MR JUSTICE JACKSON:
1.This judgment is in seven parts; namely, Part 1 "Introduction"; Part
2 "The Facts"; Part 3 "The Present Proceedings"; Part 4 "Does Article
5(3) apply to the whole of the claimant's claim?"; Part 5 "Does Article 23
require the present dispute to be litigated in Germany by reason of the
terms of the sale contract?"; Part 6 "Does Article 23 require the present
dispute to be litigated in Germany by reason of the terms of the Hire
Contract?"; and Part 7 "Conclusion".
Part 1: Introduction
2.This is an application to set aside a claim form on the ground that the
claim falls within the jurisdiction of the German courts, not the English
courts. The claimant, Hewden Tower Cranes Ltd, is an English company
whose registered office is at Castleford in Yorkshire. The defendant is a
German company, whose centre of operations is in Heilbronn. Yarm Road
Ltd ("YRL") is a structural steel contractor that will feature in the narrative
of events.
3.This litigation arises out of a crane collapse, which the claimant alleges
was caused by the negligence of the defendant. By way of introduction,
I should say something about the plant, which was involved. The vertical
mast of a tower crane comprises a number of sections, which are pinned
end to end. A Climbing Frame is a piece of equipment, which travels
up and down the mast of a tower crane using grooved guide wheels. A
Climbing Frame is used to support the masthead of the crane when an
additional tower section is being inserted. The accident in the present
case occurred when the Climbing Frame became detached from the crane
mast on which it was being used.
4.Let me now turn to two enactments, which are central to the issues in
the present application. I shall refer to the Civil Liability (Contribution) Act
1978 as "the 1978 Act". Section 1(1) of the 1978 Act provides:
"Subject to the following provisions of this section, any person liable
in respect of any damage suffered by another person may recover
contribution from any other person liable in respect of the same damage
(whether jointly with him or otherwise)."
5.I shall refer to Council Regulation (EC) No.44/2001 either as "Regulation
44/2001" or as "the Regulation". Article 2(1) of the Regulation provides:
"Subject to this Regulation, persons domiciled in a Member State shall,
whatever their nationality, be sued in the courts of that Member State."
Article 5 of the Regulation provides:
"A person domiciled in a Member State may, in another Member State, be
sued....3. in matters relating to tort, delict or quasi-delict, in the courts
for the place where the harmful event occurred or may occur..."
Article 23 of the Regulation provides:
"1. If the parties, one or more of whom is domiciled in a Member State,
have agreed that a court or the courts of a Member State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connection with a particular legal relationship, that court or those courts
shall have jurisdiction. Such jurisdiction shall be exclusive unless the
parties have agreed otherwise. Such an agreement conferring jurisdiction
shall be either:
(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have
established between themselves..."
6.After these brief introductory remarks I now turn to the facts.
Part 2: The facts
7.The defendant company was established in 1854. For approximately
150 years it has been engaged in the manufacture of cranes. Throughout
its life the defendant has been based in Heilbronn, Germany. The
defendant's original name was Julius Wolff & Co GmbH. On 17 January
1997 the defendant's name was changed to MAN WOLFF-Kran GmbH. On
7 December 1999 its name changed to MAN WOLFFKRAN GmbH. On 14
November 2005 the defendant's name changed to Wolffkran GmbH.
8.The defendant is now an international company, which exports tower
cranes and their components to customers based all over the world.
Following the reunification of Germany in 1989 there was a high demand
for tower cranes to be used in connection with construction works in the
former East Germany. Accordingly, the defendants supplied numerous
cranes to large dealerships, which rented them out for construction works
in East Germany. Two of these dealerships became insolvent and so the
defendant was left with many surplus cranes on its hands.
9.In those circumstances, the defendant established a crane rental
business. In order to carry on that business the defendant set up a
subsidiary company WOLFF Baukran-Vermietungs GmbH to which I shall
refer as "WBV". WBV was established in June 1997 and carried on the
business of renting out cranes and associated plant.
10.On 14 December 1998 WBV and the defendant entered into an
agreement under which WBV transferred, or purported to transfer, its
business to the defendant with effect from 1 July 1998. The validity of
that agreement under German law is in issue. On 2 October 2002 WBV's
name was changed to MAN Maschinen-und Anlagenbau GmbH and the
seat of that company was moved to Munich.
11.Let me now turn to the claimant. The claimant is a company based
in Yorkshire, which carries on the business of supplying tower crane
equipment and associated labour to construction companies. For
many years the claimant has had a close business relationship with
the defendant. The claimant has purchased many tower cranes and
associated plant from the defendant. In more recent years, the claimant
has also hired such items either from WBV or the defendant.
12.On 31 October 1997 the claimant entered into contract of hire
No.32200291 with WBV whereby the claimant hired one KWH 20.5
Climbing Frame ("the Climbing Frame") from WBV for a rental of DM1,500
per month. I shall refer to this contract as "the Hire Contract". By a
contract dated 30 July 1999 the claimant purchased from the defendant
a 320 BF luffing jib tower crane ("the Crane") as well as certain other
cranes and related equipment. I shall refer to this contract as "the sale
contract". The Climbing Frame and Crane to which I have referred formed
but a small part of the total equipment, which the defendant supplied to
the claimant during that period.
13.During 1999 a 44-storey office block was being built for the Hong Kong
and Shanghai Banking Corporation at Canary Wharf, London E14. YRL
was engaged upon that project as structural steel contractor. Pursuant
to a sub-contract made between YRL and the claimant, the claimant
provided both the Crane and Climbing Frame (as well as much other
similar equipment) for use at the Canary Wharf site. This particular crane
was known on site as TC3.
14.On the afternoon of 21 May 2000 an erection crew was using the
Climbing Frame to increase the height of Crane TC3. An accident occurred
as a result of which the Climbing Frame and the top part of the Crane
fell to the ground. Three employees of the claimant were killed in the
accident; two others were injured. Following the accident, the claimant
faced a number of claims. Claims were brought by the families of the
men who had died, by the employees who had suffered injury and also by
YRL. The claimant settled all those claims. The claimant also faced claims
for property damage brought by other companies based or operating in
Canary Wharf. Those claims are still current.
15.The claimant maintains that the accident of 21 May 2000 was caused
by defects in the Climbing Frame; namely, defective welds which failed
and caused the guide wheels, or one of them, to disengage from the
mast of the Crane. The claimant attributes those defects to negligence by
the defendant in the design and/or manufacture of the Climbing Frame.
Accordingly, in order to recover its substantial losses flowing from the
accident, the claimant commenced the present proceedings.
Part 3: The present proceedings
16.By a claim form issued in the Technology and Construction Court on
17 May 2006 the claimant claimed damages and a contribution under
the 1978 Act against the defendant in respect of the accident on 21 May
2000. In the accompanying Particulars of Claim the claimant alleged that
the defendant had been negligent in the design and/or manufacture of
the Climbing Frame. The claimant alleged that as a result of the accident
it had (a) suffered property damage and consequential losses and (b)
incurred substantial liabilities to third parties.
17.The claimant selected England as the forum for this litigation because
the relevant accident had occurred in London. The claim is pleaded in
tort. Under English law the cause of action accrued in London where
damage occurred, not Germany where the allegedly negligent design
and manufacture took place. Furthermore, for the purposes of Article
5(3) of Regulation 44/2001, the "harmful event" occurred in London.
The claimant duly served the claim form on the defendant outside the
jurisdiction, namely in Germany.
18.Upon being served with these proceedings the defendant took a
different view about the appropriate forum. The defendant maintained
that Article 23 of the Regulation applied on the grounds that the parties
had agreed to settle their disputes at the courts of Heilbronn in Germany.
Accordingly, on 15 December 2006 the defendant issued an application
for the following relief: first, a declaration that the English court does not
have jurisdiction over the claimant's claim; and, second, an order that the
claim form be set aside.
19.Both parties have served factual evidence in support of their respective
positions as well as expert evidence on German law. The defendant's
application was listed for hearing on Friday 30 March and the argument
lasted for a day. Mr Colin Edelman QC, represents the claimant. Mr
Alexander Layton QC, represents the defendant. Since the hearing on
Friday both counsel have written to me drawing attention to further
authorities, which I have duly taken into account.
20.The issues between the parties, as they have emerged during
argument, may be formulated as follows:
(i) Does Article 5(3) apply to the whole of the claimant's claim?
(ii) Does Article 23 require the present dispute to be litigated in Germany
by reason of the terms of the sale contract?
(iii) Does article 23 require the present dispute to be litigated in Germany
by reason of the terms of the Hire Contract?
I shall address the three issues in that order.
Part 4: Does Article 5(3) apply to the whole of the claimant's claim?
21.Mr Layton accepts that the claimant's claim for damages for the tort of
negligence falls within Article 5(3) of
22.Regulation 44/2001
23.. He also accepts that for this purpose the harmful event occurred at
Canary Wharf in London. Accordingly, Mr Layton accepts that pursuant
to Article 5(3) the English courts have jurisdiction over the claim in
negligence, unless the defendant can successfully invoke Article 23. Mr
Layton makes no similar concession in respect of the claimant's claim
for a contribution under the 1978 Act. He submits that this is a statutory
claim, which does not fall within the ambit of Article 5(3). Accordingly,
Article 2 applies and the defendant must be sued in the state where it is
domiciled, namely Germany.
22.Let me begin by reviewing the authorities which counsel have cited
on this issue. In Kalfelis v Bankhaus Schröder, Munchmeyer, Hengst &
Co [1988] ECR 5565 Mr Kalfelis concluded, through a Luxembourg bank,
some spot and futures stock exchange transactions, which resulted in a
total loss. Mr Kalfelis sued the bank in the German courts for breach of
contract, tort and unjust enrichment. The bank challenged the jurisdiction
of the German courts, which sought a preliminary ruling from the
European Court of Justice. In its judgment the court gave the following
guidance about the meaning of Article 5(3):
"16. Accordingly, the concept of matters relating to tort, delict or quasi-
delict must be regarded as an autonomous concept, which is to be
interpreted, for the application of the Convention, principally by reference
to the scheme and objectives of the Convention in order to ensure that
the latter is given full effect.
17. In order to ensure uniformity in all the Member States, it must be
recognised that the concept of 'matters relating to tort, delict and quasi-
delict' covers all actions which seek to establish the liability of a defendant
and which are not related to a 'contract' within the meaning of Article
5(1)."
23.In Santa Fe (UK) Ltd v Gates Europe NV (Court of Appeal transcript
16 January 1991) a hose broke on an oil rig in the Scottish area of
the North Sea causing injury to the plaintiff's employee. The plaintiff
was held liable in damages to its employee. The plaintiff then brought
contribution proceedings in London under the 1978 Act against (1)
a Belgian company that had sold the hose to the plaintiff and (2) a
Hungarian company, which had manufactured the hose. The defendants
challenged the jurisdiction of the English courts. The plaintiff accepted
that the accident had occurred in Scottish waters. The plaintiff argued,
however, that it had suffered a "harmful event" in England, namely being
held liable to the employee in the English courts. That argument was
rejected by the master, the judge in chambers and the Court of Appeal.
The Court of Appeal rejected the submission that the ECJ's reasoning in
Kalfelis brought the plaintiff's claim within the jurisdiction of the English
courts.
24.In Davenport v Corinthian Motor Policies at Lloyds [1991] SLT 774 the
pursuer was injured in a road traffic accident in Scotland. She obtained
judgment in the Glasgow Sheriff Court against the driver responsible, but
that judgment was not satisfied. The pursuer then brought an action in
the Glasgow Sheriff Court against the driver's insurers pursuant to section
151 of the Road Traffic Act 1988. The insurers argued that because they
were domiciled in England the Glasgow Sheriff Court had no jurisdiction.
The Inner House of the Court of Session held that the insurers were
correct and the Scottish courts did not have jurisdiction. The Inner House
held that the pursuer's claim against the insurers was based solely on the
insurance certificate issued by the insurers and the provisions of the Road
Traffic Act 1988. The pursuer's claim (unlike the claim in Kalfelis) did not
fall within Article 5(3).
25.In Molnlycke AB v Procter & Gamble Ltd [1992] 1 WLR 1112 the Court
of Appeal held that an action for patent infringement fell within Article
5(3). The harmful event in that case was the marketing of allegedly
infringing nappies in England. Accordingly, the English courts had
jurisdiction.
26.In Kleinwort Benson Ltd v Glasgow City Council [1999] 1 AC
153 the plaintiff, an English bank, entered into seven interest rate
swap transactions with Glasgow City Council. Such transactions were
subsequently held to be ultra vires and void by the House of Lords. The
plaintiff brought an action in England claiming restitution of the sums paid
to Glasgow City Council on the ground of unjust enrichment. The House of
Lords held that the English courts did not have jurisdiction. At page 172
Lord Goff said this:
"Before the Appellate Committee, Mr. Pollock Q.C., for Kleinwort,
advanced a brief argument to the effect that Article 5(3), which is
concerned with "matters relating to tort, delict or quasi-delict" and places
jurisdiction in the courts for the place "where the harmful event occurred
or in the case of a threatened wrong is likely to occur," applied in cases
of unjust enrichment, and was therefore applicable in the present case.
This argument is impossible to reconcile with the words of Article 5(3),
if only because a claim based on unjust enrichment does not, apart
from exceptional circumstances, presuppose either a harmful event or a
threatened wrong. The argument was based on a misreading of paragraph
2(a) of the ruling of the Court of Justice in Kalfelis v Bankhaus Schröder
at page 5587, a misreading which is plainly inconsistent with paragraph
2(b) of the same ruling (which I have referred to earlier in this opinion).
There is, in my opinion, no substance in the point, which was rightly
rejected by Leggatt L.J. in the Court of Appeal."
The other members of the House of Lords expressed similar views.
27.In Casio Computer Co Ltd v Sayo (6 February 2001) Mr Anthony Mann
QC, sitting as a deputy High Court judge, held that a constructive trust
claim fell within Article 5(3). At paragraph 17 of his judgment Mr Mann
said this:
"The claim is clearly not a tort claim as English lawyers would understand
that term. The expressions "delict" and "quasi-delict" are not expressions
used by English lawyers to describe English causes of action, but the
overall expression "tort, delict or quasi-delict" must be interpreted in
accordance with Conventional law, not merely English law. It must be
given an autonomous meaning – Kalfelis v Bankhaus Schröder [1988]
ECR 5565. In the absence of any clear authority on the point I think
I can be guided by what Lord Goff of Chieveley said in the Kleinwort
Benson case when rejecting a submission that Article 5(3) subsumed
the unjust enrichment claim made in that case. He said: 'In my opinion,
this argument is impossible to reconcile with the words of article 5(3),
if only because a claim based on unjust enrichment does not, apart
from exceptional circumstances, presuppose either a harmful event or
a threatened wrong': see Lord Hutton at page 196 where he too relies
on the absence of a harmful event as being important to a consideration
of whether an unjust enrichment claim does or does not fall within the
Article. In that case the unjust enrichment claim related to payments
made under void interest rate swap transactions, so Lord Goff's reasoning
makes sense – there was no harmful event. The same cannot be said of
constructive trust claims, or at least those based on knowing assistance.
In those cases there is scope for describing what happened as amounting
to or involving a harmful event within the meaning of Article 5(3). Such
a conclusion is supported by the fact that, even though the English law
of tort is not operating where equity imposes a constructive trust, one
can see parallels. A wrong is being committed and loss can be said to
be caused or at least contributed to. It is also supported by the views of
Briggs & Rees on Civil Jurisdiction and Judgments 2nd Edn at para 2.150."
28.That decision was upheld by the Court of Appeal: see Casio Computer
Co Ltd v Sayo [2001] EWCA Civ 661 at paragraphs 10 to 16. In particular,
the Court of Appeal approved Mr Mann's reasoning at paragraph 17 of his
judgment.
29.In Verein fur Konsumenteninformation v Karl Heinz Henkel [2002]
ECR 1-08111, a consumer protection organisation sought an injunction
to prevent a trader from using unfair terms in consumer contracts. The
European Court of Justice held that that claim fell within Article 5(3). At
paragraph 41 of its judgment the court said this:
"Such an action meets all the criteria established by the Court in the case-
law referred to in paragraph 36 of this judgment inasmuch as, first, it
does not concern matters relating to a contract within the meaning of
Article 5(1) of the Brussels Convention; and, second, it seeks to establish
the liability of the defendant in tort, delict or quasi-delict, in the present
case in respect of the trader's non-contractual obligation to refrain in his
dealings with consumers from certain behaviour deemed unacceptable by
the legislature."
30.From this review of authority I derive two general propositions: first,
the term "matters relating to tort, delict or quasi-delict" in Article 5(3) is
an autonomous concept of European law which is wider than the English
law of tort; secondly, in determining whether and how Article 5(3) applies
it is necessary to look at the substance of the claim being brought and the
factual basis of the defendant's alleged liability.
31.With the aid of the authorities cited by counsel, I must now address
the claimant's contribution claim in the present case. Section 1 of
the 1978 Act enables a tortfeasor who has been sued to recover a
contribution from any other tortfeasor liable in respect of the same
damage. The substance of the claimant's contribution claim is as follows:
the defendant negligently designed and manufactured a Climbing Frame
in Germany, which resulted in an accident in England causing fatalities,
personal injuries, property damage and consequential losses. The
defendant would if sued be liable in tort to (a) the families of the men
who died, (b) the men who suffered personal injuries and (c) the various
companies which have suffered property damage or financial loss as a
result of the accident. Accordingly, the defendant is liable under the 1978
Act to make a contribution to the claimant who has been sued by those
parties.
32.In my judgment, a claim of this character falls within the European
concept of "matters relating to tort, delict or quasi-delict". The
reasoning in the following decisions supports this conclusion: Kalfelis,
Molnlycke, Kleinwort Benson, Casio Computer Co and Verein fur
Consumenteninformation. The Court of Appeal's decision in Santa Fe
should be distinguished. In that case, unlike the present, the relevant
accident occurred outside England and Wales and the only "harmful
event" relied upon as occuring in England was litigation. Likewise,
Davenport should be distinguished. The defender's liability in that case,
unlike the present case, rested solely upon statutory provisions and the
issue of an insurance certificate and not upon any responsibility for the
relevant accident.
33.Let me now draw the threads together. For the reasons set out above,
I hold that the claim against the defendant under the 1978 Act falls
within Article 5(3). Accordingly, subject to the defendant's contentions
concerning Article 23, the English courts have jurisdiction. My answer to
the question posed in Part 4 of this judgment is "yes".
Part 5: Does Article 23 require the present dispute to be litigated in
Germany by reason of the terms of the sale contract?
34.As set out in Part 2 above, the Crane which was involved in the
accident was sold by the defendant to the claimant pursuant to the sale
contract dated 30 July 1999. The sale contract incorporated general terms
of delivery, clause 8 of which provided as follows:
"These business conditions and all legal relations between the contracting
parties are governed by the law of the Federal Republic of Germany to the
exclusion of the UN purchase law insofar as our general conditions do not
apply.
Insofar as the buyer is a qualified merchant, a public corporate body, or
a public separate estate, the Court of Heilbronn is sole competent for any
disputes arising directly or indirectly out of the contractual relation."
35.The defendant's expert on German law, Dr Peter Andreas Brand,
asserts that the claimant is regarded under German law as "a qualified
merchant". Professor Hanns-Christian Salger, the claimant's expert on
German law, does not dispute this proposition. Accordingly, I accept that
for the purpose of clause 8 of the general terms of delivery the claimant is
a qualified merchant.
36.It follows from the foregoing that any disputes between the parties
arising directly or indirectly out of the sale contract dated 30 July 1999
must be litigated in the courts of Heilbronn. The question, which I must
address, is whether or not the present action in the London Technology
and Construction Court concerns a dispute, which arises directly or
indirectly out of the sale contract.
37.Having considered the competing submissions of counsel on this
issue and the opinions of the experts on German law, I have come to
the conclusion that the present action is completely unrelated to the
sale contract dated 30 July 1999. None of the claims advanced in the
particulars of claim arises either directly or indirectly out of the sale
contract.
38.I reach this conclusion for three reasons. First, both the claim for
damages in tort and the claim for a contribution under the 1978 Act
are based upon the proposition that the defendant was negligent on
some date prior to 30 October 1997 in designing and manufacturing the
Climbing Frame. Secondly, the sale contract dated 30 July 1999 was
entered into some two years after the alleged acts of negligence. The
subject of the sale contract comprised five new cranes being purchased
by the claimant and seven used cranes being sold back to the defendant.
The allegedly defective Climbing Frame was not an item of plant, which
featured in the sale contract. Thirdly, on the evidence before the court
it appears to have been pure chance that Crane TC3 rather than some
other crane was involved in the accident. The claimant does not plead any
defect in the Crane or allege any negligence in the design or manufacture
of it. The claimant does not plead any facts, which would constitute
a breach by the defendant of the terms of the sale contract. On the
claimant's pleaded case, Crane TC3 was merely the location where the
defects in the Climbing Frame manifested themselves with devastating
consequences.
39.For the reasons set out above, I conclude that the jurisdiction clause
incorporated in the sale contract does not require the present litigation to
be conducted in the courts of Germany. My answer to the question posed
in Part 5 of this judgment is "no".
Part 6: Does article 23 require the present dispute to be litigated in
Germany by reason of the terms of the Hire Contract?
40.It will be recalled from Part 2 above that although the defendant
manufactured the Climbing Frame, it was WBV (a subsidiary of the
defendant) which entered into the Hire Contract with the claimant. The
Hire Contract was signed by Herr Mentel and Herr Zuber of WBV on 13
October 1997. It was signed by Mr Paul Phillips, a director and general
manager of the claimant, on 31 October 1997. The Hire Contract included
the following provisions:
"14. Contract conditions: The lessee confirms with his signature that he is
fully instructed with the contract conditions of the lessor and knows that
they have a non-restrictive validity. The following mentioned enclosures
are parts of the contract...
Enclosure:
a) Terms and conditions for the hire of Wolff tower cranes and
components.
b) Delivery conditions."
41.Enclosure a) to the Hire Contract comprises two pages setting out
terms and conditions for hire. These terms cover matters such as rental
period, payment, notice of termination and so forth. These terms and
conditions do not include a jurisdiction clause.
42.I turn now to enclosure b), the delivery conditions. There is an issue
between the parties as to what constituted the delivery conditions and
whether they incorporated a jurisdiction clause. Before I address the
evidence on this issue I must first determine how I should approach
the question. Mr Layton contends that the burden is on the claimant
to establish the court's jurisdiction to the standard of a good arguable
case: see paragraph 16 of his skeleton argument. Mr Edelman contends
that the burden is on the defendant to show that it has the better of the
argument: see paragraph 12 of his skeleton argument.
43.I shall now review the authorities relevant to this issue upon which
counsel relied in oral argument. In Sallotti RUWA v Polstereimaschinen
GmbH [1976] ECR 1831 a German company contracted to supply
machinery to an Italian company. The issue that arose was whether a
German jurisdiction clause contained in the seller's conditions of sale
should prevail. Accordingly, the European Court of Justice had to consider
the effect of Article 17 of the Brussels Convention (the predecessor of
Article 23 of
44.Regulation 44/2001
45.). At paragraph 7 of its judgment the court said this:
"The way in which that provision is to be applied must be interpreted in
the light of the effect of the conferment of jurisdiction by consent which
is to exclude both the jurisdiction determined by the general principle laid
down in Article 2 and the special jurisdictions provided for in Articles 5
and 6 of the convention.
In view of the consequences that such option may have on the position of
the parties to the action, the requirements set out in Article 17 governing
the validity of clauses conferring jurisdiction must be strictly construed.
By making such validity subject to the existence of an agreement between
the parties, Article 17 imposes on the court before which the matter
is brought the duty of examining, first, whether the clause conferring
jurisdiction upon it was in fact the subject of a consensus between the
parties, which must be clearly and precisely demonstrated.
The purpose of the formal requirements imposed by Article 17 is to
ensure that the consensus between the parties is in fact established."
44.In Konkola Copper Mines plc v Coromin Ltd [2006] EWCA Civ 5;
[2006] 1 Lloyds Law Reports 410, Rix LJ reviewed a line of English
authorities bearing on the standard and burden of proof. At paragraphs 94
to 95 he set out his conclusions as follows:
"94. I would seek to sum up these authorities, which are all at first
instance, in this way: that where an established Regulation (or
Convention) jurisdiction in England is challenged under article 23 (or
article 17), (1) there are conflicting views as to where the burden of proof
lies (there is a decision in Carnoustie that the burden remains on the
claimant, a decision in Knauf (at first instance) that it is on the defendant,
and a view in Bank of Tokyo-Mitsubishi also to the latter effect); (2) that
the standard of proof has not been settled, but that there is a general
tendency to apply the good arguable case test in a form which is more
or less consistent with the Canada Trust gloss, but that question was
expressly reserved in this court in Knauf; and (3) that no case cited to
us has dealt specifically with either aspect of the present case which
is of particular interest here, namely (a) a situation where the foreign
jurisdiction clause is not within article 23 (17), and (b) the jurisdiction
clause issue goes to the heart of the ultimate merits at trial.
95. As for the difference of opinion at first instance on burden of proof,
I would hazard the opinion, without seeking to decide the issue, that
the views of David Steel J and Lawrence Collins J are to be preferred.
It seems to me to be counter-intuitive to think that, where a statutory
jurisdiction has been established but an exceptional jurisdiction elsewhere
is put forward based on a contract which must be clearly shown to have
the assent of both parties, it remains the burden of the claimant to
prove a negative rather than that of the applicant who challenges the
established jurisdiction to prove that he is entitled to rely on the clause in
question. After all, article 23 comes in a section of the Regulation (section
7) called 'Prorogation of Jurisdiction."
Both the Master of the Rolls and Richards LJ agreed with that judgment.
45.In Bols Distilleries BV v Superior Yacht Services Ltd [2007] 1
WLR 12 the claimant, a Gibraltar company, brought proceedings in
Gibraltar against two companies domiciled in the Netherlands and Poland
respectively. The claimant relied upon a contractual provision that the
courts of Gibraltar should have jurisdiction. The defendants disputed that
any contract had been concluded and contended that by reason of Article
2(1) of
46.Regulation 44/2001
47.they could be sued only in their own states. The claimant was
successful at first instance and in the Gibraltar Court of Appeal. The
Privy Council allowed the defendants' appeal. Lord Rodger delivering
the judgment of the Privy Council reviewed a line of authorities on the
question of approach. He set out his conclusions as follows at paragraph
28:
"The rule is that the court must be satisfied, or as satisfied as it can be
having regard to the limitations which an interlocutory process imposes,
that factors exist which allow the court to take jurisdiction. In practice,
what amounts to a "good arguable case" depends on what requires to be
shown in any particular situation in order to establish jurisdiction. In the
present case, as the case law of the Court of Justice emphasises, in order
to establish that the usual rule in article 2(1) is ousted by article 23(1),
the claimants must demonstrate "clearly and precisely" that the clause
conferring jurisdiction on the court was in fact the subject of consensus
between the parties. So, applying the good arguable case standard, the
claimants must show that they have a much better argument than the
defendants that, on the material available at present, the requirements
of form in article 23(1) are met and that it can be established, clearly
and precisely, that the clause conferring jurisdiction on the court was the
subject of consensus between the parties."
46.From this review of authority I derive two propositions which are
relevant to the present case: First, where one party relies upon Article 23
in order to oust the jurisdiction of the courts which would otherwise deal
with their dispute, the burden is upon that party to prove an agreement
satisfying the requirements of Article 23. Secondly, since jurisdictional
questions are resolved at an interlocutory stage upon written evidence,
the standard of proof required must be moderated. The party invoking
Article 23 must show that it has much the better of the argument.
47.Let me now turn to the question whether the Hire Contract included
a German jurisdiction clause. No such clause is included in the general
conditions for hire. It is by no means clear on the evidence what
document constituted the delivery conditions. Unfortunately, the actual
document annexed to the Hire Contract cannot be found. Herr Schock,
an employee of the defendant who deals with sales and service, has
produced a set of conditions, which he believes would have been the
delivery conditions annexed to the Hire Contract. This document,
which was found at the office of the defendant's former lawyers, is
headed "Allgemeine Liefer und Montage Bedingungen". Clause 17 of this
document provides that all disputes arising out of the contract shall be
dealt with by the courts of Heilbronn.
48.Herr Zuber, who in 1997 was employed by the defendant to deal
with rental contracts, has produced a different document. The document
produced by Herr Zuber is entitled "General Terms of Delivery" and is
dated 10.98. It includes a jurisdiction clause referring all disputes to
the courts of Heilbronn. The document produced by Herr Zuber came
into existence a year after the Hire Contract with which this court is
concerned. Furthermore, the document is in the name of the defendant,
not WBV. Nevertheless, Herr Zuber believes that a similar if not identical
document would have been attached to the Hire Contract of October
1997.
49.I turn to the claimant's evidence on this point. Mr Paul Phillips was
the director and general manager of the claimant who signed the Hire
Contract. He cannot now recall what constituted the delivery conditions
attached to the Hire Contract of October 1997. He is however confident
that he would not have accepted any conditions which were in German
because he does not read German.
50.It is clear from the witness statements of Herr Schock, Herr Zuber
and Mr Phillips that there is considerable doubt about what constituted
the delivery conditions attached to the Hire Contract of October 1997.
The German conditions produced by Herr Schock should, in my view, be
ruled out for the reasons given by Mr Phillips. The document produced
by Herr Zuber came into existence a year too late and it is not in the
name of WBV. It is not at all clear that a document in this form would
have been attached to the Hire Contract of October 1997. The language
of the document produced by Herr Zuber is inconsistent with a hiring
arrangement. The party receiving the plant is described as the buyer.
Indeed, neither the conditions produced by Herr Schock nor the conditions
produced by Herr Zuber appear to fit with the provisions of the Hire
Contract dated October 1997.
51.Having considered all of the evidence on this issue, it seems to me
that the claimant has much the better of the argument. The evidence
before the court falls far short of demonstrating that the Hire Contract of
October 1997 included a German jurisdiction clause.
52.Let me assume I am wrong and that the Hire Contract did include a
jurisdiction clause as set out in Herr Schock's document, alternatively
Herr Zuber's document. The next question which arises is whether the
defendant, which was not a party to the Hire Contract, can invoke that
clause. In this regard the defendant relies upon the transfer agreement
dated 14 December 1998, whereby WBV transferred all of its business
to the defendant. The defendant contends that following this transfer it
became substituted for WBV in the hiring contract of October 1997.
53.Counsel have debated whether the transfer agreement of 14 December
1998 was a valid agreement under German law. Professor Salger's opinion
is that the agreement is not valid because it was not authenticated by
a notary: see paragraph 1.1.2 of his first report. Dr Brand holds the
opposite opinion as set out in section 1 of his second report.
54.I am not going to embark upon an analysis of German law. Suffice it
to say that I have read the two expert reports and have studied the terms
of the transfer agreement. On this issue I am quite satisfied that the
defendant has much the better of the argument. I shall therefore proceed
upon the basis that the transfer agreement was valid. With effect from 1
July 1998 WBV transferred its assets and liabilities to the defendant. One
of the assets so transferred was the Hire Contract of October 1997.
55.In those circumstances, the question arises whether the German law
equivalent of a novation occurred, so that the defendant became lessor of
the Climbing Frame in place of WBV. It is clear from the expert evidence
that this could have occurred under German law but only if the claimant
was informed of the substitution and consented to it. Such consent may
be communicated by conduct: see section 5 of Dr Brand's first report,
paragraph 1.2.3 of Professor Salger's first report and section 2 of Dr
Brand's second report.
56.The defendant's factual witnesses do not assert that they informed
the claimant of the transfer or that the claimant consented to it. The only
evidence which they give on this issue is that there was a change in the
invoicing arrangements. The copy invoices produced by Herr Zuber are
not helpful to the defendant's case. The invoices up to February 1998
are in the name of WBV. In March 1998 the name changes from WBV
to Wolffkran. That was four months before the date of transfer and nine
months before the execution of the transfer agreement.
57.It is also significant that throughout this period the payment
instructions remained the same. Rental payments were made to
the parent company's account at Commerzbank in Munich. The only
change made to those arrangements concerned the note, which was to
accompany payments. From March 1998 onwards this note referred to the
defendant rather than WBV.
58.The claimant's evidence on this issue is contained in Mr Phillips'
witness statement. Mr Phillips states as follows:
"12. I was aware in general terms that Wolffkran's group was consolidated
in the late 1990s, which I believe was essentially for tax reasons. I do not
recall having been formally told of the consolidation, whether before or
after it took place. I believe that it was mentioned to me informally over
drinks by one of my business contacts in the Wolffkran group and that this
discussion occurred after the consolidation had taken place (but I cannot
recall how long afterwards). My recollection is that I was told that the
purpose of the consolidation was to generate certain tax losses that could
be utilised by the group for tax mitigation purposes.
13.. I was not given any reason to believe that the consolidation of the
group would have any effect on Hewden, as a third party trading partner.
As far as I was concerned, the consolidation of the Wolffkran group was
an internal, intra-group matter for them and did not have any effect on
the Hire Contract. It did not have any effect on operational matters; we
continued to deal with the same people throughout the hire period.
14.. I am not aware of any assignment of the hire contract, whether
in connection with the above consolidation or otherwise. I was not told
that the above consolidation of the group would have any effect on
existing contracts, nor was I asked to consent to an assignment of the
hire contract from WBV to Wolffkran. I do not recall any new standard
terms for hire contracts being issued.
15.. If there had been any dispute under the hire contract and Hewden
wished to pursue a claim against our contracting partner, I would have
regarded WBV as the company against whom Hewden should bring its
claim. We continued to hire the Climbing Frame from WBV, even if within
the Wolffkran group ownership of that equipment had passed to Wolffkran
for tax reasons."
59.Mr Phillips goes on to say that accounts clerks dealt with the invoices.
The invoicing arrangements never alerted Mr Phillips to the fact that there
was any change to the contracting parties under the Hire Contract.
60.Having reviewed the evidence of both parties on this issue, I come
to two conclusions: first, the fact that WBV's business was transferred
to the defendant in 1998 was never drawn to the claimant's attention;
secondly, the claimant never consented either expressly or by conduct
to the substitution of the defendant as lessor under the Hire Contract
of October 1997. The conclusions which I reach on these issues are not
final, because no witness has given oral evidence. My decision is that the
claimant has much the better of the argument on these issues.
61.A further question which has been debated between counsel is whether
the claimant's claim in the present action falls within the jurisdiction
clause contained in Herr Schock's document or Herr Zuber's document. In
view of my conclusions on incorporation and novation that question does
not arise for decision.
62.Let me now draw the threads together. For the reasons set out above,
I have come to the conclusion that the claimant has much the better of
the argument on both the incorporation issue and the novation issue. I
do not accept that the Hire Contract of October 1997 contained a German
jurisdiction clause. Furthermore, I do not accept that the defendant
became a party to that contract by being substituted as lessor. Indeed, I
would reach the same conclusions about those matters on the evidence
whether the burden of proof lay on the claimant or the defendant.
63.It follows from these conclusions that the defendant cannot rely upon
the terms of the Hire Contract in order to require that the present dispute
be litigated in Germany. My answer to the question posed in Part 6 of this
judgment is "no".
Part 7: Conclusion
64.For the reasons set out in Parts 4 and 5 above, I have come to the
conclusion that this is a case to which Article 5(3) of the Regulation
applies. The claimant's claims relate to tort, delict or quasi-delict and
the harmful event occurred in England. Accordingly, the English courts
have jurisdiction. The defendant is unable to rely upon any agreement
requiring the present dispute to be litigated in Germany. Accordingly, the
defendant's challenge to this court's jurisdiction on the basis of Article 23
fails.
65.I am grateful to counsel on both sides for the excellence of their
written and oral arguments. For the reasons stated above, the defendant's
application is dismissed.