[1] The pursuers are a partnership which carries on the practice of
chartered surveyors. They have a place of business in Glasgow. They
have other places of business elsewhere in the United Kingdom, including
London. The defender has an address in London. He is domiciled in
England and Wales.
[2] In this action the pursuers sue the defender for payment of an
introduction fee alleged to be contractually due by him as a consequence
of a portfolio of properties, owned by the R. B. S. plc, having been
acquired by a company in which the defender, through certain corporate
mechanisms, had a beneficial interest. Some of those properties were
situated in Scotland and others in England and Wales. The pursuers aver
that, having become aware of the possibility of that portfolio being for
sale, they contacted a client in Aberdeen who in turn introduced them
to two individuals who operated as investors in property through certain
corporate bodies in England. A contract, it is averred, was entered into
between the pursuers and those two individuals in terms of which the
pursuers were entitled, on a relative purchase of the portfolio being
completed, to an introduction fee. Prior, however, to the portfolio being
sold these two individuals ceased to be involved in the proposed purchase
but the defender, who had in turn been introduced by them, maintained
an interest in such purchase. The pursuers aver that the defender
adopted the agreement between the pursuers and the two individuals,
becoming thereby subject to the latter's obligations thereunder, and
further and in any event, that, by virtue of a custom of the relative trade,
he became directly subject to a like obligation of payment to the pursuers
in the event of the purchase being completed. A relative purchase was
completed in early October 1998. The defender denies any liability to the
pursuers.
[3] The defender challenges the jurisdiction of this court to adjudicate
upon the pursuers' substantive claim. Parties were heard at debate on
the defender's contention that the pursuers' averments were irrelevant
to instruct jurisdiction in this court and that the action should for that
reason be dismissed. The ground of jurisdiction invoked is the special
jurisdiction in matters relating to a contract identified in the first place in
the 1968 Brussels Convention and enacted, as modified for the allocation
of jurisdiction within the United Kingdom, in Schedule 4 to the Civil
Jurisdiction and Judgments Act 1982. Article 5, as so modified, provides -
"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 ....".
[4] Certain matters are not in dispute. The present action relates to
a contract. The obligation in question is the obligation of payment
thereunder. The system of law applicable to the relevant relationship is, or
at least for present purposes may be taken to be, Scots law. The place of
performance of that obligation falls to be determined by that law.
[5] As regards the ascertainment under Scots law of the place of
performance of a contractual obligation of payment, the leading authority
is Bank of Scotland v Seitz 1990 S.L.T.584. Although that case was
concerned with the interpretation and application of Article 5(1) of
the Convention without modification, the material provisions in the
Convention as modified in Schedule 4 are in identical terms. In that case
the First Division approved the statement 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".
The court further addressed the question, relevant also to this case, of
the place of performance of a contractual obligation of payment where
the creditor has places of business in more than one jurisdiction. It
held that the Convention postulated a single place at which the creditor
could insist on performance of the unfulfilled obligation of payment. I
followed and endeavoured to apply that ruling in William Grant & Sons
International Limited v Marie Brizard Espana S.A. 1998 S.C.536. The
question for decision in the present case is whether the pursuers have
averments relevant to instruct the proposition that under the alleged
contract between the pursuers and the defender there was, when the
action was raised, a single place at which the pursuers could insist that
the obligation of payment be performed and that that place was their
place of business in Glasgow.
[6] The circumstances on which the pursuers rely on averment may be
summarised as follows. Although they have offices in London, the work
for which payment is sought in this action was undertaken by staff in
Scotland. While many of the properties in the portfolio were situated in
England and Wales, the investigations into their values were "initiated
from Scottish staff". The partner dealing with the matter was based in the
Glasgow office. The pursuers' accounting procedures were such that the
Glasgow office had distinct accounts. In accordance with those procedures
the pursuers, shortly before the purchase was completed, wrote to the
defender from the Glasgow office asking to whom the account should be
issued. As no response was received, no invoice was in the event issued;
had one been issued, it would have been issued in accordance with the
pursuers' practice from the Glasgow office. It is not suggested that those
accounting procedures were at any stage of the transaction known to the
defender.
[7] Mr Currie for the defender submitted that these circumstances fell well
short of meeting the requirements for jurisdiction under Article 5(1). The
jurisdiction under that Article was a derogation from the basic principle of
jurisdiction based on domicile. As such, its scope required to be construed
restrictively (Kleinwort Benson Limited v Glasgow City Council [1999]
1 A.C.153, per Lord Goff at pp. 163-4, Lord Nicholls at p.173, Lord
Clyde at pp.179-180 and p.184 and Lord Hutton at p.188). While those
observations were immediately directed to the issue of interpretation
of the Convention, the principle of a restrictive approach was also by
implication appropriate to the application of the relative rule to the facts.
That was consistent with the basic policy of the Convention and with
decisions under it. Reference was made to Dumez France and Tracoba
v Hessische Landesbank (Helaba) [1990] E.C.R.I-49 and to Marinari v
Lloyds Bank plc [1996] Q.B.217. There was no hardship in so applying
the policy; a defender could always be sued in the place of his domicile.
In Ferguson Shipbuilders Limited v Voith Hydro GmbH & Co KG 2000
S.L.T.229 Lord Penrose at page 233F observed that a narrow approach to
the application of Article 5 must be adopted. A similar approach had been
adopted by Lord Eassie in Eddie v Alpa srl, 10 March 2000, unreported.
[8] In any event, whether or not a restrictive approach to application
was appropriate, the test laid down in Bank of Scotland v Seitz and
subsequently applied in William Grant & Sons International Limited v
Marie Brizard Espana S.A. was clearly not satisfied here. The defender
was content to adopt the formulation used in the latter case at page
541G-H. The present pursuers clearly had no averments to the effect that
they were "contractually entitled to insist on payment at [their] place of
business at [Glasgow] and only at that place". There was nothing in the
pursuers' averments to show that, on an objective assessment, a person
in the position of the defender (or of the individuals whose contract he
had allegedly adopted) would reasonably infer that the pursuers intended
to insist that payment be made at the Glasgow office. Correlatively,
there is no ground for inferring that the pursuers intended to exclude
the entitlement of the obligant to pay at the London office. Nor was
there any basis on averment for any inference that any obligant had any
such intention. The present circumstances could readily be contrasted
with those in Bank of Scotland v Seitz (where under banking law and
practice an account was localised at a particular branch) and William
Grant and Sons International Limited v Marie Brizard Espana S.A. (where
the Court had proceeded on a regular course of dealings and an express
acknowledgement in evidence by the obligant's Director General that the
obligant was prepared to make payment in accordance with the method
specified by the supplier). The place of performance could not be fixed
unilaterally by the payee. The action should be dismissed.
[9] Mr McNeill for the pursuers submitted that the pursuers' averments
were relevant to instruct jurisdiction in this court. The passages in their
Lordships' speeches in Kleinwort Benson Limited v Glasgow City Council
were concerned with the interpretation of Article 5 as set against Article
2. No such question of interpretation arose here. The pursuers' claim was
clearly one relating to a contract. Where the issue was the application
of Article 5, no question of derogation arose. The issue at this stage was
simply whether the place of performance had, in accordance with the
relative rules, been identified. There was no presumption against its
identification.
[10] It was not essential that a pursuer invoking Article 5 in respect of
a contractual obligation of payment should identify a contractual term
that payment be made at a particular place. Where the contract was
silent as to the place of performance, the appropriate exercise was to
analyse the facts relied on to see whether they showed that the claimant
could in the whole contractual context insist on performance at only
one place. The provision in Article 5 existed "because of the existence,
in certain clearly defined situations, of a particularly close connecting
factor between a dispute and the court which may be called upon to hear
it, with a view to the efficacious conduct of the proceedings" (Martin
Peters etc v ZNAV [1983] E.C.R.987, quoted by Lord Goff in Kleinwort
Benson Limited v Glasgow City Council at p.164). The factual context in a
particular case might demonstrate such a connecting factor in relation to
the place of performance. The potential place of performance might vary
during the subsistence of the contract and come to be localised only at
the end of the day (Bank of Scotland v Seitz, per Lord Prosser at p.593).
A consideration of the whole context had been the approach adopted both
in Bank of Scotland v Seitz and in William Grant and Sons International
Limited v Marie Brizard Espana S.A.. In the latter case the accounting
arrangements of the pursuers had been of importance. There was nothing
in that case to the effect that an agreement had been reached that the
account be localised in Bellshill. Looking at the totality of the facts relative
to payment (including Grants' accounting system) the court had there
held that there was no alternative place of payment of such importance as
Bellshill. In the present case, provided that the pursuers were able to say
that they had a place of business in Glasgow and that the circumstances
pointed importantly to the localisation there of the obligation of payment,
that was sufficient. It was unnecessary that the defender should have
prior knowledge of the pursuers' accounting arrangements. Often the
place of payment would be of no importance to the payer, though it might
for accounting reasons be of importance to the payee. The subsumption
was that parties impliedly accepted that there might be a localisation of
the place of payment and that such place might change. It was then a
question of fact whether it had been so localised and, if so, where.
[11] For the purposes of the disposal of this case it is unnecessary, in
my view, to decide whether, when a court comes to apply Article 5(1)
to the circumstances of the case before it, it should or should not adopt
a restrictive or narrow approach; however, lest this case goes further, I
express my opinion on that question. By that stage the court will have
decided (if it has not been conceded) that the defender is being sued in a
matter relating to a contract. It will also have decided (if it has not been
conceded) what is the applicable law and ascertained the relevant rules
of that law as to the place of performance of the obligation in question.
The final stage will be the application of those rules to the circumstances
before it - whether on averment or after proof on the evidence. My view is
that at that stage, at which no question of construction of the Convention
arises, a restrictive or narrow approach is inappropriate. I find nothing in
the speeches in Kleinwort Benson Limited v Glasgow City Council or in the
judgments in any of the European cases cited to me that requires such an
approach at that stage. Insofar as the approach indicated by Lord Penrose
in Ferguson Shipbuilders Limited v Voith Hydro at p.233 is to a different
effect, I would respectively disagree. My view appears, however, to be
broadly consistent with that adopted by Lord Eassie in Eddie v Alpa srl
where (in the context of obligations largely of delivery) his Lordship said:
".... it appears to me that an inquiry will be appropriate only where a
pursuer relying upon the special jurisdiction has set forth a prima facie
relevant case that the obligation at the base of the action required to be
performed within the territorial jurisdiction of the court before which the
action has been brought".
The court has, I believe, at that stage simply to apply the ascertained
rules of law to the facts averred or proved. For the purposes of disposal
of this case, I proceed on that basis. Accordingly, the earlier stages being
undisputed, the only issue is whether the pursuers have averred facts
and circumstances which, if proved, would entitle the court to hold that
the pursuers' Glasgow office was the sole place of performance of the
obligation of payment.
[12] It is, in my view, important to notice that, in construing Article 5(1)
and applying it in the context of Scots law to the place of performance
of contractual obligations of payment, the judges in Bank of Scotland v
Seitz emphasised that, for the purposes of Article 5(1), the sole place
of performance must be one which arose as a matter of obligation, not
of choice (Lord President Hope at p.588I-J; Lord Sutherland at p.592L,
Lord Prosser at p.593G-I). The test adopted by them was not simply
whether on the facts there was a particularly close connection between
the obligation of payment and a particular place. Lord Prosser observed
at p.593I-J that the place of performance might vary during the currency
of the agreement. With that observation I agree. But, if the special
jurisdiction is successfully to be invoked in the Court of Session, there
must, at the time when it is invoked, in my opinion be in Scotland a place
of performance at which and at which alone the creditor in the obligation
is entitled to insist that the obligation be discharged. That entitlement
may arise by reason of an express or an implied term of the contract - in
the latter case to be inferred from the whole circumstances of the case,
including in some circumstances the parties' actings in furtherance of
the contract; a course of dealings between the parties or practice in the
relevant trade may also give rise to such an implication. The entitlement
may, as in Bank of Scotland v Seitz, arise from what has come to be a
rule of law relative to the localisation of banking obligations. I do not
exclude the possibility that it might arise in other ways. The entitlement
might not exist at the outset of the contract but come to exist, by express
or implied variation, by the time the obligation comes to be enforced. But,
however it arises, it must be an entitlement in the creditor to insist, if he
chooses, on payment at such a place, with a correlative restriction on the
freedom of the debtor to choose where he will pay. The circumstances
must be such that the parties' mutual rights and obligations have, prior to
the jurisdiction being invoked, come to be so ordered.
[13] In my view the circumstances averred in the present case are
insufficient to found the jurisdiction relied on. The circumstances that
the initiative for the transaction occurred at the pursuers' Glasgow
office and that the partner in charge was based there (even if known
to the defender or his authors) hardly advances matters, particularly
in circumstances where the properties in the portfolio were spread
throughout the United Kingdom and the prospective seller of them was a
financial institution with interests equally widely spread. The circumstance
that the pursuers' accounting arrangements for this transaction were
localised at the Glasgow office is not suggested to have been known to
the defender or his authors, far less to have been expressly or implicitly
concurred in by him or them. That state of affairs may be contrasted with
that established in William Grant and Sons International v Marie Brizard
Espana S.A.. In short, the factors relied on, singly or in combination, are
insufficient, in my view, to confer on the pursuers, as creditors in the
payment obligation, an entitlement to insist that payment be made at the
Glasgow office. For those reasons I shall sustain the defender's first and
second pleas-in-law and dismiss the action.