In this blog, Cressida Mawdesley-Thomas considers the recent decision in Johnson v Berentzen & Anor [2021] EWHC 1042 (QB), handed down on Monday.
This is an important case for anyone doing cross-border work. It involved a direct challenge to the decision in Pandya (see here). This determined that, in Rome II cases, service of proceedings for the purpose of stopping the limitation clock is treated as a matter relating to limitation under art. 15(h) rather than as a matter of evidence and procedure under art. 1(3).
The significance is that, pursuant to art. 15(h), matters relating to limitation are governed by the lex causae (the applicable substantive law) rather than by the lex fori (English law). So, if, for example, Greek law requires that proceedings must be served to stop the limitation clock, then service has to be effected within the relevant Greek limitation period rather than in the separate period set by the English procedural rules.
Background
This case arose out of a serious road traffic accident where the Claimant suffered life changing spinal-cord injuries. The accident occurred when both the Claimant (resident of England and Wales) and Defendant (German national and resident) were on holiday in Scotland. The claim of the Claimant’s pillion passenger was settled before the expiry of the relevant limitation period.
Following service of the claim, the Defendants asserted that the claim was statute barred because it had been issued but not served on the defendants before the expiry of the applicable three-year limitation period under Scots law.
In reply, the Claimant asserted that service of the claim was a procedural issue and therefore should be governed by the procedural rules of England and Wales as the lex fori (meaning the law of the place where the litigation is being conducted).
Accordingly, it was asserted that the Claimant had four months from issue of the proceedings in which to serve the claim and therefore the claim was not out of time. In the alternative, the claimant sought an extension of time under the discretion provided by s. 19A of the Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”).
The law governing limitation
There was no dispute that pursuant to art. 4(1) of Rome II the applicable substantive law was that of Scotland being the place where the tort occurred. Further, under art. 15(h) of Rome II, it was Scots law that that governed the “rules relating to the commencement, interruption and suspension of a period of prescription or limitation”.
It was also agreed that the rules of procedure of England and Wales applied pursuant to art. 1(3) of Rome II as the courts of England and Wales had jurisdiction to hear this claim.
The Scots law experts agreed that there was a three-year limitation period and that time ran from the day of the accident on 15 June 2016 and the triennium expired on the third anniversary of the accident. It was also agreed between the parties that in Scotland, unlike in England, in order to stop time running for the purposes of limitation it is necessary to effect service on the defender quite unlike the position in England and Wales.
The Claimant’s argument was quite simply that the service of the proceedings is a procedural step within the scope of the exception in art. 1(3) of the Rome II Regulation and therefore to be governed by the law of England and Wales where the proceedings have begun.
This argument was emphatically rejected by the High Court.
The decision in Pandya
Stacey J noted that this point was recently considered by Tipples J in the context of another foreign road traffic accident case in Pandya v Intersalonika General Insurance Co SA [2020] EWHC 273 (QB).
Tipples J, having carefully reviewed the authorities, academic literature and textbooks cited to her, reached the following conclusion (emphasis added):
There is no dispute between the parties that the law of limitation in this case is governed by Greek law. On the agreed expert evidence before me, it is clear that it is a rule of Greek law that, in order to interrupt or stop the period of limitation, the claim form must be both issued and served…. Further, the experts agree that as a matter of Greek law, a claim that is served after the five-year period is time-barred. Therefore, service of the claim form is, as a matter of Greek law, an essential step which is necessary to interrupt the limitation period. Service of the claim cannot be severed, carved out or downgraded to a matter of mere procedure which falls to be dealt with under English Civil Procedure Rules. That, apart from anything else, would give rise to a different limitation period in England and Wales than in Greece. The clear intention of the Rome II Regulation is to promote predictability of outcomes and, in that context, it seems to me that such an outcome is not what the Regulation intended to happen in these circumstances.
Was Pandya wrongly decided?
Given the doctrine of stare decisis, in order to depart from Pandya, the Claimant would have to show it was wrongly decided given that the cases were materially identical.
A number of submissions were made that Pandya was wrongly decided. However they were all rejected.
In summary, none of Mr McDermott QC arguments could overcome the central difficulty that the requirement to serve the proceedings in order to stop the limitation clock is not merely procedural but a long-standing matter of substantive Scots law. His argument that Pandya was wrongly decided could not succeed.
More specifically:
- The “assertion that Pandya wrongly interpreted art. 15(h) in concluding that the provisions of art. 15 are to be construed widely consistent with the promotion of legal certainty and case law such as KMG International NV v Chen [2019] EWHC 2389 (Comm) was unsustainable and not supported by authority.”
- Neither was Stacey J persuaded that service of proceedings was a matter of procedure, not substantive law in Scotland. Lord Hope in Canada Trust Co v Stolzenberg (No 2) [2002] 1 AC 1, citing Erskine’s Institutes, III vi 3, found that: “the date of the commencement of an action in Scotland is the date of the execution of service on the defender.”
- It was agreed in Pandya that art. 1(3) of Rome II is an exception to the general rule set out in art. 4 and, as an exception, is to be construed narrowly. In this case, as in Pandya, the claimant has not succeeded in arguing that the service of proceedings fell within that exception.
- There was no identifiable error in Tipples J’s conclusion in Pandya that Dicey, Morris & Collins correctly identified that art. 15(h) includes matters which historically or traditionally had been regarded as procedural, but which are no longer to be considered so.
- The Claimant’s submissions on the 1984 Act failed to grasp the full implications of s.8 (in force since 17 December 2009), which provided that: “(1) Where in proceedings in England and Wales the law of a country other than England and Wales falls to be taken into account by virtue of any choice of law rule contained in the Rome I Regulation or the Rome II Regulation, sections 1, 2 and 4 above shall not apply in respect of that matter”
Accordingly, the claimant’s action was commenced outside the relevant limitation period, having been served after 15 June 2019.
Court’s discretion
Stacey J considered whether the Court should exercise its equitable discretion to allow an action to proceed out of time pursuant to s. 19A of the 1973 Act. In summary, the judge was persuaded to exercise the equitable discretion afforded under Scots law.
She found that the Claimant “established cogent factors to merit depriving the defendants of what would have been a complete defence to the claim”. The delay would not cause prejudice in the investigation and preparation of the claim, as this had already been undertaken by both sides. Further, limitation had only been missed by a few weeks, so there was not a long delay which would have gone in the Defendant’s favour. Moreover, in the circumstances of the claimant’s physical and mental health and disabilities from the accident and a subsequent heart attack “the possibility of claiming against his own solicitors” was not the Defendant’s trump card as the Claimant would not realistically be in a position to bring such a claim.
Concluding comment
For claims falling within the scope of Rome II, it is important to bear in mind that the law governing the substance of the dispute (i.e. liability) will also apply to limitation (and damages) under art. 15. This position is also recognised under s. 8 of the Foreign Limitation Periods Act 1984.
If the lex causae provides that proceedings must be served as a matter of substance to stop the limitation clock, then this is what must be done. Accordingly, it will be wise to ensure that a foreign expert is instructed early in proceedings to determine the foreign limitation period and service requirements.
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