The recent High Court judgment in Land Hessen v Gray & Gerrish could have far-reaching consequences for insurers and for those involved in personal injury cases with a foreign element.
On the trial of a preliminary issue, Mr Justice Sachs decided that the plaintiff, a German state could, in principle, recover from a tortfeasor certain payments made to employees injured or killed in road traffic accidents in England.
The two accident victims in this case received medical expenses and other benefits from Land Hessen, their employer. Under German law, Land Hessen acquired by assignment a direct right to claim the payments back from the person who caused the accident, rather than dealing with the claims through subrogation, as would be usual under English law.
The plaintiff argued its claim was enforceable in England either through EU law, in particular article 93 of regulation 1408/71, or under the English law of restitution.
Interestingly, Judge Sachs decided the English law of restitution was adequate and found it unnecessary to delve into the various European law and conflicts issues raised. To bring a claim in restitution, he found that the plaintiff must prove three things:
that it paid money to the victims under compulsion of law (including foreign law);
that it did not officiously expose itself to liability; and
that payment discharged a liability of the defendant(s).
He found that all three were in principle satisfied in the Land Hessen case, albeit that certain payments made for lost earnings were irrecoverable under a prior Court of Appeal decision.
Quantum issues were left to a future hearing, and primary liability for the accident was not addressed.
The judgment's effect is that, subject to proving that defendants are liable to make relevant payments to the victims, plaintiffs can recover direct from defendants. The decision is relevant in PI cases where, for example, an employer has paid expenses or benefits to an injured employee, particularly where the victim is foreign.
Many European states operate a system of assignment in these cases, rather than subrogating claims. The decision also focuses attention on the law of restitution.