In the case of HYDE v SARA ASSICURAZIONI SPA (2014) the High Court decided that a cap on the amount of damages that could be awarded to a British claimant in a road traffic accident in Italy, under an Italian insurance policy, was not to be reduced to take into account the fact that other claims made in respect of the same accident had already been paid out, because the insurer had not used due diligence to identify the claimant, as required under Italian law.
The court was required to determine preliminary issues concerning a limit on the amount of damages that could be awarded in a personal injury claim brought by the claimant British national (Hyde) against the defendant Italian insurance company (Sara).
Hyde had suffered serious injury as a passenger in a car crash while in Italy in 2004. He contacted Sara in 2005 with a view to bringing proceedings before the Italian courts. However, following a decision that an EU resident in a cross-border claim had the right to sue a defendant’s insurer in a claimant’s home court even if that was not the country where the accident occurred, Hyde brought proceedings before the English courts, albeit not until 2012. By that time, the claims had been settled with regard to other parties injured in the same accident. Sara admitted liability but there was a dispute as the amount of damages that Hyde should be awarded. Hyde accepted that the substantive issues should be decided under Italian law. Following late disclosure, Hyde also conceded that under the policy the maximum amount of damages that could be claimed was capped at € 775,000. The preliminary issues were whether the cap (i) applied per accident, such that the amount should be reduced in light of payments already paid to other claimants; and (ii) included the costs of the action and interest.
The evidence was that, under Italian law, Hyde would be entitled to claim the full amount under the policy regardless of amounts paid to other parties where Sara had negligently failed to identify all the injured persons. The questions were thus whether the duty to identify Hyde had been complied with and which party bore the burden of proof. Italian law said that if “diligence” was shown in identifying Hyde then the insurer was not liable to pay above the cap. Therefore, on ordinary construction principles, Sara had to prove due diligence. Further, the Italian principle of “proximity to the evidence” meant that the burden of proof was on the party best able to get the evidence. Clearly, Sara was in a better position to show the steps it took with regard to due diligence than Hyde was in a position to refute it. Both English and Italian law pointed to the conclusion that the burden was on Sara. Sara had completely failed to satisfy the court that it had shown due diligence. It had never disclosed the other claims, including the basis on which they were paid or whether Hyde’s position was taken into account at all in paying them. Sara would have received the police report identifying Hyde’s injuries and other claimants might have mentioned him. Sara also had express notice of his intention to bring a claim in 2005. Although it had asked for further information which was not received, Sara never even notified Hyde of the other claims, never mind its intention to settle, until 2012. Accordingly, Hyde was entitled to claim for the full € 775,000.
The court also decided that costs were a procedural matter and the English court was entitled to award costs in excess of the cap. Costs were the means by which justice was maintained. It was not appropriate to tie the hands of the English court and allow a foreign contract to cap the amount of costs awarded, or to deduct costs from any damages awarded. The expert evidence on Italian law pointed to the same conclusion. Had the court been obliged to find that it was required to deduct Hyde’s costs from any damages awarded to him in order to respect the cap, that would be contrary to public policy, as it allowed Sara to fight the case in an unreasonable manner that might deny Hyde a significant amount of compensation. In such a case it would have been appropriate for the court to invoke the Private International Law (Miscellaneous Provisions) Act 1995 s.14(3)(a) to disapply Italian law.
The rule regarding costs applied similarly to interest; that was, the English courts could award interest in accordance with its own principles regardless of Italian law. Under Italian law, in any event, an insurer might be held liable for delaying payment. However, in the instant case, Hyde had let a long time pass before issuing proceedings. The court was not persuaded that Sara would be liable to pay interest above the limit of damages. That was not a bar on the English court from awarding interest but a factor to be taken into account.
This decision is a timely reminder of the need to instruct specialists and undertake all necessary due diligence when dealing with international claims.