regards, English law was more generous to Mrs. Cox:

First, the English Fatal Accidents Act 1976 specifically provided that "where there fall to be assessed damages payable to a widow in respect of the death of her husband there shall not be taken...