Case Report

Assessment of Damages under Spanish Law: Scales v MIB [2020] EWHC 1747 (QB)

Date: 02/07/2020

Since the introduction of the Rome II Regulation on the law applicable to non-contractual obligations, and the consequential application of foreign law to the assessment of damages, there has been much litigation of catastrophic injury claims where damages are to be assessed under Spanish law. However,  Scales v MIB (heard by Cavanagh J in May 2020) is the first such reported case where Spanish law quantum was actually determined by an English court.  Although it was not in fact a case where Spanish law applied as a result of Rome II, it is an instructive example of the approach to the application of foreign law generally, and also to the important questions that arise when applying the Spanish law

Mr Scales was cycling in Spain when he was hit by an uninsured driver. He suffered multiple severe injuries. As the culpable driver was uninsured, Mr Scales applied for compensation from the MIB under the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003.  Under the scheme of the Motor Insurance Directives, the MIB would stand in the shoes of the Spanish Guarantee Fund, the Consorcio de Compensacion de Seguros (“CCS”), and then seek reimbursement from the CCS.  Consequent to the Supreme Court’s decision on the 2003 Regulations in Moreno v MIB [2016] UKSC 52, the claimant was entitled to the same compensation from the MIB as that to which he was entitled from the CCS: accordingly it was necessary to apply Spanish law in order to determine that sum.  (Thus Spanish law applied as a result of the Regulations rather than of Rome II.)

Cavanagh J directed himself that in applying Spanish law, he must not only apply the black-letter law, but also the “soft law” as well i.e. adopt the practices, conventions and guidelines that the foreign Court would apply. The judge noted that his role was to assess damages in the same way that a Spanish judge would do, even if that exercise might be unclear or difficult: defaulting to English law was not an option.

Spanish law uses a tariff system for the assessment of damages, the Baremo. The version of the Baremo which applied to the accident (the old Baremo) was substantially revised with effect from 1 January 2016. The revisions altered a number of rules considered to be unfair or unsatisfactory, resulting in the post 2016 Baremo being substantially more generous to claimants.

There are three aspects to the judge’s application of Spanish law that are particularly instructive. First, there was a significant issue as to whether there was flexibility under the old Baremo in awarding damages, or whether its provision for closed and limited categories of loss was to be strictly applied. Second, the judge had to identify the “consolidation date” (the date at which the victim’s injuries  reach a point of plateau or stabilisation) and assess the points to be awarded for permanent sequelae. Third, there was an issue as to whether penalty interest should be awarded.

Flexibility in the Baremo

The claimant argued that it was not necessary to apply the letter of the old Baremo but rather there was flexibility to award heads of loss not specifically dealt with by the express language. Further, that flexibility should be used, in line with the principle of restitutio in integrum, to make full compensation. The express terms of the Baremo were significant because they would preclude the bulk of his claim: a claim for hospital, pharmaceutical and medical expenses “post-consolidation”; expenses that were not hospital, pharmaceutical or medical, regardless of whether they were pre or post consolidation and, where the claimant was not a gran invalido, the claimant’s care claim.

The judge rejected the suggestion of the claimant’s Spanish law expert, who said in practice that the Spanish Courts would find a way round the strict wording and construe the old Baremo in line with the new and more generous post 2016 Cavanagh J accepted that the language of the old Baremo was clear and no such flexibility was allowed: he followed a “clear and authoritative steer” to this effect from a Spanish Supreme Court decision in 2017, although it was not strictly binding. He held that confining the old Baremo to its literal interpretation would accord with the legislative structure which set out detailed and specific rules. Further, the judge considered it would accord with legislative intention in that the old Baremo attempted to strike a balance between compensating claimants and keeping premiums low.

Accordingly, the limits of the Baremo could not be exceeded, even if their effect was unfair, and thus the claims for the bulk of the claimant’s past and future financial losses failed. In particular, there was no award at all for the cost of care.  Cavanagh J did decide, however, that the practice of the Spanish Courts was to “bump up” awards within a tariff where a head of loss was not otherwise recoverable within the Baremo and as long as the same remained within the tariff limits.

Consolidation date / sequelae

Cavanagh J also had to decide the consolidation date i.e. the date at which the claimant’s injuries plateaued or stabilised. This date is significant as substantially different tariffs apply pre and post consolidation. Further, he was required to attribute points in respect of the permanent effects of each of the injuries, in accordance with a detailed scale.

In a Spanish Court, a judge would be assisted in these tasks by a Forensic Medical Examiner: a doctor instructed by the court or the parties to advise a judge on matters of medical judgment. Cavanagh J had to rely instead on the medical reports and advice of the non-medically qualified Spanish law experts. In respect of consolidation, the parties were necessarily confined to simply making submissions on the medical evidence to construe a point at which recovery stopped.  In respect of the sequelae, the judge had to grapple with processing a large raft of English-style medical evidence to assess the number of points for each injury, and noted that all he could do was to do the best he could.

This highlights the substantial difficulty that can arise when attempting to quantify non-financial losses under a foreign law tariff or points scheme, without the benefit of relevant medico-legal evidence. Although the judge noted that there was no equivalent of a Forensic Medical Examiner in the English High Court, the court does have the power under CPR Part 35 to permit the parties to call foreign medico-legal evidence to assist in the resolution of such issues, either alongside or instead of English-style medical evidence.  Those specialising in cross-border personal injury cases frequently recognise the benefit of such expert evidence, particularly in complex injury cases, and will co-operate to obtain it.  This case illustrates the obvious advantage of doing so.

Penalty interest

Cavanagh J considered that the existence of a right to claim interest was a matter for the lex causae. However, in any event, the English Court had a discretionary power to award interest and to decide an amount of interest. It did not matter whether he proceeded under the lex causae or his discretion because the judge stated that he would regardless exercise his discretion in line with Spanish law.

Spanish law provides for an insurer or the CCS to be compelled to pay a penalty rate of interest on the full amount of damages – at 150% of the Spanish legal interest rate in the first two years, and at 20% pa thereafter – if they have failed to pay damages to an RTA victim within a short period of being presented with a claim.

Penalty interest will not be awarded where there is a justified delay in payment or where the delay is not attributable to the defendant, but the Spanish legal experts agreed that this exception must be interpreted restrictively, and that the mere fact that a defendant insurer might seek to defend a claim, and consider that it has a good defence, does not make good the exception.

Cavanagh J considered that it was not relevant to whether the exception was triggered that the MIB might not be as familiar with Spanish legal principles as the CCS or a Spanish insurer; or that the MIB was subject to English procedure, which had resulted in a longer period to trial. Rather, the MIB, standing in the shoes of the CCS must be treated in the same way the CCS would be treated had the matter proceeded in Spain. Penalty interest was accordingly awarded and the penalty was severe: the interest comprised almost a third of the total award.

Lucy Wyles of 2TG appeared for the Defendant, instructed by Weightmans LLP.

This case note was prepared by Lucy Wyles and Benjamin Phelps.

 

Back