Facts
The claimant was a UK national who had been injured in a road traffic accident in Germany on 16 November 2009. She had moved to Germany with her husband after he was posted there by the British army and they had been living in the country for over eight years at the time of the accident. Whilst in Germany, the claimant and her family had been living on a British Army base: three of her children attended an army-run school and she was employed at one such school. It was the intention of the claimant and her husband to move back to England at some time in 2012. The first defendant was also a UK national whose husband had been posted to Germany by the army. She had lived in Germany for between eighteen months and two years at the time of the accident. The second defendant was a company registered in England which acted as the first defendant’s motor insurer.
At the time of the accident the claimant was a rear seat passenger in a car driven by the first defendant. The car collided head-on with another vehicle. The first defendant admitted that the accident had been caused by her negligence.
The claimant returned to England in 2011 and brought proceedings against the first and second defendants.
Issue
The preliminary issue that came before the High Court was whether German or English law applied to the assessment of the claimant’s damages. Resolution of this issue turned on the application of Article 4 of Regulation (EC) No. 864/2007 (“Rome II”), which provides as follows:
“1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.
2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.
3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”
The claimant accepted that German law would apply were the issue to be determined solely under Article 4(1). However, she argued that this was not the case.
Decision
Article 4(2): Habitual Residence of Claimant and Defendant at the Time of Damage
First, the claimant submitted that both she and the two defendants had been habitually resident in England at the time of the accident such that Article 4(2) applied.
Slade J responded by reaffirming Owen J’s finding in Jacobs v MIB [2010] EWHC 231 (QB) that “the person claimed to be liable” would always be the allegedly negligent driver and not her insurer. It was therefore irrelevant that the second defendant was registered in England and, by virtue of Article 23, habitually resident there as a result.
Slade J then turned to the claimant’s submissions as to her own residency status. As Rome II provided no definition of habitual residency for individuals, she examined how the concept had been approached in family law cases, deciding by analogy to the test employed in Re LC (Children) [2014] 2 WLR 124 and Mercredi v Chaffe C-497/10 PPU that the claimant’s “‘wishes’, ‘views’ ‘intentions’ and ‘decisions’” should not be taken into account when making a determination under Article 4(2).
In her view, the decisive features of the case, bearing in mind that the relevant time under Article 4(2) was ‘the time when the damage occurs’, were that: (i) the claimant’s residence in Germany had been established for a long period, (ii) she was in full-time employment and her children were schooled there, (iii) the reason for their stay was to cater to the demands of the husband’s job, (iv) there was no evidence that the claimant had a house in England during this time. These factors, coupled with the irrelevance of the claimant’s intention eventually to return to England, were sufficient to establish that the claimant was habitually resident in Germany at the time of the accident.
Article 4(3): Manifestly Closer Connection with the Tort
Second, the claimant contended that the tort was manifestly more closely connected with England than it was with Germany for the purposes of Article 4(3).
Slade J began by emphasising that the standard required to trigger Article 4(3) was a high one given the uncertainty it could generate – this was reflected in its designation as an ‘escape clause’ by Recital 18 of Rome II (the Recitals being interpretive aids to the Articles). Determination of the issue required a ‘balancing exercise’ involving consideration of all the circumstances of the case, including the country in which the damage had occurred and the common habitual residence at the time of accident, despite these also falling for consideration under Articles 4(1) and (2). More importantly, it was open to the court to consider changes in circumstances which would not fall to be considered under Article 4(2), which, as noted above, is tied to the time at which the damage occurred. Similarly, while the location of any consequential losses suffered by the claimant would be irrelevant under Article 4(1), Slade J approved Sir Robert Nelson’s determination in Stylianou v (1) Toyoshima (2) Suncorp Metway Insurance Ltd [2013] EWHC 2188 (QB) that they could be considered under Article 4(3).
She therefore held that the following factors supported there being a closer connection with English law: (i) both the claimant and the first defendant were UK nationals; (ii) both were habitually resident in England at the time of the trial; (iii) the second defendant had always been habitually resident in England; (iv) the claimant continued to suffer pain and require medical treatment on her return to England; (v) the proceedings had been issued in England.
On the other hand, however: (i) the accident had occurred in Germany; (ii) the claimant’s injury had been sustained in Germany; (iii) both the claimant and first defendant had been habitually resident in Germany at the time; (iv) the claimant had lived there for an extended period and continued to live there after the accident until she returned to England in 2011. In Slade J’s view, the strength of these factors meant that the claimant had been unable to overcome the high threshold required under Article 4(3). As a result, Article 4(1) was not displaced and the applicable law was German law.
Comment
The case provides a welcome clarification of the principles applicable to Rome II’s central provision.
The factors that Slade J considered relevant in relation to Article 4(2) demonstrate that each case will depend on its own facts. While from a certainty standpoint it surely makes sense that a claimant’s intentions and desires will not form part of this inquiry, there is clearly still considerable scope for inconsistency depending on the exact combination of relevant circumstances present in a particular case. The issue must not be overstated, however, given that the vast majority of cases raising issues under Article 4(2) will be unlikely to depart from the norm of a group of friends going on holiday together and one member of that group negligently injuring another.
Slade J’s highly inclusive approach to the factors relevant under Article 4(3) is welcome to the extent that it clarifies how the test will function in practice, in particular with respect to those apparently material considerations that are barred from consideration by the strict wording of Articles 4(1) and 4(2). It is important that her eventual decision is not seen as based on some unexplained preference for one set of factors over another, but rather as an affirmation of the high threshold of the test under Article 4(3). As long as there are real arguments supporting a closer connection between the tort and the country in which it occurred, it is unlikely that an argument under Article 4(3) will succeed.
