Bianco v Bennett

Vladimiro Capano was an Italian who worked for Tesco Go SpA, an engineering and design company. He lived in Turin with his wife Daniela and their twin children, Elisa and Matteo, now 16. Between October 2010 and February 2011 Mr Capano commuted weekly from Turin to England, to work on a car project with McLaren in Woking. On the evening of 17 February 2011 he was walking home down Triggs Lane in Woking. As he crossed the road he was hit by a car driven by the defendant. He died in hospital three days later. His widow now brings this claim for damages for personal injuries and wrongful death caused by the negligence of the defendant.

The defendant has admitted that he was two thirds to blame for Mr Capano’s injuries and death, and judgment for the claimant on liability was entered on 21 February 2014 by consent, subject to a deduction of 33%, with damages to be assessed. The claimant claims £481,079 on her own behalf and on behalf of the children under the Fatal Accidents Act 1976 (FAA), and £7,513 as administratrix of the deceased’s estate, pursuant to the Law Reform (Miscellaneous Provisions Act) 1934 (LRMPA). There is no dispute that these claims are valid in principle, though quantum is not yet agreed and may have to be assessed.

Two further claims made by the claimant are however disputed as a matter of principle. These are described in the claimant’s Schedule of Loss as “subrogated claims”, and I shall use that term. The claims relate to sums paid and to be paid to the family by INAIL, the Italian Workers Compensation Authority, and a sum paid by Mr Capano’s employer, Tesco Go. The subrogated claims in respect of INAIL, set out at items 7 and 8 of the Schedule of Loss, amount to £343,442. The claim in respect of Tesco Go, set out at item 9 of the Schedule of Loss, is for £65,195. The question now before me at this trial of a preliminary issue concerns the recoverability of these claims.

The question is set out in paragraph 1 of the Order dated 27 November 2014 by which Master Eastman directed this preliminary trial:

“Subject to the claimant proving that the sums claimed in paragraphs 7-9 of the Schedule of Loss have been paid and/or are to be paid to the Claimant:

‘Are the claims pleaded at paragraphs 7, 8 and 9 of the Schedule of Loss dated 4th June 2014 recoverable by the Claimant, on behalf of INAIL and TESCOGO, from the Defendant?’”

That order was made at the case management conference (CMC). It was made by consent. Three further things are to be noted about the Master’s order. The first is that the issue is formulated by reference to what is pleaded, and specifically to what is pleaded in those three paragraphs of the Schedule of Loss. The second is that the order reserved for determination after the preliminary issue trial the question of whether the sums claimed had or were to be paid to the claimant, but no other question. The third point is that the Master’s order contained no provision for the service of any evidence. Neither party has filed or served any evidence. It follows that the court can only proceed at this trial by reference to the pleaded case and the relevant law.

The claims pleaded in the claim form and Particulars of Claim are conventional claims for damages pursuant to the LRMPA and FAA. No other cause of action is indicated in either document. No reference is made in either document to the subrogated claims. The prayer for relief in the Particulars of Claim claims relief under four headings: damages under the LRMPA, damages under the FAA, “bereavement damages”, and interest. The subrogated claims first emerged, so far as the statements of case are concerned, in the Schedule of Loss dated 4 June 2014.

The Schedule of Loss is divided into three sections. The first is an Introduction, setting out basic facts about the nature of the claim and details of the dependants, as required by PD16 5.1. The second section is headed “Law Reform (Miscellaneous Provisions) Act 1934” and contains two items: 1 is general damages, and 2 is comprised of funeral expenses and damaged clothing cut off at hospital. The third section is headed “Fatal Accidents Act 1976”. There are 9 heads of claim, starting again at 1. Items 1 to 6 are for bereavement, financial dependency, loss of services, and miscellaneous expenses. The subrogated claims are items 7, 8 and 9 in this section of the Schedule.

The claim in respect of INAIL is pleaded, so far as relevant, in this way:

“7 Subrogated claim (INAIL) Past Loss

The claimant has the benefit of a payment totalling €509,307.93 equivalent to £427,818.66 from an Italian insurer (INAIL) who pays a benefit to the family of the deceased if the deceased dies whilst in employment.

Under the terms of the policy the claimant is contractually obliged to seek a subrogated claim against a defendant in a civil case who has been held partially or fully liable for the death.

To date the policy has paid out €65,078.89 to the family and €1,907.24 in respect of funeral expenses. Interest on that sum to date is sought at €1,906.35; a total claim of €68,892.48.

8 Subrogated claim (INAIL) Future Loss

The remaining €442,321.80. This is paid in instalments as follows:

To the claimant at a rate of €14,406.60 p.a. for 25.4 years

To the dependent children at a rate of €5,762.64 p.a. for 6.63 years

…”

The pleaded case therefore sets out what are said to be contractual obligations of the claimant under the terms of a policy of insurance with INAIL, to “seek a subrogated claim”. No reference is made to any provisions of Italian law, statutory or otherwise. The subrogated claim in respect of Tesco Go is pleaded, so far as relevant, as follows:

“9 Subrogated Claim (Deceased’s Employer)

The deceased[‘s] employer is obliged under article 2122 of the Italian Civil Code to provide compensation to the family of a deceased who dies whilst at work. The sum payable is €77,612.90 equivalent to £65,194.84. Where a third party is at fault, the claimant is bound to seek a subrogated claim.”

Again, the pleaded case asserts an obligation on the claimant to “seek a subrogated claim”. The source and nature of that obligation are not clearly explained. One might surmise that the obligation derives from Article 2122, which is the only provision of Italian law referred to. That however would be speculation and, as it turns out, this is not the claimant’s case. In the submissions of Ms Howells, to which I shall come, the obligation relied on is said to flow from Article 1916 of the Italian Civil Code, a provision which is also said to create the right of subrogation relied on in respect of INAIL.

English law holds, of course, that the content of foreign law is a question of fact, and if foreign law is to be relied on it must be pleaded and proved as a fact, as a rule by expert evidence: see Dicey Morris and Collins on the Conflict of Laws 15^th edn Rule 25(1). Dicey’s Rule 25(2) is that: “In the absence of satisfactory evidence of foreign law the Court will apply English law to such a case.” This rule, commonly known as the “presumption” that foreign law is the same as English law, has recently been re-examined and endorsed by the Court of Appeal in OPO v MLA [2014] EWCA Civ 1277, [2014] EMLR 4: see [108]-[111] (Arden LJ). It is apparent that the claimant’s legal team contemplated that expert evidence of Italian law would be adduced in support of the claim: the claimant’s directions questionnaire of July 2014 identified an Italian law expert as a potential witness; and an application for permission was foreshadowed in the skeleton argument for the CMC submitted by counsel then instructed for the claimant. However, no application to adduce expert evidence was in the event made, then or subsequently.

The defendant’s initial skeleton argument for this trial responds concisely to the case as it is pleaded on behalf of the claimant. Ms Kinsler submits that the claim is pleaded as an English law tort claim pursuant to the FAA and LRMPA; and that it is rightly so pleaded, having regard to Regulation (EC) 864/2007 on the law applicable to non-contractual obligations (Rome II). Noting that the subrogated claims are advanced under the heading of the FAA, she submits that the heads of loss recoverable in English law pursuant to the FAA are circumscribed, and confined to funeral expenses, bereavement award, and loss of dependency. There is no head of loss which is apt to include the subrogated claims. Moreover, the receipt or anticipated receipt by the claimant of any sums paid by her late husband’s insurer and/or employer are disregarded in the assessment of her claim as irrelevant. Accordingly, the answer to the question raised for determination is no. To the extent that the claimant seeks to advance a case based on Italian law, warned Ms Kinsler, the defendant would object on the basis that any such claim would have to be pleaded and proved by expert evidence.

As I have indicated, the skeleton argument filed by Ms Howells on behalf of the claimant puts the case differently from the way it is stated in the Schedule of Loss, and refers to unpleaded matters of Italian law. Ms Howells accepts that the claim is governed by English law. She submits, however, that the sums claimed are recoverable by the claimant on behalf of INAIL and Tesco Go pursuant to Article 85 of Regulation (EC) No 883/2004 on the co-ordination of social security systems (the 2004 Regulation).

The 2004 Regulation, which replaced similar provision in earlier Regulations, is directly applicable in Member States. The relevant parts of Article 85 state as follows:-

“1.

If a person receives benefits under the legislation of one Member State in respect of an injury resulting from events occurring in another Member State, any rights of the institution responsible for providing benefits against a third party liable to provide compensation for the injury shall be governed by the following rules:

(a)

where the institution responsible for providing benefits is, under the legislation it applies, subrogated to the rights which the beneficiary has against the third party, such subrogation shall be recognised by each Member State;

(b)

where the institution responsible for providing benefits has a direct right against the third party, each Member State shall recognise such rights.”

Article 85 of the 2004 Regulation, submits Ms Howells, requires the United Kingdom to recognise, in proceedings brought in this jurisdiction, rights of subrogation provided to INAIL and Tesco Go in Italy. Those rights, she submits, must be given effect in this country. The claimant’s argument addresses the nature and extent of the rights which arise under Italian law. It sets out, by reference to documents included in the trial bundle over the objections of the defendant, the workings of the Italian system of compulsory insurance for workers, and the role of INAIL, identifying the provision of Italian law under which it is said that INAIL has made and will make payments to the claimant (Article 85 of the Presidential Decree No 1124 of 30 June 1965, the consolidated law on compulsory insurance against accidents at work and occupational diseases). The claimant’s argument goes on to assert that the payment which Tesco Go made to the family was one required of it by Articles 2122 and/or 2118 of the Italian Civil Code, which impose a duty on an employer to pay wages in lieu of notice upon the death of an employee. It is said, further, that pursuant to Article 1916 of that Code “INAIL and Tesco are subrogated to the rights of the claimant against third parties who are liable for the damage”. This is the right of subrogation to which it is said that Article 85 requires the United Kingdom to give effect. In order to explain the way she puts the claimant’s case, Ms Howells has taken me through all of these provisions in the course of her oral submissions. This has been a helpful exercise in enabling me to understand the way the claimant wishes to put her case.

The first question I have to resolve however is whether, as submitted by Ms Kinsler, all of this is objectionable as an illegitimate attempt to introduce in support of the subrogated claims matters which require pleading and proof, but are neither pleaded nor the subject of any evidence. That is the basis for the defendant’s objection to the inclusion in the trial bundle of the material referred to by Ms Howells. Ms Howells naturally accepts on the claimant’s behalf that if the claims are good in principle it would be necessary for her client to establish that she had received or would receive the sums which are the subject of the subrogated claims. That much is clear from the Master’s order. Ms Howells has however also maintained that the Master’s order does not provide for the determination of all the questions of law that, on her client’s case, are involved. She accepts that the claim as she seeks to put it has not been fully pleaded. Her position is however that the question asked is one of “recoverability in principle”, leaving it open to the claimant to plead, at the end of this hearing or subsequently, matters of Italian law which are not presently pleaded and, having done so, to adduce evidence on a later occasion to prove the content and effect of the relevant provisions, so far as they bear on this case.

In response to Ms Kinsler’s objections it is said that the claimant has proceeded on the understanding or assumption that the Master’s order does not require these matters to be pleaded or established by evidence at this stage. Ms Howells points out, and it is not in dispute, that the claimant’s intention to rely on Article 85 was made known to the defendant a considerable time ago. That cannot be said to come as a surprise, and the defendant has suffered no prejudice. Ms Kinsler responds that the onus is on the claimant to state her case fully and clearly, and to establish it in the ordinary way. She submits that, on its true interpretation, the Master’s order provided for the question of whether the subrogated claims can be recovered to be determined finally at this hearing, subject only to proof of the fact of receipt or anticipated receipt of the pleaded sums.

In my judgment, Ms Kinsler is right in these submissions. The issue identified for trial as a preliminary issue was the recoverability of the subrogated claims. That was subject to the express reservation of one question of fact: whether the pleaded sums had been or were to be paid. No other reservation or qualification was contained in or implicit in the order. All other matters in issue between the parties on this aspect of the claim were therefore for determination at this trial, and not at any later stage.

Generally speaking, the matters in issue between parties are to be identified by reference to the statements of case. Here, the order defining the issue for trial specifically referred to the pleading of the claims in items 7, 8 and 9 of the Schedule of Loss. In those paragraphs, the subrogated claims are set out as heads of damage recoverable in English law pursuant to the FAA. The pleaded basis for that is, in the case of the INAIL claim, a contractual obligation owed by the claimant to INAIL to seek a subrogated claim and, in the case of the Tesco Go claim, an obligation to seek a subrogated claim which is of an unspecified nature and origin.

The Schedule of Loss makes no reference to Article 85 of the 2004 Regulation. However the 2004 Regulation, as a directly enforceable instrument of EU law, is part of English law. It is not a general requirement of the rules of pleading as laid down by the CPR, that a party should plead matters of domestic law on which it relies. It is sometimes convenient or appropriate to do so if, for instance, the legal proposition is of an unusual kind and for that or some other reason might take the opposing party by surprise. But that is not suggested by the defendant, and it is not as such objectionable for the claimant to advance arguments based on Article 85.

But the position is different, in my judgment, when it comes to the provisions of Italian law which Ms Howells has identified as the foundation of the subrogated claims. Since Italian law is treated, like any foreign law, as a matter of fact, any averment as to the existence and content of a rule of Italian law should, like any other relevant factual averment, be pleaded. As it is, the only provision of Italian law to which express reference is made in the Schedule of Loss is Article 2122 of the Italian Civil Code, alleged to impose a duty on Tesco Go to pay the claimant what it has paid. There is no reference in the Schedule to Article 85 of the Presidential Decree of June 1965, on which reliance is placed so far as the INAIL claim is concerned, nor is there reference to Article 2118 of the Civil Code, relied on in respect of the Tesco Go claim, or to Article 1916, on which both limbs of the claimant’s subrogated claims are now known to depend.

The matter goes beyond a question of pleading. The Italian law materials that the claimant placed in the trial bundle, and to which I have been referred, have enabled me to see the general shape of the claimant’s case, but they are not admissible evidence of the foreign law relied on. The English court will not conduct its own researches into foreign law: Bumper Development Corporation v Commissioner of Police for the Metropolis [1991] 1 WLR 1362, CA. A practical expression of this principle is that “a court is not permitted to assess any documentary evidence of foreign law, save that which is introduced in support of expert opinion”: Richard Fentiman, International Commercial Litigation, 2^nd edn (OUP) para 20-30. There are some limited exceptions to this, but none that could apply in the present case.

These principles have obvious practical justifications. Even where agreed translations of foreign materials are provided – which is not the case here - an English lawyer is liable to lack an understanding of the right approach to construing the foreign statutes or other materials relied on. And there may be much room for debate between those expert in the foreign law about the true interpretation of that law.

The claimant’s proposed reliance on Article 1916 of the Italian Civil Code serves as an illustration of the potential value of expert evidence. The claimant’s pleaded case is that she is obliged or bound “to seek a subrogated claim” in respect of the sums received or to be received from INAIL and Tesco Go. The claimant’s translation of Article 1916 is, so far as relevant, as follows:

“1916 Right of subrogation of insurer. An insurer who has paid the indemnity is subrogated, to the extent of the amount of the said indemnity, to the rights of the insured against third persons who are liable for the damage.

…

The provisions of this article also apply to workmen’s compensation insurance and accident insurance.”

It is not obvious that this provision supports the pleaded case. Ms Howells submitted, in another context, that the term subrogation has different meanings in different laws and may sometimes be used to designate legal principles of a different character from subrogation as understood in English law. To an English lawyer, however, Article 1916 appears to provide for conventional subrogation, by which the insurer assumes the rights of the insured, to the extent of the indemnity provided by the insurer, and not otherwise. Moreover, whilst INAIL would seem, on the face of it, to provide “workmen’s compensation insurance”, the term “accident insurance” is not an obvious fit for the obligation to pay wages in lieu of notice which Tesco Go is said to have had, pursuant to Articles 2122 and/or 2118 of the Italian Civil Code.

The defendant is in my opinion entitled to object to reliance by the claimant on the Italian law which has now been identified as founding her case under Article 85. The Italian law case, as now explained, is not pleaded, or not sufficiently so, and there is no admissible evidence before the court to support it. In addition, there is no or no adequate evidence before the court as to the factual context of the schemes pursuant to which the payments have been and are to be made.

I recognise that the claimant is not seeking to secure findings on these issues at this hearing, but that serves to reinforce the grounds of objection rather than to meet them. The position adopted by the claimant can properly be regarded as amounting, in substance, to a late application to adjourn the hearing of part of the preliminary issue ordered by the Master and/or or to vary the Master’s order by adding a further qualification to this effect: “and subject to the claimant pleading and proving the nature and extent of any rights of subrogation conferred on INAIL and Tesco Go by Italian law”. In my judgment it is not just or appropriate to deal with the preliminary issue on any more limited a basis than the one prescribed by the Master’s Order.

In reaching this conclusion I have had regard to the overriding objective. Factors favouring my conclusion are the need to deal with cases at proportionate cost, saving expense, ensuring that a case is dealt with expeditiously, and that it has allotted to it an appropriate share of the court’s resources. I accept that the claimant has approached this hearing on what I have found to be a false assumption or understanding as to the scope of the preliminary issue. It is not suggested, however, that the defendant caused or contributed to the making of that assumption. If I took the approach that is urged on me by Ms Howells there would be delay, and cost incurred in pleading the claimant’s Italian law case and, more significantly, securing expert advice and potentially expert evidence on both sides. There would be further cost incurred in preparing evidence as to the relevant factual matters. It is hard to predict to what extent the claimant’s case would be disputed, but it would be wrong to assume that everything put forward by Ms Howells would be admitted by the defendant.

In my judgment the subrogated claims as pleaded cannot succeed. Rome II applies to claims in respect of accidents, such as the one in issue here, after 11 January 2009: Case C-412-10 Homawoo, interpreting Articles 31 and 32.The general rule under Rome II is that the law applicable to a non-contractual obligation is that of “the country in which the damage occurs”: Article 4(1). The relevant damage for present purposes is the damage sustained at the time and place of the accident: see Recital (17) to Rome II and Jacobs v MIB [2009] EWHC 231 (QB).

The scope of the law applicable to a tort claim is determined by Article 15 of Rome II, which provides that it shall govern, among other things, “(c) the existence, the nature and the assessment of damage or the remedy claimed … (e) the question whether a right to claim damages or a remedy may be transferred, including by inheritance; (f) persons entitled to compensation for damage sustained personally.” It is therefore pursuant to Article 15(e) that the LRMPA, which provides for the deceased’s estate to inherit causes of action, governs the claimant’s right to sue as administratrix. It is pursuant to Article 15(f) that the claimant and her children are entitled to claim as dependants under the FAA. This is clear from the terms of the Commission Proposal for Rome II 2003/0168 which says of the draft provision which became Article 15(f) that “The law that is designated will also determine ... whether a person other than the ‘direct victim’ can obtain compensation for damage sustained on a ‘knock-on’ basis, following damage sustained by the victim [such as]… financial. … loss sustained by the children or spouse of a deceased person.”

The provisions of the LRMPA and FAA are not only the sole pleaded basis for the claims advanced by the claimant, they are the only basis available to her as a matter of English law for advancing claims in respect of her husband’s death. As Lord Sumption explained in Cox v Ergo Versicherung AG [2014] UKSC 22, [2014] AC 1379 at [6], at common law no claim can be made in tort for the death of a human being; the provisions of the LRMPA and FAA are the “sole legal basis on which a claim can be made for bereavement or loss of dependency in English law.”

The subrogated claims are plainly not causes of action possessed by the deceased before his death, so the LRMPA is rightly not treated as applicable in the Schedule of Loss. The claims are pleaded as falling under the FAA, but they cannot be brought within its terms. Section 1 of the FAA provides a right of action for a wrongful act causing death. By s 1A, damages for bereavement can be recovered. Section 3(1) provides the basis for the recoverability of damages for loss of dependency and loss of services: it provides that the claimant may recover “such damages … as are proportioned to the injury resulting from the death to the dependants respectively”. By s 3(5) damages may be awarded for funeral expenses incurred by the dependants. All of these claims are pleaded on the claimant’s behalf. No other heads of damage are recoverable under the Act.

The dependants have the benefit of s 4 of the FAA which provides that “in assessing damages in respect of a person’s death under this Act, benefits which have accrued or may accrue to any person from his estate or otherwise as a result of his death shall be disregarded.” The intention of Parliament and the effect of this provision is that all benefits coming to a dependant as a result of death are to be left out of account; today “all that must be done is to quantify the loss of dependency”; Arnup v White Ltd [2008] EWCA Civ 447, [26] (Smith LJ). Accordingly, there can be no question of the claimant having to give credit in the assessment of damages under the FAA for any benefits received from INAIL or Tesco Go as a result of her husband’s death. Such benefits fall to be ignored for the purposes of assessing the damages payable under the Act. It follows that, unless INAIL and Tesco Go can recoup from the dependants, they will recover compensation for what they have lost as dependants of Mr Capano, whilst retaining the benefits received from INAIL and Tesco Go. But that is a matter between those parties. It cannot give rise to a right on the claimant’s part to recover from the defendant the amount of the benefits paid or payable.

For these reasons I agree with the defendant that the answer to the question posed by the preliminary issue is no; the claims pleaded in items 7, 8 and 9 of the Schedule of Loss dated 4^th June 2014 are not recoverable by the claimant.

Ms Kinsler nonetheless invites me to consider and decide whether, assuming that the claimant did plead and prove the facts on which she now seeks to rely, the subrogated claims would succeed as a matter of law. Having heard full argument on that question it is appropriate that I should decide it. My clear conclusion is that the claims would fail in any event. Assuming that Article 85 of the 2004 Regulation is applicable to the facts of this case, on the true construction of Article 85 the issue of whether the subrogated claims can be maintained against the defendant is a matter of English law, under which the answer to the question posed is no.

The argument for the claimant relies on Article 85(1)(a), and is at one level beguilingly straightforward. It involves the following steps. (i) The dependants have “receive[d] benefits” (from INAIL and Tesco Go); (ii) they have done so “under the legislation of one Member State” (Article 85 of the Presidential Decree and Articles 2122 and/or 2118 of the Italian Civil Code); (iii) “resulting from events in another Member State” (the road accident in the UK that caused Mr Capano’s injuries and death); (iv) INAIL and Tesco Go are “institution[s] responsible for providing [such] benefits”; (v) the defendant is, to the extent admitted in this action, a “third party liable to provide compensation for the injury”; (vi) Each of INAIL and Tesco Go is, under “the legislation it applies” (Article 1916 of the Civil Code) “subrogated to the rights which the beneficiary has against” the defendant; (vii) Article 85(1)(a) mandates that “such subrogation shall be recognised by” the UK as a Member State, and hence in these claims.

The defendant has reserved its position on whether the subrogated claims fall within the material scope of the 2004 Regulation. This is defined by Article 3, and Ms Kinsler observes that initial researches by her and her junior, Mr Krsljanin, have identified a considerable body of authority concerned with the scope of the 2004 Regulation, and that there is no evidence as to the detail of the schemes in question here. There could also be a question as to whether Tesco Go falls within the scope of the term “institution” for this purpose. But even leaving these points aside, and accepting each step in this argument, it still does not go as far as the claimant requires it to go in order to sustain the subrogated claims. To achieve that would require a further proposition: that the obligation to recognise the right of subrogation carries with it an obligation to recognise a substantive claim which could be advanced by a claimant under Italian law (and to which INAIL and Tesco Go would be subrogated), even if the claim is of a nature that would not be permitted in English law.

It is submitted for the claimant that European and domestic authority supports the approach adopted to this claim. Ms Howells relies on the decision of the CJEU in Deutsche Angestellen-Krankenkasse v Laerersandens Brandforsikring G/S Case C-428/92, [1994] ECR I-2259 (DAK) and a decision of HHJ B C Forster QC sitting as a Deputy Judge in Donkers & another v Storm Aviation [2014] EWHC 241 (QB), [2015] 1 All ER (Comm) 282 (Donkers). It is said that DAK demonstrates that the duty to recognise a foreign institution’s domestic law right of subrogation prevails over provisions of domestic law (in that case Danish law) which prohibit a claim of a particular nature. Donkers, in which the court considered DAK and other authorities, is relied on by Ms Howells as a “recent re-emphasis of the importance of the longstanding right in Europe of institutions providing benefits to make claims across borders against third party wrongdoers in exercise of rights of action which they have acquired by way of subrogation or other operation of law in their own jurisdiction.” (The emphasis is mine.)

In my judgment this argument misunderstands the nature and scope of the obligations imposed on Member States by Article 85, and the jurisprudence. Article 85(1)(a) is a choice-of-law provision by which the “home” law of the institution providing benefits in respect of an injury will govern whether the institution is subrogated to rights enjoyed by the beneficiary against the wrongdoer and, if so, the extent of the subrogation. Member States must recognise the rights of subrogation conferred on the institution by the foreign law, to the full extent provided for by that law. But Article 85(1)(a) does not require the court of the foreign Member State to apply the law of the institution’s home jurisdiction to the claim against the defendant. That law has no impact on the nature and extent of the rights of the “beneficiary”. Those questions are to be answered by reference to the law applicable to the tort, pursuant to private international law – and in this case, under Rome II, English law. The rights to which the institution is subrogated cannot exceed those possessed by the claimant under the applicable law.

The words that I have emphasised in the quotation in paragraph 37 above seem to me to illustrate the flaw in the claimant’s argument: they assume that subrogation under Italian law confers on the institution an Italian law right of action. The jurisprudence is, on a proper understanding, clear and consistent in affirming the analysis outlined above. The relevant decisions of the CJEU are Hessische Knappschaft v Maison Singeret fils Case 44/65 [1965] ECR 965 (Singer), Case 78/72 L’Etoile-Syndicat Général v de Waal [1973] ECR 499 (de Waal), DAK, and Case C-397/96 Caisse de Pension v Kordel [1999] ECR I-5959 (Kordel). Singer was concerned with Article 52 of Regulation 3 on social security for migrant workers (OJ No 64, 5/4/1967), which was in materially identical terms to Article 85 of the 2004 Regulation. The Court held that “Article 52 of Regulation No 3 in no way modifies the creation and limits of extra-contractual liability, which remains subject solely to national law. It is limited to substituting the institution liable for payment of the beneficiary in any claims which he may have against the third party liable, in other words, to substitute a new claimant for the old.”

De Waal was a case concerning a direct right of action created by the domestic law of the claimant institution, a Belgian insurer. The insured was killed on Dutch territory by Mr de Waal and the claimant sued in Holland. The question raised by the Dutch court was whether the effect of Article 52 was that the common law of Belgium was to be taken into account for the purpose of determining the claimant’s rights against Mr de Waal. The Court gave a negative answer, confirming the logical next step in the argument set out in Singer. The court stated at [4] that “Since Article 52 is thus limited to the substitution of a fresh creditor for the previous one, the institution liable cannot claim from the third party responsible any payment other than that which could be claimed by the victim of the damage or his dependants.” The substantive content of the right was “determined by the rule of the national law defining the source and limits of the right of compensation vested in the victim or his dependants vis-à-vis the third party responsible”: [7].

In DAK the Court considered Article 93(1) of Council Regulation (EEC) No 1408/71, the successor to Article 52 of Regulation 3 and the predecessor of Article 85 of the 2004 Regulation. Again, this was in terms materially identical to those of Article 85. DAK was a German social security institution and the defendant (LB) a Danish insurance company. DAK sought to recoup from LB sums paid by DAK following an accident in Denmark to the daughter of DAK’s insured, caused by a motorist insured by LB. Article 116 of the German Social Security Code (SGB X) provided for the subrogation of DAK to compensation rights in respect of damage for which it had to pay benefits. LB relied on provisions of Danish law by which the social security benefits could not form the basis of a recoupment action against the party liable for the damage. At [18] the Court said:

“Article 93(1) must thus be seen as conflict-of-laws rule, which requires the national court hearing an action for compensation brought against the party liable for the injury to apply the law of the Member State to which the institution responsible is subject, not only to determine whether that institution is subrogated by law to the rights of the injured party or has direct rights against the third party liable, but also to determine the nature and extent of the claims to which the institution responsible for benefits is subrogated or which it can bring directly against the third parties.”

The Court held at [22] that provisions such as those relied on by LB:

“…which relate to the rights of recoupment of social security institutions against third parties bound to compensate for injuries as a result of which social security benefits have been paid, cannot be applied to determine whether and to what extent an institution responsible for benefits in another Member State has a right of recoupment against the party who has caused an injury in the territory of the Member State where those provisions apply.”

Ms Howells relies on this decision in support of her client’s case, submitting that the defendant’s argument that the available claims are limited to those provided for by the FAA cannot stand with this judgment. In my view, however, DAK supports rather than undermines the argument for the defendant. The decision was concerned with the rights of the institution by way of subrogation. The argument rejected by the court was that Danish law, rather than Article 116 of the SGB X, should be applied to ascertain the existence and extent of any such rights. DAK is not authority for the proposition that the law of the institution’s home country applies to determine, or that it affects in any way, the existence and extent of the rights to which the institution is subrogated. On the contrary, citing Singer and de Waal the Court expressly noted at [21] the limits on the impact of the law of the institution’s home country:

“Finally, it should be noted that Article 93(1) of the regulation is intended only to ensure that the rights which the institution responsible may have by virtue of the legislation which it administers are recognized by the other Member States. Its purpose is not to alter the rules applicable for determining whether and to what extent there is non-contractual liability on the part of the third party who has caused the injury. The third party's liability remains subject to the substantive rules which are normally to be applied by the national court before which proceedings are brought by the institution responsible or by the victim, in other words, in principle the legislation of the Member State in whose territory the injury has occurred…”

The overall picture is conveniently summarised in paragraphs [15] to [17] of Kordel:

“15.

…Article 93(1)(a) does not purport to alter the applicable rules for determining whether and to what extent non-contractual liability on the part of the third party who caused the injury is to be incurred. The third party’s liability continues to be governed by the substantive rules which are normally to be applied by the national court before which proceedings are brought by the victim or those entitled under him, that is to say, in principle, the legislation of the Member State in whose territory the injury was sustained…

16.

It follows that the rights that the victim or those entitled under him have against the person who caused the injury and the requirements to be satisfied to enable an action in damages to be brought before the courts of the Member State where the injury was sustained must be determined in accordance with the law of that State, including any applicable rules of private international law.

17.

It is to such rights alone, thus determined, that the institution responsible for benefits can be subrogated. Subrogation such as that provided for in Article 93(1)(a) cannot have the effect of creating additional rights for the recipient of the benefits against third parties.”

The judgment of HHJ B C Forster QC in Donkers is entirely in line with this European jurisprudence. Applying DAK and Kordel the Judge concluded at [40]:

“The national court before which a claim is brought must recognise the claim of a responsible institution in another Member State but the extent of the claim and the assessment of damages remain to be determined by the law of the national court. Where there is subrogation the claim of the institution must be recognised in all Member States but it cannot exceed the rights that the victim has against the tortfeasor. The determination of the claim that passes from the benefits recipient to the responsible institution must be determined in accordance with the law of the substantive claim.”

The emphasis is mine. It had been submitted that “the Regulation exports the law of the Member State of the claiming social security benefits institution into the country where the third party is sued by the social benefits institution”: [38]. At [46] the Judge rejected that submission, saying:

“It is essential that the right of claim of the responsible institution is recognised in all Member States but the interpretation suggested would lead to uncertainty and complication particularly if the Court had to consider claims arising from the same accident where Claimants were resident in different countries.”

The paragraphs from Donkers that I have cited at 45 and 46 above were relied on by Ms Howells, but not the words I have emphasised. It is those words that reflect the right answer to the question posed by the preliminary issue. I do not accept Ms Howells’ submission that Judge Forster’s reference to whether the subrogated claim “exceeds the rights” of the victim concerns the quantum of the claim, which seems to me a misreading with no principled basis. In summary, the claims which this claimant is entitled to advance are governed by English law. She has pleaded her claims, and those of the children, to the fullest extent possible under English law. The sums claimed under items 7, 8 and 9 of the FAA section of the Schedule of Loss are not recoverable by the claimant in English law and therefore cannot be recoverable by her on behalf of INAIL or Tesco Go, whatever rights of subrogation they may enjoy under Italian law. Any such rights must fall to be exercised, if at all, in respect of the English law claims pleaded by the claimant on her own behalf and on behalf of the children under items 1 and 2 of the LRMPA section, or 1 to 7 of the FAA section, of the Schedule of Loss.

I add that if, and to the extent that, the subrogated claims fall outside the material scope of Article 85, they would in my judgment fail by reason of Articles 4 and 19 of Rome II. Article 19 is headed “Subrogation”. It provides:

“Where a person (the creditor) has a non-contractual claim upon another (the debtor) and a third person has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the third person’s duty to satisfy the creditor shall determine whether, and the extent to which, the third person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship.”

For the purposes of Article 19, the claimant and the defendant are the creditor and debtor, and INAIL and Tesco Go are third persons. The effect of Article 19 is, therefore, that Italian law governs whether and the extent to which INAIL and Tesco Go are entitled to exercise the rights which the claimant has against the defendant under the law governing that relationship. However, the effect of Article 4 is, as already noted, that the relationship between the claimant and the defendant is governed by English law. Rome II and Article 85 of the 2004 Regulation are therefore in harmony. This is unsurprising. Recital (35) to Rome II recognises that although Community law may make special provision with regard to particular matters “a situation where conflict-of-law rules are dispersed among several instruments and where there are differences between those rules should be avoided”.

For all these reasons the preliminary issue is determined in favour of the defendant. I will hear Counsel on the appropriate consequential judgment and orders.