THE SHERIFF PRINCIPAL (N. D. MACLEOD, Q.C.).
The pursuers are a firm who describe themselves as "Hotel and Licensed
Property Agents". They specialise in the marketing of hotel and licensed
premises. The defenders, who own licensed premises, concluded a
contract with them for the marketing of the premises that they own. This
action has been raised by the pursuers to recover sums which they claim
are due to them in terms of that contract. The defenders are domiciled
outwith the jurisdiction of this court and jurisdiction is founded upon
the following term of the contract: "The parties hereby prorogate the
exclusive jurisdiction of the Sheriff Court at Glasgow."
When the case called before the sheriff, he took the view that the contract
was in nature a "consumer contract" and, as such, could be raised only
in the courts for the place where the defenders were domiciled. He
accordingly refused decree, referring to rule 3 (4) of Sched. 8 to the Civil
Jurisdiction and Judgments Act 1982. Against this decision the pursuers
have appealed by stated case.
At the outset of the hearing of the appeal the solicitor for the appellants
made certain concessions that effectively narrowed the field of inquiry.
He conceded that (1) no question of exclusive jurisdiction arose; (2) the
rule applicable to consumer contracts constituted an exception to the
rule permitting prorogation; (3) the contract in question was one for the
supply of services; (4) the defenders took the steps necessary to conclude
the contract in Scotland; and (5) no agreement as to jurisdiction had
been entered into by parties after this dispute arose.
Attention therefore focused upon rule 3 in Sched. 8, the relevant parts of
which are as follows:
"3.--
(1) In proceedings concerning a contract concluded by a person for a
purpose which can be regarded as being outside his trade or profession,
hereinafter called the 'consumer'... jurisdiction shall be determined by
this Rule if it is --... a contract... for the supply of... services, if -- (i) the
consumer took in Scotland the steps necessary for the conclusion of the
contract....
"(4) Proceedings may be brought against a consumer by the other party
to the contract only in the courts for the place where the consumer is
domiciled".
The argument which the solicitor for the appellants advanced was a
simple one: that the contract was not in fact a consumer contract. In
support of that argument he submitted that as the defenders were
licensees engaged in the licensed trade, a contract for the marketing
of their licensed premises was one concluded for a purpose within their
trade. He sought to contrast the approach of the English courts when
determining what was a consumer contract (as that appeared from R.
& B. Customs Brokers Co. Ltd. v. United Dominions Trust Ltd. [1988]
1 All E.R. 847) with the approach required to determining what was
a consumer contract within the meaning of rule 3. The English courts
looked at the degree of regularity of a transaction when deciding whether
it was or was not a transaction within the normal course of business.
European Community law, he contended, required the courts to adopt a
purposive interpretation when considering a rule like rule 3. The purpose
of rule 3 was to protect the weaker contracting party. In his submission,
it could not be said that the defenders were the weaker contracting party;
accordingly, the rule should not be construed as conferring protection
upon the defenders. In this connection I was referred to the part of the
Schlosser Report that relates to jurisdiction over consumer contracts
and to comments on much the same topic in the report by Professors
Giuliano and Lagarde. He referred also to para. 13.86 of the Maxwell
Report. He drew especial attention to the case of Societe Bertrand v. Paul
Ott K.G. (150/77) [1978] 3 C.M.L.R. 499 at p. 509 as illustrative of the
European Court's reluctance to extend protection beyond buyers who
required it. He also referred to the Di Pinto case (Case C-361/89 of 14
March 1991) as a case very close on the facts to the present. In it the
European Court had held that "a trader canvassed with a view to the
conclusion of an advertising contract concerning the sale of his business
is not to be regarded as a consumer protected by Council Directive
85/577/EEC of 20 December 1985 to protect the consumer in respect of
contracts negotiated away from business premises". That decision, it was
contended, clearly excluded the defenders from the protected category,
and it was a decision binding upon this court. He referred me also to the
Council Directive in question. For completeness of citation he referred me
to Anton's Private International Law (2nd ed.), pp. 175 and 345 and to
Anton's Civil Jurisdiction in Scotland, pp. 99 and 194. The defenders in
his submission, had been acting in a course of their trade as licensees,
and were not in a position of economic disadvantage when contracting
with the pursuers. On a purposive construction of the rule, the defenders
did not require the protection conferred by the rule, so the contract in
question should be held to fall outwith its ambit. The questions of law
should be answered in the negative, the sheriff's decision be recalled, and
the decree sought be granted.
The parts of rule 3 with which this case is concerned are derived from
arts. 13 and 14 of the 1968 Convention (as amended by the 1978
Accession Convention) appearing in Sched. 1 to the Act, more particularly
in Title II, Section 4. Any question as to the interpretation of Sched. 8
must be determined in accordance with the principles laid down in any
relevant decision of the European Court, and the courts may also consider
in this connection, the Jenard and Schlosser Reports: vide ss. 3 (3) and
20 (5) of the Act.
At p. 29 of his report Mr Jenard comments that the Convention contains
special rules governing consumer contracts, rules that "are dictated by
social considerations and are aimed in particular at preventing abuses
which could result from the terms of contracts in standard form". In his
Civil Jurisdiction in Scotland, Professor Anton observes, at p. 90, that "the
underlying assumption is that the... consumer lacks bargaining power
and should be assisted by limits being set to the places where he may be
sued".
In Bertrand v. Ott the contract in question was a special form of credit
sale. However, both contracting parties were companies, and both were
contracting in the normal course of their business. The European Court
interpreted the relevant rule strictly so as to confine it to buyers in need
of protection. By this the court meant buyers in a weaker position than
sellers, in that they were buying privately and not in the course of their
trade. The buyers in Bertrand v. Ott were not buying privately but in
the course of their trade. They were not in a weaker position than the
sellers, and it was not the purpose of the rule to offer protection to such
buyers. The case appears to me to be an instructive example of purposive
interpretation.
On the other hand I feel that I can derive no useful assistance from the
Di Pinto case. That case relates to a directive that protects consumers
in respect of certain particular commercial practices. Examination of the
case and of the directive reveals that it relates exclusively to commercial
practices and not at all to the matter of jurisdiction.
In arriving at an answer to the questions posed for my opinion I
acknowledge that the purpose of the rule is to protect the "buyer" in a
weaker position than the seller because he is buying privately, and not
in the course of his trade. I bear in mind too that underlying the rules is
the social consideration that the buyer should be protected from abuse
resulting from the terms of contracts in standard form.
It seems to me that a contract for the marketing of their licensed
premises is a contract for a purpose which can be regarded as being
outside the defenders' trade. Their trade is to sell, not licensed premises,
but spiritous liquors, etc. In my opinion the defenders were acting
privately when entering into this contract. They were also obliged to sign
a contract in standard form which provides, inter alia, that they would not
themselves market their property, that the pursuers would be sole and
exclusive selling agents and that any offer received by the defenders will
be submitted to the pursuers. The contract also makes provision for a fee
of 3 per cent of any purchase price with a minimum fee provided for; and
it also provides that only certain terms of the contract are revocable.
It seems to me that the defenders were economically in a weaker position
than the pursuers and that they were buying privately and therefore were
in need of such protection as is afforded by the rule. The pursuers, on the
other hand, were concluding a contract of the kind ordinarily concluded
in the course of their business as agents specialising in the marketing
of licensed premises. The contract entered into was in a standard form
prepared by the pursuers the detailed terms of which were in large
measure advantageous to the pursuers and restrictive of the defenders'
position.
In my respectful view the sheriff was clearly correct to view this contract
as a consumer contract and to hold that because the consumers, namely
the defenders, were domiciled outwith the jurisdiction of this court,
this court lacked jurisdiction. The questions of law that I am required
to answer are: "(1) Whether the sheriff erred in law in finding that the
transaction in question between the parties was a 'consumer contract'?
(2) Whether the sheriff erred in law in refusing to grant decree as craved
by the pursuers and appellants?" It appears to me that both questions
require to be answered in the negative.