England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/10/2014

MRS JUSTICE SLADE:

1. The issue for determination in this application is whether German or English law applies to the assessment of damages for personal injury arising from a road traffic accident which occurred on 16 November 2009 in Germany. Liability was conceded by the First Defendant's insurer, the Second Defendant. The Second Defendant is domiciled in England. Proceedings were issued in England. Council Regulation on Jurisdiction No. 44 of 2001 and the Fourth and Fifth Motor Insurance Directives No. 2000/26/EC and No. 2005/14/EC apply. The only remaining issues to be determined in the proceedings are the causation and quantum of the damages to which the Claimant is entitled.
2. At the time of the accident the Claimant had been living in Germany for about eight and a half years, having moved there with her husband who was in the Army and had been posted there. She is a UK national as is the First Defendant. The Claimant was a rear seat passenger in a motor vehicle driven by the First Defendant. The motor car was involved in a head-on collision with another vehicle driven by a German national.
3. By her Particulars of Injury the Claimant claims in respect of a prolapsed disc, continuing pain in the right leg, nerve related pain and depression. Her Schedule of Special Damages includes loss of earnings, the cost of care and assistance and medical expenses.
4. By their Defence, the Second Defendant avers that:

"…pursuant to Article 4(1) of Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations ('Rome II'), German law is the law applicable to all issues arising out of the accident, including but not limited to the availability of a cause of action giving rise to actionable damage, identification of recoverable heads of loss or damage and mitigation."

5. On 6 December 2013 District Judge Jenkins entered judgment for the Claimant with causation and quantum to be assessed. He ordered that:

"There be a preliminary issue hearing by the Court in order to determine the appropriate law for the assessment of damages in the claim, namely whether German law or English law applies."

6. The determination of the Preliminary Issue, that of whether German or English law applies to the assessment of damages, turns on the interpretation and application of Article 4 of Council Regulation No. 864/2007 on the law applicable to non-contractual obligations ('Rome II').
7. The relevant recitals to Rome II provide:

"(14) The requirement of legal certainty and the need to do justice in individual cases are essential elements of an area of justice. This Regulation provides for the connecting factors which are the most appropriate to achieve these objectives. Therefore this Regulation provides for a general rule but also for specific rules and, in certain provisions, for an 'escape clause' which allows a departure from these rules where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country. This set of rules thus creates a flexible framework of conflict-of-law rules. Equally it enables the court seised to treat individual cases in an appropriate manner.

(16) Uniform rules should enhance the foreseeability of court decisions and ensure a reasonable balance between the interests of the person claimed to be liable and the person who has sustained damage. A connection with the country where the direct damage occurred (lex loci damni) strikes a fair balance between the interests of the person claimed to be liable and the person sustaining the damage, and also reflects the modern approach to civil liability and the development of systems of strict liability.

(17) The law applicable should be determined on the basis of where the damage occurs, regardless of the country or countries in which the indirect consequences could occur. Accordingly, in cases of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged respectively.

(18) The general rule in this Regulation should be the lex loci damni provided for in Article 4(1). Article 4(2) should be seen as an exception to this general principle, creating a special connection where the parties have their habitual residence in the same country. Article 4(3) should be understood as an 'escape clause' from Article 4(1) and (2), where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country.

…

(33) According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seised should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and costs of after-care and medical attention."

Rome II Article 4 provides:

"1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question."

The facts relied upon by the parties

8. Save for whether the Claimant and the First Defendant were both habitually resident in England or Germany at the time of the accident and the causation and nature of the alleged loss and damage, the facts which are set out in the witness statements of the Claimant dated 11 September and 29 December 2013 and that of her husband dated 4 April 2014 are not in dispute. These are that:

i) The Claimant is a UK national.

ii) At the time of the accident, 16 November 2009, the Claimant was living in Germany, having moved there in January 2001 with her husband who was a member of HM Armed Services. Germany was not the preferred posting of the Claimant's husband. It was his second choice. He had four separate three year postings in Germany.

iii) Since the Claimant's husband was due to leave the army in February 2014 after twenty-two years' service he would have returned to England one and a half to two years before that date to undertake re-settlement training. It was always their intention to return to live in England.

iv) Whilst in Germany, the Claimant and her family lived on a British Army base where schools provided an English education. The Claimant's eldest son remained in England at boarding school when the Claimant's husband was posted to Germany. Their three other children were at school in Germany.

v) The Claimant was employed while in Germany on a full-time basis as an Early Years Practitioner by Service Children's Education. This is a UK Government Agency.

vi) On 16 November 2009 the Claimant was a rear seat passenger in a motor vehicle driven by the First Defendant. The car was involved in a head-on collision with a vehicle driven by a German national. The accident is admitted to have been caused by the negligent driving of the First Defendant.

vii) The Claimant suffered injury for which she received some treatment in Germany.

viii) The Claimant and her husband returned to live in England in June 2011, earlier than planned. Her husband left the Army in August 2013.

ix) The Claimant claims continuing loss and damage including care and assistance and loss of earnings. She asserts that the majority of her loss has been and will be incurred in England. The Claimant alleges continuing pain, suffering and loss of amenity.

x) The First Defendant is a UK national. She was also an army wife. Her husband served with the Army in Germany. She had been in Germany for between eighteen months and two years before the accident. She returned to England soon afterwards.

xi) The Second Defendant was the motor insurer of the First Defendant. It is a limited company registered in England and Wales.

xii) Proceedings were started and are continuing in the English courts.

The submissions of the parties

9. Mr Chapman for the Claimant accepted that if Article 4(1) was not displaced, German law would apply to the assessment of damages in this case. However he contended that the rule in Article 4(1) is displaced by Articles 4(2) or 4(3), the latter being principally relied upon.
10. As for Article 4(2), Mr Chapman contended that the Claimant and the First Defendant were habitually resident in England at the time of the accident. Further, by reason of Article 23 which provides:

"1. For the purposes of this Regulation, the habitual residence of companies and other bodies, corporate or unincorporated, shall be the place of central administration."

the Second Defendant was and is habitually resident in the United Kingdom.

11. Whilst Rome II includes a definition of the habitual residence of corporate bodies, there is no such definition for individuals. The question of where an individual is habitually resident is one of fact.
12. Mr Chapman submitted that the following principles are to be applied in determining habitual residence. The mere fact of residence in a particular country is not sufficient: the duration of residence and the settled intention of the person in question are relevant. Counsel relied upon M v M [2007] EWHC 2047 in which Munby J (as he then was) referred to habitual residence as:

"…the place where the person had established, on a fixed basis, his permanent or habitual centre of interests, with all the relevant facts being taken into account for the purpose of determining such residence."

Mr Chapman also relied upon passages in Dicey Morris and Collins on the Conflict of Laws (15^th Edition 2012) paragraphs 6-123, Andrew Dickinson, The Rome II Regulation (2008) paragraph 3.51 and Cheshire, North and Fawcett, Private International Law (14^th Edition 2008), page 186 to submit that a settled intention to reside in a particular place was relevant to determine habitual residence. Further, counsel relied upon page 185 of Cheshire, North and Fawcett citing Lord Scarman in R v Barnet London Borough Council ex p Shah [1983] 2 AC 309 in writing that both ordinary and habitual residence:

"…refer to a person's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or long duration…"

13. Submitting that the Claimant was habitually resident in England at the time of the accident, Mr Chapman relied in particular on the short-term nature of the Claimant's residence in Germany, the fact that her husband was not there voluntarily but because of posting and that their settled intention was to return to live in England.
14. Mr Chapman contended that applying the principles he had outlined, the First Defendant as well as the Claimant was habitually resident in England at the time of the accident. By November 2009 she had been in Germany for a short period of time. Thereafter the First Defendant remained for a limited time and was always to return to England. As was the situation of the Claimant, the First Defendant did not live in Germany voluntarily. She was there because of her husband's Army posting.
15. Article 4(2) applies where "the person claimed to be liable" and the person sustaining damage both have their habitual residence in the same country when the damage occurs. Mr Chapman submitted that if the Second Defendant is "the person claimed to be liable" because as the insurer it will have to meet the loss and damage caused by the First Defendant's negligence, Article 23 provides that it is habitually resident in the United Kingdom. Whether the "person claimed to be liable" is the First or the Second Defendant, they as well as the Claimant, were both habitually resident in England. In accordance with Article 4(2) English law applies.
16. While advancing an argument that Article 4(2) displaces Article 4(1), Mr Chapman's principal submission was that by operation of Article 4(3) English law applies to the assessment of damages. He accepted that the burden of establishing that Article 4(3) applies rested on the party, in this case the Claimant, seeking to disapply Article 4(1). The Regulation requires that a party relying on Article 4(3) must show that in all the circumstances, the tort is manifestly more closely connected with a country other than that indicated by Article 4(1) or 4(2). Mr Chapman also referred to paragraph 35-032 of Dicey which states that Article 4(3) should only be applied where there is a "clear preponderance of factors" pointing to another country than that indicated by Articles 4(1) or 4(2).
17. Mr Chapman pointed out that unlike Articles 4(1) and 4(2) which require consideration of specified factors at the time of the damage, the relevant factors to be considered in applying Article 4(3) are not limited in time or subject matter.
18. Mr Chapman relied upon the factors set out by Mr Dickinson in the The Rome II Regulation (2008) at paragraph 4.87. Counsel listed the following factors which are taken from Mr Dickinson's text:

"a. The presence or absence of factual connectors other than damage or habitual residence as these are dealt with in Articles 4(1) and 4(2);

b. Any factual connectors between the tort and the country under consideration;

c. Any pre-existing relationship between the parties. This is expressly referred to in Article 4(3);

d. The personal connections of the persons involved;

e. The permanence or transience of the circumstances that link the tort to State A (that indicated by Article 4(1) or 4(2)) or State B (a different state);

f. The nature of the connecting factors, in particular whether those linking factors were foreseeable, tangible, accidental, artificial or open to manipulation;

g. The occurrence of personal injury or damage to property (as opposed to non-material damage) in State A."

19. Mr Chapman also relied upon the judgment of Sir Robert Nelson in Stylianou v Toyoshima and Suncorp Metway Insurance Ltd [2013] EWHC 2188 to contend that the words "in all the circumstances" include the consequences of a tort. They therefore include the injuries and damage arising from the tort. Mr Chapman contended that where the majority of consequential loss is incurred in State B, although the accident occurred in State A, the centre of gravity of the tort referred to in the Explanatory Note in the Proposal by the European Commission for Rome II and by Flaux J in Fortress Value Recovery Fund ILLC and others v Blue Skye Special Opportunities Fund LP and others [2013] EWHC 14, is in State B. Accordingly the proper law of the tort is that of State B, in this case, England.
20. Counsel for the Claimant relied upon Article 15(c) of Rome II considered in Wall v Mutuelle de Poitiers Assurances [2014] EWCA Civ 138, to contend that English law determines the assessment of damages. Article 15 provides:

"The law applicable to non-contractual obligations under this Regulation shall govern in particular:

…

(c) the existence, the nature and the assessment of damage or the remedy claimed."

Mr Chapman contended that recital (33) to Rome II made special provision for the proper law of the assessment of damages in road traffic cases. Where the accident takes place in a state other than the habitual residence of the victim at the time the loss is incurred, damages are to take into account in particular the actual losses and costs of after-care and medical attention in the state of the then habitual residence of the claimant.

21. Mr Chapman accepted that the determination of the applicable law under Rome II would apply to the whole of the tort. However the circumstances to be taken into account depend on the issues to be determined in the proceedings. It was said that the law of the tort is determined at trial. Accordingly if liability is conceded, the relevant circumstances to be taken into account in applying Article 4(3) are those relating to the assessment of damages. Mr Chapman recognised that on his argument there was a tension between certainty and flexibility.
22. Mr Chapman contended that in accordance with the principles he outlined, in applying Article 4(3), over-weaning weight was not to be given to the place where the loss and damage was suffered. The continuing damage and loss was and will be suffered in England. The current habitual residence of the victim and the Defendants was also of importance. Their habitual residence is in England. Other facts which indicate that the tort is manifestly more closely connected with England than Germany are the nationality of the Claimant and the First Defendant, that the First Defendant was insured by an English insurance company and that her vehicle was registered in England. The litigation was being conducted in the English courts. Whilst the accident due to the First Defendant's negligence took place in Germany all the other relevant factors pointed to a manifestly closer connection with England. English law applies to the determination of damages.
23. Miss Kinsler for the Defendants submitted that Article 4(1) was not displaced by Article 4(2) or 4(3).
24. As for Article 4(2), at the time of the accident the habitual residence of the Claimant was Germany as was that of the First Defendant.
25. Miss Kinsler pointed out that the person claimed to be liable within the meaning of Article 4(2) is the First Defendant not the Second Defendant, the insurer. This is clear from the judgment of Owen J in Jacobs v Motor Insurers Bureau [2010] EWHC 231. Owen J held at paragraph 42:

"…I do not consider that 'the person claimed to be liable' can sensibly be said to be the MIB. It must refer to the person whose conduct caused the damage, the tortfeasor."

Accordingly the habitual residence of the Second Defendant is irrelevant for the purposes of Article 4(2).

26. Counsel contended that by reason of Article 25 of Rome II, the United Kingdom is not to be regarded as one country for the purposes of Article 4. Not every territorial unit in the United Kingdom has the same system of law. There is no United Kingdom law. The Claimant and the First Defendant have United Kingdom not English nationality. The United Kingdom is not a country in which they can have habitual residence. That would be England.
27. The Claimant's or the First Defendant's intention as to where she would live after her husband's posting came to an end is not relevant in determining their habitual residence. Miss Kinsler did not accept the contrary submission made by Mr Chapman. Counsel relied on the judgment of Baroness Hale in In Re LC (Children) [2014] 2 WLR 124 at paragraph 59 to submit that intention is not the correct test to apply in determining habitual residence. Further, Miss Kinsler did not accept that the fact that the Claimant was in Germany because her husband was posted there by the Army rendered her residence involuntary.
28. Miss Kinsler submitted that having regard in particular to the fact that the Claimant had been living in Germany for eight and a half years before the accident and remained there for eighteen months afterwards, that she was settled in Germany, that three of her sons were at school in Germany and that she worked there, at the time of the accident, her habitual residence was Germany. The fact that the Claimant and her husband were eventually to return to England, that her husband was posted in Germany and that she was a United Kingdom national did not alter the position. The Claimant was not habitually resident in England at the time of the accident. English law did not apply to the claim by reason of Article 4(2).
29. As for the contention that the operation of Article 4(1) was displaced by Article 4(3), consistently with the objective of Rome II to achieve legal certainty, the wording of Article 4(3), preamble (18), the Commission Proposal for Rome II and the authorities, the circumstances justifying a departure from, in this case, Article 4(1) must be truly exceptional. It was submitted by Miss Kinsler that the circumstances of this case do not show that the tort is manifestly more closely connected with England than Germany.
30. In its Proposal for Rome II, the Commission made it clear that to fall within the exception provided by Article 4(3) (then 3(3)) the circumstances "really must be exceptional". Article 4(3) introduces a degree of unforeseeability into rules intended to be certain. Another aim of the rules on the applicable law of tort was to reduce forum shopping. The applicable law should be the same no matter in which court the claim is heard. These principles facilitated the free movement of judgments.
31. Miss Kinsler pointed out that the suggestion raised by Mr Chapman in the light of Stylianou [63] – [64] that the enquiry under Article 4(3) for the purposes of determining the proper law of the tort was similar to that of determining the proper place for the case to be heard is in fact contrary to the judgment of Sir Robert Nelson in Stylianou. The Judge held at paragraph 115 that:

"The test under forum conveniens is different from the similar test under Article 4(3) of Rome II as this test relates to which law is the applicable law rather than the proper place for the trial."

The fact that proceedings have been brought in England is not relevant to the issue under Article 4(3).

32. Miss Kinsler submitted that recital (33) to Rome II is not a rule. It encourages courts to take account of local conditions such as local costs of care where losses are incurred. The preamble cannot alter the provisions of Article 4. In any event it does not require the application of the law of the country where consequential loss is incurred to the determination of loss and damage.
33. Miss Kinsler did not accept Mr Chapman's contention that the circumstances of the case to be taken into account in determining for the purposes of Article 4(3) – whether the tort was manifestly more connected with a country other than that indicated in Article 4(1) or 4(2) – varied depending on the stage reached in the proceedings. To have a different applicable law depending upon whether liability as well as damages were at issue or liability or damages alone would introduce an unacceptable element of uncertainty and possible "applicable law shopping" which would be contrary to the purpose of Rome II.
34. The question to be determined under Article 4(3) is not whether an issue in the proceedings, here damages, is more closely connected with a different country from that mandated by Article 4(1) or 4(2) but whether the tort is so connected. Article 4(3) does not specify the factors to be taken into account. However, Miss Kinsler submitted that that where loss is suffered on its own could not be determinative as consequential loss has been excluded as such a factor in Article 4(1). What may be of more significance is the proportion of loss incurred in a country other than that where the accident took place.
35. Miss Kinsler took issue with the list of factors to be taken into account in determining whether the tort is manifestly more closely connected with country B than country A for the purposes of Article 4(3) set out by Mr Dickinson in The Rome II Regulation paragraph 4.8.7. She submitted that where the accident happened, where injury was sustained and where the parties involved in the accident were habitually resident at the time of the accident, which are excluded by Mr Dickinson in paragraph 4.8.7, are factors which are relevant to considering whether Article 4(3) applies. Miss Kinsler suggested that the correct approach is to assess each relevant factor and then their global impact.
36. Miss Kinsler contended that the "centre of gravity" of the tort is clearly Germany. The accident took place in Germany. The Claimant's personal injury was sustained in Germany where she remained for eighteen months after the accident. The parties involved in the accident were all resident in Germany at the time of the accident. The Claimant had been in Germany for eight and a half years. The countervailing factors are the nationality of the Claimant and the First Defendant, the fact that the insurer is an English registered company and that the Claimant is now living in England.
37. It was submitted the British nationality of the Claimant and First Defendant is not a factor which connects the tort to England for the purposes of Article 4(3). The Claimant is not an 'English' national and there is no 'United Kingdom' tort law. In any event Rome II focuses on habitual residence rather than nationality. The habitual residence of both the Claimant and the person liable for causing the accident at the time it took place was Germany. Whilst the habitual residence of the Claimant and First Defendant at the time the applicable law is to be determined is relevant to consideration of Article 4(3), it is a weak factor connecting the tort to England. The Claimant suffering continuing loss in England on its own is not sufficient to show that the tort is more closely connected with England than with Germany. Accordingly Article 4(1) is not displaced by either Article 4(2) or 4(3) and German law applies to the proceedings brought by the Claimant in England.

Discussion and conclusion

38. Article 4 of Rome II applies to all torts. The Article is modified by express provision in respect of some torts such as product liability and industrial action. Recitals (6), (14) and (16) make it clear that the objective of the Regulation is to achieve legal certainty. Preamble (6) provides:

"The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict of law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought."

Preamble (18) provides that Article 4(2) should be seen as an exception to the general rule that the lex loci damni, the law of the place of the tort, is the law to be applied. Article 4(3) should be understood as an "escape clause" from Article 4(1) and 4(2). This escape clause only applies where there is a manifestly closer connection with a different country than that mandated by Article 4(1) or 4(2).

39. To bring herself within Article 4(2), the Claimant has to establish that she was habitually resident in England at the time of the accident. In addition the person claimed to be liable must be shown to be habitually resident in England at the time. It is clear from the judgment of Owen J in Jacobs that "the person claimed to be liable" for the purposes of Article 4(2) is the First Defendant driver not the Second Defendant. It is therefore immaterial for the purposes of Article 4(2), although not Article 4(3), that the insurer is registered and therefore to be regarded by reason of Article 23 as habitually resident in England.
40. Habitual residence has been considered in a variety of legal contexts, perhaps in particular in family law. In Re LC (Children) [2014] 2 WLR 124 Baroness Hale with whom Lord Sumption agreed held:

"59. The first principle is that habitual residence is a question of fact: has the residence of a particular person in a particular place acquired the necessary degree of stability (permanent is the word used in the English versions of the two CJEU judgments) to become habitual? It is not a matter of intention: one does not acquire a habitual residence merely by intending to do so…"

In Re LC (Children) Lord Wilson drew attention at paragraph 30 to the conclusion reached in A v A (Children: Habitual Residence) [2014] AC 1 that the test for habitual residence set out by Lord Scarman in Barnet ex p Shah should be abandoned and the test should be that affirmed by the CJEU in Mercredi v Chaffe (Case C-497/10 PPU) [2012] Fam 22 paragraph 47. Whilst the test in Mercredi and in LC has to some extent to be viewed in the context of the questions before the court, the habitual residence of a child for the purpose of determining an issue in family proceedings, its application is not restricted. Baroness Hale stated:

"60. …I agree with Lord Wilson JSC (para 37) that 'wishes', 'views', 'intentions' and 'decisions' are not the right words, whether we are considering the habitual residence of a child or indeed an adult. It is better to think in terms of the reasons why a person is in a particular place and his or her perception of the situation while there – their state of mind."

41. The Claimant had been living and working in Germany for eight and a half years by the time of the accident. She was living there with her husband. Three of their children were at school in Germany. The family remained living in Germany for a further eighteen months after the accident. There was no evidence that during this time the family had a house in England. The residence of the Claimant in Germany was established for a considerable period of time. The fact that the Claimant and her family were living in Germany because the Army had posted her husband there and that it was not his first choice does not render her presence there involuntary. He and his family were living in Germany because of his job. The situation of the Claimant in Germany was similar to that of the spouses of other workers posted abroad. This is not an unusual situation. Having regard to the length of stay in the country, its purpose and the establishing of a life there – three children were in an army run school in Germany and the Claimant worked at an army base school – in my judgment the habitual residence of the Claimant at the time of her accident was Germany. When the Claimant came to live in England in 2011 her status changed and she became habitually resident here. However, the family's intention to return to live in England after the Claimant's husband's posting in Germany came to an end did not affect her status in November 2009. The Claimant has not established that the law of the tort indicated by Article 4(1), German law, has been displaced by Article 4(2).
42. The burden is on the Claimant to establish that the effect of Article 4(1) is displaced by Article 4(3). The standard required to satisfy Article 4(3) is high. The party seeking to disapply Article 4(1) or 4(2) has to show that the tort is manifestly more closely connected with a country other than that indicated by Article 4(1) or 4(2).
43. The circumstances to be taken into account are not specified in Article 4(3). As does Miss Kinsler, I respectfully take issue with the exclusion by Mr Dickinson from the circumstances to be taken into account under Article 4(3) of the country in which the accident and damage occurred or the common habitual residence at the time of the accident of the Claimant and the person claimed to be liable. That these are determinative factors for the purposes of Articles 4(1) and 4(2) does not exclude them from consideration under 4(3). All the circumstances of the case are to be taken into account under Article 4(3). If the only relevant circumstance were the country where the damage occurred or the common habitual residence of the Claimant and the tortfeasor the issue of the proper law of the tort would be determined by Article 4(1) or 4(2). However, these factors are not excluded as being amongst others to be considered under Article 4(3). Further, under Article 4(2), habitual residence is to be considered at the time when the damage occurs. Preamble (17) to Rome II makes clear that the country in which damage occurs, which is the subject of Article 4(1), is the country where the injury was sustained. However, under Article 4(3), the habitual residence of the Claimant at the time when consequential loss is suffered may also be relevant.
44. Mr Chapman rightly acknowledged that one system of law governs the entire tortious claim. Different systems do not govern liability and quantum. In Harding v Wealands [2005] 1 WLR 1539, the issue was whether damages for personal injury caused by negligent driving in New South Wales Australia should be calculated according to the law applicable in accordance with the Private International Law (Miscellaneous Provisions) Act 1995 ('the 1995 Act') or whether it is a question of procedure which fell to be determined in accordance with the lex fori, English law. Considering factors which connect the tort with respective countries, in section 12(1)(b) of the 1995 Act, a provision similar to Article 4(3), Waller LJ in observed at paragraph 12:

"…the identification is of factors that connect the tort with the respective countries, not the issue or issues with the respective countries."

The majority judgment of the Court of Appeal, Waller LJ dissenting, was overruled in the House of Lords. The obiter observations of Waller LJ on the factors which connect the tort rather than separate issues with a particular country were undisturbed on appeal.

45. I do not accept the contention by Mr Chapman that the circumstances to be taken into account in considering Article 4(3) will vary depending upon the issues to be determined and, as I understood his argument, the stage reached in the proceedings. Nor do I accept the submission that "the centre of gravity" of the tort when liability was conceded and only damages were to be considered depended upon circumstances relevant to or more weighted towards that issue. As was held by Owen J at paragraph 46 of Jacobs:

"…the question under Art 4(3) is not whether the right to compensation is manifestly more connected to England and Wales, but whether the tort/delict has such a connection."

The "centre of gravity" referred to in the Commission Proposal for Rome II and by Flaux J in Fortress Value in considering Article 4(3) is the centre of gravity of the tort not of the damage and consequential loss caused by the tort.

46. Whilst I do not accept the argument advanced by Mr Chapman that different weight is to be attributed to relevant factors depending on the stage reached in the litigation, since there is no temporal limitation on these factors, a court will make an assessment on the relevant facts as they stand at the date of their decision. The balance of factors pointing to country A rather than country B may change depending upon the time but not the stage in the proceedings at which the court makes its assessment. At the time of the accident both the claimant and the defendants may be habitually resident in country A and by the time of the court's decision, in country B. At the time of the accident it may have been anticipated that all loss would be suffered in country A but by the date of the assessment it is known that current and future loss will be suffered in country B.
47. There is some difference of opinion as to whether the circumstances to be taken into account in considering Article 4(3) are limited to those connected with the tort and do not include those connected with the consequences of the tort. It may also be said that the tort and the consequences of the tort are treated as distinct in Article 4. Article 4(1) refers separately to the tort, to damage and to the indirect consequences of the "event". Article 4(2) refers to "damage". Accordingly it could be said that the reference in Article 4(3) to tort but not also to damage or indirect consequences indicates that it is only factors showing a manifestly closer connection of the tort, but not the damage direct or indirect, caused by or consequential on it, which are relevant.
48. Section 12 of the 1995 Act considered in Harding, whilst differing from Article 4(3) by including reference to the law applicable to issues in the case was otherwise to similar effect in material respects to Article 4(3). Section 12(2) provides:

"The factors that may be taken into account as connecting a tort or delict with a country for the purposes of this section include, in particular, factors relating to the parties, to any of the events which constitute the tort or delict in question, or to any of the circumstances or consequences of those events."

Applying section 12, Elias J, as he then was, in deciding whether the law of the place of the motor vehicle accident should be displaced, took into account "the fact that the consequences of the accident will be felt in England" [34]. This approach was not doubted on appeal CA [17]. In Stylianou, Sir Robert Nelson adopted a similar approach when considering Article 4(3) which does not expressly include the consequences of the tortious events as a relevant factor in determining whether the general rules as to the applicable law of the tort are displaced. The Judge observed that there are powerful reasons for saying that the Claimant's condition in England is a strong connecting factor with this country. [83].

49. Including the consequences of a tort as a factor to be taken into account in considering Article 4(3) has received endorsement from writers on the subject. Mr Dickinson writes in The Rome II Regulation at paragraph 4.86:

"The reference in Article 4(3) to 'the tort/delict' (in the French text, 'fait dommageable') should be taken to refer in combination to the event giving rise to the damage and all of the consequences of that event, including indirect consequences."

Further the authors of Dicey write at paragraph 35-032:

"Thus it would seem that the event or events which give rise to damage, whether direct or indirect, could be circumstances relevantly considered under Art 4(3), as could factors relating to the parties, and possibly also factors relating to the consequences of the event or events."

50. Whilst the answer to the question is by no means clear, I will adopt the approach suggested as possible in Dicey, as correct by Mr Dickinson and adopted by Sir Robert Nelson. Accordingly the link of the consequences of the tort to a particular country will be considered as a relevant factor for the purposes of Article 4(3).
51. Unlike Articles 4(1) and 4(2), Article 4(3) contains no temporal limitation on the factors to be taken into account. If, as in this case, the claimant and the defendant were habitually resident in country A at the time of the accident but in country B at the time the issue of whether the exception provided by Article 4(3) applied, in my judgment both circumstances may be taken into account. Similarly, if at the time of the accident it was anticipated that the Claimant would remain in country A and all her consequential loss would be incurred there, but by the time the issue of whether the exception provided by Article 4(3) applied, she had moved to country B and was incurring loss there, in my judgment both circumstances may be taken into account in deciding whether in all the circumstances the tort is manifestly more closely connected with country B than with country A.
52. The European Commission recognised in their proposal for Rome II that the "escape clause" now in Article 4(3) would generate a degree of unforeseeability as to the applicable law. In my judgment that unforeseeability includes not only the factors taken into account but also that the nature and importance of those factors may depend upon the time at which a court makes an assessment under Article 4(3) in deciding whether there is a "manifestly closer connection" of the tort with country B rather than country A. The court making a decision under Article 4(3) undertakes a balancing exercise, weighing factors to determine whether there is a manifestly closer connection between the tort and country B rather than country A whose law would otherwise apply by reason of Article 4(1) or 4(2).
53. Whilst Mr Chapman relied principally on the country where consequential loss is being suffered and the current habitual residence of the Claimant and the First Defendant, I also consider other factors raised by counsel in determining whether, in all the circumstances of the case, the tort is manifestly more closely connected with England than with Germany.
54. In my judgment the common United Kingdom nationality of the Claimant and the First Defendant is a relevant consideration. Waller LJ at paragraph 18 of Harding considered the nationality of the Defendant to a road traffic accident claim to be relevant to determining the applicable law of the tort under the similar provisions of section 12 of the 1995 Act.
55. Although there is no United Kingdom law or English nationality in my judgment that does not, as was contended by Miss Kinsler, prevent the United Kingdom nationality of those involved in the tort being relevant to whether English law applies. For example the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 implementing Directive 2000/26/EC of 16 May 2000, the Fourth Motor Insurance Directive, referred in Regulation 13(1)(i) to the United Kingdom as "an EEA state". Regulation 12(4) specified the law applicable to loss and damage as that "under the law applying in that part of the United Kingdom in which the injured party resided at the date of the accident". Article 25 of Rome II provides that:

"Where a State comprises several territorial units, each of which has its own rules of law in respect of non-contractual obligations, each territorial unit shall be considered as a country for the purposes of identifying the law applicable under this Regulation."

I take into account the United Kingdom nationality of the Claimant and the First Defendant at the time of the accident and now, when the issue is being determined, as a factor indicating a connection of the tort with English law.

56. That the Claimant and the First Defendant are now habitually resident in England is, in my judgment in the circumstances of this case, relevant to determining the system of law to which the tort has a greater connection. However, I view the weight to be given to this factor in the light of the Claimant's habitual residence in Germany for about eight and a half years by the time of the accident. The Claimant was not a short-term visitor to Germany. She had established a life there with her husband for the time being.
57. I take account of the fact that the Claimant remained in Germany for a further eighteen months after the accident during which time she received a significant amount of medical treatment for her injuries including, in June 2010, an operation to remove a prolapsed disc. The Claimant states that between 15 and 25 March 2011 she spent just under two weeks in a German hospital for pain management. In April and May 2011 she had further treatment in Germany for the pain. Some of the injuries she suffered after the accident, neck and shoulder pains and pain in her stomach, resolved whilst she was in Germany.
58. Article 15 of Rome II makes it clear that the applicable law determined by its provisions applies not only to liability but also to:

"15(c) the existence, the nature and the assessment of damage or the remedy claimed."

Whilst recital (33) states that when quantifying damages for personal injury in road traffic accident cases all the relevant actual circumstances of the Claimant including actual losses and costs of after-care should be taken into account by the court determining the claim of a person who suffered the accident in a State other than that where they were habitually resident, as Sir Robert Nelson observed at paragraph 78 of Stylianou, the recital cannot override the terms of Article 4.

59. In my judgment "all the circumstances" of the case relevant to determining whether a tort is manifestly more closely connected with country B than country A can include where the greater part of loss and damage is suffered. Where, as in this case, causation and quantum of loss are in issue, at this stage the location of the preponderance of loss may be difficult to ascertain. However, weight is to be given to the assertion by the Claimant that she continued to suffer pain after she and her husband returned to England in June 2011. She attended a pain clinic in Oxford and received treatment. She states that as a result of her pain and the effects of the accident she had become depressed. The continuing pain and suffering and medical treatment is a factor connecting the tort with England. So is the contention that loss of earnings has been and will be suffered in England.
60. The vehicle driven by the First Defendant was insured and registered in England. Whilst a factor to be taken into account, as was observed in Harding at paragraph 18, where the motor vehicle involved in the accident was insured is not a strong connecting factor. Nor is where the vehicle was registered.
61. In Stylianou, Sir Robert Nelson considered that the continued and active pursuit of proceedings in Western Australia was an important factor to take into consideration under Article 4(3). The pursuit of proceedings by the Claimant in the English courts is taken into account in this case, however it is not a strong connecting factor. The choice of forum does not determine the law of the tort.
62. Factors weighing against displacement of German law as the applicable law of the tort by reason of Article 4(1) are that the road traffic accident caused by the negligence of the First Defendant took place in Germany. The Claimant sustained her injury in Germany. At the time of the accident both the Claimant and the First Defendant were habitually resident there. The Claimant had lived in Germany for about eight and a half years and remained living there for eighteen months after the accident.
63. Under Article 4(3) the court must be satisfied that the tort is manifestly more closely connected with English law than German law. Article 4(3) places a high hurdle in the path of a party seeking to displace the law indicated by Article 4(1) or 4(2). Taking into account all the circumstances, the relevant factors do not indicate a manifestly closer connection of the tort with England than with Germany. The law indicated by Article 4(1) is not displaced by Article 4(3). The law applicable to the claim in tort is therefore German law.