Canada: A Costly Choice (Of Law): Determining The Damages Available For An Extra-Territorial Tort

The recent UK Supreme Court decision in Cox v Ergo Versicherung AG, [2014] UKSC 22, provides helpful commentary and a potentially persuasive precedent for Canadian courts on issues of choice of law, the distinction between substance and procedure in the conflict of laws, and legislative extraterritoriality in circumstances where a cause of action is governed by a foreign law.

Consistent with Canadian law, the UK Supreme Court held in Cox that issues of substance are governed by the law of the place where the injury was sustained, but issues of procedure must be determined by the law of the forum where the case is tried.

While this rule is clear, its application in practice can be quite complex. The Court's decision in Cox should be interesting to Canadian lawyers because it demonstrates an application of this principle to questions of damages. The Court considered whether German laws excluding damages for bereavement and permitting consideration of subsequently-accrued rights in the damages calculation (both of which would substantially reduce the damages available to the plaintiff) were substantive or procedural. On the basis that these rules determined the scope of the defendant's liability and the plaintiff's enforceable rights, the Court held the German laws were substantive and governed the case at bar.


The proceedings arose out of a fatal car accident in Germany, which killed Major Christopher Cox. The driver was a German national resident, domiciled in Germany, who was insured by a German insurance company. Major Cox's widow was living with him in Germany at the time of the accident, but shortly thereafter returned to England, where she was ordinarily domiciled. In the time between the accident and the hearing, Mrs. Cox entered into a new relationship and had two children with her new partner.

It was undisputed that pursuant to the law of the European Union, Mrs. Cox was entitled to sue the insurer in the courts of the state where she is domiciled. Mrs. Cox availed herself of that right, commencing litigation in England.

Although the forum was clearly appropriate, the damages available to Mrs. Cox varied significantly depending on whether the law of Germany or England was to be applied to assess the damages to which she may be entitled. In both regards, English law was more generous to Mrs. Cox:

  • First, the English Fatal Accidents Act 1976 specifically provided that "where there fall to be assessed damages payable to a widow in respect of the death of her husband there shall not be taken account the re-marriage of the widow or her prospects of re-marriage". In contrast, the German Bürgerliches Gesetzbuch (or "BGB", the civil code of Germany) provided that in assessing damages a court should take into account any subsequent benefits received that affect the loss of dependency. In other words, Mrs. Cox stood to recover more under English law, as her damages under German law could be reduced by virtue of any maintenance received from (or right to maintenance arising from) her subsequent marriage.
  • Second, the English Fatal Accidents Act 1976 provided for damages for bereavement, while German law conferred no right to damages for bereavement unless such suffering goes beyond normal grief and amounts to a psychological disturbance comparable to physical injury.

The decision of the UK Supreme Court

Lord Sumpton, writing for the majority, outlined the parameters of choice of law issues in tort under private international law: issues of substance are to be governed by the law of the place where the injury was sustained, but issues of procedure must be determined by the law of the forum. The issue for determination before the court was whether the German laws to be applied to the outstanding damages issues were procedural (in which case English procedural law would prevail) or substantive (in which case the German laws would be determinative).

Lord Sumpton considered the leading UK authority, the decision of the House of Lords in Harding v Wealands, [2007] 2 AC 1. In Harding, the House of Lords held that questions of procedure did not solely comprise the rules governing the manner in which proceedings were conducted. The House noted that damages issues could be either substantive or procedural: questions of the kind of damage recoverable was a question of substance (to be determined under the law of the place where the injury was suffered), whereas the quantification or assessment of damages went to the extent of the remedy, and as such was a question of procedure (under the law of the forum). The kind of damage recoverable, the House held, is inexorably tied to the rules which determine liability: one is not simply liable in tort; he must be liable for something. Rules excluding a kind of damage from the ambit of liability determine whether there is liability for the damage in question, and are thus questions of substance.1

Following the reasoning in Harding, the Court in Cox concluded that the German damages rules at issue were substantive, as they determined the scope of the defendant's liability. The German law providing credit for maintenance received by a subsequent partner, the Court held, was a rule of causation, which determines the extent of the loss for which a defendant ought reasonably be held liable (the Court held it reflected the principle that a victim ought to mitigate her loss, and that credit ought to be given to the defendant by reducing damages according to such mitigation).

Similarly, the Court found that the German laws making damages for bereavement unavailable was substantive, holding that they are "paradigm examples of rules governing the recoverability of particular heads of loss, the avoidance of which lies within the scope of the defendant's duty."

The damages rules under the English Fatal Accidents Act thus could not be applied to the case at bar. Insofar as they are substantive, they would not apply because the substantive law governing the action is German law (the law of the place where the injury was sustained). In any event, the Court noted, the Fatal Accidents Act does not lay down general rules of English law for the assessment of damages, but only rules for actions brought under the Act itself. The case at bar was one to enforce liability under German substantive law, and was not commenced pursuant to the Act.

Lastly, the Court rejected the argument that the Fatal Accidents Act had extra-territorial application and should thus apply notwithstanding the aforementioned choice of law analysis. The Court noted the strong presumption against extra-territorial application of statutes, and held there was nothing in the Fatal Accidents Act, express or implied, to suggest that its provisions were intended to have extra-territorial effect and apply irrespective the ordinary principles of private international law.

Significance in Canada

The UK Supreme Court's decision in Cox is largely consistent with Canadian law, which similarly relies on the distinction between substantive and procedural law to determine choice of law in tort cases.

In Tolofsen v Jensen; Lucas v Gagnon, [1994] 3 SCR 1022, the Supreme Court of Canada laid down the rule that substantive rights of the parties to an action are to be governed by foreign law, but all matters of procedure are governed exclusively by the law of the forum. Justice La Forest, writing for the majority, espoused the benefits of this rule's predictability and its concurrence with people's ordinary expectations that their activities will be governed by the place where they happen to be, and that their legal benefits and responsibilities will be defined accordingly. The distinction between substance and procedure, however, must be drawn because a court in a particular forum cannot be expected to apply every procedural rule of the foreign state whose law it wishes to apply. Justice La Forest noted that "the purpose of the substantive/procedural classification is to determine which rules will make the machinery of the forum court run smoothly as distinguished from those determinative of the rights of both parties".

Although the distinction between substantive and procedural law for the purposes of choice of law makes sense in principle, as is evident from Cox, it can be difficult to apply in practice Justice La Forest noted in Tolofson that "clearcut categorization... is not always easy or straightforward".

In Tolofson, the Supreme Court of Canada addressed the characterization of one tricky concept – limitation periods. The Court held in Tolofson (and the Ontario Court of Appeal held more recently in Bieberstein v Kirchberger, 2013 ONCA 629) that limitation periods are substantive, as they create an accrued right. This reasoning is similar to that of the Court in Cox; limitation periods, like the questions of damages before the UK Supreme Court in Cox, determine the scope of the defendant's liability (i.e. they are only liable for those torts occurring within a particular time) and the rights of the plaintiff (i.e. upon the expiration of a limitation period, a plaintiff no longer has a right to enforce).

Canadian courts have also grappled with the characterization of damages issues as substantive or procedural, further demonstrating the practical complexity of the application of these principles. Although the courts in general have distinguished between an entitlement to damages (as substantive) and the quantification of damages (procedural) – as was done by the UK Supreme Court in Cox, on the basis of the statements in Harding – it is apparent that this categorization can be challenging. For instance, in Somers v Fournier (2002), 60 OR (3d) 225, the Ontario Court of Appeal held that pre-judgment interest was a question of substance (holding it is an entitlement akin to a head of damage), but that costs were a question of procedure (noting that an award of costs was discretionary under the Rules, rather than an entitlement). The decision relied in part on the fact that pre-judgment interest is a right provided for in the Courts of Justice Act, as distinct from courts' authority to grant costs in its absolute discretion pursuant to the Act and the factors articulated in the Rules of Civil Procedure. The Court further held that the cap on non-pecuniary damages was a question of procedure, as a question of quantification of damages after the parties' rights and liabilities have been determined.

The case law shows that drawing a distinction between substance and procedure requires careful analysis, and is easier said than done. In light of this practical challenge, the UK Supreme Court's conclusion and reasoning in Cox, providing an example of an application of this rule to damages issues, may be persuasive in Canadian cases. As is evident from the facts of Cox, the application of the law of the place where a tort occurred to limit or expand the available damages can make a substantial difference to the quantum of damages that may be awarded. Canadian lawyers would be well-advised to pay attention in order to appropriately assess the scope of potential damages in complex cases relating to multiple jurisdictions.

Case Information

Cox v Ergo Versicherung AG, [2014] UKSC 22

Date of Decision: April 2, 2014

To view the original article please click here.


1 The application of this reasoning to the facts of Harding was, in the words of the UK Supreme Court in Cox "surprising" and "questionable". The application to the facts in Cox follows more logically from the principles stated in Harding, making Cox a potentially more helpful precedent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.