Quantum of Damages - EJTN · The harmonization of substantive laws relating to the quantum of...

Quantum of Damages

Carlos M. G. de Melo MarinhoJudge at the Lisbon Court of Appeal

Ljubliana – 25 September 2013

Quantum of Damages - Carlos Marinho

Object

It is object of this presentation the analysis of questions related to the

definition of the quantum of damages emerging from motor vehicle accidents

connected with more than one Member State of the European Union.


Problem

The visiting victims, that is, the victims of accidents that occur outside of their

State of residence don't reach, sometimes, for the single fact of being outside

their national borders, the compensation that they could expect if the accident

had occurred in their own Country.

An insufficient indemnity can generate several lateral costs, namely for the

victim's insurance company, for the victim itself, for the national Social or

Healthcare System or for some emergency fund.


Method

The firs step on the approach to the problem of the quantification of damages

in cross-border motor vehicle accidents must be the analysis of the problem of

the choice of the applicable law. At this level, the European Union Law rules on

non-contractual obligations deserve a special attention.

After it, and facing the fact that it is impossible, in this kind of approach, to

encompass the study of each national system, it seems reasonable to point out

some common ideas or strong notions that could serve as common criteria for

the concrete definition of the fair compensation.


Difficulties

The main difficulties emerge from the asymmetries between the member

State's Systems, especially:

� In the consideration of the personal profile of the victim – age, family,

profession, salary, social status;

� In the consideration of national standards of living;

� In the exclusion of some types of damages;

� In the limitation of the damages and legal rights of the indirect victims –

like family and dependants.


Future

The harmonization of substantive laws relating to the quantum of damages

don't seem, for the time being, more than a mere possibility and a goal not

foreseeable in the short to medium term.

The problems, in the field of the definition of the adequate compensation for

damages go much further than the mere questions of choice of law and touch

the core of the needs of a Common space of Justice under construction that –

for coherence and credibility reasons and in order to produce the confidence

presupposed by the free circulation of goods, capital, services, and people –

must seek the similarity of solutions thus granting that the application of

different national legal rules, imposed by the crossing of a border, don't

generate collateral damages, especially to the victim.


The choice of Law

A cross border motor vehicle accident occurring within the EU imposes to the

legal practitioner the analysis of three main sets of rules:

(a) The Rome II Regulation – Regulation (EC) No 864/2007 of the European Parliament and

of the Council of 11 July 2007 on the law applicable to non-contractual obligations –

(Rome II);

(b) The Hague Convention on the Law Applicable to Traffic Accidents – Concluded 4 May

1971 – (HCTA); and

(c) The Motor Insurance Directive – Directive No 2009/103/EC of the European Parliament

and of the Council of 16 September 2009 relating to insurance against civil liability in

respect of the use of motor vehicles, and the enforcement of the obligation to insure

against such liability (MID).

In none of these texts we can find direct answer to the difficult questions of the

quantification of the damages but only criteria that can solve the first part of the problem,

essentially allowing us to adequately choose the applicable law .


1. The Rome II Regulation

The Rome II Regulation contains the present European legal system on obligations

with non-contractual origin, that introduces an harmonized juridical structure of

choice of law rules for two classes of non-contractual obligations: (a) torts; (b)

restitutionary obligations – unjust enrichment, 'negotiorum gestio', 'culpa in

contrahendo' and infringement of an intellectual property right.

It is a legal document that tries to grant the 'Restitutio ad integrum' , that is, the

restoration to original condition.

It doesn’t contains a definition of 'tort'.

Anyway, according with its global structure, this concept should be considered to

point: (a) a wrongful act; (b) that originates liability to pay compensation for

damage.



Rome II contains a set of precepts that:

(a) Point out the law applicable to non-contractual obligations;

(b) Have incidence in civil and commercial matters;

(c) Function in all situations 'involving a conflict of laws' – Article 1 (1);

(d) Are applicable where those situations have a 'cross-border impact', that is,

have a foreign element, a connection with two or more countries – recital (1);

(e) Are incident on claims governed by private law.



Rome II is centred on the notion of damage, that is, it is applicable to all events

that give rise to a damage.

For its effects, any events that produce such damage are relevant – criminal or

only civil events.

All kind of damage is contained under this set of precepts, i.e., moral and material

damages are both included.

'The conflict-of-law rules set out in this Regulation should also cover non-

contractual obligations arising out of strict liability' – Recital (11) – that is, not only

intentional or negligent acts which give rise to a legal obligation but also events

without fault are included.



Not only the existent non-contractual obligations are comprehended in Rome II

but also the ones that are likely to arise, that is, the obligations emerging from

future events that must be expected to appear in the sequence of some facts or

actions – Article 2 (2).

An event giving rise to damage includes facts that generate damage which are

likely to occur and any reference to damage includes losses which are likely to

come – Article 2 (3) (a) and (b).

The Regulation 'apply irrespective of the nature of the court or tribunal seised' –

see Recital (8).

According with Article 3, not only the internal law of a Member State can be

pointed out as applicable by Rome I. In deed, any 'law specified (…) shall be applied

whether or not it is the law of a Member State'.



The choice of law under Rome II can be made according to some structural

connection criteria that indicate the following legal rules applicable:

(1) Law chosen by the parties – Article 14 (1);

(2) Law of the Common Habitual Residence ('Lex Domicilii Comunis Partium') – –

Article 4 (2);

(3) Law of the country in which the damage occurs ('Lex Loci Delicti Commissi' or

or 'lex damni' ) – Article 4 (1);

(4) Law of the country to which the tort/delict is manifestly more closely

connected (escape clause) – Article 4 (3).



Overriding mandatory provisions

The precepts of Rome II don't represent an obstacle to the application of the

internal imperative rules on non-contractual obligations, whatever the choice-of-

law made in the Regulation might be – Articles 16 and 14 (2).

The provisions of Community law, as implemented in the Member State of the

forum which cannot be derogated from by agreement have precedence of the

parties agreements on choice-of-law – 14 (3).

Rules of safety and conduct

The 'rules of safety and conduct which were in force at the place and time of the

event giving rise to the liability' must be considered 'in the valuation of the

conduct of the person claimed to be liable' – Article 17. This question must be

treated as a matter of fact and not as legal question. The consideration of such

rules is not unlimited but, on the contrary, just goes to a level considered

appropriate.


2. The HCTA

Conventions concluded both by Member States and Third Countries take

precedence over the Rome II Regulation. We can find in this situation the Hague

Convention on the Law Applicable to Traffic Accidents (1971).

The application of the HCTA, allowed by Rome II to the Member States that were

parties to it at the time when the Regulation entered into force generates differing

choice of law results since it were different the objectives, motivations, times and

contexts of production.

Through the HTCA, it be will designated the law of the place of the accident or the

law of the place of registration of the vehicle, as applicable, while the application

of Rome II will likely lead to the application of the law of the place of the accident

or the law of shared habitual residence between the parties to the action.


3. The MID

The MID comes in a path opened by previous Motor Insurance Directives –

Directives 72/166/EEC of 24 April 1972, 84/5/EEC of 30 December 1983, 90/232/EEC

of 14 May 1990, 2000/26/EC and 2005/14/EC – that conducted to the:

(a) Abolition of checks on insurance certificates at borders;

(b) Compulsory insurance against civil liability in respect of the use of vehicles;

(c) Protection of injured parties (in their country or abroad) with imposition of

minimum amounts for compensation;

(d) Attribution of relevance to the providing of better information for victims and

creation of guarantee funds, information centres, compensation bodies and

central bodies.


3. The MID

The MID has a great relevance considering the high number of cases emerging

from traffic accidents that are met by insurers.

This Directive has, in these situations, a fundamental role, namely in the domain

of the choice of law. It results from it that insurance coverage and the conditions in

which personal injuries are to be regarded as significant should be provided in

accordance with the law of the place of the accident or the law of the place where

the vehicle is normally based, when the cover is higher.

A conflict between the MID and Rome II can emerge if the notion of providing

cover has not only relation to the maximum amount that the policy will pay out

but also to the type and quantification of damage.


Internal notions

Structural notions

� Who is required to repair a damage has to erase the consequences of the illicit

fact, id est, to reconstruct the situation that would exist if the event that

requires repair had not occurred. It results from here that, when assessing or

quantifying damages or compensation related to a motor vehicle accident, the

court must provide the victim the fullest possible compensation by placing

him in the same financial position he was in prior to the event that caused the

damage.

� The obligation to compensate only exists in relation to the damages that the

victim probably would not have suffered if there was no aggression to his

property, health or life.

� The duty to indemnify should not only be related to injury but also to the

benefits that the claimant failed to obtain as a result from such injury.


Internal notions

Structural notions

� When assessing the compensation, the court may consider damages in the

future, provided that they are predictable.

� It seems recommendable that, if the losses are not determinable at the

moment of the judgement, it can be assessed later through a mere

quantification procedure.

� It appears fundamental that compensation for provisional damages already

proved can also be granted.

� A money compensation must be given whenever the exact natural

reconstitution of the previous situation is not possible, do not fully repair the

damage or is too expensive for the debtor.


Internal notions

Structural notions

� If the damages result from the loss of property or right, the responsible for it

may demand, at the time of payment or at a later date, that the injured party

transfers to him his rights against third parties.

� When a negligent fact of the injured party has contributed to the production or

aggravation of damages, it should be up to the court to determine, based on

the dimension of the faults of both parties and its consequences, whether

compensation should be fully granted, reduced or even excluded.

� If the liability is based on a mere presumption of guilt, the guilt of the victim or

of its legal representatives, in the absence of a rule in an opposite sense,

should exclude the duty to indemnify.

� Who claims the guilty of the victim should have the burden of proof but the

court shall investigate it even if not claimed.


Internal notions

Structural notions

� The pecuniary compensation has, as measure, the difference between the

patrimonial situation of the victim at the most recent moment that can be

considered by the court and the one that, on that date, would exist if there

were no damages.

� If it cannot be ascertained the exact amount of the damages, the court should

judge equitably within the proven limits.

� Given the continuous nature of a specific damage, the court should, at the

request of the victim, give the compensation, in whole or in part, under the

form of a lifetime or temporary income, determining the proceedings needed

to ensure the payment. Where the circumstances on which stood the

definition of such income suffer appreciable change, it must be allowed the

change of the judicial decision or parties settlement on compensation of

losses.


Quantum of damages

In the field of the assessment of the quantum of damages, the usual complexity of

the questions of proof are over-passed by the hardness of the strict problem of the

choice of the right criteria that can allow the court to reach a pecuniary amount –

which can be reasonably inferred from the evidence – that can place the claimant –

so far as money can do it – in the situation he would have been – under normal and

predictable circumstances – if the accident had not occurred.

Here, the difficulties show different levels and depend on the nature of the reality

to indemnify. The approaches change according with the fact of being under

assessment emerging damages, lost profits or future detrimental effects.

The quantification of damages to property, personal injuries, death or non

economical damages also show strong differences.

Damage to property is, normally, easier to quantify than it is for personal injury

since, presently, this one is considered not only in the perspective of the

immediate but also of its future impact.


Quantum of damages

The compensation for property is not free from difficulties and some of these

emerge stronger in the cross-border litigation. It involves the option of whether to

replace lost or damaged property with identical property or to apply a criteria that

can take into account the specificity of such property like age, obsolescence or

mileage of a vehicle. At this point, due to economical differences between States,

the values involved can differ substantially.

Personal injuries correspond, frequently, to a shifting concept.

The determination of non-economic losses places very complex problems. The

suffering of close relatives started to be recognized in several Member States as a

damage that deserves to be compensated. In this domain, asymmetries can occur

since, in some States, such damage is neither recognized nor compensated.


Quantum of damages

The correct measure of damages is especially hard to reach if it is necessary to

make the assessment of damages for the future since, in this kind of situation,

calculation – eventually calculation formulas – and prognosis are needed.

The search for an objective and uniform solution to the hard problems associated

to the calculation of future loss can generate a secondary risk under a dangerous

appearance of rigour and objectivity when it is exclusively chosen the adoption of

legal or jurisprudential formulas standing on mathematical basis or pre-fixed

values that can alleviate the judge's task but that also leave him and the parties far

from the fair composition of the dispute and from the adequate reparation of the

social tissue disrupted by the accident.


Quantum of damages

When assessing the due compensation for future damages, one objective is to

indemnify the injured party for the loss of some earning capacity, that is, the work

limitations that emerged from the accident.

In order to define a pecuniary compensation for futures losses, it must be attained

a money amount that can correspond to a capital susceptible of producing the

income that the victim will not receive by virtue of such incapacity and that will be

extinguished at the end of his predictable life period.


Quantum of damages

The definition of this capital should be based on two sort of criteria:

(a) In first place, objective criteria – mathematical formulas, financial calculations,

application tables;

(b) Secondly, correction criteria – which means that it is necessary to take into

account that such objective tools provide only a static value since it assume

that the claimant would no longer improve his professional situation or

increase productivity, don’t consider the trend (at least in the medium and

long term) to the growth of the economic and social conditions of the specific

country and society, don't take into account the changes in the dimension of

the working life, don't count with the real inflation and don't pay attention to

the increase in longevity.


Quantum of damages

In order to adequately define the damages foreseeable in the future, equity must

perform a decisive correcting role, giving the due value to all the specific factors of

the situation under judgement.

The assessment of the damages needs to be casuistic, detailed, non artificial and

adapted to the specific facts of each case.

The individualized definition of the quantum of the damages is the only method

that can grant the concrete justice.

In all kinds of situations of definition of damages, the sharper and richer insight of

the facts and the attention to the broadest amount of elements produces a better

justice.

Horizontal and unified legal criteria about the quantum of damages that could

allow the attainment of uniform results all-over the EU Space could be highly

recommendable in order to produce coherence and confidence.

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