Or the importance of the definite article…
Brownlie v Four Seasons Holdings Incorporated
19 December 2017
The long awaited Supreme Court decision in the case of Four Seasons Holdings v Brownlie was recently handed down, but has the question of how to interpret "damage" in what is called the "tort jurisdictional gateway test" set out in CPR Practice Direction 6B been resolved? Head of DWF's European Group Sara-Jane Eaton reviews the judgment to find out.
Sir Ian Brownlie QC, a well-known international lawyer and his daughter were killed and his wife and grandchildren seriously injured in a tragic motor vehicle accident in Egypt in January 2010. The accident occurred whilst the family were on an excursion in a hired chauffeur-driven car which Lady Brownlie had booked with the hotel over the telephone before leaving the UK.
Following the accident, Lady Brownlie attempted to pursue a claim for her own personal injuries, a claim as executor for her husband's estate under the Law Reform (Miscellaneous Provisions) Act 1934, and a claim as a widow for bereavement and loss of dependency under the Fatal Accidents Act 1976.
She issued proceedings in the UK jurisdiction against the holding company of the Four Seasons Hotel Group ("Holdings"), which she believed operated the hotel, and which was incorporated in British Columbia, Canada. She then sought permission to serve the claim form on Holdings in Canada.
The crux of the appeal for Lady Brownlie was whether permission should be granted so that she could proceed with her claim in England and Wales. The case however also threw up a number of very interesting questions for practitioners, both on the tort jurisdictional gateway test and in the sphere of travel law regarding the liability of a hotel for an excursion in a hired chauffeur-driven car which had been booked from the UK.
For permission to be granted for service outside the jurisdiction, three conditions must be satisfied. A claimant must establish that:
i. the case falls within at least one of the jurisdictional gateways in paragraph 3.1 of Practice Direction 6B (CPR 6BPD);
ii. the claim has a reasonable prospect of success; and
iii. England and Wales is the proper place in which to bring the claim
Falling at the first hurdle
Given the potential areas to be explored in the case, it was unfortunate then that the claimant fell at the first hurdle when it emerged that "Holdings" neither owned nor operated the Cairo hotel even though its subsidiary companies provided certain central services there. The Supreme Court unanimously allowed the defendant's appeal concluding that there was no claim in either contract or tort against the named defendant and therefore the claimant had not established, for the purposes of the second condition, that the claim had a reasonable prospect of success.
Having said that, the Justices did go on to consider the question of jurisdiction albeit that the comments on this issue are to be considered "obiter dicta" (and so not of binding nature but only persuasive with regards to future cases) and it is of note that the Justices were split 3:2 in their opinions on the issue.
Before that though, the Justices were also able to quickly deal with the third condition, which reflects the principle of "forum conveniens": the question of which country's courts are the most appropriate court for the resolution of a particular dispute. That was no issue in this case as the parties agreed that England and Wales was the proper place in which to bring the present claim if the other conditions of the test were satisfied.
Jurisdictional gateway test
In relation to the first condition, "the jurisdictional gateway" Lady Brownlie's application was based on CPR 6BPD paragraph 3.1(6)(a) with regard to a contract made within the jurisdiction, and paragraph 3.1(9)(a) insofar as it related to tort and the damage sustained within the jurisdiction.
For Lady Brownlie the jurisdictional gateways had not been satisfied because the incorrect defendant had been sued: Holdings could never have been responsible in either contract or tort so she failed to satisfy the factual requirements of the gateway.
It is worth noting here that, with regard to the claim in tort, had the motor accident occurred in the EU, this set of circumstances would produce a different result in terms of jurisdiction. These are now governed by Article 18 of the consolidated Sixth Motor Insurance Directive (2009/103/EC) which provides for a direct right of action against an insurer in relation to accidents which occur in the EU. The hugely important ruling in the case of FBTO Schadenverzekeringen NV v Odenbreit (C-463/06 of 2007) states that a claimant in a motor accident is entitled to sue in the courts of his or her own domicile provided there is a direct right of action in the law where the accident occurred and where the insurer has its place of business. The law of the country where the accident occurs usually applies. The Sixth Motor Insurance Directive and the ruling in Odenbreit however could not assist the claimant in this case given that this accident occurred outside the EU.
Turning then to the theoretical consideration of the issue of jurisdiction (in the event that the correct defendant had been sued) the Justices looked closely at the issue of "damage". In particular they considered CPR 6BPD paragraph 3.1(9) which permits the courts of England and Wales to assume jurisdiction:
"In a claim made in tort where
a) damage was sustained within jurisdiction;
b) damage sustained … results from an act committed … within the jurisdiction.
It was accepted by the parties that the applicable law was governed by Article 4(1) of EU Regulation 864 of 2007, relating to the law applicable to non-contractual obligations also known as "Rome II" such that the law where the accident occurred would apply - so in this case the applicable law would be Egyptian law. In the Court of Appeal Arden LJ accepted an argument that the same concept should be applied to the question of jurisdiction, but the Supreme Court Justices all agreed that this analogy should be rejected and that Rome II should have no bearing on the construction of the jurisdictional gateways. They were however, subsequently divided on their interpretation of that.
The minority view
Lords Sumption and Hughes were quite clear that the damage was not sustained in the UK jurisdiction. They drew an analogy between this and Article 7(2) of the Recast Brussels Regulation which allows proceedings in tort "in the courts of the place where the harmful event occurred" when not relying on the defendant's domicile or seat of business. The CJEU have previously concurred that the Brussels Regulation did not confer alternative jurisdiction for economic consequences arising from an accident but relied on where the harmful event occurred. Reference was made to the cases of Dumez France SA v Hessische Landesbank  ECR I-49 and to Marinari v Lloyds Bank Plc  ECR I-2719.
On that basis, Lords Sumption and Hughes formed the view that Lady Brownlie would not, in any event, be permitted to pursue her claims for damage arising from an accident in Egypt in the UK courts. Lord Sumption stated (paragraph 28):
''In the context of personal injury, a principle which located damage in the place where the pecuniary consequences of the accident were felt or where any continuing pain, suffering or loss of amenity were experienced would in the great majority of cases confer jurisdiction on the country of the claimant’s residence. It would confer on the English courts what amounts to a universal jurisdiction to entertain claims by English residents for the more serious personal injuries suffered anywhere in the world.''
Lord Sumption was clearly averse to such an idea, as was Lord Hughes.
The majority view
However, this approach was not agreed by the three remaining Justices who followed the many but different first instance positions in non-EU cases such as Booth v Phillips  EWHC 1437 (Comm), Cooley v Ramsey  EWHC 129 (QB), Wink v Croatia Osiguranje DD  EWHC 1118 (QB) and Pike v Indian Hotels  EWHC 4096 (QB). Lady Hale relied in particular on the New South Wales case of Flaherty v Girgis  63 ALR 466 where the concept of "damage" was found to be contrasted with the element necessary to complete the cause of action so that it includes all the detriment, physical, financial and social which the plaintiff suffered as a result of the tortious conduct of the defendant.
The three Justices therefore concluded that the gateway required "damage" to occur rather than "the damage" to occur. They looked beyond the pure meaning of the words and considered the policy reasons behind the legislation. By omitting the definite article they concluded that the gateway test may have been met by Lady Brownlie had the correct defendant been pursued.
Ultimately then, the answer to the question posed at the beginning of this article as to whether there was now clarity in the interpretation of "damage" in the tort jurisdictional gateway test must be no… for the time being. The leanings of the Supreme Court Justices by a majority of 3-2 were in favour of an interpretation which involved any detriment experienced within England and Wales being sufficient to establish jurisdiction. As the minority pointed out, this would mean that provided an English claimant returned home after an accident overseas, at a time when the effects of that accident were continuing to be felt, then that claimant could bring his or her claim here. Although this was the minority view, insurers will see some force in Lord Sumption's concern about the creation of "a universal jurisdiction to entertain claims by English residents for the more serious personal injuries suffered anywhere in the world" and the potential to open the floodgates to such claims being brought in this country.
The lack of clarity comes primarily from the fact that the appeal was disposed of on other grounds. Both Lady Hale and Lord Sumption were keen to emphasise that their comments on jurisdiction were obiter and should be treated with appropriate caution. As Lord Sumption said when handing down the judgment "the question will have to be resolved in another appeal in which the question directly arises".
As to that future case, it may well be relevant that the two Justices in the minority, Lords Sumption and Hughes, will retire under the court's mandatory retirement provisions which operate at the age of 75, later this year. While Lord Clarke, part of the majority, has already retired, the others, Lady Hale now President of the court, and Lord Wilson, will continue to sit until 2020 and so may be involved in another appeal on the same point. We must await further higher court consideration of this point.
For further information please contact Sara-Jane Eaton, Partner and Head of European Group, on 020 7280 8827 or at firstname.lastname@example.org