Insurance & Reinsurance
The Supreme Court has handed down judgment on a longstanding case dealing with significant issues involving matters of jurisdictional gateways and foreign law issues.
The key takeaway from this decision is the interpretation from the Supreme Court of the term ‘damage’ which expands the boundaries of the harm required to enable a tortious claim to pass the jurisdictional gateway. Whilst the parameters of the judgment will be tested, the outcome is beneficial to claimants, and we may see more claims pursued against overseas defendants.
By a 4:1 majority, the Supreme Court held that Lady Brownlie’s claim in tort against the hotel operator met the criteria allowing the claim to proceed in the English courts. These criteria required that “damage was sustained… within the jurisdiction.” The argument by the hotel operator that jurisdiction only founds where initial or direct ‘damage’ was sustained in England and Wales was dismissed. The Supreme Court held that ‘damage’ refers to actionable harm, direct or indirect, caused by the wrongful act alleged. Thus, the term was given a broader meaning to the effect that the damage should not be limited to that required to complete the cause of action in tort. Therefore, due to this broader interpretation, the claim had a substantial connection between the wrongdoing and England, and thus passed the relevant gateway.
On the issue of foreign law, it was common ground that Egyptian law governed the claim(s). The criteria for allowing the claim to proceed also required a reasonable prospect of success. The hotel operator had alleged that Lady Brownlie had failed to adduce enough evidence of Egyptian law to identify a reasonable prospect of success. Lady Brownlie had argued that, in the absence of evidence on Egyptian law, the court could apply English law in the alternative. The Supreme Court, despite unanimously ruling in favour of Lady Brownlie, dismissed both parties arguments. In this instance, it was held that the ‘presumption of similarity’ would apply. The Supreme Court held that the presumption could be that Egyptian law was materially similar to English law, and therefore, jurisdiction was established.
Lady Brownlie and her family were on holiday in Egypt in 2010, staying at the Four Seasons Hotel in Cairo. They were travelling on a guided Desert Safari driving tour when the vehicle in which they were travelling overturned. The accident resulted in the death of Lady Brownlie’s husband and his daughter, with Lady Brownlie and her two grandchildren left seriously injured. The tour was booked through the Four Seasons Hotel.
The claims have had a longstanding procedural history stretching back several years. Lady Brownlie issued a claim against two defendants, one being the holding company incorporated in Canada, Four Seasons Holdings Incorporated (FSHI). The other was a company in Egypt, on whom proceedings were ultimately not being served.
The procedural history to these claims is significant. The initial proceedings pleaded claims against FSHI in contract and in tort in respect of Lady Brownlie’s injuries but also in her capacity as the executrix of her husband’s estate.
In order to serve proceedings out of the jurisdiction, Lady Brownlie required permission, by satisfying the criteria set out in Practice Direction 6B for tortious and contractual claims. This was granted by Master Yoxall in 2013. However, upon challenge by FSHI, this was set aside by Master Cook, yet overturned by Mr Justice Tugendhat in 2014 who declared the court had jurisdiction to try the claims.
The Court of Appeal affirmed that decision, save that the court did not have jurisdiction to hear the tortious claims, only the contractual claims. FSHI appealed to the Supreme Court, and a cross-appeal by Lady Brownlie on the tortious element was granted. During a series of subsequent hearings, FSHI was substituted for an Egyptian company, FS Cairo (Nile Plaza) LLC (“FSC”). To conclude, FSC was granted permission to appeal on the scope of the jurisdictional gateway for tort claims, and whether Lady Brownlie had reasonable prospects of success in respect of the contractual and tortious claims.
Therefore, the two issues before the Supreme Court:
The tort gateway issue
For permission to be granted to serve proceedings outside of the jurisdiction is was necessary for Lady Brownlie to establish that she had:
Practice Direction 6B 3.1(9) considers claims in tort and requires that damage was sustained (or will be sustained) within the jurisdiction. FSC argued that as the initial or direct damage was not sustained in England and Wales, the claim did not fall within the gateway. Lady Brownlie submitted that the interpretation was limiting, and “represented a significant change in the law.” It was submitted that the Claimant’s pain, suffering and loss of amenity extended to the continuing damage suffered and not just at a single point in time when the injury was initially suffered.
With a 4-1 majority, Lady Brownlie was successful on this issue. Lord Lloyd-Jones, offering the judgment for the majority, referred to Lord Sumption’s judgment in Brownlie I which expressed his view that ‘damage’ within the confines of 3.1(9) did “not extend to the financial or physical consequences of that damage.” Lord Lloyd-Jones disagreed, finding this was “unduly restrictive”, with no justification. Considering judicial precedent, it was held that the authorities supported the conclusion that the “present case damage was sustained within the jurisdiction within gateway 9(a).” Concluding, the “pain, suffering and physical injury were suffered sequentially, first in Egypt, then in England,”
Lord Leggatt, dissenting, stated that as the road traffic accident and the injuries sustained occurred in Egypt, this was the relevant location where the damage falling within the scope of ground 9(a) was sustained. The continuing pain and disability suffered after Lady Brownlie returned home to England did not, in his view, bring the claim within the tort gateway.
The foreign law issue
Lady Brownlie was successful on this ground, with the judges in unanimous agreement. Lord Leggett provided the leading judgment.
It was held to be common ground that the only claims Lady Brownlie could advance were those available under Egyptian law. It was FSC’s case that Lady Brownlie must adduce evidence of Egyptian law. They submitted that she had failed to do so, and thus she was unable to demonstrate that her claims had a reasonable prospect of success. Lady Brownlie maintained that in the absence of satisfactory evidence of Egyptian law, the court should apply English law in the alternative.
As stated above, the judgment held that neither party were correct in this instance.
Lord Leggett emphasised the difference between the ‘presumption of similarity’ and ‘default rule’. “The presumption of similarity is a rule of evidence concerned with what the content of foreign law should be taken to be. By contrast, the “default rule” … is not concerned with establishing the content of foreign law but treats English law as applicable in its own right where foreign law is not pleaded.”
As Lady Brownlie’s claims for damages are pleaded pursuant to Egyptian law, English law could not be applied in line with the default rule. It thus followed that English law, in this instance, could only be applied on the basis of a presumption that the content of the applicable foreign law is materially similar to the English law on the matter in question.
There was expert evidence on Egyptian law submitted by both parties, FSC had submitted that “it is not permissible in such circumstances for the claimant to rely on the presumption of similarity with English law where there are gaps or shortcomings in the expert evidence.”
Lord Leggett disagreed. He held that in the absence of any evidence of Egyptian law, he saw no basis to challenge the presumption that the presumption of similarity with English law was sufficient to show the claim had a real prospect of success. However, it was considered appropriate for the Court of Appeal to require Lady Brownlie to serve revised particulars of claim setting out how the claim under Egyptian law will be advanced. This was within “the generous ambit of the court’s case management powers [and] thoroughly desirable for the orderly progression of these proceedings.”
What can we learn?