(back to preceding text)

    27.  Lord Wilberforce said, at p 389:

"The broad principle should surely be that a person should not be permitted to claim in England in respect of a matter for which civil liability does not exist, or is excluded, under the law of the place where the wrong was committed. This non-existence of exclusion may be for a variety of reasons and it would be unwise to attempt a generalisation relevant to the variety of possible wrongs. But in relation to claims for personal injuries one may say that provisions of the lex delicti, denying, or limiting, or qualifying recovery of damages because of some relationship of the defendant to the plaintiff, or in respect of some interest of the plaintiff (such as loss of consortium) or some head of damage (such as pain and suffering) should be given effect to."

    28.  Lord Pearson said, at p 394:

"If the difference between the English law and the Maltese law could be regarded only as a difference of procedural (or adjectival or non-substantive) law, there would be an easy solution of the problem in this appeal. On that basis the nature and extent of the remedy would be matters of procedural law regulated by the lex fori, which is English, and the proper remedy for the plaintiff in this case according to English law would be that he should recover damages for all the relevant consequences of the accident, including pain and suffering as well as pecuniary expense and loss…But I am not convinced that the difference between the English law and the Maltese law can reasonably be regarded as only a difference of procedural law. There is a radical difference in the cause of action, the right of action, the jus actionis. A claim to be reimbursed or indemnified or compensated for actual economic loss is substantially different in character from a claim for damages for all the relevant consequences of the accident to the plaintiff, including pain and suffering. If an accident caused no economic loss, but only pain and suffering, there would be a cause of action according to English law, but not according to Maltese law. Surely that must be a matter of substantive law."

    29.  On the other hand, Lord Guest said, at p 382 that —

"It would not be correct, in my view, to talk of compensation for pain and suffering as a head of damage apart from patrimonial loss. It is merely an element in the quantification of the total compensation"

and Lord Donovan said, at p 383, that once the claim was actionable in an English court, "it was right that it should award its own remedies".

    30.  Thus the majority held that the Maltese law denying liability for non-economic damage was substantive law to be governed by the lex causae while the minority thought that it was a matter of remedy to be governed by the lex fori. All of them agreed that the quantification of the damages to be awarded for actionable heads of damage was a question of remedy or procedure.

    31.  The next question is whether this distinction between questions of liability and questions of remedy or procedure was affected by Part III. Section 10 abolishes the Phillips v Eyre (1870) LR 6 QB 1 requirement of double actionability "for the purpose of determining whether a tort or delict is actionable" and the common law exceptions to that rule created by cases like Boys v Chaplin [1971] AC 356 and Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190. Section 11 substitutes a "general rule" that the applicable law is the "law of the country in which the events constituting the tort or delict in question occur." Section 12 provides for displacement of the general rule in certain cases in which it is "substantially more appropriate" for the applicable law to be different. This was the provision applied by Elias J on his alternative hypothesis that the MACA restrictions were substantive. But section 14 provides:

"(2)  Nothing in this Part affects any rules of law (including rules of private international law) except those abolished by section 10 above.

(3)  Without prejudice to the generality of subsection (2) above, nothing in this Part — …

(b)  affects any rules of evidence, pleading or practice or authorises questions of procedure in any proceedings to be determined otherwise than in accordance with the law of the forum."

    32.  It will be noticed that whereas the older cases spoke of questions of "remedy" being governed by the lex fori and Willes J in Phillips v Eyre (1870) LR 6 QB 1, 29 spoke of "remedy or procedure", section 14(3)(b) refers only to "procedure". Does that mean that the old rule that remedies were a matter for the lex fori was to be abolished and the rule preserved only so far as it related to questions which could strictly speaking be regarded as procedure? In my opinion this would be absurd. In this context, the terms "remedy" and "procedure" had been regularly used interchangeably. Thus in Boys v Chaplin [1971] AC 356 Lord Hodson said, at p 378, that "the nature of a plaintiff's remedy is a matter of procedure to be determined by the lex fori. This includes the quantification of damages…". Lord Guest, at p 381, posed the question as: "Assuming that the conduct was actionable in Malta, what law is to be applied to the ascertainment of the damages? Is it to be the substantive law, the law of Malta, or is to be the procedural law which is the lex fori?"

    33.  Furthermore, section 14(3) is expressed to be without prejudice to the generality of section 14(2), which says that nothing in Part III is to affect any rules of law except those abolished by section 10. Section 10 is concerned with the rules which determine "whether a tort…is actionable" and not with the rules concerning the remedies available for actionable injury.

    34.  The conclusion that the amount of damages for an injury actionable by the lex causae must be determined according to the lex fori was to be left untouched is confirmed by the Report of the Law Commission and the Scottish Law Commission (Private International Law: Choice of Law in Tort and Delict (Law Com No 193, Scot Law Com No 129), published in 1990, on which Part III was based. Paragraph 3.38 dealt with damages:

"The Consultation Paper [Law Commission Working Paper No 87 and Scottish Law Commission Consultative Memorandum No 62, which had been published in 1984] provisionally recommended that there should be no change in the present law on the question of damages, which we confirm. Accordingly, the applicable law in tort or delict determines the question of the availability of particular heads of damages whereas the measure or quantification of damages under those heads is governed by the lex fori."

    35.  There are several statements in the Consultation Paper to the same effect, which it is unnecessary to cite.

    36.  Mr Haddon-Cave QC, who appeared for the appellant, said that if the House thought that the language of section 14(2) and (3) was ambiguous or obscure, it should resolve the ambiguity by reference to a statement made in Parliament by the Lord Chancellor during the passage of the bill. For my part, I do not think that there is any ambiguity or obscurity. Of course, taken out of context, the word "procedure" is ambiguous. In its narrow and perhaps most usual sense it means, as La Forest J expressed it in Tolofson v Jensen (1994) 120 DLR (4th) 289, 321 those rules which "make the machinery of the forum court run smoothly as distinguished from those determinative of the rights of both parties." Or it can have a wider meaning which embraces what Mason CJ in Stevens v Head (1993) 176 CLR 433, 445 called "the traditional equation drawn between matters relating to a remedy and matters of procedure". This is the sense it which the term has always been used in English private international law. If section 14 is read in its context, against the background of the existing rules of common law and the report of the Law Commission, there can be no doubt that the latter meaning was intended. For my part, therefore, I see no need for Mr Haddon-Cave to resort to Hansard.

    37.  If, however, there had been any ambiguity which needed to be resolved, I am bound to say that this is as clear a case within the principle stated in Pepper v Hart [1993] AC 593 as anyone could hope to find. At the Report stage in the House of Lords, Lord Howie of Troon put down an amendment to add a further paragraph to what is now section 14(3), so that it would read "[nothing in this Part] (d) authorises any court of the forum to award damages other than in accordance with the law of the forum". Lord Howie declared an interest on behalf of Cape Industries plc, which had a few years earlier been sued in Texas for asbestos-related injuries (see Adams v Cape Industries plc [1990] Ch 433) and was anxious that Part III should not import American scales of compensation into English courts. In the debate on 27 March 1995 the Lord Chancellor, Lord Mackay of Clashfern, made what was obviously a carefully prepared statement:

"With regard to damages, issues relating to the quantum or measure of damages are at present and will continue under Part III to be governed by the law of the forum; in other words, by the law of one of the three jurisdictions in the United Kingdom. Issues of this kind are regarded as procedural and, as such, are covered by Clause 14(3) (b).

It follows from this that the kind of awards to which the noble Lord referred of damages made in certain states, in particular in parts of the United States, will not become a feature of our legal system by virtue of Part III. Our courts will continue to apply our own rules on quantum of damages even in the context of a tort case where the court decides that the 'applicable law' should be some foreign system of law so far as concerns the merits of the claim.

Some aspects of the law of damages are not regarded as procedural and, in accordance with the views of the Law Commissions in their report on the subject, Part III does not alter this. These aspects concern so-called 'heads of damages'—the basic matter which is being compensated for—such as special damage relating to direct financial loss. Whether a particular legal system permits such a head of damage is not regarded as procedural but substantive and therefore not automatically subject to the law of the forum. This seems right given the intimate connection between such a concept and the particular nature of the case in issue. But again, I foresee no significant increase in awards of damages because a particular head of damage permitted by some foreign system of law would continue, so far as the quantum allocated to it in any finding is concerned, to be regulated by our own domestic law of damages.

I hope the noble Lord will feel reassured…"

    38.  Lord Howie declared himself reassured and did not move his amendment. The Lord Chancellor's statement clearly satisfied the requirements of being (a) clear and (b) made by the Minister promoting the bill: see Hansard (HL Debates) 27 March 1995, Cols 1421-1422.

    39.  My Lords, the next question is whether the provisions of MACA to which I have referred should be characterised as relating to the actionability of the economic and non-economic damage suffered by Mr Harding or to the remedies which the courts of New South Wales provide for such damage. On this point we could not have better authority than that of the High Court of Australia in Stevens v Head (1993) 176 CLR 433. The majority (Brennan, Dawson, Toohey and McHugh JJ) analysed the equivalent damages-limitation provisions of the Motor Accidents Act 1988, at pp 454-460, and concluded that they were concerned with quantification rather than heads of damage. Although MACA is more restrictive of the court's power to award damages than the 1988 Act, the character of the relevant provisions is in my opinion the same. Thus, at p 459, the majority said of section 79(3) of the 1988 Act, which provided that the maximum amount ("only in a most extreme case") which might be awarded for non-economic loss was A$180,000:

"[It] is plainly a provision which affects the measure of damages but does not touch the heads of liability in respect of which damages might be awarded. It is simply a law relating to the quantification of damages and that, as we have seen, is a matter governed solely by the lex fori."

    40.  These extracts are from the opinion of the majority. But there is nothing in the dissenting judgments by Mason CJ and Deane and Gaudron JJ to suggest that, if they had accepted that the court should apply the traditional distinction between actionability and remedy, including quantification of damages, they would have disagreed with the way the majority characterised the provisions of the 1988 Act. It was the traditional distinction itself which the minority rejected. Thus Mason CJ, at p 445, proposed that the court should adopt:

"a new criterion for the substance-procedure distinction which…characterize[s] as procedural 'those rules which are directed to governing or regulating the mode or conduct of court proceedings'. All other provisions or rules are to be classified as substantive."

    41.  Deane J likewise said, at p 462, that the lex fori should be applied "only to the extent that it was procedural in the narrow sense of being directed to regulating court proceedings in that State" and Gaudron J adopted the same test: see pp 469-70.

    42.  In principle, therefore, I think that the relevant provisions of MACA should be characterised as procedural and therefore inapplicable by an English court. But Mr Palmer QC, who appeared for the defendant, submitted that in English private international law a limit or "cap" on the damages recoverable is regarded as substantive. There is, it is true, some authority for this proposition. The 7th edition (1958) of Dicey's Conflict of Laws, edited by Dr JHC Morris, contained the statement, at p 1092, "statutory provisions limiting a defendant's liability are prima facie substantive; but the true construction of the statute may negative this view" with a footnote: "This is suggested by two dicta in Cope v Doherty (1858) 4 K & J 367, 384-385 and (1858) 2 De G & J 614, 626."

    43.  Cope v Doherty concerned an application by the owners of an American ship which had collided with and sunk another American ship to limit its liability pursuant to section 504 of the Merchant Shipping Act 1854. Wood V-C held that the section did not apply to collisions between foreigners. The owners argued that the limitation rule was procedural and should therefore be applied as part of the lex fori. I should have thought that the short answer was that whether the rule was substantive or procedural, Parliament had said that it should not apply to foreigners and that was the end of the matter. But the Vice-Chancellor dealt with the argument on its own terms, 4 K & J 367, 384-385:

"Clearly an Act, which limits the damage to which the ship owner is to be liable under circumstances like the present, deals with the substance and not the form of the procedure. It in effect forms a contract that, whereas by the natural law the owner of the ship or property that has been injured would be entitled to damages to the full extent of the loss he has sustained, all those persons upon whom the Legislature can impose such a contract, that is to say, all its own subjects, shall forego that which the natural law - the common law, as we should call it in England - would give them, and shall be entitled only to the amount of the value of the ship by which the injury has been inflicted, and of the freight due or to grow due in respect of such ship during the voyage."

    44.  Thus his reasoning was that the statute operates as if it imposed a contractual term limiting the damages recoverable. In fact, one of the reasons why the Vice-Chancellor held that the statute did not apply to foreigners was that he thought that, as a matter of international law, the United Kingdom could only impose such a deemed contract upon British ships. Such a term in a contract would clearly be a modification of the substantive obligations of the parties. As Lord Diplock said in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 849:

"The contract…is just as much the source of secondary obligations as it is of primary obligations; and like primary obligations that are implied by law, secondary obligations too can be modified by agreement between the parties".

    45.  When Cope v Doherty went to the Court of Appeal, Turner LJ dealt with the point very briefly ((1858) 2 De G & J 614, 626):

"An attempt was made on the part of the appellants to bring this case within Don v Lippman and cases of that class, but I think those cases have no bearing upon the point. This is a question of liability, and not of procedure."

    46.  In my opinion the proposition in Dicey was too widely stated. Cope v Doherty is authority for the proposition that a contractual term which limits the obligation to pay damages for a breach of contract or a tort, or a statutory provision which is deemed to operate as such a term, qualifies the substantive obligation. It is not part of the rules of the lex fori for the assessment of damages. I therefore agree with the opinion of Street CJ in Allan J Panozza & Co Pty Ltd v Allied Interstate (Qld) Pty Ltd [1976] 2 NSWLR 192, 196-197 that a statutory limitation on damages deemed to be incorporated into a contract of carriage is "an express limitation upon the substantive liabilities." But, as the majority said in Stevens v Head (1993) 176 CLR 433, 458:

"Where the sources of the rights and obligations of contracting parties are in part the express terms of the contract and in part the provisions of its proper law, the courts of the forum are constrained to ascertain the parties' rights and obligations from those sources, not from the lex fori. In our respectful opinion, there is no valid analogy between the rules for determining the contractual rights and obligations arising in part from the proper law of the contract and the conflict of law rules governing the assessment of damages in respect of extraterritorial torts."

    47.  The Merchant Shipping (Amendment) Act 1862 extended the right to limit liability to all ships of whatever nation and thereafter it became impossible to regard such a provision as equivalent to a contractual term imposed upon British subjects. In my opinion, therefore, Clarke J was right in Caltex Singapore Pte Ltd v BP Shipping Ltd [1996] 1 Lloyd's Rep 286 to treat a modern limitation statute (in that case, of Singapore) as a procedural provision, limiting the remedy rather than the substantive right: see also Seismic Shipping Inc v Total E&P UK plc (The Western Regent) [2005] EWCA Civ 985; [2005] 2 Lloyd's Rep 359, 370.

    48.  There is accordingly in my opinion no English authority to cast any doubt upon the conclusion of the Australian High Court in Stevens v Head (1993) 176 CLR 433 that, for the purposes of the traditional distinction between substance and procedure which treats remedy as a matter of procedure, all the provisions of MACA, including limitations on quantum, should be characterised as procedural. This was also the view of the Court of Appeal in Roerig v Valiant Trawlers Ltd [2002] EWCA Civ 21; [2002] EWCA Civ 21; [2002] 1 WLR 2304. In John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, however, the High Court reversed itself, abandoned the traditional rule (at least for torts committed in Australia) and confined the role of the leges fori of the Australian States to procedure in the narrow sense of rules "governing or regulating the mode or conduct of court proceedings": see pp. 543-544. This change was said to be required by constitutional imperatives of Australian federalism. In a later decision (Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491, 520, para 76 the court left open the question of whether it would apply to foreign torts. But the decision in the Pfeiffer case 203 CLR 503 clearly influenced the judgments of the majority in the Court of Appeal in this case, to which I must now turn.

    49.  Arden LJ said, at p 1559, para 52 that "the meaning of substance and procedure for the purposes of section 14 of the 1995 Act must be sought in the context of the 1995 Act". That, if I may respectfully say so, seems to me plainly right. But then, instead of putting the 1995 Act into the context of the previous common law and the proposals of the Law Commission, she approached the matter in a more abstract way, saying that a reference to the law of the forum must be "justified by some imperative which, relative to the imperative of applying the proper law, has priority". Such a reason, she suggested, might be the inability of the English court to "put itself into the shoes of the foreign court" and adopt some procedure which was not available in this country. But otherwise, she thought that the principle adopted in the Pfeiffer case should be applied and restrictions on the right to recover damages in the foreign law should not be regarded as procedural.

    50.  Arden LJ may have been influenced in her approach to the construction of section 14(3)(b) by her view, expressed earlier in her judgment, at p 1559, para 51, that what she called "the damages principle", ie the rule that the assessment of damages is governed by the lex fori, was "one of uncertain meaning and application". So she felt that she was entitled to start on the basis that section 14(3)(b) was, so to speak, written on a clean sheet of paper. Of course there were peripheral uncertainties and differences of opinion. We have seen that in Boys v Chaplin [1971] AC 356 Lords Guest and Donovan were willing to give the concept of procedure wider application than the majority, although, if I may say so with respect, the majority were in my opinion plainly right. There was also some uncertainty, largely generated by Dicey's interpretation of Cope v Doherty 4 K&J 367; 2 De G & J 614, about whether a statutory limitation on damages could be construed as substantive. I could add other possible uncertainties which have not yet come before the courts. For example, there may be rules of foreign or domestic law, under which a tort or other wrongful act gives rise to a liability to pay a conventional sum of money, which make it impossible to separate the concept of actionable damage from the concept of a remedy for that damage. It might be more realistic to say that the rule simply lays down the conditions under which the claimant is entitled to payment of a prescribed sum of money. But I do not propose to explore this or other hypothetical cases because they do not arise in this case and, so far as I know, have not arisen in the past.

    51.  There can however be no doubt about the general rule, stated by Lord Mackay in the House of Lords debate, that "issues relating to the quantum or measure of damages" are governed by the lex fori. And this was the rule which Parliament intended to preserve. Even if there appeared to be more logic in the principle in Pfeiffer's case (and the 13th edition (2000) of Dicey and Morris, p 172, supports Arden LJ on this point) the question is not what the law should be but what Parliament thought it was in 1995. As Lord Lloyd of Berwick said of a provision in the Limitation Act 1980 in Lowsley v Forbes [1999] 1 AC 329, 342:

"It is Parliament's understanding of the existing law when enacting the Limitation Amendment Act 1980 that matters, not what the law is subsequently shown to have been. As Lord Simon of Glaisdale said in Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [1975] A.C. 591, 648:

'Once it is accepted that the purpose of ascertainment of the antecedent defect in the law is to interpret Parliament's intention, it must follow that it is Parliament's understanding of that law as evincing such a defect which is relevant, not what the law is subsequently declared to be.'

If common error can make the law, so can parliamentary error."

    52.  Sir William Aldous likewise said [2005] 1 WLR 1539 1566, para 86 that the term "procedure" in section 14(3)(b) "should be given its natural meaning". He placed considerable reliance upon John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, despite the express statements in that case that it was, for Australian reasons, departing from traditional principles of English law. Such a construction was, he said, supported by Dicey and Morris, which is true, and by the Law Commission's Report, which in my opinion is not true. The only passage in the Commission's Report which may be said to support the conclusion reached by Sir William Aldous (although not his reasoning) is paragraph 3.39, which reproduces Dicey's comment that "a statutory ceiling on damages" is a question of substance. But the Law Commission appears to have thought this proposition could be reconciled with its statement in the previous paragraph (3.38) which I have already quoted. In my opinion, that paragraph is consistent neither with the narrow construction of "procedure" adopted by Sir William Aldous nor with a characterisation of limits on damages as not being procedural in the broader sense.

    53.  In my opinion, therefore, Elias J was right to treat the MACA restrictions as entirely inapplicable. In the circumstances it is unnecessary to decide whether, if they had been properly characterised as substantive, it was open to the Court of Appeal to reverse his judgment that it was substantially more appropriate to apply English law. The hypothesis necessary to raise this question is in my view somewhat artificial, because most of the reasons why it may be more appropriate to apply English law are the reasons why the assessment of damages is traditionally characterised as a matter for the lex fori. I would therefore prefer not to express a view on this question. In my opinion the appeal should be allowed and the judgment of Elias J restored.

LORD RODGER OF EARLSFERRY

My Lords,

    54.  In January 2002 the claimant and the defendant were living together in London. The defendant, who is Australian, travelled to New South Wales to attend a family wedding. A fortnight later the claimant flew out to join her. On 3 February near Huskisson, New South Wales, the claimant was a passenger in a car driven by the defendant when it was involved in an accident. As a result of the accident the claimant was rendered tetraplegic. He subsequently commenced the present action for damages for his injuries against the defendant who was living in England at the time. She admits liability. The claimant contends that the English court should assess the damages according to English law, while the defendant contends that the assessment of damages is regulated by the law of New South Wales which limits the amounts which can be recovered.