Damages Assessment Proceedings
Court judgments regularly include an order for one of the parties to pay damages to be assessed separately. This places the parties at the outset of a new procedure: the damages assessment proceedings. However, the parties are not starting from scratch. The damages assessment proceedings can be viewed as a continuation of the case, the sole purpose of which is to determine the individual heads of damage and the extent of the compensation to be paid.
Expert Advice on Damages Assessment Proceedings
These proceedings may concern, for example, whether a particular head of damage qualifies for compensation, or the extent to which the obligation to compensate is reduced by circumstances attributable to the injured party. This distinguishes the damages assessment proceedings from the main proceedings, which are primarily concerned with establishing the basis of liability and the attribution of damages.
When Can the Court Refer to Damages Assessment Proceedings?
Once the basis of liability has been established in the main proceedings, the court may refer the parties to damages assessment proceedings. However, such a referral is not always available to the court of first instance. As a general rule, the court is in principle required to assess the damages itself in the judgment in which compensation is awarded.
Only when assessment of damages in the main proceedings is not possible — for example because future losses are involved or because further investigation is required — may the court depart from this rule and refer the parties to damages assessment proceedings. Furthermore, damages assessment proceedings can only be used in connection with statutory obligations to pay compensation, such as those arising from breach of contract or tort, and are not applicable where the obligation to pay damages arises from a legal act, such as a contract.
Advantages of Separating Liability and Damages Proceedings
The possibility of separate but consecutive damages assessment proceedings offers several advantages. The split between the main proceedings and the damages assessment proceedings makes it possible to first address the question of liability without needing to raise the question of the extent of the damages and incur the considerable costs of substantiating them.
After all, it cannot be ruled out that the court will reject the other party’s liability. In that case, any discussion about the extent of the damages and the costs incurred for that purpose would have been in vain. Moreover, once liability has been established by the court, the parties may subsequently reach an out-of-court agreement on the amount of compensation, thereby avoiding the costs and effort associated with quantifying the damages entirely.
Another significant advantage for the claimant lies in the level of court fees. When the claimant litigates only on the question of liability in the main proceedings, court fees are calculated on the basis of a claim of indeterminate value. This results in lower costs than if a substantial sum in damages were claimed immediately in the main proceedings.
Content and Structure of the Damages Statement: Establishing a Prima Facie Case
Although the damages assessment proceedings may be regarded as a continuation of the main proceedings, they must be initiated as a separate and independent procedure. This is done by serving the damages statement on the other party. In doing so, the statutory requirements that also apply to a writ of summons must be observed.
In terms of content, the damages statement must set out “a specified account of the amount of damages whose settlement is claimed” — in other words, a breakdown of all past and future heads of damage, supported by documentary evidence. It is in principle not necessary to claim payment of compensation again or to specify the exact amount for each head of damage. The court will independently assess the damages on the basis of the facts and evidence submitted. The grounds of the claim must, however, be set out in the damages statement. The damages statement as filed is not binding in principle, and it is possible to introduce new heads of damage even after service of the statement. The damages assessment proceedings are bound by the findings from the main proceedings, so defences already addressed do not arise again.
The further course of the damages assessment proceedings resembles ordinary summons proceedings. The standard exchange of pleadings takes place, in which the defendant responds in writing with a statement of defence, followed by a hearing before the court. Directions for the taking of evidence or requests for expert reports may also be made in these proceedings. The court may also appoint independent experts to assess the damages objectively. Court fees will again be charged.
Mandatory Legal Representation in Damages Assessment Proceedings
The defendant must again be represented by a lawyer in these proceedings. If the defendant fails to appear, a default judgment may be entered. With regard to the final judgment, the ordinary rules apply, and the court issues a definitive ruling in which the defendant may be ordered to pay all forms of compensation. The judgment in the damages assessment proceedings also constitutes an enforceable title, enabling the claimant to levy execution immediately if the opposing party does not pay, and has the effect that the damages have been determined and settled.
When it comes to damages assessment proceedings, it is advisable to consult a lawyer. In the case of the defendant, this is in fact mandatory. This is not surprising, as the law of damages assessment is an extensive and complex area. Are you dealing with a damages assessment or would you like more information about the damages assessment proceedings? Please contact the lawyers at Law & More. The lawyers at Law & More have expertise in procedural law and damages assessment and are happy to provide you with legal advice or representation in the damages assessment proceedings.
Case Law of the Supreme Court and Key Considerations
The damages assessment proceedings are governed by established case law, including recent judgments of the Supreme Court. In a recent case, the Supreme Court held that for referral to damages assessment proceedings it is sufficient that the possibility exists that loss has been or will be suffered; it is not required that damage has already been made plausible. This also applies in cases of wrongfully levied provisional attachments, where the party subject to the attachment may have suffered loss. The district court and the court of appeal must assess the causal link and the claimed damages on the basis of a strict standard, whereby an earlier decision in the main proceedings may be of guiding importance for the further course of the case, and the court may itself decide to invite the parties to address the damages further or to have a separate procedure follow.
In earlier judgments, the Supreme Court held that the court is not always obliged to assess the damages itself. Both in the main proceedings and in the damages assessment proceedings, the court has considerable discretion in assessing damages, as also follows from the judgment on the assessment of damages following a professional error by a lawyer. The Supreme Court further refers to two earlier judgments in support of that standard. The court may therefore decide to refer to damages assessment proceedings, particularly where compensation is to be assessed or where the heads of damage are complex. The assessment of damages also depends in part on what the parties have submitted and on every relevant circumstance, including the contributory negligence of a party and other factors that may affect the extent of the damages. In damages assessment proceedings, the damages are specified in greater detail and the court may make an assessment that is binding on the parties. A judgment may already include an order against the liable party, with the precise amount to be determined at a later stage.
Practical Tips for the Parties
Parties involved in damages assessment proceedings would do well to seek expert legal advice at an early stage, particularly because the threshold for referral to such proceedings is low and the procedure constitutes a separate, independent process with its own procedural rules. It is also important to specify the heads of damage carefully and, where possible, to gather evidence to establish the claimed losses on a prima facie basis. The statutory conditions for referral must be met before such proceedings have a reasonable prospect of success.
In addition, parties must take into account the possibility that the damages assessment proceedings may also produce an unfavourable outcome — for example if the court finds that, notwithstanding liability, no loss (or less loss) has been suffered. A request for referral may also be rejected if it is deemed insufficiently established that loss has been or will be suffered. Nor does every claimed head of damage necessarily result in an award of compensation. It is therefore advisable to align the main proceedings and the damages assessment proceedings carefully and, where possible, to reach agreement in order to avoid further litigation. Sound substantiation and a clear litigation strategy may contribute to satisfying the relevant conditions and to a more focused course of proceedings.
For further information or legal assistance in damages assessment proceedings, please contact specialist lawyers who are familiar with the established case law and the standard applied by the Supreme Court in this complex area of law.
