THE SHERIFF (G. I. W. SHIACH).
This is an action in which the pursuer seeks decree against the defenders
for an alleged breach of contract. The defenders' first plea in law is a
plea that the defenders are not subject to the jurisdiction of Edinburgh
Sheriff Court. The defenders are designed in the instance as having their
registered office in Surrey, England.
It is a matter of agreement that the pursuer was employed by the
defenders in terms of a service agreement. This agreement contained
inter alia the following provision: "19.1 The construction validity and
performance of this Agreement shall be governed by the laws of England
and the parties hereto hereby submit to the jurisdiction of the English
Court and agree that process in respect of any proceedings brought in
connection with this Agreement may be served on them in the manner
set out above." The "manner set out above" refers to the provisions of
provision 18 of the agreement, for the service of notices.
The basis on which jurisdiction is claimed
The pursuer avers in cond. 1 inter alia: "Notwithstanding that the pursuer
signed a document which purports to prorogate the construction validity
and performance of the agreement to the English court, the document is
not specific as to which English court is meant. In any event the pursuer
enjoys the benefit of Sched. 4, arts. 17 and 18 to the Civil Jurisdiction
and Judgments Act 1982 whereby the court or courts agreed between
the parties to an agreement have concurrent rather than exclusive
jurisdiction even where the parties have agreed that the nominated courts
will have exclusive jurisdiction. This court accordingly has jurisdiction.
In any event this court has jurisdiction under the doctrine of lex locus
contractus as the place of performance of the obligations called for in the
said contract took place within the Sheriffdom of Lothian and Borders at
Edinburgh. In particular the pursuer represented the defenders' company
in Scotland which entailed him calling on prospective customers not only
in the Scottish area as a whole but in the Edinburgh area in particular
all with a view to selling the defenders' company merchandise and
securing contracts on behalf of the defenders. In particular the pursuer
representing the defenders' company in Scotland had business dealings
with the following companies all situated in the Edinburgh area namely:".
There then follows a list of some 52 business names and addresses. The
condescendence then concludes: "The pursuer was successful in securing
several contracts which in turn necessitated him in making several calls
upon the said customers with a view to implementation of the sale
contracts which he had secured on behalf of the defenders' company.
Accordingly this Court has jurisdiction."
The defenders' submissions on Jurisdiction
The defenders' submissions fell under three headings which may be stated
as follows:
(1) Jurisdiction of the English courts has effectively been prorogated.
Their jurisdiction is exclusive.
(2) Alternatively, even if the English courts do not have exclusive
jurisdiction by reason of prorogation, jurisdiction can only otherwise be
constituted in respect of the place of payment under the contract. Such
place of payment is the registered office of the defenders which is in
England.
(3) In any event, even if the place of payment were held to be the
pursuer's residence at B, Edinburgh Sheriff Court would have no
jurisdiction because B lies within the sheriff court district of Linlithgow.
I have, for convenience, transposed submissions 2 and 3 from the order
in which they were presented by the defenders' solicitor. I have done
so because the question of the domestic court of jurisdiction would
be superseded if there were no ground of jurisdiction within Scotland.
The solicitor also presented an argument on the basis of forum non
conveniens which he withdrew in the course of his submissions. I now
consider the remaining submissions in turn.
Prorogation
The defenders' solicitor referred to art. 17 of Section 6 in Sched. 4 to the
Civil Jurisdiction and Judgments Act 1982. Schedule 4 has effect, in terms
of s. 16 of the Act, for determining for each part of the United Kingdom
inter alia whether the courts of law of that part have jurisdiction in
respect of proceedings within the scope of the 1968 Brussels Convention
on Jurisdiction and Related Matters. Article 17 provides:
"If the parties have agreed that a court or the courts of a part of the
United Kingdom are to have jurisdiction to settle any disputes which have
arisen or which may rise in connection with a particular legal relationship,
and, apart from this Schedule, the agreement would be effective to confer
jurisdiction under the law of that part, that court or those courts shall
have jurisdiction."
The submission presented for the defenders was that provision 19.1 of
the agreement between the pursuer and the defenders contained a valid
and effective prorogation of the jurisdiction of the courts of England.
The provision effectively applied English law to the interpretation of the
contract, and was clearly intended to create exclusive jurisdiction in the
courts of England.
In his submissions, the solicitor for the pursuer raised the question
whether there was an effective prorogation of jurisdiction when the
contract referred to "the English Court", and not either to a specific court
or to the English courts in general. The argument was not amplified and
was not essential to the submissions presented for the pursuer. It is not
therefore necessary that I should decide that issue today.
The essential submissions for the pursuer were to the effect that
prorogation of jurisdiction in matters to which Sched. 4 to the 1982
Act applies does not by itself create exclusive jurisdiction. The solicitor
founded on the dicta of Sheriff Boyle in British Steel Corporation v.
Allivane International Ltd., 1989 S.L.T. (Sh. Ct.) 57 at p. 59L. The
sheriff there indicated that "Parliament deliberately declined to invest
the prorogated jurisdiction described in the first paragraph of art. 17
of Sched. 4 to the Act of 1982 with an exclusive complexion." The
pursuer's solicitor contrasted art. 17 of Sched. 4 with the provisions anent
prorogation of jurisdiction contained in (a) art. 17 of Sched. 1 to the
Act, and (b) rule 5 (1) of Sched. 8 to the Act. The latter two provisions
expressly state that the court or courts whose jurisdiction has been
prorogated shall have exclusive jurisdiction.
The defenders' solicitor referred in his submissions to the judgment
of Sheriff Principal Mowat in Jenic Properties Ltd. v. Andy Thornton
Architectural Antiques, 1992 S.L.T. (Sh. Ct.) 5. That case related to a
contract in which it was stated that it "shall be subject to English law and
Courts of England and Wales alone have jurisdiction". The learned sheriff
principal, considering the interpretation of art. 17 of Sched. 4 to the Act of
1982, stated inter alia that he had not been persuaded that an agreement
to prorogate the exclusive jurisdiction of a court is to be treated as
conferring only concurrent jurisdiction. He expressed the opinion that the
omission of the word "exclusive" in art. 17 of Sched. 4 "simply means that
if the agreement would have been treated as conferring only a concurrent
jurisdiction by the local law, the same result would obtain under the
Schedule". As the intention of the parties was so clear in the case of Jenic,
to the effect that the courts of England and Wales alone should have
jurisdiction, the Scottish courts were entitled to assume that English law
would give effect to it in the absence of averment to the contrary.
Unlike the contract in Jenic Properties Ltd., supra, the agreement in the
instant cause does not specify that the court of any particular jurisdiction
"alone" has jurisdiction. Sheriff Principal Mowat, in the Jenic case, referred
to Scotmotors (Plant Hire) Ltd. v. Dundee Petrosea Ltd., 1982 S.L.T.
181, as a case which "showed that it was possible for an agreement to
prorogate only concurrent jurisdiction". The law of the contract set out
in the case of Scotmotors, supra, was as follows: "This Agreement shall
be governed and construed in accordance with the Laws of England, and
the parties hereto submit to the jurisdiction of the English Courts." At p.
182, in the opinion of the Second Division, it was stated: "In our view
the proper meaning and effect of the second part of the condition is that
the parties agree to submit to the jurisdiction of the English courts if an
action is raised there. It does not provide that the parties agree that all
disputes must be submitted to the jurisdiction of the English courts. Nor
does it mean that the parties agree to abandon their right to resort to the
otherwise obvious jurisdiction of Scottish courts. Had it been intended
to give exclusive jurisdiction to the English courts that could easily have
been clearly specified."
In the whole circumstances I respectfully agree with the opinion of Sheriff
Principal Mowat in the Jenic case, that when a clear intention of parties
is expressed that a particular court or courts should have jurisdiction,
effect must normally be given to that intention. In the instant cause
however, a prorogation of jurisdiction is in all essentials the same as
the Scotmotors case. In that case the wording was construed, before
the 1982 Act, as conferring concurrent jurisdiction and not exclusive
jurisdiction. The effect of the omission of the word "exclusive" in art.
17 of Sched. 4 to the Act of 1982 is that, if in the instant cause there is
otherwise jurisdiction in the courts of Scotland, such jurisdiction will not
be excluded by the prorogation. The position would have been different if
the service agreement in the instant cause had provided that an effective
prorogation of jurisdiction should be exclusive.
It is thus necessary at this stage to pass to the second submission of
the defenders, to ascertain whether there is jurisdiction in the courts of
Scotland in respect of the place of performance of the contract.
Special jurisdiction
The general statutory provision for jurisdiction within the United Kingdom
is that, subject to the provisions of Title II in Sched. 4 to the Act of 1982,
persons domiciled in a part of the United Kingdom shall be sued in the
courts of that part: art. 2. Special jurisdiction is however constituted by
Section 2, art. 5 inter alia as follows:
"A person domiciled in a part of the United Kingdom may, in another part
of the United Kingdom, be sued: (1) in matters relating to a contract, in
the courts for the place of performance of the obligation in question".
On the question of place of payment under a contract, the defenders'
solicitor referred to the case of Bank of Scotland v. Seitz, 1990 S.L.T. 584.
Lord President Hope at pp. 588-589 approved the following statement of
the law of Scotland as to place of payment, which is contained in Gloag
on Contract (2nd ed.), at p. 709: "Where the contract makes no express
provision regarding the place of payment, the legal implication is that
the debtor is bound to tender payment to the creditor at his residence
or place of business." (See also Bank of Scotland v. Seitz, per Lord
Sutherland at p. 592 and per Lord Prosser at p. 594.)
The defenders' solicitor however submitted that the case of Seitz related
specifically to payment under a contract of guarantee, and the dicta
were inapplicable to a contract of employment. In my opinion the
distinction is unfounded. Gloag on Contract at pp. 709-710 continues,
immediately after the passage above quoted, as follows: "So an employer
who has been found liable in weekly payments under the Workmen's
Compensation Act is not entitled to require the workman to call for the
payments. There is probably an exception to this rule if the creditor leaves
the country. In that case a request to pay to his banker is a reasonable
one, with which the debtor is bound to comply."
The statement in Gloag thus seems to be universally applicable, subject
to any express or implied terms of the contract in question. As McBryde
on Contract states at p. 521: "Employers do not in normal practice make
payment of wages at the residence of their employees. It may be readily
implied that payment should be at the employer's premises, or there may
be express agreement for payment at the employee's bank."
There is, however, an averment by the defender in the instant cause,
in ans. 1 of the closed record, that the pursuer's "salary and other
emoluments were paid to him by the defenders by means of cheques
sent to the pursuer at said home address", that is his address in B.
Undaunted by this admission, however, the defender goes on to aver that:
"in terms of the contract the pursuer required to serve as a director of the
defenders. Accordingly, in terms of said contract the place of performance
of the obligation question [sic] was the registered office of the defenders
which is situated in London".
I cannot however agree, without further information, that the service as a
director necessarily means that the place of performance of the contract
was in England.
The matter is advanced by the judgment of the European Court in Ivenel
v. Schwab (133/81) [1982] E.C.R. 1891. In that case the court considered
the construction of the Article of the Convention which provided that:
"A person domiciled in a Contracting State may, in another Contracting
State, be sued: (1) in matters relating to a contract, the courts for the
place of performance of the obligation in question" (art. 5 (1) of Title II of
the Convention).
In the case of Ivenel the French Cour de Cassation sought a preliminary
ruling in relation to proceedings pending before that court. The national
court had before it various claims relating to obligations under a contract.
At para. 18 of the decision of the European Court (p. 1901) it was held
necessary to interpret the provisions of the Convention in such a way
that the national court is not compelled to find that it has jurisdiction to
adjudicate upon certain claims but not on others. The decision continues:
"Such a result would be even less compatible with the objectives
and general structure of the Convention in the case of a contract of
employment for which, as a general rule, the law applicable contains
provisions protecting the worker and is usually that of the place where the
work characterising the contract is carried out."
The defenders' solicitor referred to cl. 4.2.4 of the service agreement
which provided that during his employment the pursuer should "undertake
such travel both inside and outside the United Kingdom as the Board may
require for the proper performance of his duties". He also referred to
the passage in ans. 2, quoted supra, in which the pursuer was required
to serve as a director of the defenders, being an English company. He
submitted rightly that the latter averment was not denied by the pursuer
and must therefore be held, in terms of rule 45 of the sheriff court rules,
to be admitted.
The position is nevertheless that payment to the pursuer of his salary
and emoluments was by cheque sent to his home address in Scotland.
The defenders, for want of express denial, must be held by rule 45
as admitting the pursuer's averments to the effect that the pursuer
represented the defenders in Scotland, and that this entailed him calling
on prospective customers in the Scottish area as a whole. There is no
averment either in the condescendence or in the answers to indicate that
the pursuer performed any of the duties of his employment in England.
Although the defenders aver that the place of performance was at the
defenders' registered office in London, on the basis that the pursuer was
required to serve as a director of the defenders, there is no averment that
his duties as director took him furth of Scotland.
In the circumstances the place where the work characterising the contract
was carried out would seem to be Scotland. This is where the actual
duties as averred in cond. 1 where carried out, and where payment
was made by cheque as averred in ans. 1. Applying the test proposed
in Ivenel v. Schwab, the courts having jurisdiction in terms of art. 5
of Sched. 4 to the Act of 1982, being an article adapted from art. 5 of
the Convention, are the courts of Scotland. I am therefore of opinion
that there is concurrent jurisdiction in England (subject to the pursuer's
incomplete submissions as to the invalidity of the prorogation) and in
Scotland (in terms of the statutory special jurisdiction under the said art.
5).
Domestic jurisdiction
The defenders' solicitor submitted that, because the pursuer is domiciled
at B, and payment under the contract was made to him there, the action
(if competent in the sheriff court) should have been raised at Linlithgow
and not at Edinburgh. It is a matter of judicial knowledge that B is within
the sheriff court district of Linlithgow within the Sheriffdom of Lothian and
Borders. There was no submission that, assuming jurisdiction in Scotland,
it lay in any other sheriffdom.
In my opinion, the question of jurisdiction of the courts within a
sheriffdom is properly stated by Macphail on Sheriff Court Practice (para.
3-87, p. 121) as follows: "Where a defender is domiciled in a sheriffdom
with more than one sheriff court district the pursuer may seek to sue him
in any court of that sheriffdom; but a sheriff clerk may decline to cite a
defender domiciled in another court district, and the sheriff at a particular
court is entitled to exercise a discretion whether to issue a warrant of
citation if the defender is more suitably amenable to another court of the
sheriffdom."
The instant action no doubt passed the scrutiny of the sheriff clerk in
Edinburgh because of the averment in cond. 1 that the payment of the
sums claimed "ought to have been paid by the defenders to the pursuer in
Edinburgh". While this averment may be impossible to sustain, the place
of performance of the obligation in question, measured by the place of
payment of the former salary, is in B within the sheriffdom. The action
was in my opinion competently raised in Edinburgh as a court of the
sheriffdom. If the defenders wish to have it transferred to Linlithgow, their
remedy is by motion in terms of rule 19 of the sheriff court rules. There
is however no cause for the action to be dismissed on the ground of no
jurisdiction.
Relevance
The defenders' solicitor submitted finally that the pursuer's averments
of loss were so inspecific that the pleadings were irrelevant. He argued
that it was impossible from the pursuer's pleadings to ascertain why
the pursuer was suing for the sums craved, how such sums were
constituted, or to what they related. The pursuer's solicitor conceded
that his pleadings were irrelevant. He asked me to decide the question
of jurisdiction and, if I found in his favour on that matter, to continue the
cause for a minute of amendment. This proposal was not opposed by the
defenders' solicitor.
For the reasons already stated I am of opinion that the sheriff court at
Edinburgh has jurisdiction to consider disputes arising from the contract
in question. I have therefore repelled the plea of no jurisdiction; and have
continued the cause for a minute of amendment. As the interlocutor as
framed would not be subject to appeal, I have granted leave to appeal.
The pursuer's solicitor conceded that he could not on any view move for
the expenses of the debate. In light of my decision, however, it seems
proper that I should reserve the question of expenses meantime.
Effect of entering appearance
For completeness I should add that in the course of his submissions the
pursuer's solicitor submitted, under reference to art. 18 of Sched. 4 to
the Act of 1982, that this court has jurisdiction because the defender
has entered appearance to contest the merits and not just to contest the
jurisdiction. Article 18 provides:
"Apart from jurisdiction derived from other provisions of this Title, a
court of the part of the United Kingdom before whom a defendant enters
an appearance shall have jurisdiction. This rule shall not apply where
appearance was entered solely to contest the jurisdiction".
In my opinion the pursuer's reliance on this article in the instant cause is
ill founded. Reference is made to the decision of the European Court in
Elefanten Schuh v. Jacqmain (No. 150/80) [1981] E.C.R. 1671. At para.
17 on p. 1686 the court held that art. 18 of the Convention (which was
adapted for the purposes of Sched. 4) must be interpreted as meaning:
"that the rule on jurisdiction which what provision lays down does not
apply where the defendant not only contests the court's jurisdiction but
also makes submissions on the substance of the action, provided that,
if the challenge to jurisdiction is not preliminary to any defence as to
the substance, it does not occur after the making of the submissions
which under national procedural law are considered to be the first defence
addressed to the court seised".
If, therefore, I had held that the Scottish courts did not otherwise
have jurisdiction, jurisdiction would not have been constituted by the
appearance entered and answers lodged by the defenders. In the event
however I have, for the reasons above stated, found in favour of the
pursuer on the matter of jurisdiction.