A week ago, the Supreme Court gave its much anticipated second ruling in the Brownlie litigation.
The background to this important decision should be familiar by now. Those wanting a refresher can see our earlier blogs on the last Supreme Court decision, the High Court’s decision in the reconstituted litigation, and the Court of Appeal’s ruling.
The two issues for the Supreme Court to decide were the scope of the “tort gateway” under CPR 6BPD 3.1(9) and the proper approach to pleading and proving foreign law.
This blog post by Peter Hale, a pupil at 12KBW, is the first in a new three-part series considering the decision and its implications for future cross-border litigation. Peter deals with the background to the case and the decision itself.
In the following parts of the series, we will be taking stock of the law as we understand it and considering where this important ruling leaves cross-border litigants and lawyers.
Background
The tragic circumstances of the accident giving rise to the claim are by now well known.
Via the concierge service of the Four Seasons Hotel Cairo, Lady Brownlie had booked a chauffeur-driven tour of Fayoum and other desert destinations outside Cairo, having seen it advertised on a Four Seasons-branded brochure picked up at the hotel previously.
During the tour, a collision occurred as a result of which Sir Ian Brownlie was killed. The Egyptian chauffeur was later convicted of involuntary manslaughter.
Lady Brownlie made a claim for damages in contract and in tort for her own personal injury and on behalf of Sir Ian’s estate and his dependants.
The claim foundered when it became apparent before the Supreme Court that the named Defendant (Four Seasons Holdings Incorporated) was a non-trading holding company that could not have been liable for any tortious or contractual breaches.
The claim against them therefore lacked any reasonable prospects of success.
The 2017 Supreme Court judgment (“Brownlie I”) nevertheless provided detailed obiter commentary on the meaning of “damage” for the purposes of the “tort gateway” under CPR r. 6.36 and CPR 6BPD 3.1(9).
The claim against FS Cairo
Following Brownlie I, Lady Brownlie applied (i) to substitute the proper defendant, FS Cairo (Nile Plaza) LLC, an Egyptian company, (ii) for permission to amend the pleadings accordingly, and (iii) for permission to serve on the new defendant out of the jurisdiction.
The High Court and the Court of Appeal granted permission for all three applications. The Defendant appealed only in relation to the permission for service out and only in respect of the first two elements of the applicable test.
The issues that came before the Supreme Court the second time around were whether the Claimant had established:
- that her three claims in tort should pass through the “tort gateway” in 6BPD 3.1(9)(a);
- that each of her contractual and tortious claims had a reasonable prospect of success.
In respect of (2), the key issue was whether this could be established by relying on presumptions as to the substance of foreign law in the absence of specific pleadings and sufficient evidence of Egyptian law.
The tort gateway
3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where […]
(9) A claim is made in tort where –
(a) damage was sustained, or will be sustained, within the jurisdiction; […]
The issue on appeal was purely a question of law as to the proper construction of the “breadth” of the gateway.
The Defendant argued that in personal injury cases it only covered the initial or direct damage suffered by a person at the time of the accident. The Claimant argued that it extended to consequential or indirect damage suffered in the period after the accident.
In his judgment, Lord Lloyd-Jones (with whom the majority agreed) considered the history of the tort gateway in the pre-CPR Rules of the Supreme Court and the influence that European legislation and jurisprudence had had on the interpretation and development of that gateway [35]-[44].
Lord Lloyd-Jones observed that in Brownlie I the Supreme Court had already considered this issue and considered that “damage” should have its natural and ordinary meaning, including in personal injury claims all the bodily and consequential financial effects suffered as a result of the tortious conduct.
Lord Lloyd-Jones endorsed the approach of the majority in Brownlie I [48]-[51].
The contention that the domestic regime had been intentionally aligned with the different approach under the European Brussels regime was not supported by a proper analysis [52]-[56].
A broader construction of the tort gateway was supported by many of the domestic [57]-[64] and commonwealth [65]-[68] authorities. A line of authorities dealing with pure economic loss was not considered to be helpful [69]-[76].
Nor were any reservations about too broad a construction of the tort gateway valid, since a further control valve existed in the form of forum non conveniens [77]-[80].
It was held therefore that the definition of “damage” as used in the wording of the tort gateway should reflect the ordinary and natural meaning of the word in accordance with the purpose of the provision and general principle.
The appeal on the first issue was dismissed.
Reasonable prospect of success
The second issue was dealt with on behalf of the whole Court by Lord Leggatt (the lone dissenting voice on the tort gateway issue). The requirement to be satisfied is outlined in CPR 6.37(1)(b):
6.37 (1) An application for permission under rule 6.36 must set out […]
(b) that the claimant believes that the claim has a reasonable prospect of success;
The test has been formulated variously as “a real prospect of success” or “a serious issue to be tried”.
It was common ground that Egyptian law applied to the claims both in contract and tort.
The complicating feature was that, although the relief claimed by the Claimant was “damages pursuant to Egyptian law”, the pleadings specified no particular provision(s) of Egyptian law on which the Claimant intended to rely.
The Defendant accepted that the expert foreign law evidence demonstrated a reasonable prospect of success for the Claimant’s tort claims based on the vicarious liability of the Defendant for their driver’s negligent actions. However, the evidence did not demonstrate the same for the claims in tort and contract in respect of the Defendant’s own breaches.
In response, the Claimant argued that, in a case to which foreign law applies, “in the absence of satisfactory evidence of foreign law, the court will apply English law” (per Dicey, rule 205(2)).
Lord Leggatt approached this dispute by distinguishing between two principles: (i) the presumption for evidential purposes that foreign law will be similar to English law and (ii) the principle that, in the absence of foreign law being pleaded, English law will apply (“the default rule”) [108]-[112].
Default rule
The default rule is justified (per Lord Leggatt [113]) on the basis that parties are at liberty to plead the issue(s) which the court is asked to decide.
If a foreign law is not pleaded, the court does not need to apply it, even if a foreign law is blatantly applicable (under the Rome Regulations or otherwise) [114].
Applying the default rule therefore relies on neither party having advanced a case that a foreign law applies. Where either party does correctly plead a foreign law, the court must apply the foreign law; to apply English law would be unlawful [116].
Therefore in this case, where damages are claimed “pursuant to Egyptian law”, the default rule is excluded and Egyptian law must apply [118].
Presumption of similarity
The presumption of similarity is a separate evidential rule applicable where foreign law applies but the content of the foreign law has not been proved [119].
The presumption is only to be applied if it is fair and reasonable to assume, in the circumstances of a given case, that any differences between English law and the foreign law are unlikely to lead to a different substantive outcome [126].
Lord Leggatt explored numerous domestic cases in which the presumption has been applied, subject to the guiding principles outlined above [127]-[142], and distilled four guiding principles for the application of the presumption:
- The presumption is more appropriate where the foreign law is a common law system [144];
- The presumption is less appropriate where the domestic law is contained in statute [145];
- The presumption will be applied with a degree of judicial discretion, but the parties can always adduce direct evidence of the foreign law in order to mitigate any resulting uncertainty [146];
- The procedural context is important. There is more scope for relying on the presumption at an early stage (such as jurisdictional arguments) than at trial of the matter in dispute [147].
In addition, Lord Leggatt noted that adducing expert evidence is no longer the only alternative to the application of the presumption; the need for expert evidence depends on context.
It may be possible for the English court to form a view simply by reading (a translation of) the text of the foreign law. Even if the currency of the text is disputed, the presumption that the foreign law will remain unchanged is a more reliable basis than the presumption of similarity [148].
Decision
Lord Leggatt rejected the Defendant’s argument that the presumption cannot apply where there is some evidence, though incomplete, of the content of the foreign law [151].
The main purpose of the Egyptian law evidence was in relation to the substitution of FS Cairo as Defendant in circumstances where the claim may have been time-barred under Egyptian law [154] and nothing in the evidence adduced was sufficient to preclude the judge from finding that the claims had reasonable prospects of success.
That was in any event an evaluative judgment with which an appellate court should be slow to interfere [157]. On the current state of the evidence, the judge “cannot be faulted” for holding that all of the pleaded claims were reasonably arguable [160].
Lastly, Lord Leggatt addressed the Claimant’s application for permission to appeal against the Court of Appeal’s direction that the Claimant must more fully plead the principles and sources of Egyptian law on which her case was based.
Whilst it was correct that it was for the Claimant to choose what matters to plead and the extent to which, if any, she preferred to rely on a presumption of similarity [165], in this case the Claimant had served two expert reports referring to Egyptian law rules which were not currently pleaded.
There were also gaps in the foreign law evidence and the Defendant was entitled to know whether the Claimant intended to fill those gaps or to continue to rely on the presumption of similarity.
The direction made by the Court of Appeal accordingly fell within that court’s case management powers and was desirable for the orderly progression of the claim. The cross-appeal was therefore dismissed [166].
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