The Supreme Court has considered the meaning of the word “damage” in the tort jurisdiction gateway contained in the Civil Procedure Rules, which permits service of English proceedings in tort on a defendant abroad where “damage was, or will be sustained, within the jurisdiction”. Overturning the Court of Appeal, a majority (3:2) of the Supreme Court took the view obiter that “damage” should be given its ordinary and natural meaning and therefore indirect loss suffered in England as a result of a tort committed abroad may be sufficient to establish the English court’s jurisdiction to hear the claim. The decision has potentially broadened the English courts’ jurisdiction in tort cases: Four Seasons Holdings Incorporated v Brownlie  UKSC 80
The case arose from a car accident on a sightseeing trip in Egypt in which the claimant was injured and her husband was killed. The claimant and her late husband were UK citizens. The claimant got permission to serve English proceedings in Canada for breach of contract and tort on the Canadian holding company of an international hotel group on the basis that the contract was made in England and, for the tort claims, damage (in the form of indirect loss) was suffered in England. The defendant challenged the jurisdiction of the English court.
Court of Appeal – narrow interpretation of “damage”
The Court of Appeal held that: (i) the claimant was entitled to bring proceedings in England for damages for breach of contract; and (ii) the English court had no jurisdiction to hear tort claims for personal injury to the claimant and on behalf of her late husband’s estate. “Damage” meant direct damage and did not include consequential damage. Claims for indirect loss suffered in England caused by foreign torts would not therefore fall within the English court’s jurisdiction. Both parties appealed.
Conditions for permission to serve proceedings outside the jurisdiction – a reminder
Before the English courts can allow service of a claim abroad (in circumstances where the English common law rules apply) the claimant must show that: (i) the case falls within at least one of the jurisdictional gateways in the Civil Procedure Rules (CPR PD 6B para 3.1); (ii) the claim has a reasonable prospect of success; and (iii) England and Wales is the proper place in which to bring the claim.
The evidential standard for establishing that a claim falls within a jurisdictional gateway is that of “a good arguable case” (Canada Trust Co v Stolzenberg (No 2)  EWCA Civ 2592). Lord Sumption said that there would be a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.
Jurisdiction for tort claims – what does “damage” mean?
The Supreme Court did not need to consider the tort claims jurisdictional gateway as it found that the Canadian holding company was not the correct defendant to the claimant’s claims. The Supreme Court made important obiter observations, however, on the meaning of “damage” for the purposes of the tort jurisdictional gateway, which enables the English court to permit service of an English tort claim abroad where “damage was sustained, or will be sustained, within the jurisdiction”.
Damage given a wide meaning – the view of the majority
Lady Hale considered that the claimant’s tort claims fell within the tort gateway to the extent that the claimant sought damages for personal injury to herself and, as executrix, to her late husband. There was a consistent line of first instance decisions allowing tort claims to be brought in England if damage is suffered here as a result of injuries inflicted abroad, which Lady Hale considered were correct. Lady Hale was reluctant to disagree with the first instance judges who had found that “damage” referred to the actionable harm caused by the alleged wrongful act and included all the detriment – physical, financial and social – which the claimant had suffered as a result of the defendant’s tortious conduct.
Despite giving “damage” a wide meaning, Lady Hale considered that the court’s discretion to refuse to give permission to serve proceedings outside of the jurisdiction should be robust enough to prevent claimants from choosing where to bring a claim.
Lord Wilson and Lord Clarke agreed with Lady Hale. In particular, they considered that because the tort gateway refers to “damage” rather than “the damage,” “damage” can be wider than the damage which violates the claimant’s interests and which completes the cause of action.
Damage given a narrower meaning by the minority
In the minority, Lord Sumption (with whom Lord Hughes agreed) thought that “damage” meant the damage which completed the cause of action.
Lord Sumption considered that “damage” meant direct damage, relating to the nature of the duty broken in a personal injury action and the character of the damage recoverable. There was a fundamental difference between the damage done to an interest protected by law and facts that only go to evidence the financial value of the damage. The first and most important interest protected by the law of tort was bodily integrity. A tort against bodily integrity is complete at the time of the injury, even though damage “is an essential element of it”.
Lord Sumption said that there are two important policy considerations supporting a narrow interpretation of “damage”:
- The jurisdictional gateways seek to identify a substantial link between the cause of action and England. This purpose is better served by locating jurisdiction where the interest of the claimant was damaged rather than by asking where the claimant experienced the effects of the damage.
- Despite differences between the English and the European jurisdictional regimes, the approach adopted by the European Court of Justice (see eg Marinari v Lloyds Bank Plc(Case C-364/93)  QB 217) should be followed. It embodied an unanswerable analysis of what constituted damage and the English tort gateway had been drafted to assimilate the tests for asserting jurisdiction over persons domiciled in a European Union member state and persons domiciled elsewhere.
Although the case related to a personal injury action the Supreme Court’s observations are relevant for all types of tort claims in which the English court’s permission is required to serve outside England. Lady Hale stressed that the Supreme Court’s obiter views on jurisdiction “should be treated with appropriate caution”, but, they have created new uncertainty by challenging the Court of Appeal’s more restrictive interpretation of the meaning of “damage.”
The case also suggests at least some judicial appetite for reform of the contract gateway in the Civil Procedure Rules which permits service abroad of claims arising from contracts made in England. When finding that there had not been any contract between the claimant and the defendant, Lord Sumption noted obiter that the legal test for where or when a contract is made is somewhat artificial in nature. The test is particularly arbitrary when the mode of communication used is instantaneous as it depends on assumptions about the point at which an offer is accepted or deemed to be accepted and gives rise to serious practical difficulties. Lord Sumption considered that the issue could “profitably be re-examined” by the Civil Procedure Rules Committee.
The case is also a useful reminder of ensuring proceedings are brought against the correct defendant, which can be easier said than done in the context of claims against companies within complex multinational group structures.